Sometimes it may seem like a good idea to delay a church building project during an economic downturn. We mentioned in our last post that there can be a hidden cost with this decision. Here are two scenarios that demonstrate how the logic of waiting may not pay off as one would expect when church leaders choose to postpone a church building’s construction, or renovation, amidst financial strain.
Scenario A: Borrowing and Capital Campaigns
First, imagine a scenario where church leaders decide to move ahead with a project rather than waiting. Let’s suppose this church embarks on a million-dollar building project, initiating a capital campaign that spans over three years. The following chart shows the projected income and expenses.
In the inaugural year of the campaign, pledges totaling $178,000 are made. Yet, by educating current and new church members about the project and fostering a culture of spiritual giving, there’s a potential increase in contributions each year. In the first year, this amounts to $9,750. The interest cost of borrowing the funds in year one is just under $40,000.
As the second year unfolds, the building is completed and the ministry increases attendance and, consequently, increased giving of $19,500. Another $178,000 of pledged money is also realized, and this is, of course, offset by both interest and principal payments for the new church building, totaling about $119,000.
By the campaign’s culmination in the third year, the church is thriving with new ministries reaching new people. The church has brought in $445,000 in pledges and almost $60,000 in additional giving from new members, as well as participation from established attendees. After paying interest and principal for the three years, the church has roughly $226,000 on the plus side.
Scenario B: Campaigns and Saving Funds
Now, consider an alternative path where the church opts to save the funds collected during the three-year capital campaign waiting until it concludes before building.
History shows that when church leaders decide to wait to begin construction after a campaign, the amount of pledged money is much less. In this instance, let’s assume that only 70% of pledges are collected, amounting to $311,500 over the three-year campaign.
Simultaneously, as economic circumstances fluctuate, inflation takes its toll on building costs. Over the three years, inflation drives the project’s price tag up by a staggering $311,000. Also, without seeing construction and eventually a completed new building to encourage excitement and participation, little or no additional “giving increase” is realized.
At the culmination of this approach, the church possesses $311,500 in saved funds. While this is a commendable total, when accounting for inflation, church leaders have only saved one hundred or so dollars by delaying the project. Deduct from this the loss of $58,000 or so in additional giving that was accumulated in the first scenario. Furthermore, there’s no new building, no new ministries, no increased space and perhaps few new members.
Intangible Costs of Waiting
There are also other intangible expenses associated with delaying church construction. There is a loss of momentum for the church to grow and reach the community. The church can also lack the tools to both serve current members and to reach new ones. In addition, the credibility of church leaders can be diminished because of delays in moving the project forward. So, the cost of waiting for a new or remodeled church building is more than just monetary.
The examples presented here are taken from one of our free i3 webinars. Each on-line session covers a different topic or trend in church building and church design. Be sure to sign up today.