Last month, The McKnight Group officially turned 50. As we commemorate our 50th anniversary year, we’ve been presenting a special podcast on our history. In this post, we share excerpts from the first part of the episode “Tough Times,” where our founder, Homer McKnight, talks about how The McKnight Group survived some early challenging times and still grew as a leading church design firm.
Surviving Record Interest Rates
One of the significant challenges that stands out for Homer McKnight over the past fifty years was the interest rate spike that occurred in the 1980s. Back when the company began building churches in the 1970s, interest rates were ranging between 6–9%. Then, in the mid-1980s, interest rates were deregulated and suddenly began rising rapidly, often multiple times in a month. In Homer’s words, “When they hit 12%, we thought they couldn’t go any higher, then they were 16%, then 18%, and then 20%, and then above 20%.”
Of course, churches could no longer afford to make payments on construction projects, and The McKnight Group’s roster of active church building projects quickly plummeted from nine to zero. Fortunately, that period didn’t last long, though Homer had to mortgage his house and stop paying himself in order to keep paying his employees. In Homer’s words, “We believed so much in what we were doing—that God had called us to do this and that he was going to provide. So, there was a lot of faith there.” Homer recounts in the podcast how that faith was rewarded.
How Tough Times Changed the Church Building Funding Process
Naturally, there were significant changes that came out of that interest rate spike. Church building stewardship campaigns became much more popular during that time. Many church denominations had, or developed, funding groups that became much more popular during this time, as churches could no longer afford to build or renovate on their own.
Church bond financing programs also arose in those tough times, although they are no longer common today. With these programs, a bond company would issue bonds to church members and friends, who would act like the bank for a church design and building project.
Rebounding and Growing into a Nationwide Church Design Firm
Fortunately, such high interest rates were not sustainable and did not last long. Not only that, but word began to spread about The McKnight Group’s innovative church design work. During the 1990s and 2000s, business boomed. In Homer’s words, “we became known all around the country. There were many other churches around the country that wanted it done the way we did it, because ours seemed to be the most effective church building anybody was building at the time.” This became the time of greatest growth as a company, reaching even into Alaska and Canada, despite other difficult events like the dot-com recession and 9/11.
In our next post, we will share some stories about more recent difficult times, such as the 2008 recession, and how they affected our church building business. Visit our Anniversary website page to listen to the entire “Tough Times” episode and the rest of our podcast series.