Church Lenders Directory

How Are We Going To Pay For That?

By Doug Turner

As a former pastor and a consultant for a company that has conducted literally thousands of capital campaigns for churches, I am often asked tough questions. Those questions range from, "How do I pay for our new worship facility?" to "Are loans or bonds a good option to finance our project?"

Financing the ministry and future vision of your church is an important topic to explore. There are several primary financing options available to churches. The first and most obvious is a bank loan or line of credit. Bank loans are often pursued by churches because they provide quick money to pay building and planning costs. A loan can jump start a project and build momentum for it by providing funds for construction quickly. Lenders recommend that no more than 30% of the church's income be allocated to service debt.

Loans, however, come at a cost. First, closing costs to obtain the loan will not be recovered. Those funds are not an investment in the ministry of the church, but a fee to the bank. Carefully analyzing the cost of the loan in terms of any other debt the church may be servicing is an important step. Another consideration with a loan is that in most cases, 50% of the interest is paid in the first five years of the loan. If the loan is refinanced or reviewed, the interest is again placed at the front end of the loan.

Another common financing option is bonds, either held entirely by the church or held by the church and the public. Bonds are attractive because they can usually be financed for a longer term than a traditional loan. In addition, most are fixed loans that will not need to be reevaluated. Bonds are usually financed at a lower interest rate than a traditional loan, which makes them attractive. Church and community members receive the benefit of participating in a financial investment, which can generate a sense of ownership in the building project.

In order for bonds to be an effective tool for generating revenue, the bonds must be sold to someone. Generally there is no guarantee they will be sold. Rather, "best efforts" to sell is common terminology that the bond company uses to communicate their responsibility in the transaction. While participating in an investment is a positive aspect of bonds, most churches do not plan to pay bond debt for 15- 20 years. Instead churches often pay them off early, which eliminates the investment tool and sometimes causes ill will among persons relying on the investment. Finally, bonds must be considered as debt the church needs to manage until the bonds are called and paid.

Capital stewardship campaigns are a third means to generate funds for building expansion. Unlike bank loans and bonds, a capital stewardship campaign does not generate debt service for the church. Rather, a campaign solicits pledges that will be honored over a three year giving period. Instead of paying interest to a bank or bond company, the fee paid to professional stewardship counsel is often the same or even less than closing costs or bond fees. By staying out of debt, dollars are freed for use for other ministry purposes because no additional strain is placed on the annual operating budget of the church.

Capital stewardship campaigns do entail upfront costs, such as the fee for professional counsel and campaign expenses (e.g. video, event refreshments, newsletters). The very best counsel will identify costs in full – no hidden costs or surprises. The AAFRC (American Association of Fundraising Counsel) code of ethics prohibits contracts providing for a contingent fee, a commission, or a fee based on percentage of funds raised. A capital stewardship campaign consultant will help you identify and manage expenses throughout the process, practicing faithful stewardship during each step.

The most powerful advantage of a capital stewardship campaign, however, is not financial but spiritual. A capital stewardship campaign is the only financing option that focuses on raising faithful stewards through stewardship awareness activities and biblical education. The cornerstone of a campaign is communicating the vision of the church and asking individuals to pray about how they will each participate in its mission. Staff, lay leaders, and volunteers will give time and talent to share the vision and increase the ministry of the church. In my experience, the investment of growing stewards as a means to expand the ministry of the church through a capital stewardship campaign is priceless.
In order to accomplish the strategic plan for the church and its facilities, a combination of financing options may be necessary. Often projects require some level of borrowing. But the right blend of capital dollars raised and dollars borrowed will provide the momentum needed, while preventing the church from being strapped by debt for years to come. In this way, the leadership of the church not only encourages good stewardship but also practices it by taking advantage of short-term borrowing options and investing in the spiritual lives of its members.

"How are we going to pay for it?" does not need to be a paralyzing question. Options exist that can help further the ministry of your church, vitalize your vision, and build faithful stewards.

Doug Turner is the president of RSI Church Stewardship Group. Since he joined RSI in 1991, he has personally led more than 120 successful capital stewardship campaigns generating in excess of $430 million, and provided management overview to over 1,200 campaigns. Prior to joining RSI, Doug served as a senior pastor for 14 years, successfully leading his congregation through two capital stewardship campaigns. He can be reached at or visit