Church leaders are sometimes reluctant to seek help and advice. This seems to be especially true when it comes to facility planning and financing.

They may believe they know enough and are wise enough to undertake a building project without seeking the best professional guidance. Perhaps they are unfamiliar with Proverbs 11:14: "Where there is no guidance, a people falls, but in an abundance of counselors there is safety."

There are several types of professional help that a wise church leader will seek when preparing to build:

• Finding the right property and land acquisition
• Planning, design, and construction
• Fundraising
• Financing

Obtaining professional guidance for fundraising and financing is as critical to the process as finding the right architect and contractor. Wise leaders should know when to seek help and should know that the right advice and council will result in a more successful project. They understand that seeking the right help will allow them to be better stewards of the financial resources of the church.

Raising funds to build

Excellent services are available to help churches with capital stewardship campaigns. These services employ experienced people who know how to help churches conduct successful fundraising programs. These services will usually help a church raise much more than the church would be able to on its own.

The capital stewardship consultant serves as an advisor and trainer to work closely with the steering committee and especially the finance/fundraising subcommittee to help them learn how to conduct a capital stewardship campaign. Most church members are hardly aware of the work of the consultant who is working behind the scenes during the campaign.

Campaigns usually consist of several phases:

• Initial investigation and recommendations
• Training of finance/funding subcommittee and volunteers
• Pledge campaign conducted by volunteers and church staff, under guidance of the consultant
• Conclusion of the capital campaign and evaluation of the results

After the initial training and survey phase, the campaign kicks off with a banquet or special worship service and ends 6-8 weeks later. A concluding "big event" is usually planned, during which the results of the fundraising campaign are revealed. Sometimes a churchwide event highlights the plans for the project with the unveiling of renderings or the showing of computer animation videos of the proposed new facility.

There are several main purposes for the campaign. One is to help the entire church body to better understand biblical teachings about stewardship and generosity and to become tithers, if they are not doing so already. Another is to encourage members to see the need for financial commitment to the building program over a period of three years or longer.

With such commitments in hand, the church is in a better position to evaluate member support for the project and get a loan, if needed.

There is a right way and a wrong way to ask church members to contribute. The campaign advisor will help the committee and staff to understand the most effective ways to gain member support and pledges.

The results should be a highly successful capital campaign, if ...

• the campaign emphasizes biblical principals of stewardship;
• leadership, committee and volunteers closely follow the consultant's training and advice;
• everyone prays for God's leadership;
• and the members have been adequately briefed on the purpose and intent of the project.

Here are eight failures church leaders often encounter that inadvertently reduce the financial support for a proposed project:

• Fail to seek expert financial advice
• Fail to explain to the membership what is being proposed
• Fail to show visuals of the proposed facility
• Fail to clearly set forth a clear vision to the members
• Fail to explain why the project is needed
• Fail to explain the cost or ask for contributions
• Fail to reveal to members the need for the church to borrow money
• Fail to generate interest and excitement about the project

Financing

There is a difference between financing and borrowing. Borrowing is often part of the way to finance a project. Not every project requires a loan, but every project needs a financing strategy. Most successful projects involve use of cash reserves and a loan.

Many church expansion projects will follow this pattern:

• Pay off existing loans.
• Conduct a capital campaign, asking for pledges from members.
• Raise cash reserves until a significant part of the project budget is set aside in cash.
• Negotiate loan terms with several lenders and settle on a single lender.
• Finalize terms of loan and gain church member approval.
• Avoid trying to borrow more than the church can pay off in a reasonable time frame.
• Proceed with project using cash first. When cash is used up, begin draws against the loan.
• Pay down the loan as quickly as possible.

However, there are other ways to finance a church expansion, including all cash, bond financing and pay-as-you-go.

Bonds are just another way to borrow money. Pay-as-you-go means starting the project before having a clear method worked out for paying for it. This can be a dangerous strategy, and many churches have started building projects they could not complete.

There are many differing opinions about borrowing, including those who believe it to be unbiblical. There is no question that many churches have gotten themselves into difficult financial situations by borrowing more than they could afford to pay back.

It is not the intent of this article to explore all the pros and cons of borrowing, especially the argument that it is unbiblical. I will leave that to the theologians. However, there are numerous examples of churches that have borrowed responsibly and have been enabled thereby to move forward with a facility expansion in a timely manner.

From my observation, the least-successful financial strategy is to try to raise 100 percent of the cash needed and not borrow anything. It can take many years to raise enough cash, and in the meantime facilities can become more overcrowded and more inadequate.

The lack of facility expansion or upgrades may actually stop growth. Ministry needs may go unmet due to shortages of space and the fact that all extra funds are being saved for the expansion project.

During this time, project costs will also continue to grow because of inflation. Delayed construction always tends to increase costs. Plus, interest rates may increase during the time the church is trying to raise the cash. If the money does not come in, the church may end up having to borrow at a higher interest rate, and the overall project cost may end up being more than had they proceeded sooner.

Sometimes the all-cash strategy can actually cost more than a combination of cash and loan. This is why churches need expert financial advice to help them sort through the options. An expert on church financing will be well worth every penny of his or her fee.

Consulting the experts

The best financial consultants are the most independent. In my opinion, the best financial advice does not normally come from the architect, the contractor or from a design-builder. Advisors who are closely tied to the design or construction process are often biased.

They have a conflict of interest. Their interests tend to be with their businesses, not with the church. The lender's main purpose will usually be to make a good loan from which the financial institution will profit. Likewise, church members, even ones in the financial industry, are not always the best judge of what is financially best for their church.

It is always better if the primary financial advisor is completely independent of the lender, the church membership, the contractor or the architect. One of the big mistakes churches make is not using an independent financial consultant and following his or her advice.

Where does a church find an expert financial advisor? There are many advisors available to the business community, but they may not be experienced with churches. The best source of names will come from denominational leaders.

Independent churches can get referrals from denominational groups or other churches. Advisors often work across denominational lines. Some larger denominations (Baptist, Methodist, Catholic, etc.) have on-staff financial advisors available to assist churches in their denomination. Be sure to obtain references from consultants not tied to your denomination.

The church financial advisor can help answer questions such as:

• Is our church a good candidate for “all cash” financing?
• If a loan is needed, what size loan will be best for our church?
• What are the best currently available loan terms?
• What are the names of the lenders who can provide the best loan value?
• How much cash should we have on hand before proceeding with the project?
• What length of loan would be best for our church?
• Should we try to pay off our loan early?

Why would any church choose to proceed without this kind of guidance? If expert advisors are available who can help the church answer these questions, why not take advantage of it? The financial cost of a poor choice of lender could be substantial over the life of the loan.

The consulting fees paid to a good financial advisor will be tiny compared to the cost of taking out a loan with the wrong lender, paying higher interest rates than necessary or borrowing more than the church can pay back. Paying a reasonable consulting fee to an independent financial consultant should result in the best possible financing arrangements. This is just good stewardship of the church's financial resources.

Conclusion

Churches need expert advice for both raising capital funds and financing a project. Churches that use capital stewardship consultants usually raise more money than those who take the "do it yourself" approach.

Churches should seek expert financial advice from reliable sources. The best sources of financial guidance for churches are independent advisors, specializing in helping churches. Seeking this kind of help and advice is good stewardship of the church's financial resources.

Successful projects will be the result when expert financial advice is followed.