Churches and Debt

Should a church carry debt?

No.

Oh, you were hoping for more? Fine. Here are a few reasons it's a bad idea. I mean, besides the fact that debt is a bad idea for everyone. Here are some that apply especially to a church.

Possible damage to witness. Want to make sure someone won't hear a word you say about Jesus? Borrow a bunch of money from him and fail to pay it back. The gospel is offensive as it is; the last thing we need to do is offend someone by sinning against them before preaching it to them!

1 Peter 3:15 is the apologist/evangelist's favorite verse, and the context is applicable here: proclaiming Christ while suffering. Peter makes it plain: if you want to preach Christ through suffering, it should be suffering for doing good and not for evil (see also 4:12-19, Heb 12:12-17). If you want to minister, don't let your unrighteous behavior stand in the way (and don't dare claim the just consequences of your actions as 'persecution'). And don't ever let Romans 2:24 be accurate for you.

Want to give unbelievers an opportunity to blaspheme? Want to make sure they don't trust you? Borrow and fail to repay. They are downright giddy whenever a church files bankruptcy; why even take that chance?

Compromising the message to keep crowds large and the money flowing. So you're preaching through one of Paul's epistles and come to a passage that contains a really unpopular position. If you preach it faithfully, people might leave. A lot of people. Maybe even some rich people who give a lot of money. Enough people and money that, if they leave, you won't have enough money to pay the mortgage, or maybe even some salaries.

You can preach the Word faithfully, and take your chances. Or you can take the edge off a little, and make it more likely they'll stay (and keep giving). What do you do?

Oh, we all know how we hope we would answer this. But it doesn't take much of a look at the evangelical landscape to see how often the wrong answer prevails. Praise God when pastors stay faithful to the Word when under this pressure. It can't be easy, and far too many cave week after week. Wouldn't it be best to avoid being in this situation to begin with?

What will you do when you lose tax-exempt status? Note: not 'if'. It should be obvious by now that tax-exempt status will eventually be revoked. It may be a pure money grab (churches own a lot of property and receive a lot of gifts they don't pay taxes on), but more likely it will come as punishment for refusing to bow to Caesar on one of several issues.

Would it surprise anyone if, by the time you finish reading this paragraph, the government announces the revocation of  tax exemption for any church which refuses to (1) pay for the murder of unborn children per the HHS mandate, (2) bless serial sodomy as if it's the sacred, God-ordained institution of marriage, and/or (3) appoint female elders/pastors? It may not be as immediate as I think, but it's certain to happen eventually. Either bow on these issues (or whatever the next issue will be) and functionally cease to be a church of Christ, or pay up.

When it happens, it will affect your church's finances dramatically. Property taxes and other taxes must now be paid. Offerings are no longer tax-exempt, and will likely decrease. Expenses go up, income goes down. That's not a good dynamic when you're already in debt. It's really, really, really bad.

Your finances will change. Make no mistake, if this isn't what causes it, something else will. Maybe the big plant in town will close and half your congregation will be out of work. Your biggest donors will die or move away. A hundred people leave to plant another church. Whatever it is, things change, and you could go through a financial dry season. If your budget absolutely needs everything to continue at current levels or better indefinitely, you're setting yourself up for disaster.

Paying interest from tithes/offerings. You know, it just feels different when it's money given to a church for the purpose of proclaiming the gospel to the ends of the earth. Someone stealing from an employer is bad, but if his employer's a church, it's outrageous. Want to waste your money on pointless junk? Whatever. Squander money given for ministry on pointless junk, and don't be surprised if there's a wee bit of outrage, and it's tough to say it's not justified. And make no mistake - interest payments are a waste.

Consider a church with $1million in debt at 4% interest. If it receives $500k in offerings annually, an entire month of giving goes to nothing except paying interest. No ministry function, just interest payments. With that $40k, you could pay much of the cost of an additional full-time staff member, or several part-timers or interns, or support a missionary family pretty well, or provide benevolence ministry to hurting families in the congregation, or... Or, you could give it to the bank, for the past favor of lending you money for a new building/media system/parking lot/whatever before you could pay for it (or you didn't really need it, but decided to get it because you could).

Yes, there are benefits to getting those things now rather than waiting for them. But there's also a cost. And I suspect the ongoing cost will always outweigh the short-term benefits.

If you build it, they won't necessarily come. Pardon my rant within a rant here, but the "Field of Dreams" attitude pervasive in evangelicalism is just absurd. It goes like this. We have an old church building with room for 500. We've grown from 200 to about 450 recently, and some weeks we're at capacity. So we should build a bigger church, with room for 5,000, and 'trust God' to keep bringing growth to fill it (and increased offerings to pay of the mortgage which we can't currently afford).

Let's say it works, and that church experiences explosive growth - it triples in size in a short time! Guess what? It's still at less than 30% capacity, and the incredibly larger church still won't be able to afford the mortgage! And that's even assuming the new attenders give at the same rate as the old faithfuls, which is far from a given.

An extreme example? Maybe. But you probably can think of a church that did something very similar, building so big and borrowing so much that they needed to quadruple or more in size (and giving) to have any chance of keeping up with the mortgage (not to mention the greatly increased operating costs). And this is always done under the banner of "faith".

You know what faith isn't? Doing something irresponsible and hoping God will bail you out. Or, trusting God to do something He hasn't specifically promised to do. You know what requires faith? Living obediently to God's commands and according to His revealed wisdom (check what Proverbs says about debt), and trusting God to provide your needs when you live according to His revealed will. And if God doesn't provide for you to have a church with a 12,000-seat sanctuary, faith is being content with what He has provided.

The upside - what a great opportunity! So what do you do if you've accumulated too much debt and want to repent and pay it off (or if you inherited it from a previous generation of church leadership)? There are all sorts of materials available for churches looking to get out of debt, and some of them are actually useful (and not the church-growth and giving-manipulation crap that got you in the predicament in the first place). I'd probably check with Crown Financial or other similar organization for help with the how-to.

But the how-to details are almost beside the point. If you're in that position, one way to work some good from it is to use it to define what your church is about, and get rid of the chaff. It's time to prioritize, to emphasize what is necessary and scale back (or eliminate outright) what is not.

When faced with a budget crisis, any serious person will do exactly that. You look at your income and expenses, and prioritize. Home? Gotta have a place to live. Food? Gotta have some - but you can scale back the cost of groceries, and eliminate restaurants entirely if needed. Cable TV? You can live without it. And so on. You wind up with a prioritized list - if we can only do one thing with our money this month, what will it be? What do we pay second? If some unexpected money comes in, what will we pay next? Providing food, shelter, and clothing for your children is more important than tickets to sporting events. Pay for necessities first, and only then can you put money on luxuries.

As a church, is there any reason you shouldn't do the same thing? (And while this is about church debt, it would be a pretty good thing for non-indebted churches to do as well.) What are the things that every church absolutely must do? Having someone devoted to studying and teaching God's Word is absolutely necessary; having a full-time ventriloquist for puppet shows in the children's ministry is just a luxury. A really creepy luxury.

So if you're in debt, don't resist the opportunity it's trying to force on you. Search the scriptures to find what the church is to be about. Teach that to your people. Then cut out the unnecessary fluff, and go and do what is best.