Yesterday, one of the really solid pastors that I am fortunate enough to work with called me. The conversation went something like this, “Clif, we just got updated numbers from our architect on the building and we are 1.5 million over what we had previously thought. We hit our target on the campaign and have everyone ready to move forward with a vote very soon. I am concerned about where this will put us debt-wise, however, and wanted to run this by you. Do we just add this cost in and borrow more money or do you think we should cut the project back? I don’t want debt to come back to hurt our ministry.”

I cannot count the number of times this conversation has been had with pastors over the years, except it usually is slightly different because they would tell me about the increase in amount borrowed after it was already borrowed.  I have seen churches wind up borrowing 50-100% more than was originally projected with no more thought to how they were going to pay it back except that for the next three years they had capital funds to apply. Good business people, wonderful church people, and highly effective pastors are all complicit in the fairy tale that just because it is the church it will somehow get paid back without a problem. What they are doing is exactly what got America is the mortgage mess it is in right now. People had a bank that said they would give them the money, so they borrowed the maximum, without serious thought to how they would ever pay it back. It has ruined families and it is ruining many of our churches. I can frequently see that a church began to struggle with income and ministry output in direct correlation to when the note rolled around with no solid plan to cover it.

I want all of our churches to step back and get a bit more “Dave Ramseyed”. We must get off our insatiable belief that credit and debt is the answer. How we spend our money is a spiritual issue with which we are accountable unto God. Is ringing up more and more debt really what He is calling your church to do? Do not mishear. I am not anti-credit for the church and I believe that debt can be an effective ministry tool, just like credit can help one buy a house. We just must use far better judgment than we have been using.

Some rules to consider:

1. Don’t build more than 40% of what you raise in a capital campaign
2. Have someone do a cash flow analysis showing that you reasonably can be out of debt in 7-8 years
3. Never have your debt be more than 15% of your budget
4. Never forecast that success demands that you do more than two campaigns back to back
5. Don’t fall prey to ‘build it and they will come’. What if they don’t?
6. Do calculate start-up/operations cost in your analysis of expenses.

The pastor above and I agreed that he must find a way to cut his project by $1.5 million before going ahead. It would have been easier to sell just adding to the debt, but our projections showed he was maxed out.  He made a wise decision. I predict good ministry days ahead for him and for his church.