Horizons is seeing very positive outcomes in our pre-campaign development, which focuses on aligning ministry and financial leaders around a vision that supports debt reduction, deferred maintenance, and capital improvements. If you have debt or other capital needs, I encourage you to invest 30 minutes in an exploratory conversation to determine if now is the time for you to assess your readiness to address debt elimination, deferred maintenance, and campus upgrades.
If your church has debt that consumes 10% or more of your ministry funding, I encourage a strong sense of urgency in determining whether now is the time to act.
Why Now May Be the Best Time to Eliminate Debt or Fund Needed Upgrades
In most churches, donors continue to be very supportive of debt elimination efforts, needed renovations, and capital upgrades. Here are just a few of the factors motivating them.
Loans are being repriced at higher rates: Many churches are seeing loans that had been at 4-5% interest rates being repriced to 7% or more. If you don't know when your loan reprices, find out. Most church loan interest rates are expected to adjust within a few years to what is widely anticipated to be higher rates, resulting in higher monthly payments.
Inflation: Higher building costs in the future make acting now a less expensive option than waiting.
A Desire to See More Ministry Funding: If you have unfunded ministry needs, repurposing your annual debt service into ministry can energize your givers.
You may be surprised to learn that churches whose annual ministry giving is flat or in decline consistently have remarkably successful capital debt elimination campaigns, precisely because doing so provides more funding for ministry.
Critical Facilities Maintenance and Improvement: Many churches have both existing debt and essential capital needs that require immediate attention. Combining debt elimination with facilities improvements is an excellent strategy for broadening the appeal during a capital campaign program. Today, most churches choose to incorporate capital needs into their debt elimination efforts, resulting in increased overall giving toward both.
Funding New Ministry Delivery and Engagement Strategies:. AlmostAlmost all growing churches have had to strengthen their technological capabilities, including investing in making online and on-demand worship more engaging. This always requires additional capital and ministry investment. Others have discovered new and innovative ways to engage members in spiritual formation, community building, and serving their mission fields. This almost always requires additional funding, both in terms of technology and staffing. Churches that service debt through operating revenues struggle to free up resources to fund new ministry opportunities.
If you are wondering if the timing is right for your church, download our free guide: "How to Know if Our Church is Ready for a Capital Campaign."
Preparing for the Next Chapter
If you feel the timing might be right for a debt elimination effort, there are a few initial steps you should consider.
Gather the facts on your debt and capital needs: You will need to share detailed information with your congregation regarding how and why the debt was incurred, the terms of your loan agreements, and the financial impact of returning these savings to ministry funding. Many have joined your congregation since you took on the debt, while others have forgotten the details. Telling the story of why the debt was incurred, the impact the projects have had, and the financial details of your loan with your congregation will help to establish the trust and transparency that is essential to success. The same is true for renovation and capital improvements. You will need reliable cost estimates of the upgrades and renovations you want to test in your donor alignment and feasibility study. It is crucial that your donors can visualize how your ministries will be enhanced through capital giving. When you share this impact, put a face on it by telling the story of a life that will be changed.
Engage your Ministry and Financial Leaders: Before making any decisions about a debt elimination effort or new capital funding initiatives, gather your ministry and financial leaders and share your vision for the sole purpose of gathering their wisdom and feedback. Whether you meet one-on-one or in a group, in person or via Zoom, be sure to outline the specific objectives you hope to achieve through your campaign. When you invite their feedback, you are also gaining their buy-in and support. Your ministry and financial leaders have already demonstrated their investment in your church. Inviting them into the conversation regarding the church’s future will ensure their continued engagement.
Allow these leaders to share what excites them about your vision, after the debt is addressed, to ask questions, and provide feedback. For success, they must have a clear understanding and be supportive of your plans once you have liberated crucial ministry dollars. The best way for this to occur is to invite your ministry and financial leaders to begin to dream God-sized dreams with you about your future and the next chapter in the life of your church. Dreaming and praying together will create the ideal environment for discerning God’s plan for your church.
One thing is clear. No matter how much we desire to, we will never go back to “the way we have always done it.” The changes created by the pandemic necessitate the need for experimenting with new and creative ideas.
Building Your Next Chapter Together
Remember that the key motivator for eliminating debt or funding a renovation or campus upgrade for most people is not the debt or the physical changes to your buildings, but the opportunities that eliminating debt or improving your ministry space creates. As you prepare to share your plan with the congregation, be sure to clearly articulate how you plan to expand your ministry funding plan once your debt has been paid off, or how the upgrades will enable more effective hospitality, discipleship, or other ministries. Would you be able to hire additional staff to facilitate new ministry initiatives? Do you plan to launch a digital discipleship program? Will you begin a new outreach ministry program or worship service? Do you plan to increase funding for youth and young adult ministry? Whatever your God-sized vision is for your church, be sure to share how you intend to rebuild your ministry budget post-debt.
Before proceeding with a capital campaign, it is crucial to first assess the congregation's willingness to support your vision. In this webinar from Horizons and CapinCrouse, we discuss the importance of conducting a feasibility study before launching a capital campaign. Understanding the readiness of your congregation, and in particular, your ministry and financial leaders, will help shape your capital campaign process and timing. A feasibility study will assess the importance of debt elimination to your members and their potential support for a capital campaign. You will also be able to inform members and test their levels of support for your post-debt vision. Gathering this critical data before launching your capital campaign will enable you to pivot, if needed, and forge ahead if the study determines there is broad support. Conducting a quality feasibility study will ensure your congregation moves forward together in mission and ministry.
Now is the time to consider the opportunities for rebuilding your annual ministry plan without the burden of debt service.