Does Your Church Carry Debt?
by Patricia at Smart Church Management
I recently visited a church while traveling and was intrigued that they were part of a new trend of churches that do not take an offering during service. However, the Pastor casually mentioned in his sermon that the church was debt-free.
As I watched the weekly update video, I was pleasantly surprised that this church provided many services at no cost to members or their community.
It was clear that this church was able to do more because it carried no financial liability.
What percentages of churches are in debt?
There is no database that I could find that tells of all church debt. Much of this is because there is no centralized reporting that captures these statistics.
Denominations may have data regarding the financial liability of their member churches but I was not able to find a global database of all churches.
However, I was able to find some statistics that show that the top 200 Methodist churches have an average debt of $2.75 million.
Of those 200 churches, only 60 carry no debt and the church with the highest debt carried $21.20 million.
It is clear that churches are all over the map in regards to taking on debt to support their mission.
What God says about Debt
The Bible is full of scripture that talks about good stewardship of money and the pitfalls of unnecessary debt.
“The rich rule over the poor, and the borrower is servant to the lender.” Proverbs 22:7
“For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it?” Luke 14:28
“She came and told the man of God, and he said, Go, sell the oil and pay your debts, and you and your sons can live on the rest.” 2 Kings 4:7
Reasons Churches go into Debt
Churches go into debt for obvious reasons. Most start-up churches need a building and campus facilities.
Some churches have outgrown a building and borrowed money to expand their space.
These ministries with stable membership and consistent givers are able to go to the bank and get a loan.
And we all know that banks love to lend money.
Churches get into trouble when they borrow and don’t have a strategic end date for paying off the debt.
Some churches go through cycles of refinancing their loan to reduce monthly expenditures only to extend the life of the loan.
This is a sad case of never seeing the end of the financial burden.
Why your church should strive to be debt-free.
Debt-free Churches are good stewards. The most important reason a church should strive to be debt-free is its commitment to being good stewards of the resources God has provided.
Churches that borrow money pay hefty interest fees to the bank. This is money that people give only to see those donations make payments to the bank.
Giving and the economy can be unpredictable. The economy has taken several twists and turns recently and since the Covid Pandemic, many churches have experienced a decline in attendance and giving.
These uncertainties have become the norm, which is why carrying little to no debt can help a church weather these unpredictable giving storms.
Debt-free churches can do more. During times of plenty, a debt-free church is able to do more for its community and the mission field.
Debt-free churches have the resources to support the needs of other non-profit organizations, missionaries abroad, and support local community outreach efforts.
Members like being part of a debt-free church. Members give to support the local church and trust that the church is good stewards with the money that is given.
When members see this responsible stewardship demonstrated through a commitment to being debt-free, they are confident in their giving.
Steps your church can take to eliminate its debt.
Count the cost. Most people who go through debt elimination training, learn that the first step is to identify how much money is owed.
A church needs to look at the real numbers and identify its total debt.
This is a project that a budget committee or the church board could tackle.
Develop a plan to get out of debt. Every church is different and the debit it carries varies greatly.
Develop a plan based on your church’s unique situation and set a realistic goal. This goal should be as simple as:
“ABC Church will be debt-free by December 31, 20XX”.
Set the goal and then determine the best approach to achieving that goal.
Determine if there is margin in the budget to pay off debt. This option may not be feasible for many churches. However, some ministries may have enough excess in their budget to commit to increased debt payments.
This approach may be challenging but could possibly be the easiest way to get a big chunk of debt paid off.
For instance, if your church has a sizable buffer account, it may make sense to pay off debt and use existing loan payments to refund the buffer.
Plan a debt-reduction campaign. It is common for churches to do a capital campaign to raise funds for an expansion or a new facility. But perhaps your church can develop a campaign to raise funds to eliminate debt.
The challenge with any kind of campaign is the grit to pursue the plan through the many stages of fundraising.
These stages include:
making the need known,
getting buy-in to the needs,
setting giving goals,
soliciting giving commitments,
following through until all the funds are received.
A self-guided campaign can be an exhausting process, which is why many churches use outside companies that specialize in fundraising.
The downside is there can be a significant cost of using an outside company.
Make the case for investing in a debt-free church. Committed members give out of a passion for the mission of the church. These loyal givers may get excited to help the church achieve a debt-free status.
Inform members of the need and engage them to meet the debt payoff goal.
Part of this process may be painting a picture of how much more the church could do once it has no debt.
Every Church Is Different
There are no two churches alike when it comes to debt. I’ve seen ministries refuse to break ground on a project until all the funds were in the bank.
I’ve also seen churches take on enormous loads of debt. Both are effective at fulfilling their mission. The biggest difference is the amount of money that goes to the bank every month.
If you are a debt-free church I want to congratulate your efforts and stewardship. If your church does carry debit, I would like to challenge you today to count the cost and develop a plan to remove that debt burden.
While you are doing that I would like you to keep in mind that member tithes are God’s money. Then ask yourself if He would want your church to use those sacrificial donations to make interest payments?