Imagine that there is a group who obeyed God’s call and planted a church in a growing suburban area. This fledgling church held its first meeting in a living room, then graduated to the community clubhouse and eventually began meeting in an elementary school auditorium. Church attendance grew, as did the commitment of the congregation and the leadership to reach this area and beyond. Within just a few years, this “church in a box” that met in a school multipurpose room expanded to two services with about two hundred people attending each service. Volunteerism was high as everyone was committed to the mission and vision of the church. Without the burden of debt, the church was able to invest heavily in outreach, finding ways to impact the community and support initiatives globally. However, the school district decided that the church had outstayed its welcome, forcing a decision – to find a new place to rent or a property to purchase.
After much prayer, planning, and patience, the church found a property and purchased their new home. The size of the congregation made the mortgage manageable, with enough left over to pursue its mission. By all accounts, this is a success story of God working in and through a local body of believers.
Debt is a Thief
I bet this story sounds familiar because you are likely a part of a church like this or know of one. But what happens if the church experiences a split or a pandemic causes a global shutdown and half of the people don’t return? Suddenly the mortgage debt that was so easy to manage became a burden. Decisions become based on mission, vision, values, and financial constraints, and Proverbs 22:7 (The rich rules over the poor, And the borrower becomes the lender’s slave.) takes on new meaning. The Bible contains plenty of warnings about going into debt, and churches should be extremely cautious before entering loan arrangements. But, to be clear, taking on debt, like mortgage debt, is not a sin but a hindrance, and the obligation of debt robs the church of carrying out its mission.
Develop a Debt Elimination Plan
Churches carrying debt, especially non-mortgage debt, must develop a debt elimination plan in their budget. Here are some ideas that may help kickstart a debt-elimination plan.
- It may not be the most creative or sophisticated plan but start with the baby steps Dave Ramsey outlines in Financial Peace University (FPU) for households. Baby Step 2 is to eliminate all non-mortgage debt using a plan Ramsey’s team calls the debt snowball. A church can use the same plan by listing all non-mortgage debt from the smallest amount owed to the largest. Immediately attack the debt with the smallest amount first by adding to the principal while making the minimum payment on the other debts. Once the smallest debt is fully paid, use that amount to add the next smallest debt as principal payments, and so on and so on. Since the church is already accounting for these debt payments in the budget, adding a line item to increase the principal payment on the smallest debt is one way to minimize the negative impact on the budget while getting out of debt. Of course, this means the church cannot take on any additional debt.
- Another approach is to go to the congregation with a debt-elimination campaign. In this scenario, the church leaders need to own the fact that the church is in debt and explain how and why the debt seemed necessary. Then, cast vision, painting the picture of what a debt-free church looks like and the ministry to accomplish when freed from debt. Campaigns could be in the form of a promise card where congregation members commit to donating an extra amount designated explicitly toward paying off debt. Again, the church cannot take on additional debt during the process.
Debt-free churches have a huge advantage compared to those carrying debt
- They can be generous: This takes on many forms, but generally, it means that instead of looking for a loan, the church becomes a financial resource for the community and globally. It also means paying its staff appropriately and keeping up with the increasing cost of living.
- They can build sinking funds: A sinking fund is a way to address future needs by setting aside money in advance. For example, at some point, large dollar items like roofs, HVAC units, and sound systems require replacements. Debt-free churches plan for these expenses in the church budget and will not require taking out a loan.
- They can pursue their mission: Church budgets that do not include debt payments are free to invest more financial resources into the ministry, just like that church plant that started in a living room so many years ago.