Generating Funding

In Uncategorizedby tfwm

One of the biggest obstacles pastors and church leadership will face when stepping out to build a new facility is deciding how to generate funding for the new project. As they begin the process, they will come to the place where they begin to search for banks, commercial lenders or other lending institutions that provide loans to churches or assistance in just getting started. So, it is crucial to know that the way a church packages itself can make it or break it. There are three key components that are crucial to the success of any church financing project: the vision, the project and the loan package.

The Vision
The first component is the overall vision and the preparation that goes along with that. Many churches have built new facilities without carefully thinking through the purpose of each building and the needs of the ministries that they will be house. Naturally, the main purpose of each building should be to advance the kingdom of God; however, this will not happen automatically. It is wise to take time to define the ministries’ need that will occupy each new facility before building begins, so it can be certain each building will be used to its maximum potential.

It is crucial to write out the church’s vision and a detailed plan of how to accomplish the completion of the vision. This plan should include such items as the church’s financial history and its present status. Many times, banks see churches as a risk.

It is wise that the church leadership clearly present the vision to the congregation. When the people realize the vision and know the purpose behind what is being done, then it is possible to garner the greatest financial support and church member buy-in. Some churches may choose to have creative fundraising campaigns, for instance, they may have a visual they use to indicate the amount of money they have raised or they may have a chart that shows how many seats have been sold in their new facility. The point of this is to keep the congregation sold on the idea of the new facility and to show them that they are achieving the church’s goals one step at a time.

Another great way that churches approach fundraising is through capital campaigns. A capital campaign is run by professionals that are available to assist churches or other ministries with raising money. These professionals offer campaign advice and help build funds within a congregation for specific goals. Finding a reputable consultant is important, as they will be spending a large amount of time with the ministry’s leadership and will cost the church money.

Some churches may question if hiring a professional consultant is being prudent, because they may feel that they can raise the money themselves. This is a good question that should be taken into consideration before hiring a consultant. However, there are some reasons why congregations may want assistance from a professional when attempting a capital campaign:

• First, these professionals know how to go about the capital campaign from every angle, whereas a church going through a capital raising program for the first time will often struggle though the process.

• Second, consultants can be focused in their job. They aren’t concerned with the day-to-day operations of the church like other church leadership would be.

• Third, these consultants have the time to plan, execute and follow up on the campaign. Again, this is their primary purpose; they do not have to take time out to address other church issues.

• Fourth, based on the churches financials, they set achievable goals.

Pastors/church leadership cannot require so much from their congregation that they reach the point where they feel they cannot succeed. When people feel they are accomplishing something, then they are motivated to follow through until the end. However, if they have unattainable goals, then they will not be inclined to complete what they have set out to do, because it feels impossible. People want to know what they are giving to and how their money will be used. When they have the vision, their giving is based on advancing the kingdom, not just facilitating a building project.

The Project
The second key component to the church financing process is the project itself. Since the church history and present status has already been established in the visioning stage, church leadership must now look toward the future and begin to give real values and measures to the plan, which is required in order to receive financing. This step will require the development of detailed information of the new church project, including such items as the project’s location and architectural plans of the new church building. Often times lending institutions will even want to see the church’s contract with the builder.

It is crucial at this point to gather a competent and fully committed team to fulfill the vision. The church leadership should work in a close relationship with the engineers, the architect, the builder and the creative team. We have discovered that when there’s a team mindset from the start, it not only puts the owner but everyone else involved in a position to win.

In the team concept, everyone works for the pastor/leadership and each decision is made in light of what their needs and desires are. In the planning stage, a lot of effort is put into making sure all the ideas are considered, digested and implemented in the best way possible. This allows time for engineers and contractors to talk before plans are complete. Team concept also encourages the involvement of subcontractors even before the plans go out to bid. This allows input from every area and insures that the owner is getting the most for his money.

The Loan Package
The final ingredient to a successful church building project is the loan package. Church leaders must realize that they will need to provide the bank with a clear plan for requesting the loan amount, with a precise strategy on how the church proposes to repay the loan. Here are some helpful tips that can aid leadership in preparing for the day they need a mortgage to begin a new church construction:

• Keep good records of church finance and attendance

• Be honorable with the finances of the church

• Build a relationship with the banker. Be friendly and talk to him and share the vision in short form

• Make sure corporate papers are in order

• Work to improve past credit history both personally and corporately

• Look at market analysis of the town and area

• Deal with any bad credit problems both personally and as a church

• Prepare a church budget, include a mortgage payment and live by it

The success of funding a church building project will be entirely dependent on the amount of time that is spent in preparation and planning. Good preparation time is never wasted! If a church plans thoroughly, then great success will be realized in attaining a good financing package and accomplishing the overall vision. However if the church fails to plan, then it will plan to fail.