Building Costs

Posted on August 27, 2012 Written by

An article a few months in a facilities magazine reflected that the true cost of building in not in the architect’s fees, furnishings, or even in the actual construction of the building. The article stipulated that over 80% of costs of a building are in the maintenance and operations of the structure.

Say a building has a lifespan of 50 years. The first year the building is built. The next 49 years the building is used for its purposes. Over the course of the 49 years, the cost of the utilities, maintenance, repairs, improvements, alterations, etc. will cost at least four (4) times as much as the initial construction done in year one. That operations cost (the one over the 49 years) does not include the cost of any personnel associated with that structure: custodians, employees, technicians, etc.

Before (BEFORE) you build a building, look at your budget and your future revenue streams. Does your budget have the financial margin to grow and absorb the cost of a new building. Can you afford the additional utilities and maintenance costs? How will you pay for new heavy equipment and major repairs (e.g., HVAC or a new roof) over the next few decades? (By the way, if you set aside funds 10% of the original building cost into a reserve account to cover those costs, you’ll have enough to cover all major repair costs over the life of that building.) Is your budget healthy enough to add staff to take care of the buildings over its lifespan and ministers to put on programming in that building? Ask these questions ahead of time – you won’t regret it.

Also, before you build, think creatively as to why you’re building. There are some opportunities that if a church is willing to think outside the box, you can leverage a lot of resources. Here are a couple of examples:

  • One church wanted to build a parking deck. Members of a Sunday School class knew that the city also wanted to build a parking deck in that area of town. The city and church worked together – the church provided the land and the city paid for the construction and they got a win/win. The church gets a parking lot it uses for free each Sunday and it didn’t have to pay for the construction; the city got the parking it needed but it didn’t have to buy the land.
  • A church wants to build a recreation center. What if the church worked with a local fitness center: the church offers the land and the fitness center builds the facilities? Church members can use the center for free and the church then has people right next door who may have never gotten near a church – a mission field right next door. And the church didn’t have to find $5 million to build a center and then $200,000 a year to staff the facility.
  • The same could be done with a daycare – collaborate with a respectable day care center to use church faciliites for the benefit of the church, the center, and the community.

Think long-term and think creatively.
Lead On!
Steve

Filed Under: budget, buildings, facilities Tagged: , ,

What Hasn’t Changed?

Posted on August 20, 2012 Written by

My missionary/pastor father was born in 1928. I distinctly remember going on vacations where he wore a coat and tie every day – of vacation! That’s who he was and the generation of which he was a part. He went to church every time the doors were open, even when he wasn’t the pastor of the church.

It’s been 32 years since he died. And times have changed – dramatically. My children don’t go to church in “Sunday go to meeting” clothes. They wear what they wear to school – shorts, flip-flops, shirts (we usually do require a solid color shirt, not a logo shirt).

What else has changed in church from 30, 40, or 50 years ago? Actually, EVERYTHING!

  • The music we sing to
  • The instrumentalists
  • The “hymnals”
  • The pews
  • What people wear
  • The Bibles people bring (mine is on my iPhone)
  • How people learn (in the middle of a Bible study, someone will pull up a doc from the internet)
  • The “Sunday School quarterlies”
  • Mission trips
  • How we do missions
  • How members support their church financially (electronic offerings are increasingly the norm)
  • etc., etc.

I can’t think of a single area of church-life which has remained stagnant in the past 30 years (except maybe the sermon!).

Okay, now think 30 years from now to the year 2042. If you think we’ve had a lot of change in the past 30 years, it’s going to be increasingly exponential change in the next 30. That leads me to ask:

Are you being intentional in preparing your church for upcoming changes? OR Are you just going to let the changes happen to you?

Change will happen – you can’t stop time, don’t even try. But you can get ready for change. I’m not saying you have to embrace every change that comes along, but you don’t have to fight every change either. Pick and choose your battles (the best piece of advice my mom ever gave me!) – learn what changes your church should adopt and adapt to. If you resist change, your church might end up with closed doors. Your church will be stronger in the long run by developing a healthy attitude to change.

Lead On!
Steve

Filed Under: church administration, leadership, wisdom Tagged: , ,

Generous Living

Posted on August 14, 2012 Written by
  • My daughter participated in Relay for Life a few weeks ago. This event is put on by the American Cancer Society to raise funds for cancer research.
  • Last week, my church had a yardsale to raise money for youth to go on a mission trip.
  • A couple of months ago a friend participated in St. Baldricks – an event during which people will shave their heads to raise money for cancer research.
  • Every time I go to Starbucks, they give me the opportunity to buy a mosquito net for $10 for give a few dollars for some cause.

Every week I’m given the opportunity to be generous – to give a few dollars to people or a cause that is worthy of financial support. There are countless ones that don’t deserve your money or time – it is up to the donor to do his/her due diligence to ensure that the cause is worthy. But for the ones that are worthy, how are you giving to them. More importantly, is “generous living” part of your nature?

A few years ago Oprah interview some poeple who came into sudden wealth. Some were lottery winners and others were actors. All said they were mobbed by family and friends who wanted/needed money. The bottom line that everyone agreed with is that sudden wealth magnifies your innate personality: if you are stingy, you will be even more stingy with your money; if you are innately generous, you will be even more generous with your new money.

Children learn more by watching than by listening to their parents. If they see their elders being generous, I want to believe that these youngsters will grow up being generous (that is a hope of mine, I don’t know that there is any documentation to prove that). I’ve seen that lived out many, many times in individual situations – youth will be naturally generous because that is what they were taught by their parents.

All of us can be examples of daily generosity to individuals and causes. All of us need the practice of being more generous. All of us should be examples of generosity to the next generation. Generosity is not just about money, but also about your time, your skills, your expertise, your wisdom – its about being generous with YOU!

What are you doing to live out generosity? Do you take advantage of those opportunities that literally come across your path or do you ignore them? Do you research the causes that are requesting money or do you ignore them or give them a token gift instead of really digging?

Then, when you are living out your generosity, do you tell others about the neat cause or purpose? Make sure your motivation is pure – don’t tell others to get them to applaud you, tell others because you want them to be aware of how they can help, too.

Make generosity part of your DNA. Make it so that when other people talk about you, the word “generous” is used countless times. Make “a generous person” the words that should be on your tombstone.

Why do this?

  • If you are a follower of Christ, you’ll be generous because God was and is generous and you are commanded to be generous (you have absolutely no other option).
  • If you are not a follower of Christ, do it because there is no downside to being generous. When is the last time you heard someone get criticized for being “too generous?”

Give. Be generous in all you do, every day, so that people will automatically presume you will be wisely generous.

Lead On!
Steve

Filed Under: generosity Tagged:

Conversations Not Confrontations

Posted on August 6, 2012 Written by

In elementary school I remember the entire class being punished because of the infraction of one person who would not come forward and admit to what he or she did. Instead, all of us got punished. I’ve seen that happen in churches and church staffs, too. Because of one person’s actions, an edict is issued or a policy is passed which applies to everyone.

Church policies have their place but my experience is that when you have formal policies, then you need “policy police” to enforce them. At worst, that can lead to a culture of negativity or fear or confrontation. Many church policies are created in reaction to one incident in an effort to prevent future situations. My experience tells me that often these are over-reactions to one occasion. Instead of passing policies, let me suggest that church leaders act as leaders and confront the person that caused the situation.

Actually, confrontation has negative connotations but there are positive ways to have a confrontation. So, intead of using a negatively-tinged word, I’ll switch to the word “conversation.” Rather than have a confrontation, have a conversation.

A conversation – a constructive, positive, “one-minute-manager” conversation – can do a lot to salvage the employee or volunteer in ways that a policy can never do. In fact, the person that caused the incident may never associate that his action resulted in a policy. Policies require time and discussion among a bigger group when that may not be necessary.

So, please talk with people – have conversations. Help the person understand how his words or actions were received by others, how what she did caused confusion, pain, or even disruption in the organization. Show that person how he could have handled it better or what she should have said. Do this in a conversational way, not confrontational.

At the end of this, you will have saved loads of time in not passing a policy when then requires further policing. You will have gone straight to the source of the issue. And you will have had a conversation which will lead to better communication among everyone in the organization.

Lead On!
Steve

Filed Under: church staff, leadership Tagged: ,

Electronic Donations

Posted on July 31, 2012 Written by

Making donations or gifts without using checks or cash is increasingly routine and within a few years will become the norm for many churches (but not all – some churches will fight this tooth and nail). There are a lot of ways to give electronically – let me list a few:

  • Bank Drafts
    • Bank drafts have been around for a couple of decades or more. This is where you authorize your bank to send money to the bank account of an organization (either at your bank or even another bank). It is easy to do but the donor has little control over the situation and gets reports only from the bank statement or from the organization sending the donor a contribution statement. This system is okay, but antiquated.
    • I work with a church that has been using this system for many years. Each month, almost 10% of their budget comes in this way. The fees are very low and the church gets most of the money, too.
  • Online Giving
    • In the past 10-15 years online giving has become quite the rage – as it should be. Younger generations don’t carry cash or even plastic – they “keep” their money in their phones or other electronic devices. They want to be able to go to a website where they can readily and easily give money to the organization they wish to support. This is a very good way to support your church and every church should have an electronic giving portal.
    • Credit card fees range from 2.30% to as high as 5% of the total gift and debit cards are typically much less. These fees should be considered part of the “cost of doing business.” In general, the easier it is for people to donate, the more people and the more donations will be received which will offset the fees. http://www.serviceu.com/ or http://www.e-giving.org/ are good companies that know churches and can provide solutions.
  • Giving Kiosk
    • About 10 years ago the idea was born of a computer station in the lobby of the church where people could give by either swiping a credit card or going to a website to give money. This is very neat – Stu Baker with http://www.securegive.com/ can show anyone their product which was developed by his father, a pastor in Georgia.
    • This kiosk provides great flexibility to the donor who can set up a one-time or recurring gift (just like in online giving), but it also gives the donor the option to swipe a credit or debit card by which means that personal data is transferred to the account and that makes it even easier for the donor. I very much like the idea of giving kiosks.
    • A colleague of mine even dreamed up a “kiosk-lite” by finding an old computer and monitor, connecting them to the internet and programming the PC so that it would only stay on their churches E-giving website and never go anywhere else.
  • Texting Service
    • After natural disasters like the earthquake in Haiti in 2011, several organizations advertised where people could text money. This is a very simple method for people to donate money to their favorite cause – the problem is that most of the organizations that coordinate these apps have amounts of $5 and $10 – nothing more. I’d like for there to be an “unlimited” category where people put in their own amounts. I read in June 2012 where they are exploring increasing the amount that can be given to $20 (this is negotiated with the cell phone companies).
    • This is very convenient but it limits how generous people can be. If I want to give $100, I don’t want to tap my phone 10 times (at $10 per time) to give money. I very much like this concept, I just want it to be less restrictive.
  • QR Code
    • A QR code is that square made up of hundreds of very small black and white squares. QR codes are free. What they do is to activate the web browser on a portable device (phone, tablet, etc.). Every QR code is linked to a specific website. Linking your QR code to your churches giving website allows people to navigate to that site immediately.
    • A friend of mine created the QR code for his church and now places the QR image in every Sunday bulletin. As the offering is passed, people can pull out their smartphones, scan the code, and give as much as they want.
    • This is ultimate flexibility – it puts the donor in total control of when, where, how much, and to what he or she is giving. People can take the document with the QR code and use it later or save the destination of the QR code for later referral.

Additional benefits to electronic giving:

  • There is the well-documented fact that online giving is pretty much impervious to Sundays where the church is closed due to weather (snow, hurricanes, etc.) and tithing declines due to vacations and holidays. The internet is never closed due to weather and it never takes a vacation or is sick.
  • What is less well-known is how much online giving will make it easier for people (guests and regular attendees) who want to give who don’t have cash or a check with them that Sunday. If they could, they would give – but they left their money at home. No one leaves home without their smartphone!
  • An insurance agent told me the church’s premium will decrease because of the reduced exposure since there is less cash on hand (fewer dollars that could be stolen). That is a good but hidden benefit!
  • Online giving is becoming the norm – society is teaching people how to buy things online and make them feel comfortable with it. Since the marketplace is already doing the education to/for church members, churches can piggyback on this and leverage this knowledge for the church’s benefit through its online giving.
  • Donors can keep track of their contributions themselves. People can see what they’ve given to and what they haven’t supported (yet). This will help the church’s Finance Office by having donors more informed and even be able to print out their own statements of contribution as they need.
  • It also makes it easy for the church to send an email to everyone who has donated online which can result in increased communication between the church and members, especially donors.
  • Also, it might help the Finance Office. Some online giving sites interface with church financial software so that online gifts can be imported directly to the member’s database. That will update the financial portion of a member’s record and help the church keep track of all contributions by that person.

There are lots of ways to leverage online giving. Wise churches will be looking at ways to maximize the number of ways to receive gifts and to make it easier for donors to give. If you make it hard, then you’ll be on hard times. Make it easy for people to give – use the KISS principle: “Keep It Simple, Stupid!”

Lead On!
Steve

Filed Under: church finances, church financial statements, generosity, young adults Tagged: , , ,

How Much Debt Should a Church Have?

Posted on July 17, 2012 Written by

Personally, I think church debt should be exactly like your homeowner’s debt: that ratio should never exceed 2 to 1. Yes, a bank will loan you 3 to 1 but you’ll be so strapped financially that you won’t have any disposable cash for doing anything else.

The ratio to the operating budget, my suggestion is 10% or less. Basic economics for a church with no debt:

  • building is about 20%
  • programming (including missions) is about 30%
  • staffing is about 50%

To pay your loan, you’ve got to take it out of one or all three of these. Most of your building costs are fixed (energy and maintenance). That leaves programming and staffing – if you cut those too much, you’ll have a great building with no one to lead and no one to follow.

 

Better to have programming at 25% and staffing at 45% with some growth than to cut to the bone at 20% programming and 40% staffing (which will kill your staff, too). You can grow out of debt, but that takes a lot of intentionality – that is hard when most pastors are trying to manage what they already have and can’t imagine taking on more in order to grow giving and attendance even more than they are already doing.
I’ve worked with some churches that have a 3 to 1 ratio (debt to annual budget), but they are hurting financially. And, their new building will be old and worn down long before the debt is paid off at their current rate. The appearance won’t attract new people, especially a younger generation.

My recommendation, get out of debt as soon as feasibly and fiscally possible. Debt is fine so long as it doesn’t become the boa constrictor that wraps around the church and kills it.

Lead On!
Steve

Filed Under: budget, church administration, church finances Tagged: , ,

Roadblocks to Strategy Implementation

Posted on July 5, 2012 Written by

Below is the outline of materials presented by Susan Beaumont, a consultant with the Alban Institute. She is very effective and what she has to say (and how she says it) is excellent. Think about each of these 10 items – flesh them out in your own mind and reflect on which one(s) are the roadblocks to the success of your vision and your church.

Top 10 List of What Gets in the Way of Executing Strategy

  1. Too many strategic priorities (should be no more than 2-3 priorities)
  2. Senior clergy losing strategic focus
  3. Board fails to provide oversight
  4. Rogue committees that over-function
  5. Board micromanages the staff team
  6. Staffing structures that don’t support the strategy
  7. No performance management system
  8. Absence of program evaluation
  9. Lack of meaningful measures of success
  10. Operating budget not aligned with strategies

Lead On!
Steve

Filed Under: leadership, planning, strategy, wisdom Tagged: , , ,

Reading List

Posted on June 26, 2012 Written by

This is a list of some of my favorite reading materials for my profession: church business administration in no particular order. What’s on your list? Share it.

  • Books
    • Me, Myself and Bob by Phil Vischer
    • E-Myth Re-visited by Michael Gerber
    • In Search of Excellence by Tom Peters
  • Magazines
    • Fast Company
    • Religious Product News
    • Church Executive
    • Peachtree Business Products catalog
    • NACBA Ledger
    • Harvard Business Review
    • Christian Computing Magazine
    • Today’s Facility Manager
    • Church & Clergy Tax Update

 

Filed Under: church finances, church staff, leadership, wisdom Tagged: , , ,
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