The Stewardship of Debt

Do you ever wonder if debt is wise or even biblical? Consider the following?

First Church bit the bullet and borrowed five million dollars to build their new family life center three years ago. Across town Faith Church faced with essentially the same project decided to pay cash for their family life center. Both churches embarked upon a capital stewardship campaign raising $three million dollars.

First Church for the last two years has been in their new building. They are gearing up for their second capital stewardship campaign to pay off the existing debt they incurred. Faith Church is starting their second capital stewardship campaign and hope to be in their building in another two years. Their hope is to be able to be completely debt free at the time of the grand opening.

Which church took the right course of action? The answer is not as easy as you might think. At times and in some situations there are good arguments for each course taken. Yet often those that take the non debt route do so with a mistaken idea that their decision is the only biblical decision. Even in churches where borrowing is seen as a necessary option pastors and leaders are often bombarded by individual members who feel the church is entering into sin.

In this edition of The Stewardship Coach I want to talk with you about what I call The Stewardship of Debt. In the times that we live in it is almost impossible for churches to build without incurring some type of debt along the way. For me there are two major questions that need to be addressed.

Is debt unbiblical?

In some circles this is a raging debate. I find that those that hold that any debt at any time is unbiblical are almost beyond reasoning with. Perhaps we cannot win those people over. We can help others feel good about the decision we make regarding debt.

My friend Dr. Don Sweeting of Cherry Creek Presbyterian in Denver, Co. wrote this about debt. He said, 'Some Christians think that believers should never borrow money to go into debt. They hold this conviction with regard to their car, their house, their business and their church. Other Christians operate no differently than the world, and they irresponsibly borrow up to their eyeballs. They borrow for things they should have paid cash for, like clothes, vacations, stereos, etc. They are haunted by it for a long time.

We, at Cherry Creek, believe there is wise middle ground that is biblically responsible, where debt is sometimes taken on and used as a tool with the intent to pay it back as soon as possible. That is the action we took this past summer.
It is interesting that the Bible verses most often used regarding debt are Romans 13.7, 8. The NIV renders it, "give everyone what you owe him" and "let no debt remain outstanding." The only debt that is to remain outstanding is the continuing debt to love one another. Paul is not making a statement that it is wrong to borrow, but saying that when you borrow, pay it back!"

So, in answer to the question is debt unbiblical I believe the answer is, it depends! It depends upon whether the debt is a manageable debt. Does the debt so debilitate the church so that missions and other vital ministries are cut or curtailed? If not then I believe debt can at times in fact be good stewardship of God?s money.
Is debt practical?

There are times when it makes good practical sense to use debt to accomplish Kingdom work. Let?s take for instance the story we began with about First Church and Faith Church. One waited to build debt free while the other borrowed and began building immediately. It is my position that First Church actually was a better steward by borrowing than Faith Church. Let me explain.

First, you need to take into consideration the rising cost of construction and materials. You can count on at least a 10% increase a year. When we are hit with natural disasters like Hurricane Katrina you can add another 10% on top of that. Let?s take a simple 10% increase annually.

For example:

Project	Cost Increase (10%)	Per month
$1 million	$100,000	$8,333
$3 million	$300,000	$25,000
$5 million	$500,000	$41,666
$10 million	$1,000,000	$83,333

Secondly, you need to consider what the new building will mean in terms of growth. National statistics reflect that churches with new facilities grow on average 20% to 30% the first year. That equates out to about a 20% increase in giving income.

For example:

Annual Budget	Income Increase (20%)	Per month
$ 300,000	$60,000	$ 5,000
$1,000,000	$200,000	$16,666
$2,500,000	$500,000	$41,666
$5,000,000	$1,000,000	$83,333

Remember, the above charts are per year! Even if you took a much more conservative rate of increase you can see that delaying the building in the long run costs you more rather than saves you more. I recently had a church that waited three years to start on what they thought initially would be a $4 million dollar project. The low bid was $6.75 million!

In the opening illustration of First Church and Family Church two different courses of action were taken. By delaying their project Family Church lost potential growth without the new building and lost potential income that growth would have provided. To top it all off the cost of their new building increased at least 30%. What looked at the outset to be a good decision to avoid debt actually cost them more money in the long run and thus was a bad stewardship decision.

So, the bottom line is that at times debt is not only practical but it makes the best stewardship sense. The key is to find the wise middle ground for your church or ministry. Then you need a plan on how you will pay off that debt without it being a burden upon your budget. That is where a good stewardship partner like The Charis Group can help. A good plan of action can help you achieve the dreams and visions that God has given you.
Mark Brooks

The charts used above were provided by Mission Management and Consultants, LLC www.mmcbankers.com

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