Where does the money come from?
How to balance "running" the church AND advancing ministry
One of the major challenges I see that the church must deal with, but seldom does in an organized fashion, is setting a strategy and objectives for various funding sources. What we too often see is a "seat of the pants" approach to getting by each fiscal year, with small regard for tomorrow. So here is a short list of funding that we see common to most churches with a few suggestions for strategic objectives. After all, if our objective is to make disciples, shouldn't we build that into our funding patterns rather than just settling for financial transactions from members?
These fees typically leave no room for transformative funding opportunities and usually simply reimburse the church dollar-for-dollar for out-of-pocket costs. We usually see a kiosk set up at a church dinner, a fee arrangement for wedding or funeral usage, and possibly even a charge back to the Early Childhood Development Center for their daily annual usage.
The challenge: What if an endowment account were set up by the church, allowing a member or members to create a self-perpetuating fund? This would allow non-profits to use the facility free of charge for meetings or events, to the extent the funds were sufficient. Transformative giving! Note: Whenever fees are involved, consult your accounting professional to protect your non-profit status.
Deferred Maintenance Reserves
Setting up reserves to handle major predictable replacement of infrastructure such as boilers, air conditioning, and roofs is becoming a lost effort. But, for those churches with sufficient current funding to create a surplus, this helps even out the financial road bumps that can disrupt ministry. Too often these funds come from an operating surplus and not identifiable to an individual, and therefore have little transformative ability.
But again, the challenge could be to raise separate endowment funds from gifts and memorial funding to planned giving, designed to create a self-sufficient fund to assist ministry by assuring no emergency need will rob the operating fund when a boiler gives out.
Operating Funds (Annual Pledge Drive)
Most churches go through an annual routine of transactional funding by preparing an "ask for/dream" budget in October, distribute it during the annual pledge drive in November, and then ask members to "fund the budget." It's a nice little package of annual futility in teaching members how to be transactional givers, always expecting something in return for their dollar.
Challenge: What if you prepared a narrative budget of opportunity, highlighting some the great things you currently do in ministry, but also adding opportunity in front of the church for discipleship or mission that could be accomplished once the church funded the base operating and facility costs? Could we? Would we? Dare to dream big and talk about the power of transformative giving and how members can grow from the opportunity and experience! The budget will come, but not at the funding stage. It's the last stage!
Revitalizing Or Adding New Facilities
We all know the architects' mantra - form follows function. When ministry objectives change or new opportunities arise, our facilities need to be adapted to meet the future. Of course, this is where it's necessary to develop a capital campaign to meet the need. This is also your most likely opportunity for members to experience transformative giving.
Most often the financial need far exceeds one person's ability, and may even exceed the ability of the community of faith collectively, but that's not a problem, rather, an opportunity for transformative giving. If the church leadership views and articulates a transactional approach, that's what you'll get. Instead, open your minds to opportunity you now have created for members to be truly transformed by building something special, not for their use, but for generations to come. This is transformative legacy giving at its best.
Funding the church by borrowing funds is usually the result of poor stewardship when a church spends more than it receives. This happens way too often without a strategic funding vision. In my opinion, the worst case is when a governing body sees a drop-off in giving, but believes there will be an angel to fund that short-fall by yearend, or just doesn't have the toughness to make expense cuts. I have seen churches do this for four or five consecutive years, then expect to run a "capital campaign" to eliminate the debt. Ugh. I can see no redeeming value in giving to eliminate someone else's problem. Occasionally, a one or two year deficit can be acceptable if a plan exists to get back on track in the short term, but these are rare.
Short-term building loans or even borrowing to fund the future capital improvement is more acceptable, since there will be a strategy in place to eliminate the debt through a separate funding campaign. This borrowing, as opposed to the previous type, does give you the chance to make the gift a transformative opportunity. It is not uncommon that a member or members may loan the church the funds initially, and ultimately forgive the debt subsequently, making it a transformative giving opportunity.
The key to most of these, and the major difference in transformative versus transactional giving, is having a plan before the action is taken, sharing the vision with members, and properly asking for their support. Does your church have a plan for funding the future? If not, call us today to begin a dialog on how you can create opportunities while making disciples.
You're invited to a FREE Webinar!
Choosing an Annual Pledge Campaign Format
An effective annual pledge campaign will encourage greater stewardship and generosity in your congregation. Rev. Michael Erwin will demystify the broad types of campaign formats and help you decide which is right for your church.
Register to join this free webinar
on Tuesday, April 19
at 3pm EST.
To talk more
more about planning for a successful church capital campaign, please call Church Campaign Services at