Leading a church to reduce debt

Discussion in 'Pastoral Ministries' started by Joseph M. Smith, Jan 19, 2008.

  1. Joseph M. Smith

    Joseph M. Smith
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    Let me share briefly my situation and see whether there are some ideas out there to help. I began service in October as Interim Senior Pastor of a suburban congregation whose pastor served for 27 years. The church is a bit more than 50 years old. They experienced solid and steady growth for most of the pastor's 27 years, so much so that they went through several building projects, the last of which was a new sanctuary that seats up to 900.

    However, shortly after the sanctuary was completed, attendance and giving began to drop off. There do not seem to have been major issues that caused people to leave ... it is just that this is an area with a high transition rate. The immediate area around the church now has a significant immigrant population, and, although the church is multiracial, it is rather middle-class in appearance, style, etc.

    To finance the construction, loans were taken out, and capital campaigns were conducted. The first campaign had a duration of five years and raised money to begin the construction (I do not at this time know how much was raised). A followup campaign to manage the debt raised about $1 million in pledges, and the gifts are coming in on schedule). But the loss of membership has meant a decline in the main budget, and so although people were sold on the idea that giving to this more recent campaign would reduce the principal of the debt, in actuality the money has been used simply to pay the regular mortgage payments. There was not enough money in budget gifts to do that and pay all other expenses as well. So, obviously, a credibility gap exists.

    Since my arrival there has been a slight uptick in attendance and giving, though very few new members. There is much talk about how we need to get new members in order to bring in more money! I hammer away at the notion that inviting people to join the church for financial purposes is off the mark spiritually and will not work anyway ... people will "smell" that right away.

    So we are thinking about what we can do about a debt that is right at $3.8 million. The membership is about 1100, the average attendance about 315, the budget (including mortgage payments) about $1.2 million.

    We can:

    • Try to refinance the loan at a better interest rate (they are paying 7.5%) and extend the term so that the payments are reduced;
    • Opt to sell church bonds and thus refinance the debt in a different way;
    • Reduce expenses by cutting staff (they carry two full-time ministers plus support staff, with the senior pastor slot vacant except for moi);
    • Try yet another campaign (but this is bringing cries about asking the same people to give more and more).
    What else do members of this group suggest? It goes without saying, perhaps, that we in the pastoral staff have taken hold and are beginning to make sure that responsible stewardship is taught and that non-anxious prayer is modeled. Assuming my health and energy hold out -- I will be 70 next month -- I feel committed to guiding them through this issue so that they can afford a new senior pastor and can operate ministries that truly touch lives.

    If anyone is interested in knowing more, go to the website at www.fbcgaithersburg.org
     
  2. Tom Bryant

    Tom Bryant
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    OUCH! Is the giving meeting the current budget? Do you think a bank would refinance? Do your staff people do the kind of work that is needed or could it be done by lay people. The problem with laying off staff is that it usually says to the membership that we're getting ready to close the doors.

    How much can you do as the interim? Obviously you're a good leader, but do they look at you as "just" the interim?

    You're right about new people giving. The wallets is usually the last thing people, especially new believers, bring to a new church.

    A church I was at had 175 grand in bldg debt and were running about 50 people. Once we stopped the hemmorhaging by dealing with financial integrity issues. We started taking up a special no pressure offering on the 5th Sunday of every month. It started knocking it down a little and wasn't really hard on the people. Eventually, we were able to take a once a year special offering that they knew would go to the principal.

    Praying for you.
     
  3. rbell

    rbell
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    Discussing the budget honestly and openly with your members (such as your "wednesday night" folk) is a great start. Prayer should permeate EVERYTHING done. I don't like the bonds idea at all. Too much potential for problems...not to mention, trading one debt for another doesn't sit well with me. Just get rid of the debt! I also don't like getting rid of staff because of finances...unless there's simply no other option. Ministry-wise, and psychologically, it's a HUGE blow. (Now...if there's not enough ministry to support the staff...that's a different story; but that's not financial, that's ministry-related).

    Refinancing? Sure...if it's financially doable. Anything that saves money over the long haul.

    An encouraging note: In 2002, I was actively shopping my resume--not because I didn't like our church, but I didn't see any way they could pay me after a few more months. We went from $70K+ in reserves to less than $20K, and we were hemorraging more than $4,500 per month (the building payment was $10K per month, and we averaged $5,400 in receipts on the fund). In 6-7 months, we would be broke, and they would start letting staff go.

    Our church, with 200 in Sunday attendance, owed $880,000 on the stinkin' building. (Our sanctuary was built in the mid-1990's, before any of our staff was here. It was the worst job of building/financing/decorating/planning/etc. that I've ever seen. Our church went $800,000 over budget on an $800,000 building. Yikes!

    Fast forward: We paid of the building 18 months ago. We conducted a campaign in 2003...we did not push it as a campaign to "pay off the white elephant building," but rather as "we are getting ourselves poised for the future...so that as God tells us to go forward, we will not have the excuse of debt to hold us back."

    We will be moving into a new educational facility next month. The youth also get a new facility (we "inherit" the old Fellowship hall, and have money to gut/renovate/redecorate for our student ministry).

    It can be done!
     
  4. annsni

    annsni
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    I've got to say that this makes me so grateful to know how our church just did a 25,000 square foot addition - NO DEBT! Yeah, it's taking forever to finish it but we're doing it with no debt - we don't have the money to buy wallpaper? Then we don't get wallpaper until we have the money. Oh - and as I type this, there are about 30 members at the church doing the wallpapering that we were finally able to purchase. No need to hire when we can do the work ourselves! We broke ground 2 years ago and we SHOULD be in sometime in April??

    I really like what Rbell said about doing the drive to get ready for the future with no debt. I'd definitely approach the congregation with a message on debt and how important it is to not be in debt and how it can hold you back from the freedom to do what God may call you to do in the future. I'd NOT lay off staff - because you need them (our senior pastor says that for every 100 people in your congregation, you need one pastor in order to meet the needs of everyone). Look at other ways to pay off the debt if you can and look to cut holes in the budget for now.

    I'll pray for you! I can't imagine that kind of debt! Yikes!
     

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