We’ve spent over 50 years designing and building churches, witnessing firsthand the challenges church leaders face when navigating their church building projects. One potential pitfall that’s sometimes encountered relates to timing—the decision to build now or wait until all the funds are raised to pay for the project.
Our last blog post outlined how to accurately count costs when developing a church design budget. One more calculation should be considered. What’s the cost of borrowing to build now versus waiting to collect capital campaign pledges before starting? Here’s what to know, and an example of how different timing impacts project costs.
Weighing the Factors of Waiting or Building Now
When deciding to build now, the most obvious cost factor involves both the loan payments and interest that come with borrowing money to begin the project. On the other hand, starting now reduces the impact of inflation, which has been quite high as of late. Building costs don’t stay static; they increase not only because of rising prices, but also due to changes in building codes. The longer you wait, the more expensive your project becomes.
There are other factors that affect a church building project’s cost. Delaying construction can mean lost ministry opportunities. Without the new space, your church may miss out on potential growth, new members, and increased giving—all of which can help offset the cost of a loan.
Another easy-to-overlook factor is a loss of momentum. Congregations get excited when they see tangible progress on a project that they’ve supported financially. If you delay the start of the building process, you risk losing that enthusiasm, which can lead to decreased giving and support over time. People like to see their contributions in action, and prolonged waiting can lead to donor fatigue.
Scenario A: Borrow and Build Now
Here are two scenarios to illustrate the possible costs of a project. Let’s consider the first: moving forward with a building project by taking out a loan and starting construction as soon as possible. In each scenario, let’s assume the church is conducting a three-year pledge campaign. Over these three years, the church expects to raise $410,000 in pledges.
By beginning the project as soon as possible, the church can start using the new building sooner, which can lead to increased attendance and additional giving. For example, the increased attendance in the first year might bring in an additional $6,800, and by the second year, this could rise to $13,000. By the end of the third year, this increased giving could add up to $41,000.
While there are loan costs to consider, the benefits should outweigh these expenses. By the end of three years, the church could be $191,000 ahead, having completed the building, and already reaping the benefits of the new space.
Scenario B: Wait and Save
In the second scenario, the church decides to wait until all the pledged funds are raised before starting the building project. While this might seem like the more financially prudent approach, it comes with its own set of challenges.
First, there’s the issue of pledge realization. Since nothing is happening with the project, people will lose interest, and pledge fulfilment decreases. In this scenario, the church might only realize 70% of the pledged amount, which would be about $287,000 over three years—far short of the $410,000 initially anticipated.
Moreover, inflation continues to raise the cost of building. By the end of three years, the cost of the project could increase by $183,000. When you combine this with the reduced pledge realization, the church could end up with only $103,000 towards the building fund—nearly $90,000 less than if they had moved forward with a loan.
Given the factors at play—loan payments, interest, inflation, and lost ministry opportunities—many times it makes more sense to borrow and build sooner rather than later. Information and advice like this come from our free i3 webinars that help church leaders navigate the complexities of church design and building. See a list of webinar dates and topics, and sign up on our website to secure your spot in the ones that interest you.