Every year several hundred churches close their doors permanently. Countless churches are already on wobbly financial grounds and an economic crisis will close more than the usual number. The impending economic crisis forecasted for us is huge: double digit unemployment lasting months or years, economic recession or even depression, etc.

If your church does find itself being forced to close forever, consider some alternatives that will enable the assets of your church to help others.

1. Talk with your local religious body leader to see if you can donate your building and property to the local judicatory (association, convention, conference, presbytery, diocese, etc.). They will take ownership of the building and give or sell it to a new congregation. If that isn’t possible, they can sell the property to a developer and then they’ll invest that money and at a future date, make grants to new churches so that several phoenixes can rise from a closed church.
2. If you don’t have anyone to talk with about this, please contact me. I have resources.

Please do not go to extreme lengths to prolong the life of a church that is moribund. Like people, churches should have a DNR (do not resuscitate) protocol. Instead of using resources to keep a building open and a congregation going, use those resources to close the doors gracefully and bless new church starts with your assets. That will honor the Kingdom the most.

Lead On!

Steve

Listen to the podcast:
https://anchor.fm/cbf-va/episodes/Church-Finances-during-the-Pandemic-Navigating-the-Financial-Fallout–the-CARES-Act–and-Making-Tough-Decisions-ecfgm7

During this time when church buildings are closed, the church can address its finances in a productive way. During the 2008-2010 Great Recession, I advised churches to reduce their budgets by 10%; the churches that did that survived without letting go any staff or even cutting their wages. The level of our impending economic crisis is dramatically different than the Great Recession so the ideas of the past may not serve us in the present but they can help. Here are some ideas for the present reality (these ideas are good for any time of the year, not just during a crisis).

Reduce Expenses

1. Personnel – this is 50% to 60% of a church’s budget so let’s start here
   1. Hiring freeze – do not hire anyone new to your staff. Stay focused on who you currently have and try to retain them. Some may leave and that’s okay but don’t replace them right away. Try to get by with a smaller staff. When your finances stabilize decide then if you can afford to hire new staff.
   2. Cutting staff – if you do need to cut staff, then first let go the staff that under-perform. It is always painful to terminate people (I’ve terminated over 50 in my career so I speak from experience) but this might be a time for you to terminate staff that have not performed well or are part of a ministry that isn’t in your core. That is harsh – I recognize that – but we’re talking about the continuance of your church and ministry. You can provide the terminated staff with benevolence money for groceries and rent/mortgage for a few months. Terminating staff will let the rest of the staff and the membership know how serious the situation is – it’s a reality check.
2. Building – this is the second largest expense area of a church’s budget, usually 15%-25% (depending on whether you have debt)
   1. Talk with your bank about refinancing. Banks are borrowing money from the Federal Reserve at 0% so they can afford to lower the rate they charge their customers. Have this conversation – the worst your banker can say is “no.”
   2. Change your thermostat settings: 60 or 65 when it calls for heating; 80 when it calls for air conditioning.
   3. Turn off lights and keep them off
   4. Reduce the number of trash pickups
   5. Look at every one of your contracts and put them out to bid in the next few weeks and months. This is low-hanging fruit through which you can save a LOT of money if you negotiate.
   6. You may not need to bid out every contract. If you’re particularly satisfied with a vendor, ask them to reduce their fee. In 2010 I asked and my lawn management company cut their fees by 30% so I kept them and they’re still there 10 years later.
3. Programming – this is the third area of church spending and it is the smallest, usually 15%-20% of which 5%-10% is missions. There’s not much you can do here but you can be creative.
   1. It appears now (April 2020) that mission trips for this summer will be cancelled. Use the money allocated for that to do creative missions:
      1. Send the money directly to your missions partners in the country or region where you were going and let them use the money however they want or need to.
      2. Use the money to do missions in your own city.
         1. Provide meals and snacks to your local hospital’s staff.
         2. Send gift cards to your banker who is working hard for you.
         3. Give gift cards to people whose income has been deeply affected by the economic shutdown: restaurant workers, hotel staff, retail employees, small businesses, etc. These are your friends and neighbors – take care of them. They’ll remember what you did.
         4. Create videos and have them sent to your nearby retirement communities. They are in lock down and they desperately need to know that you’ve not forgotten about them. Ask the retirement community to show the videos on their in-house TV network.
      3. Natural attrition
         1. You’ll have a natural reduction in some expenses such as flowers, candles, Sunday School materials, etc. Some of your printed materials may switch to online PDFs and they are cheaper.

Bottom line: take this opportunity to seriously look at your expenses and see what you can cut that won’t affect your ministry or that will protect your core ministry.

Lead On!

Steve

Listen to the podcast:
https://anchor.fm/cbf-va/episodes/Church-Finances-during-the-Pandemic-Navigating-the-Financial-Fallout–the-CARES-Act–and-Making-Tough-Decisions-ecfgm7

As part of the $2.2 trillion CARES Act, Congress approved the Paycheck Protection Program. This program is aimed at small businesses including churches and religiously affiliated non-profits. It is a rare time when Congress authorizes money to be given to churches.

I’ve done the application for a few churches and organizations. The amount of money is you can get is dependent on your payroll but in the churches I’ve worked with it amounts to about 5-6 weeks of income. Word is that the program is so popular that it ran out of money in its first few days but Congress is already working to supply additional money.

1. It was launched on Friday, April 3, 2020 and the deadline is June 30, 2020.
2. Work with your bank, you’ll need to calculate your spending on payroll for the past year, complete some forms, and get some signatures. Your banker is the key to the program.
3. The PPP provides for a 100% forgivable loan by the US government for 2.5 months of your payroll expenses (based on some calculations). If you have the same or more employees after June through December 2020, then the loan is entirely forgiven.
4. If you don’t need or want the money – get it anyway. You can always
   1. Return the money later
   2. Give it to a non-profit that you partner with
   3. Use it for missions in your community
5. The CARES Act also has some changes in charitable giving laws which might be of benefit to some people in your church. Please consult your tax professional to see if these laws would be beneficial in letting you give more money to your church. And even if the laws aren’t in your favor, give anyway – you’ll rarely regret giving money to your church.

Lead On!

Steve

Listen to the podcast:
https://anchor.fm/cbf-va/episodes/Church-Finances-during-the-Pandemic-Navigating-the-Financial-Fallout–the-CARES-Act–and-Making-Tough-Decisions-ecfgm7