How To Look at Debt Part 2: Debt is a Resource

In our last blog, we talked about how debt is a tricky subject in church circles but it’s an important one for pastors to be able to explain to their congregations. This is especially true when the church itself is taking on debt, as churches often must to complete expansion projects.

We explained that debt must be viewed in two ways: as a burden and as a resource. This can be a difficult tension to hold as these two things may seem like opposites, but it truly is a “both-and” situation.

Since we’ve already explained the drawbacks and realities of debt as a burden, we’ll now discuss how debt is a resource.

We believe characterizing debt as only “bad” is simplistic and ignores the great opportunities that access to credit, loans and the like, afford in today’s world. Yes—you have to pay it back. But taking on debt allows you to get where you’re going faster.

A church wishing to expand may have to wait years and undertake more than one capital campaign to raise enough money. And we’ve found that most givers don’t want to wait that long. They don’t want to give their precious resources to a project that won’t be completed for another decade or so. They want to see results. Plus, if a church is bursting at the seams it doesn’t have that much time to wait.

In more extreme cases, debt enables you to do things you never could have done otherwise. It’s an investment in a future hope that, if it becomes reality, makes the amount borrowed a lot easier to pay down after the fact than it would have been to accumulate in the first place. For example, many churches we’ve worked with have grown the minute they move into their new, improved facility.

As an easy theoretical (and admittedly oversimplified) illustration of this point, consider student loans. A student who borrows a manageable amount to finance his or her education should earn more after college and therefore able to pay back the loans much faster than he or she could have saved the same amount of money working at McDonald’s.

Of course, we have to be careful with this line of thinking. The future is never assured or perfectly controllable. Remember that there is wise debt and unwise debt. Wise debt is manageable even if reasonable unforeseen circumstances pop up. It’s within our capacity. Unwise debt is that which stretches us to our outer limits so that any bump in the road sets us in a ditch.

One more thing to consider along those lines: Having a denominational lender, like National Covenant Properties for Evangelical Covenant churches, for example, provides a slightly different reality for a church taking on debt. Should a huge storm arise that might challenge your ability to pay, these lenders have been known to soften terms during hard times. Many growing churches don’t have this resource but if you do, it could be a benefit. 

Development Advisors provides A-to-Z services for expanding churches in Colorado, including advice on financing options and strategy. For more information, contact Scott McLean at scott@developco.com.