The constant, major challenge for any growing church, whether newly planted or established, is providing adequate facilities with which to do ministry. To address this challenge, you must wrestle with at least three critical questions: What can you afford to build? How will you fund it? How will you spend the money you raise?

What Can We Afford?

Most churches begin by asking, “What would we like to build?” or “How much building do we need?” These are interesting questions. The problem is they are the wrong questions. When you establish your own personal budget, you don’t ask, “What would I like to spend?” And the church shouldn’t begin this way either.

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The right question is: “What can we afford?” It’s very important that before you begin to work with an architect that you determine the answer to this question. There are three reasons for this:

1. Your answer provides the architect with some limitations or parameters as he or she designs the building.

2. Your answer will keep you from having to redesign the building several times because it keeps coming in over budget.

3. Your answer will also keep you from designing a building, putting it out for bids and then finding that you can't afford what you would like. This will disappoint your people as well as waste much time and money.

How Will We Pay for It?

In deciding how much building you can afford, first, you need to determine the total amount of money potentially available to fund the project. There are several primary funding sources the church may use.

Capital Campaign. Most churches need to conduct a capital campaign to help raise the necessary finances for a new facility, remodeling an existing one, or the purchase of land. In a normal three-year capital campaign, most churches should be able to raise one to two times their annual income. Thus it’s reasonable to expect that a church with a $1 million budget could raise an additional $1-2 million dollars in a three-year capital campaign.

General Fund. Most churches that have needs for land and facilities can service a mortgage out of their general fund. For example, a church with a $1 million budget might use 10 percent (we recommend 20 percent) of its general fund for its current mortgage payment. Thus it has $100,000 available to service ongoing debt out of the general fund. In most economies, that would service a debt of $1 million, amortized over a twenty-year period.

The church must determine how much additional mortgage service it can underwrite out of its general fund. The following process will help you answer this question for your church.

First, the church must take into account any existing mortgage debt that it is currently servicing out of the general fund. In our example, the church has designated 10 percent of its general fund to service current debt of $1 million. To service any additional debt, it has to increase the percentage of the general fund available for debt service. Let’s say, for example, over a three-year period the church increases the percentage of the general fund that services debt from 10 percent to 16 percent. To do this, one of two things must take place. The church must cut back or eliminate funding in other areas of the budget, or the church must freeze at current levels or limit the growth of other items in the budget. Then the church would allocate any increases in the total budget to service debt.