Perhaps you are in a ministry where God is moving, your attendance is growing, and you find yourself asking, "How do we facilitate this increase?" Or maybe, your ministry has plateaued and your team realizes that, in order to grow, you may need to renovate, replace or relocate.
What do you do? Where do you start? Do you do anything right now?
Those are tough questions every ministry faces at some time. Unfortunately, due to the nature of ministry, most churches reach a point of needing to do something "now" to survive the growth or the decline, and they have not made preparation. So whether your need is immediate or several years down the road, let's discuss some options and good practices you can put in place to make progress.
Let's consider first the most important issue when it comes to any type of capital improvement or expansion: How do we pay for it? So often this is the most difficult hurdle to construction projects. Too many times, churches employ the services of a design company before really considering what they can afford. They often end up with a design or set of plans they cannot build, because they did not design with a budget as the guide. The first step for any renovation or addition should begin with how much we can spend.
To determine your spending capacity, you need to know your options and which path your staff is comfortable navigating. First, do we have any excess cash that is set aside for capital improvement? As I speak to pastors and church leaders across the nation, I always encourage them to build a payment into their budget and set that money aside, even if you do not have debt.
This does two things. First, it sets aside cash that can help you initiate a process of due diligence when the time comes for your project. Second, you will have already proven to a lending institution that you can afford a loan. A liquid building fund gives leaders some capital to engage a partner to help them determine the best course of action when it comes time to upgrade or expand.
Once your cash reserves are measured, then we look to some type of capital campaign. Often church leaders are hesitant to lead their members to make a commitment to give toward buildings or renovations; however, it often can be a time of great spiritual growth for a church when it is done well.
Buildings are not the end; they are a means to an end. They are tools with which churches do ministry.
When sharing a vision to raise funds for construction projects, it is vital to put the focus on the ministry that will be accomplished for the kingdom, rather than the edifice itself. Don't discount completely the necessity to share the renderings, animations or drawings of your facility, but promote these as investments in future opportunities to reach and serve the people of your community.
A good partner to walk the journey of a capital campaign is a necessity if you have not traveled that road before. A good partner will mean the difference between great results and great growth, or average results and a potentially miserable experience.
With cash in hand and pledges on the way, what is our next source of funding? We now turn to the lenders. Two basic options are available for churches when it comes to borrowing funds. There is the conventional loan and the sale of bonds. Many factors play into the ability for a church to secure either type of funding, but some of the most important need to be in place before you attempt to borrow.
First, you need to be able to show an ability to pay back the loan. How will your budget be affected when you add the monthly payment to the bottom line? What adjustments do you need to make now in order to be prepared for that day? Second, you need to keep accurate accounting records and financial statements. Oftentimes, churches don't do a good job of keeping accurate financial records and, when it comes time to borrow, it can take months to get your financial house in order.
If you know a loan is in your future, hire an accountant to do a review of your financial records. Most of the time you will be required to have audited financial statements to present to your lender, so why not get those in order sooner rather than later?
The type of funding you choose will depend on your specific situation, but consider both before making your decision. Also, choosing your lender is very important. Many churches believe that their local bank is the best choice, and oftentimes, it may be. However, there are many lending institutions that specialize in lending to churches or ministries, and because they understand ministry, they frequently can offer better terms, better rates and larger loans. Sometimes a conventional loan may not be the best option.
Then, we turn to the sale of bonds. For the sake of space I will not detail all the differences, but let me mention a few of the major ones. Conventional loans will have lower fees; however, they may require more detailed appraisals and other requirements that often offset some of the savings. Bonds normally will provide more cash than a conventional loan and, oftentimes, the terms and refinancing benefits are much better than conventional. The interest rate will always be lower for a conventional loan over a bond program, but that should not be the only factor considered. It may be best to talk with both types of lenders to see which option provides your church with the right solution.
Once you have completed this exercise, you now know what your budget is and you can answer the questions "How much can we afford? What do we do next?" It is time now to engage a partner who can walk with you through the journey of design and construction. It is critical to choose a partner who understands construction and ministry. They can assist you by asking the right questions to help your team determine the best course of action for your project.
Any contractor can build your buildings, but to help you determine what you need to build, or if you need to build, requires the experience of a team who has been on both sides. For example, a church reached out to me to build them a new sanctuary. After attending church with them over the weekend, I helped them realize that if they built a large, new sanctuary, they would only increase the problem of an already overcrowded preschool and children's area.
Through a process of evaluation, they came to the conclusion it was better to invest their available funds in a smaller version of a new sanctuary and renovate their preschool and children's area. A partner who understands the ministry side and has a heart to help guide you can save you much heartache down the road.
A partner who will allow the budget to guide them is very crucial to the success of your design and project. It is imperative to have a partner engaged who, from the very beginning, knows the costs of building churches and ministry facilities. When a builder is not involved from the very beginning, helping with site evaluation, due diligence and cost estimation throughout the design process, statistics tell us that 36 percent of those projects will never get built. The design repeatedly ends up exceeding the financial ability of the church and the money spent on design is wasted.
When the budget drives the design and the costs are estimated as you progress through design, you end up with a feasible design that can be constructed for the funds that are available.
With an accurate budget and a good partner, there are still many questions that need to be answered. Let's address four major considerations:
1) Do we renovate, relocate, expand or multiply? Let's begin with renovation. When your existing structure is sound, your square footage is adequate and your location is still effective, you may consider a renovation project. If your existing facility does not have any major structural issues there is no cheaper place to be than right where you are. As long as you have sufficient square footage, even though it may need to be rearranged, you can rework your existing space for much less than building a new facility.
A new façade on the exterior, often tying multiple buildings together, can provide a new face to the community that communicates good things are happening at your location. Renovation, though painful during the process, can be a much less expensive way to continue to facilitate growth.
2) Relocation is a painstaking process that commonly requires churches to take two steps backward before moving forward. The cost of land, infrastructure, parking, utilities, etc. at a new location can use so much of your available funding that you may wind up with much less facility than you are currently occupying. All of those unseen expenses are difficult to swallow when you make a decision to move.
However, there are many times valid reasons for relocating. If your current area has changed so dramatically that it is difficult to continue your ministry, it may be time for a move. If current facilities have suffered damage or are structurally unsound, a new home may be a viable option. In any case, it is advisable to have a good partner to assist you in evaluating the new site to ensure you don't take any missteps in purchasing a piece of land that can be extremely costly to build on.
3) The third consideration is expansion at your existing location. If you are experiencing growth and are needing more space, adding to existing facilities may be a great step. A few considerations for this approach are important. If you expand your buildings, do you have enough parking to compensate? Oftentimes additional parking is required by code when churches expand. This can be a costly piece of your project that, if not considered early on, can be a painful hurdle to overcome. Are current utilities adequate for the expansion? What is the best configuration for the expansion? Should we renovate a portion of our existing facility and build a smaller new building? These are just a few pieces of the exercise to navigate when considering adding on.
4) Finally, multiplication is a good biblical word that is working with many churches when it comes to facilities and location. Multisite churches are popping up everywhere. This is a very valid solution to growth. Others can communicate the pros and cons to multisite expansion better than I can, but let's toss up a few thoughts on the facility side.
As mentioned before, new locations can be costly. So the purchase of "big box buildings" may be an alternative to building a new building. Whether a grocery store, hardware store or furniture store, building can provide much of the infrastructure and parking in one purchase. The interior can be renovated to accommodate a new church for much less than new construction. It is important to take into consideration things like ceiling height, parking, columns inside the building, etc. before making the purchase. Again, a partner that understands these concerns may be worth your investment.
Building, renovating, expanding or relocating are all very critical decision for churches. Planning ahead and engaging a great partner are the two best practices that can save leaders a great deal of heartache. Always remember, buildings are tools to accomplish the ministry God has called you to fulfill. Build right, and ministry is much easier.
For 20 years, Rodney James Daniels served as a pastor. During his ministry God allowed Rodney to complete multiple building projects. In 2012, Rodney joined the Churches By Daniels team as director of business and finance. By utilizing his experience and talents in ministry and business, he is able to bring a unique perspective to building churches.
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