Time is Running Out for a Fall Church Capital Campaign

A church capital campaign is not unlike the Christmas play - you begin to prepare months in advance to have the best and least stressful outcome.

The right time to be in front of your congregation for a fall capital campaign is after school is back in session and before the holidays. This provides a smaller window of opportunity for that 6-7 week time of preaching, teaching, and support building than a spring campaign.

If you plan to be raise money this fall, you should begin to organize and prepare your capital campaign team starting before the end of June. This will enable your church to achieve the best results with the lowest stress. Every week that your church delays from this point forward increases the effort and stress of a capital campaign.

For more information on capital campaign timelines, download the PowerPoint presentation on www.OurCapitalCampaign.com.

Church Financing - Still a Tough Market

Churches continue to have difficulty getting the financing they need for buildling or relocation. We have seen any number of churches that should be able to get financed turned down by lender after lender. Many churches that are getting turned down for financing today could have been financed a year ago with exactly the same financial statements. The biggest impediment to financing is inadequate cash flow - not enough money left after expenses to service a mortgage. Unlike previous years, lenders are not willing to wager that the church will reduce discretionary expenses to service a mortgage or increase income because of growth. Today, lenders want to see 6-12 monts of financial history showing a cash surplus sufficient to cover a mortgage.

Many churches are qualifying for loans, they're just qualifying for significantly less than last year, and less than they need for the church plans they have. For churches that cannot qualify for as as large of a loan as they need in order to build, they need to raise the difference in cash.

There are three things that a church can do to improve cash flow. The church needs to apply a sharp knife and cut expenses, it needs to faithfully preach and teach about giving and stewardship, and it needs to run a capital campaign (which will also help with coming up with the cash difference between what they need and what they can borrow).

Cutting expenses is difficult, but a necessity for many who want to build. Trimming expenses and increasing income and cash on hand through a capital campaign is the financial answer to many of today's church financing problems.

How To: Estimate a Church Building Program Budget

"What man would build a tower without first counting the cost?? - Jesus

Millions of dollars every year are wasted on church building plans that churches cannot afford to build. Many churches let the church building project define the budget, instead of letting the budget drive the design of the church. This simple transposition of steps in the process takes a toll on churches in terms of cost, time, effort, enthusiasm, and support for the project.

Design is part of the building process. Counting the cost does not mean sending your plans to the builder for an estimate. Counting the cost means understanding what you can afford before you begin.  There are a great number of church building plans available, and any number of church architects that will create more, but knowing what you can afford is a necessary step before you concern yourself with design.

In my book, Preparing to Build, I discuss this in great length, but below is a basic formula that any church can use to get an first approximation of their budget for a building program.

There are 4 basic variables in determining your budget.  Those 4 variables are added together to determine the preliminary budget.  Often, early in the process, the church will have to use estimates for these values and refine them later in the process.

The four variables:

1. Cash on hand:  This is the amount of money available which can be applied to the building program. This would include whatever amount of money in checking, savings, money market or CD's you want to use.
2. Money you can borrow: The maximum that any church can borrow in a loan or bond program is 3-4 times its current income; and is often less. Borrowing ability is based primarily on cash flow, not the value of assets.
3. Money you can raise from the sale of assets:  This may be your current location (if you are moving), a parsonage, or real estate. If you owe any money on the asset you are selling, it will be the net cash to the church after paying off the debt.
4. Money you can raise before construction: This is typically money raised in a church capital campaign.  In a 3 year capital campaign, churches typically raise between one and three times the current amount of their annual tithes and offerings, with around two times income being the average.

Our formula then becomes:

Cash on hand ___________

+

Money that can be borrowed _____________

+

Money from sale of assets _____________

+

Cash that can be raised before construction _______________

=

Your budget _____________________

If your church needs assistance in answering the budget questions and/or defining what it truly needs to build, I would suggest downloading this pdf file about a Needs and Feasibiltiy Study.  

If your church needs a capital campaign, we can help.  Our church capital campaign consultants can provide everything from a full-blown capital campaign to a do-it-yourself capital stewardship campaign that you run in-house.