There’s a maintenance schedule for just about everything. Rotate the tires on your car every 5,000 – 7,500 miles. Flush your home water heater every year. Clear or replace the HVAC filters every 90 days. Visit the dentist and optometrist at least once a year. And the list goes on. But what happens when you cannot afford to pay to perform some or any of these essential services? You can spend money you don’t have, that’s called going into debt, and I don’t recommend it. Or, you can put it off until you have the funds, which is known as deferred maintenance. While deferred maintenance can solve a temporary lack of funds, it can also make a bad situation much worse.
When Maintenance Is Deferred Too Long
When our church renovated an industrial property in Southern California by transforming a 54,000 sq. ft. warehouse into an amazing place of worship, part of the project included paving and striping a 6-acre parking lot. Something about a new parking lot, the painted curbs, fresh landscaping, and the super white lines delineating where to park seems inviting. But like a new car smell, it doesn’t last forever. Blacktop needs a slurry seal every five to eight years. Unfortunately, our church experienced a split, making budget cuts necessary. During that period, we went from deferred maintenance to purposeful neglect. Year after year, there wasn’t enough money in the budget to create sinking funds for high-dollar purchases like a new roof, HVAC units, a sound system, and slurrying and striping the lot.
I recall pulling a team of volunteers together with white spray paint to recreate the parking space lines for those attending services and events. It was more than embarrassing; it became destructive. The asphalt cracked (way beyond the alligator-type texture) and developed a sinkhole from the rain seeping through and the weight of vehicles. The situation turned from deferring maintenance dollars to pulling from the emergency fund. We needed to remove large sections of the parking lot, and, in some areas, the damage was so bad we needed to replace the asphalt with concrete.
The Actual Cost
Building a church budget during the best of times is difficult. No matter how big the budget pie becomes, cutting the slices in such a way as to pursue the mission requires honest, robust dialog, many times leaving some wanting more. And when the church needs to reduce the operational and ministry team’s portion of the pie, the challenges become exponential. Often, the tendency during church budget reductions centers on lowering operating costs. When it comes to maintaining a safe, clean, and welcoming facility, deferred maintenance may be a temporary solution, but there’s wisdom in calculating the actual cost. The term deferred maintenance implies that the maintenance will resume – and usually, the sooner, the better. James Piper, Ph.D., PE, wrote, “for every dollar “saved” by deferring maintenance, there comes a four-dollar increase in future capital renewal costs.” Piper goes on to show that these costs manifest themselves through emergency repairs, reduced life of the asset, reduction in asset efficiency, and can even lead to safety and health risks. It was as though Piper was reporting on the parking lot situation at our church. What started as a short-term solution to a budget problem eventually turned into a costly scenario reducing the parking lot’s life, leading to safety risks, and then using the emergency fund.
It’s nearly impossible to predict the event that will bring about the next negative impact on the church budget. A policy change, staff departure, political stance (or lack of), pandemic, moral failure, and the inability to reach the next generation can impact attendance and donations. Here’s what I learned navigating these turbulent waters.
- Have an Emergency Fund: Every church needs an emergency fund because emergencies happen. Building an emergency fund isn’t a lack of faith; it’s biblical stewardship. The good news is that, unlike Dave Ramsey’s recommendation for three to six months for personal finances, experts recommend 40-80 days’ worth of expenses when it comes to churches. Building an emergency fund to this level allows the church to cover an emergency without encumbering funds needlessly. Even though 40-80 days of expenses is realistic and strategic, use wisdom when determining the amount for your church. Churches come in different sizes and financial needs.
- Have Sinking Funds: Building sinking funds is the tried and true way to prepare for upcoming costs in advance. It takes discipline to build sinking funds, requiring the church to set aside a specific amount of money as part of the church budget to save enough cash to replace, repair, or refurbish high-cost assets. Let’s use the parking lot as an example. Parking lots require slurry and stripe every five to eight years. Here’s a simple formula to calculate the cost of slurrying a parking lot: 1. Obtain competitive quotes for the project. 2. Divide the dollar amount of the quote by the years left before it needs another slurry coat. Example: The cost to slurry = $25,0000. The number of years left to re-slurry = 5 years. $25,000/5 years= $5,000 per year to build the parking lot sinking fund. Remember, a sinking fund differs from an emergency or reserve account. An emergency fund is for emergencies; sinking funds show foresight, planning, discipline, and diligence. Churches must evaluate big-ticket assets like the roof, HVAC units, sound system, etc., calculate the amount, and build as many sinking funds as necessary.
- Prioritize Maintenance: Knowing your church’s assets and how long you expect them to last is a crucial step in the process. Churches that do not have a way to track their assets should invest in software to track and manage assets. (Pro Tip: If money is a prohibitive factor, free options like Asset Tiger are available.) When severe budget reductions are necessary, and deferred maintenance is part of the strategy, always prioritize safety. At the top of the priority list are compliance items like fire alarm and sprinkler system testing to ensure proper functionality. Then, prioritize general operations to ensure essential building functions like lighting and plumbing work.
- Avoid Long-Term Neglect: Deferred maintenance can quickly become purposeful neglect over time. Some budgeting reductions come on unexpectedly, making rapid adjustments necessary. Putting thoughtful and deliberate pauses on specific maintenance areas may be the strategic space the church needs to regroup and grow. But be aware that the trap happens when churches cannot reintroduce the funds, and eventually, what started as a plan to get out of trouble becomes the new way of operating, ultimately costing the church more.
When churches find themselves in financially difficult seasons, deferring maintenance on non-critical assets may provide the short-term relief needed to get back on track. Churches must have a handle on their assets and then carefully consider the areas of maintenance to defer to keep the facility operating safely. Unfortunately, the cost is often steep when the church cannot quickly reallocate the funds to the budget, trading $4 for every dollar “saved” while deferred. One way churches can avoid falling into this trap is to build adequate emergency and strategic sinking funds. While creating these funds takes discipline, they are worth the effort in the long run.short url: