Reserving for the Inevitable
January 4, 2022 |David Graf
Have you ever noticed how, with buildings, everything seems to fall apart at the same time? My wife and I had our current home built 19 years ago. It’s a wonderful house, and we feel blessed to own it; however, all of a sudden there is much that needs to be done. We have recently replaced all of the carpet and the furnace. The fence is shot. Our contractor-grade windows have lost their seals and are full of condensation. The linoleum in our master bathroom is coming up. The roof is close to the end of its useful life. We need to repaint the exterior, and all of the decorative stone beds are beyond a simple weeding and actually need to be pulled out and replaced. I could go on and on. Looking back, none of these maintenance issues are a surprise. With very little effort, we could have somewhat accurately predicted the life expectancy of each of these things, and we should have. Had we been disciplined, we would have counted the cost of what it would take to maintain our home throughout our lifetime, and we would have begun setting aside money each month to handle each expense as it was incurred. Instead, we will have to borrow against the equity in our home to pay for some of these things, and others will have to wait. It didn’t have to be this way, but we took advantage of having little maintenance to do in the early years of owning this new home and spent our money on other things. Now, we are paying the price.
It didn’t have to be this way, but we took advantage of having little maintenance to do in the early years of owning this new home and spent our money on other things. Now, we are paying the price.
This is very similar to what I see most churches do. There is little as exhilarating as reaching the end of a successful church building project. After years of planning, fundraising, securing financing, managing construction, and purchasing furniture and equipment, you finally reach the end goal. The sigh of relief among you and your co-laborers is well-deserved. You have succeeded in providing a beautiful new building with which your congregation will serve the Kingdom, and you have carefully managed the finances along the way to make this dream a reality.
But wait a minute – there is one more critical step that remains. It is very important that you establish a projected maintenance schedule and budget to begin saving for these future events. This is such a simple concept, and yet it is one that is ignored in the vast majority of churches. Even when it is considered, the cost of construction and the new mortgage payments make it very difficult to regularly set aside funds for future maintenance. It’s all too tempting to put off saving until the church grows some or until you are closer to the end-life of some of your building components. If the discipline isn’t established at the very beginning, it probably never will be. What is the end result? Usually, it’s either a desperate fundraising effort to fix the leaky roof or a 10- or 20-year loan to pay the cost. Did it really surprise you that the roof with a 20-year life expectancy only lasted 23 years? Why wasn’t your church prepared?
But wait a minute – there is one more critical step that remains. It is very important that you establish a projected maintenance schedule and budget to begin saving for these future events.
The best time to tackle this problem and develop the necessary discipline is not at the end of construction but during construction planning. Routine maintenance and updating aesthetics should be part of the budgeting process when calculating the financing for a new building or addition. If you leave no room in your finances to prepare for the inevitable future expenses of building ownership, then you’ve doomed yourself—or your kids—to financial hardship in the future.
Orchard Alliance has a “Maintenance Reserve Calculator” spreadsheet (available by contacting [email protected]) to help with budgeting for these future expenses. With this tool, you can avoid the financial pitfalls of being unprepared for routine maintenance. And, while you’re at it, if you do decide to set aside funds for these future expenses, please consider investing these reserves with Orchard Alliance to earn a competitive return.
Vice President for Lending
*Originally published in 2015, revised and reposted Jan, 2022