You may have decided it’s time to consider more space for your church.  The coffee line wraps into the parking lot.  The youth are meeting in the hallway.  Last week, three toddlers were running through the supply room.  

Preparing yourself and your congregation for an expansion project begins with a careful season of planning.  To help get started, consider these thoughts:

Get the house in order.  All obligations to every vendor and creditor should be current.  All credit card debt should be paid off.  (If you have outstanding credit card debt, you are basically telling the prospective lender that you spend more money than you receive-not the place to start a lending discussion.)  Make sure your bylaws are up to date.  Financial statements (income & expense) should be up to date and accurate.  The bank will likely ask for the past three years’ financial statements.

Determine an appropriate level of debt.  A good rule of thumb is to keep monthly debt payments at no more than 25% of operational revenues.  When utilities, insurance and maintenance are added, facility costs should be at or below 30% of budget.  Most churches are comfortable borrowing 2.2 to 2.5 times their annual undesignated giving.  If you have heavy personnel expenses (over 40–45% of budget), then the share of the budget dedicated to facility expenses may need to shrink.

Capital Campaign.  A well-managed capital campaign can supplement the amount you can borrow for a larger project or reduce the amount needed to borrow.  A three-year commitment period is most common and, generally, the most effective.  Prior to the financial collapse of 2008-2009, for a typical three-year commitment period, we saw a range of pledges and receipts between 1.0 and 2.5 times annual revenues.  Many people now feel less secure in the amount of their savings and are less willing to give from stored resources.  The COVID-19 pandemic has exacerbated this impact, as people have seen that their livelihood can be shut down for an extended period of time.  A more reasonable expectation for a three-year capital campaign from 2022 – 2024 might be 0.75 – 1.25 times annual revenues.

Preach it.  Don’t be shy about preaching what the Bible says about tithes and offerings, generosity and abundance.  The number one factor in the success of any capital or stewardship campaign is the spiritual maturity of the congregation.

Share it.  I have often shared the story of the time back in 2000 when I chaired my church’s capital campaign to raise funds for our church expansion.  My wife and I had carefully considered and decided upon our contribution at the start of the campaign.  During the course of the six week campaign, our pastor asked one family each week to share how God had spoken to them about the campaign.  As school teachers shared about taking a second job cleaning offices three nights a week to raise money for their contribution, and a construction worker shared about contributing the amount of what would have been his monthly payments on a badly needed new pick-up, we ended up increasing our pledge to almost double the original amount.  People who are actually sacrificing can have a big impact on those of us who only thought we were being generous.

This may seem a little overwhelming, but planning is essential for successful financing even if it slows down your initial timeline.  It will all be worth it when your senior adults are all seated, happily sipping their coffee, the youth are hanging out in their space, and the toddlers are safely corralled.

Be in touch.  We welcome your questions and are happy to help no matter where you bank.

Dominic Sokolosky is Chairman and CEO of First Bank of Owasso, which serves over 270 church and ministry clients in 30 states.