5 Models of Sustainable Ministry For Church

5 Models of Sustainable Ministry For Church

Excerpt from 10 Tsunamis Impacting Ministries, a book which identifies significant areas impacting Christian ministries in the coming years, and identifies very practical responses for churches to overcome these shifts.

What would happen to our ministries

if we cut out the mortgages, reduce the overhead expenses of our buildings by two thirds or more, and use our buildings seven days a week?

What would happen if we make a real estate investment which allows us to interact with lots of people, employ persons from within our ministries and gain sustainable income in the process? This is exactly what sustainable ministries will need to do in order to still be standing in the coming years.

Here are five different sustainable church ministry models which help to introduce and explain the sustainable concept.  These are examples, to serve as a catalyst for your unique ministry to begin thinking about how sustainable ministries could serve your church.

MODEL NUMBER ONE: EVENT CENTERS


The Event Center model utilizes the space normally used by churches during those vacant days and nights of the week when churches are not present. Event Centers were selected because of the adaptability of using the same spaces as churches and the strong daily income potential (four times the income potential per square foot as office space in markets that have a demonstrated strong market for event centers).
Let's examine two potential models of development for a new church building which we will call "traditional" and "sustainable." Each of these ministries has a need for a five million dollar project including site, building, fees, furnishing, audio visual, etc.

SUSTAINABLE EVENT MODEL This model combines a ministry with private investors generally from the ministry into a limited liability company who will generally lease the asset from the ministry. The ministry retains ownership of the asset and would generally not pay property taxes.

To Learn More Attend a Real Church FREE Seminar Event!

There is a wide swath of cultural and economic "tsunamis" taking place in our country today and Christian ministries are in the "eye of the storm".  Churches must be willing to change in order to impact generations to come for the Kingdom.  Based on the book, "10 Tsunamis Impacting Ministries", written by BGW founder and architect Dan Cook, the “REAL Church” seminar will uncover the significant cultural and economic challenges facing ministries today and offer effective strategies for not only surviving but thriving in the storm ahead. 

Church facilities are not just for Sundays any more!  Attend this free half-day seminar and discover a paradigm shift in the way church buildings are designed, constructed, funded and utilized! 

click here to learn more!

Purchase your own copy of the book 10 Tsunamis Impacting Ministry

The following describes a scenario for each model:

The proposed $5 million dollar project is funded as follows:

1. The ministry through existing resources and capital campaign will raise a minimum of 20% or $1 million dollars.

2. The ministry would form an LLC and generally be the general partner of this company. For-profit investors would come into the LLC with an investment of 30% or $1.5 million dollars. The $1.5 million could be a loan to the ministry or work as a deposit for the ability to lease the facility from the ministry.

3. A 25 year bond (mortgage) will be placed with the ministry for the balance of the project or $2.5 million dollars.

4. The LLC leases the facility from the ministry for 7 years and runs the business as a for-profit.

5. The net profit of the business pays for the lease and a return to the investors generally in the 6 - 9% range.

6. The ministry pays the payment to the bond company with the lease income from the limited liability company (no taxes on this income since it is passive).

7. At the end of 7 years the ministry buys out the limited partners for the original amount of their investment ($1.5 million) and places the entire operation under professional management so that the income to make the bond payment and sustainable cash will go to the ministry as passive income.

8. All debt service payments have come from the business, not from the ministry.

Advantages to the ministry:
1. The ministry extinguishes its debt, yet retains the right to future cost free ownership of an "appreciated asset." This is what the nonprofit obtains in return for allowing the Limited Partnership to operate the structure as an event center or other financially sustainable use.

2. The ministry relinquishes the responsibility of having to maintain the asset, as the Limited Partnership will outsource the management/maintenance to a for-profit management firm while the non-profit pays as little as 1/5th of the expenses of ownership.

3. Opposed to receiving only the benefit of tax deductible charitable donations which many of the higher income ministry members cannot fully utilize, Limited Liability Company investors still support the non-profit's cause while receiving a return on investment and return of principal. In addition, they obtain the benefits of tax deductible depreciation and interest.

4. Investors may also receive a closing tax deductible gift upon donating the asset back to the non-profit if they make that choice rather than return of capital. Limited Liability Company investors incur nominal risk, as the company will be restricted to maintaining debt equity below 50% of the asset's appraised market value.

5. Ministry spends financial assets for Kingdom Building Purposes.

6. Ministry increases outreach with quantity of people visiting the facility for non-ministry purposes - events, etc.
7. Unrelated Business Income Taxes (UBIT) are not applicable since all of the income is on the for-profit side of the model and the ministry is not involved in this side of the model until it takes over ownership.

8. Once this happens, all of the income will be passive income and non-taxable because of a management agreement with a for-profit.

DISADVANTAGES OF SUSTAINABLE MODEL
1. While the nonprofit can lease variable amounts of time/space (more/not less), it relinquishes its control and autonomous rights to use the property/facility at their will.

2. Church member approval of this concept.
I know that churches have always owned their buildings and they have really never opened them up to a "commercial" use when they were not using them. Jesus clearly was upset at money changers in the temple! Should we have our temples desecrated with meetings, events, bridal receptions, children's parties, and these types of activities?

The short answer is that we should not have this happen in our temples. But…our churches are not temples and we must exercise the best stewardship we possibly can in reference to our local ministry buildings. In addition, this concept allows us many "touches" to lots of members of our communities when they come to our buildings for a wide variety of events. The fact is that the for-profit LLC will do a much better job of operating the building and maintaining the building because they are focused on this one item.

The for-profit world creates business models and is constantly updating these models to be able to show long term sustainable income. It is time for the ministries in our communities to take a strong look at this model. I started this model in May of 2014 in Ogden, Utah with a 25,000 square foot facility which is known as Hub801.

The goal was to combine a church ministry who would use the building on Sunday and Wednesday nights with an event business who would use the building the balance of the time for revenue and return to the investors. The investors took the risk in the project by constructing the building, opening and operating the business. The Genesis Project (local church ministry in Ogden) has joined this event center as the ministry partner. Since moving in (January 2015) they have seen a 30% growth of people and continue to attract more and more first time guests. They have in excess of 1,400 people coming to the event center on a normal Sunday.

The event center is also doing well with revenues in excess of projections. In addition, the Genesis Project has the option to purchase from the investors (most of whom attend The Genesis Project) the entire event center in January of 2022 or earlier for the original cost of the project less any equity builds up during the first 7 years of operation. The projections show an ultimate $300,000 per year of cash flow in excess of mortgage payments! That is sustainability. You may see this project on the web at www.hub801.com or get more information by calling the author.

BGW had no business going into the event business, but the more we thought about it the more it made sense. After all, Jesus didn't just hang out at the synagogue or for that matter spend much time there. He spent a lot of time at wells, and wells were the gathering places in that day. Event centers are the gathering places of our cities today and they may work extremely well to further the cause of Christ. The Genesis Project is fantastic. I wouldn't want to be any place else, doing anything else, with anyone else than working with Matt Roberts who is the pastor of The Genesis Project.

MODEL NUMBER TWO: MULTI-SITE CHURCHES

A 2012 report by Leadership Network reveals that there are over 5,000 churches with more than one location for worship, up from 200 in 2002. Many of these multi-site churches are linked to one another every Sunday morning by a single connection: video screens. These campuses generally broadcast the sermon being preached at another campus, but allow for more intimacy among the smaller group of people at each campus.

Video venues are perhaps the clearest example of how technology is changing church. Advances in audio-visual technologies, as well as Internet and email capabilities have made video campuses feasible. At first, the large auditoriums in megachurches simply required video screens so people could see the pastor. After that, it was only a short step to video campuses.

The number of megachurches may have exploded in the U.S. over the last few decades but the landscape is changing and people are seemingly less attracted to the big box church experience. According to Leadership Network, there are nearly 2,000 megachurches - those averaging 2,000 or more in weekly worship attendance, adults and children - in the U.S. Megachurches represent only about half of one percent of the almost 350,000 churches in the country yet almost 10% of churchgoers attend a megachurch.

The event center model is well situated to create a multisite ministry that will have significantly less cash outlay and operating costs to accomplish the same goals and objectives of church ownership. A multi-site project may cost four million dollars or more with purchase of site, land development, building construction, and furnishings. Most ministries would need to come up with half of this or two million in equity and then have payments to the lender of $180,000 per year along with additional costs of maintenance, utilities, depreciation, and janitorial.

Under the event center concept the ministry would put up a total of $800,000 as a deposit up front, have no payments over the next seven years and only pay about one fifth of the ongoing common area maintenance and utility costs. The ministry would still use the building when it normally would have services but the building would be used as an event center when not being used by the ministry. One of the reasons that this model can be so successful is the ability of the ministry to support the program through full utilization (event rental) of the building by their businesses, personal use, and linkage to the community.

MODEL NUMBER THREE: HOTEL DEVELOPMENT

Another tremendous for-profit ministry is in the area of hotel development.

You may be asking yourself why hotels would have great ministry opportunities. Pastor Eric Bahme who is the director of Stewardship for BGW started his first mission-based enterprise in Portland, Oregon.

After fourteen years as Senior Pastor of New Life in Seattle, God led Eric to plant a church. From moment one, he wanted this new church to impact its community and the world in a big way. God's mission drove him forward in a very unusual way, but he followed with his whole heart. Eric and his wife Rita were eventually able to purchase the Flamingo Travel Lodge Hotel in Portland.

While there were tremendous ups and downs, it became a powerful ministry that witnessed to thousands and saw thousands come to know the Lord. Pastor Bahme has written a wonderful book called MBE - Mission Based Enterprises, which I wholeheartedly endorse and believe every ministry leader should read. They also founded a ministry in a Best Western hotel in Kalispell, Montana. Last year this ministry gave a mission organization in Africa $700,000 cash from operation of the hotel, supplied jobs and training for YWAM, and allows 3 different ministries to meet in the meeting spaces at no cost. Yes, hotels can be sustainable! We have two churches exploring this concept today. The first market analysis shows substantial financial advantages for the ministry as well as a steady stream of "visitors" that we can show Jesus to!

MODEL NUMBER FOUR: ATHLETIC FACILITIES

There is an incredible shortage of athletic facilities in most cities. Gymnasiums, indoor turf fields, recreation areas and other athletic facilities can fill an incredible void in both ministry and sustainable income. BGW completed a project in Annapolis, Maryland a number of years ago that has been able to make the payments on a $10 million dollar bond, provide recreation and classroom space to a Christian school, and provide scholarship funding from the use of the recreation spaces when the school was not using them! While Annapolis did not use the for-profit model, I believe we would today because of the major advantages of this model.

In the for-profit model, investors will be paid a nice return from the athletic side of the property while the school or church uses the same space for ministry during non-prime times. In addition to the obvious cash flow implications, this model can impact the users for the Lord in a very special way. We have another project in Rowlett, Texas that has taken excess land and used it for sustainability. In this case they developed two major soccer fields and 10 practice fields. Leases net out $120,000 per year and bring thousands to their site on evenings and weekends. The church already owned the infrastructure to make this project happen. They owned the land and went through with the vision. One of the unique programs is the ability to combine athletic and exercise programs with youth leadership programs where we both impact youth from a leadership standpoint as well as physical programs.

Every youth will make a decision at some point in the growing up time frame that is critical to their future. Will they be a leader or a follower? We believe it should be a choice that is made after fully understanding the potential of biblical leadership which can only be taught with God in the center of the equation.

MODEL NUMBER FIVE: DAY CARE FACILITIES, ADULT CARE FACILITIES, WOMEN'S SHELTERS

Each of these facilities are being constructed all over the country in large numbers. They are being constructed for profit. Why should we not be constructing the same facilities which can provide financial sustainability to a ministry while providing tremendous facilities for the ministry on Sunday and perhaps another evening a week. Generally the ministry will have far better facilities and someone else is paying for them!

BGW is presently working with a ministry in Surprise, Arizona which plans to construct a six million dollar facility for their church which is paid for through the day care model of financial sustainability (the church is primarily putting up the land and consultant fees for the project). If the market is strong enough, this model is exceptional when done through private enterprise in a for-profit direction. My wife and I own a day care in Ogden, Utah which is managed by our national day care provider. This day care houses two churches in addition to over 120 kids per day hearing about God.

The churches have never paid rent in this facility because of the operation of the day care facility. We also lease the commercial kitchen out to a catering company who pays a percentage of their total income to the day care. The same catering company provides food service to the day care at rates not normally found in the industry. In addition, we are working with a group in Portland, Oregon that is doing a women's and children's shelter. They are purchasing an older motel which will be renovated and used for the shelter. The State of Oregon will be the responsible party for paying the operating expenses which will give the ministry significant cash to fully reach this group of people while paying all of the expenses of their ministry.

FREE Seminar Event!

There is a wide swath of cultural and economic "tsunamis" taking place in our country today and Christian ministries are in the "eye of the storm".  Churches must be willing to change in order to impact generations to come for the Kingdom.  Based on the book, "10 Tsunamis Impacting Ministries", written by BGW founder and architect Dan Cook, the “REAL Church” seminar will uncover the significant cultural and economic challenges facing ministries today and offer effective strategies for not only surviving but thriving in the storm ahead. 

Church facilities are not just for Sundays any more!  Attend this free half-day seminar and discover a paradigm shift in the way church buildings are designed, constructed, funded and utilized! 

click here to learn more!

Purchase your own copy of the book 10 Tsunamis Impacting Ministry

About the author:  Dan Cook is a visionary architect, developer, builder and the founder of the Building God's Way (BGW) network of Kingdom Building Services.  He has led BGW through the design of more than 700 ministry-based facilities and has pioneered a number of innovative programs that have revolutionized the way churches and Christian schools are designed and built. These programs were all founded on Biblical principles of stewardship, relationship and outreach.  Dan’s strong commitment to Christ drives his passion for helping churches develop strategies to reach the next generation, adapt to cultural change and become financially sustainable.

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