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Of Bricks AND Dollars

Of Bricks AND Dollars

Finding funds in tough economic times

Your sanctuary is filled to the rafters twice every Sunday and it would likely overflow a third time if you added another service. Meanwhile, your nursery has expanded to include a goodly portion of your multipurpose room.

Sounds like it's time to put together the funding to expand your worship facility. But with the price of gas around $4 a gallon and rising, housing tanking, jobs at risk, and inflation reducing buying power, your parishioners' pockets may not be quite as deep as usual. Meanwhile, the credit crunch continues, curtailing the activities of a lot of (but no, not all) lenders that otherwise might be lining up to provide the debt piece of your funding plan.

Today's uncertain economy hasn't completely shut the door on capital projects "but there is a kind of waiting for the other shoe to drop' environment," according to Mike Stickler, managing partner of Faith-Based Solutions LLC (FBS), a Reno, Nevada-based consulting firm whose services to the non-profit faith-based market include grant writing, fundraising, strategic planning, organizational development, training seminars, and meeting and event planning.

Be they homeless missions, individual churches, or multi-million dollar evangelical organizations, there are two mentalities ministries can adopt in response, he says.

"One is to go into survivor' or Donner party mode,' where they circle the wagons, wait everything out, eat everything they haveand wind up eating each other," Stickler explains. The more productive approach, though, is the "We're going to grow through this" mode, he notes, "namely, where the ministry decides it is going to look at every aspect of its organization, figure out how to do things better, and do what it takes to keep growing the missionwhich is what the fully funded ministry is all about."

Recession-proof Tactics
FBS's approach to helping churches raise the funds is to train and coach their staffs in developing fundraising programs. These programs typically begin with a classic internal capital campaign aimed at church membership; then move to a second phase that gets friends and families of members involved; and from there to a final third stage aimed at the business and professional community.

All of these activities are being run by church members trained and coached by FBS, as opposed to a consultantan approach that makes sense for a couple of reasons, according to Stickler.

"These campaigns are not rocket science," Stickler says. Churches get a better return on investment by getting the training and information necessary to raise funds themselves, as opposed to the classic method of bringing in consultants to run the entire fundraising effort, "because once they learn how to do it themselves, they can sustain their efforts over time, and their growth will keep building on itself."

Fundraising needs to be vision-based, not needs-based, adds Stickler.

"What needs to be communicated is not we need money for a building,' but rather we have a God-given vision of impacting our community with this new facility'that is the important point to remember," Stickler says. "People will give pocket change for a new buildingbut they will give sacrificially to a vision."

Indeed, "Money alone is never enough to build a strong financial foundation for a campaign," agrees Doug Turner, a former pastor and president of Dallas, Texas-based RSI Church Stewardship Group, a capital stewardship campaign group.

"Successful campaigns are built on the rock of dynamic leadership, diligent planning, and, most importantly, a clear and compelling campaign vision," says Turner, adding, "Once the spiritual ground is prepared for a new building, bricks and dollars enter the discussion."

In the process of putting together the funding for construction, casting the vision for the campaign is followed by careful study of the space needs of the churchboth current and into the future.

"Anticipate growth and potential ministry opportunities of the future," Turner says. "If the demographics of your area are changing (i.e., a shift from a predominantly singles neighborhood to one with young families), think ahead. Be careful not to be shortsighted; have a long-term view of the church and its ministry."

Into Action
Once a plan is determined, it's time to enter the design phase. "Consult with your architect to help you estimate the cost of construction," Turner advises. Costs vary widely depending on the type of facility, he notes: for example, pricing for worship space with audio-visual components will be different than a gym or classroom space. At the same time, he adds, it is also prudent to estimate the cost of operating the new building, along with related costs such as landscaping and security systems.

Vision, plan, and design in place, it's time for the capital campaign. These campaigns should be carried out by professional counsel for a number of reasons, according to Turner. The specialized knowledge, experience, and objectivity of outside professional counsel combine to optimize the level of funds raised and the chances of success of a campaign, he notes.

Also, says Turner, "While most pastors are more than able to lead a capital campaign, it is not the most faithful use of their time and leadership skills. Hiring professional counsel allows the pastoral staff to focus on the vision and mission of the church as it is expressed in the campaign, instead of attending to campaign mechanics."

The Lending Environment
Most churches are going to need to borrow a portion of a construction project's cost to augment the equity raised from the capital campaign. Today's lending environment can be difficult, according to Mark Johnson, executive vice president of the Ministry Development Group of Brea, California-based Evangelical Christian Credit Union (ECCU).

While the amount of financing ECCU provides continues to grow, "In this economic climate, many for-profit lenders appear to have pulled back on some of their commercial real estate lending effortsand this includes some of the willingness they previously had to consider loans to faith-based non-profits," Johnson says.

With fewer financing resources available to the typical church or ministry today than a year ago, churches need to even more effectively manage their financial resources, according to Johnson.

"ECCU's team spends a good deal of time consulting with churches on the principles of cash management, liquidity, and the implications of less predictable cash flow," Johnson says, adding, "The need for sound financial management becomes even more critical for ministries in challenging economic times such as these.

"Every church is different, but the value of adequate cash reserves, prayerful planning for the future, and prudent overall financial management are the issues we discuss with each of their leadership teams," Johnson continues. "And in the process, we're discovering that in these challenging economic times, churches appreciate even more the value of a relationship with a stable financial institution that understandsand even shares a passionfor what they do."

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