Should a Church Take on Debt for Capital Projects?


Boiling down ADF’s ministry operational plan to the most basic elements is simple: we “borrow” money from Alliance people and churches (our investors) in order to provide loans to Alliance churches for property and buildings. As awkward and unspiritual sounding as it may seem, debt is a key component of our ministry model. One would think, especially given what the Bible has to say about debt, that it would be hard for us to sleep at night. But we sleep just fine for a number of reasons. Let me first approach this with some practical statements and then we will get to a biblical response.

Churches that are opposed to borrowing have two basic options when it comes to construction: raise all the money before they begin construction or raise it as they go throughout construction. Here is a harsh, but practical reality of trying to build without debt: construction cost inflation is almost as certain as death and taxes. Not only is there a constant inflationary pressure placed on labor and materials costs, but building codes can also change, and these changes rarely lead to cost savings. This makes it difficult for the debt-free builder to “get ahead of the curve.” Your leadership might design and receive bids for construction of a building, let’s say for $1 million. You show the drawings to the congregation and tell them that it will be built once the $1 million is raised. A typical capital fund-raising campaign will last three years. Let’s say that your congregation faithfully raises the $1 million by the end of year three. That’s great, but at a fairly modest construction inflation rate of just 2.5-percent, that building would now cost $1,076,891 – $76,891 more than you raised, and that doesn’t account for the likely increases due to changes in the building codes over those three years. In addition to building code changes, it is quite possible that you will rethink your design over the course of three years and have changes of your own. All of these changes can only be accomplished with new architectural drawings and resubmittals to the building department, all at an increased cost. You will now need to raise even more money to proceed.

Raising the money as you go can be just as frustrating. Here’s what this can look like, based on our experience. The church starts construction with great anticipation. They’ve raised enough money to do the earthwork and place the foundation. People are excited as they watch the building come out of the ground. About fifty-percent of building costs are expended just to get to this point in construction so, by now, all of the previously saved funds are gone. The people are still excited though, so they continue to give and manage to come up with enough money to get the shell up. At this point, their contractor is getting frustrated. He cannot work without being paid, nor can he work efficiently if the church can only afford to have him on-site on an erratic schedule, doing the work piecemeal as the funds become available. The church decides to do most of the work themselves and only hire out jobs that require a professional tradesman. This slows progress down tremendously. It’s hard for volunteers with full-time jobs to sacrifice more than a few hours a week and, even when they’re available, they can’t work as quickly as professional contractors. Most of the volunteer force is unskilled – they must rely on a couple of skilled members of the congregation to train and supervise them. Mistakes are made that cost time and money. Discouragement sets in. Before you know it, construction has slowed to a snail’s pace and is being accomplished primarily by a small handful of people. Excitement about the project fades as the job and the financial need seem overwhelming. Pastoral pleas for renewed commitment and participation begin to lose their effectiveness, as do sermons from Nehemiah. As more time passes, the weather begins to play a role, as the materials of the framework and sheathing begin to deteriorate in the fluctuating conditions of a shell without heating and air conditioning. Members of the congregation begin to lose heart and leave the church. The building becomes the focus of all board and congregational meetings. The church gets a reputation in town as “the church with the unfinished building.” You now regret what seemed like a spiritually sound decision to build only as you raise the money.

While we admire the faith of every congregation that commits to debt-free building, we’re not certain that this faith is always well-founded. The Bible teaches that faith is not a blind commitment to something you wish would happen but, rather, it’s belief in something you know to be true. God’s Word promises many things to those who believe, but nowhere does it promise a shiny new church building. Yes, there may be times when the Holy Spirit directs us to achieve such an objective without incurring debt and, obviously, if that’s the case, God will make it happen. There are also times when congregations are especially equipped to pull off such a feat – when they have the financial wherewithal to raise the necessary funds within a reasonable timeframe, and, for those churches, ADF would be the first to say that they should try to build debt-free. But most congregations fall into a different category – they haven’t heard God clearly direct them to attempt their project debt-free, nor do they have the financial resources to pull this off within a short timeframe. ADF would encourage these congregations to prayerfully consider a building plan that allows for modest debt.

While these are practical reasons why your church might consider borrowing, most churches have at least some members who will raise the question of scriptural prohibitions from borrowing. Obviously, these are weightier questions that must be answered appropriately. For this, I’ll turn to well-known author and pastor, John Piper. Piper’s church was undertaking a large satellite expansion project, but this project was unique in that it was one that the church could walk away from if they hit a financial snag. This fallback option is probably not available to most who are reading this, but look beyond this practical safeguard and consider the theological points that Piper makes to see if they resonate with your church. You can read John's article here.

David Graf