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.

Raising Money From Outside the Church

A reader asked about how a church capital campaign can reach outside the church to get money from the community. This is a good question, and I will try to give a clear answer.

The quick answer is that a church capital campaign is not the best tool for obtaining financial support from the community. The reason being that the campaign is strongly based on a Kingdom need and God's provision to meet that need through His people; an approach that will find little traction with most folks outside your church and faith.

Getting support from the community takes a somewhat different approach, and is much more like a grant writing effort than a capital campaign. The similarity to a campaign  is you will be creating a case for support. This case for support, however, will focus on the ministry of the church and its measurable impact in the community. It will also be much more extensive, objectively detailing what you do and giving a qualitative analysis of how you have impacted the lives of those you have ministered to, and the impact the community

Essentially, you need to tell the story of what you do and how those programs and ministries are improving or serving the community as a whole. You need to make the case and explain what effect the donation you are seeking will make in the community.

It will also be helpful to research your community, find which businesses give to local charity and religious organizations. Also, you can research if there are any local donors or foundations that support programs in the community. These two sources would be the best place to begin looking for financial support for your church, outside it's four walls.