- Next Sunday
- Posts
- Don’t let debt hinder your church’s mission
Don’t let debt hinder your church’s mission
The importance of reframing debt for church growth
We’re discussing one specific type of debt today: mortgage debt. The debt that every church that has a permanent location has to deal with one way or another.
The first thing we need to establish is that just because you can make the payments doesn't mean you can afford to.
We’ll explain what that means shortly.
Debt can be a touchy subject due to how varied our experiences are. The way we watched our parents and even grandparents handle finances contributes to how we view debt.
That can lead to church boards butting heads when it comes to how to manage it.
How do we balance the emotional and practical elements of navigating debt without negative impacts on our mission?
It starts with understanding what your financial obligations are as a church.
A healthy run rate should allow for ministry expenses
Let’s circle back to the idea that just because you can make the payments doesn't mean you can afford to.
If you have the cash flow to make mortgage payments but it leaves you with 13 cents on the dollar, you can’t afford it. A healthy church needs wiggle room to run effectively across:
Ministry
Personnel
Building maintenance
Those areas should not suffer because of mortgage debt and are the categories you should consider when deciding to take on a loan or how to manage the loan you’re already paying off.
It comes down to one question: What would freeing up more funds mean for expanding your ministry?
Getting your congregation and board on the same page
Asking that question can help your board and flock see the benefits of paying down mortgage debt quicker and more strategically.
The goal doesn’t need to be “debt free” to have an impact on your ministry.
There are other more manageable ways to handle debt while still pouring into your community and mission.
Part of that is helping your board and congregation see how paying down debt directly affects the resources, opportunities, and outreach the church is capable of providing.
That goal becomes all the more achievable with the support of the entire church dialed into the outcome.
Action Items:
Be transparent with church expenditures
We don’t mean payroll numbers or salaries. However, having a transparent display of church expenditures can help people get a picture of how the church is doing and what ways they could potentially help.
You could do this in video format with your finance chair, have them posted on your website, or even have them available in a printout.
Keep your borrowing capped at one time your annual income
Why? Because that is a manageable amount to pay back in a reasonable amount of time. That, paired with taking your other financial obligations into account, helps you stay in the green.
There are circumstances where you can justify borrowing a time and a half of your annual income, but this should be done with salaries in mind.
If you’re a young church, don’t worry about having a permanent facility (yet)
There is no rush here. Putting yourself in the red can cause more trouble than it does growth in the long run.
Focus on staying mobile and building the critical mass of your church for as long as you can. That helps you save for the building you need without sinking into unnecessary debt.
God is never in a hurry. His timeline is paramount, and that includes how we handle debt for the betterment of the work He calls us to do.