PROPERTY FUNDING & ADVISEMENT

Count the Cost

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PROPERTY FUNDING & ADVISEMENT

OVERVIEW

ADVISEMENT SERVICES

TERMS & PRODUCTS

FOR DISTRICTS

COUNT THE COST

GET STARTED

“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.

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.

Other new expenses could include increased utility costs, increased maintenance and replacement expenses, and increased property/casualty insurance costs, depending on the type of project. 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.

As you consider the above costs, especially a monthly loan payment, it may be in your ministry’s interest to pursue short-term capital fundraising. If so, we recommend the services of CIF Campaigns & Consulting, a division of Christian Investors Financial. This consulting ministry specializes in church capital campaigns and has helped numerous Alliance ministries meet or exceed their short-term fundraising goals. For more information, you may click here to contact Steve Johnson at CIF Campaigns & Consulting. Be sure to let them know you are a C&MA ministry and were referred by ADF.

Taxable Income

One common misconception about ministry organizations is that any income they generate is non-taxable. In fact, it is quite common for ministries to generate income that is fully taxable. The IRS is concerned with how your income is generated, regardless of whether or not 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 consulting the Church Risk 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.

DOWNLOAD - UBIT DECISION TREE.XLS

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.

 
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