Count the Cost

January 4, 2022 |David Graf

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“It is a great blessing from God to be in a position in which you do not have to borrow. But does that mean that the Bible teaches that all borrowing is unwise?” Pastor, teacher, author, and respected theologian John Piper argues that it does not. Read more here.

Estimated Loan Payment

Most loan projects result in multiple new ongoing expenses. Foremost among these expenses is the monthly loan payment. Calculate your estimated loan payment in advance, so you can count this cost and plan accordingly. Try our online calculator here or call us at 833.672.4255 to explore rates.

Planning for Other Expenses

Depending on the scope of your project, it could also result in increased utility costs, increased maintenance and replacement expenses, and increased property/casualty insurance costs. To estimate utility cost increases, we recommend accounting for any increase in property square footage as well as any increase in property usage throughout the week. A planning tool is available here for calculating ongoing maintenance and replacement expenses. To estimate property/casualty insurance cost increases, ask your insurance company for a quote; they will need property information related to your project.

Short-Term Fundraising / Capital Campaigns

As you count the cost, especially a monthly loan payment, it may be in your ministry’s interest to pursue short-term fundraising. If so, Orchard Alliance recommends the services of Steve Johnson at Stewardship Journey Consulting. Steve specializes in church capital campaigns and has helped numerous Alliance ministries meet or exceed their fundraising goals. You can connect with Steve at (763) 294-1814 or [email protected]. Be sure to tell him you are an Alliance ministry and were referred by Orchard Alliance.

Taxable Income

Does your church or ministry receive income from any source other than charitable contributions? If so, some or all of that income may be fully taxable. The IRS is concerned with how your income is generated, regardless of whether it is ultimately used for your tax-exempt ministry purpose. Therefore, it is important to look at the source of your income rather than the ultimate use of it to determine if it is tax-exempt.

One of the more common sources of potentially taxable income for ministries is rental income, and we encounter this fairly often when helping ministries with funding for capital projects. If your ministry receives income from any source other than charitable contributions, we strongly recommend that you investigate whether or not you may have an unrelated business income tax (UBIT) liability. A good way to begin this investigation is by reviewing the Church Management Guidelines resource provided by the C&MA’s Office of the Corporate Secretary.

To further assist in this process, please take advantage of the link below, which will allow you to download a Microsoft Excel spreadsheet containing a UBIT decision tree.

Important note: choose “enable macros” as you open the spreadsheet. The decision matrix linked to above is designed to provide accurate information for C&MA churches and districts in regard to the possibility of unrelated business income. This tool is provided to assist a church or district in making a preliminary finding and is not intended to encompass all applicable laws and regulations. Because the response to each question must accurately reflect the circumstances of a specific scenario, there is no guarantee that the results obtained will always be completely accurate. It should be understood that the provider of this decision matrix is not engaged in rendering legal, accounting, tax, or other professional services. Once a conclusion is drawn from the decision matrix, it is strongly recommended that the services of a competent professional be sought.

David Graf
Vice President for Lending

*Originally published in 2014, revised and reposted Jan, 2022

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