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Responsible Church Financing

Church FinancingThe “key” to determining how much the church can comfortably borrow is the Capital Campaign.

Things to think about financing a Ministry Project-
  • A church can expect an initial capital campaign to result in 3-year pledges of 1 1/2 to 3 times their normal annual giving.
  • The second 3-year capital campaign will often be 80% to 85% of the initial campaign.
  • The size of the capital campaign is important, but so is the balance of pledges. In other words, a capital campaign that has five $100,000 gifts is better than a campaign with one $500,000 gift.
  • A single large pledge creates a “concentration issue”. The bank will probably want additional details on this pledgor.

A church typically collects 90% of the total pledges.

Financing Information-
  • Standard amortization for church loans is “interest only” during the construction phase and a 20-year amortization on the long term loan.
  • The loan term is often 7 to 10 years
  • Construction loans are advancing loans that advance to pay contractor’s draw requests.