Borrowing billions

Ah, not a post railing against politicians at all! Tricked ya!

No, what I am talking about is the latest article on "church" foreclosures. Turns out churches are being foreclosed on like the rapture is next week. From the Slate article, Church Foreclosures Reach Record Highs, I came across this little nugget...

The Evangelical Christian Credit Union, whom Reuters calls a "particularly aggressive" lender in the property boom, has been previously reported on by Bloomberg. The ECCU was the largest evangelical lender in 2009, with more than $3 billion in mortgages initiated since 1999.

$3,000,000,000 in new mortgages. That is at just one lending institution and in ten years they loaned out an average of $300,000,000 to build or expand "churches". Servicing that debt takes a lot of money in the offering plate!

Seriously though. When the church is in the position of being a major debtor, it invariably changes the focus from reaching the lost to paying the mortgage. That may sound mean-spirited but having worked in financial services most of my adult life I know the influence money has on people. If you think that is unfair, look at this statement from a spokesperson for the Evangelical Christian Credit Union...

“We are a ministry structured as a credit union that functions as a commercial bank” said Jac La Tour, a spokesman for ECCU.

What?! We are a ministry structured as a credit union that functions as a commercial bank? Try to make that statement fit into any sort of definition of ministry in the New Testament.

Brothers and sisters, money changes things. Getting entangled with buildings and mortgage payments and salaries invariably changes the focus of a group. It might not always be disastrous but it always demands caution and writing billions of dollars in commercial mortgages is sure to lead to divided priorities. We have enough distractions in the world that impede our mission, we don't need to pile on mortgage payments and salaries.

The cost of college

The Wall Street Journal reported today that the total student loan debt in America ($829.785 billion) passed the total of revolving (i.e. credit card) debt ($826.5 billion). Of this amount, the report estimates that $300,000,000,000 has been incurred in the last four year, I assume as a response to the poor economy leading to more people staying in school because they can't find a job and people going back to school for the same reason.

Set aside for a moment the fact that we owe as Americans over $800,000,000,000 in unsecured revolving debt and what that says about our culture, a culture that much of the church has embraced with a smile. Think instead about the enormous debt that we have incurred as a people for college educations. This readily available debt has put a lot of people under a debt load that will take a very long time to pay off and at the same time inflating the cost of college. Because debt is so readily available to pay for college, it has less of an impact to raise tuition costs year after year, which college after college has done.

As Christians, what does this say to us about college? Is it necessary for our kids? Is it something we should go into debt to obtain? Even if we have the means, is spending perhaps $100,000 on a college education for our kids a sign of responsible stewardship?

I am increasingly having a hard time justifying the expense of college as a means to ensure that our kids "have a good life" and are able to live the American dream, a dream which increasingly requires us to go deep into debt before we even enter the workforce. If $830 billion in debt is the entry fee for living the middle-class lifestyle, perhaps we need to reevaluate whether that should be our goal at all?

Tough times for church budgets

The Barna group released an interesting report on the impact of the recession on church budgets and as expected the picture is bleak.

Across all Protestant churches, budgets are down about 7% from a year ago, though that indicator masks extremes. The typical “down” church has lost, on average, 14% of its budget. Among those churches with contracting income, smaller churches were the hardest hit: churches of 100 or fewer adults who had shrinking revenue had lost 16%; those with 100 to 250 adults were off by 13%; churches with 251-999 adults were down 11%; and churches of 1,000 or more adults were down 9%.

Some churches have been even more significantly hurt by the economy than others: one out of every 11 churches (9%) has lost 20% or more of their budget from 12 months ago. Within that proportion are 2% of churches with incomes off by 35% or more. Among the rare churches that have grown financially, the average annual budget increase was 10%.

That makes perfect sense and is pretty much what you expect to see. Little church gatherings are struggling, in part because they are bleeding attendees and in part because they feel the need for the same sort of bells and whistles and buildings that large churches have. Plus it has been my experience that many people in smaller churches tend to be older and frankly generally less affluent. Not many churches have the star power of Rick Warren who can put out a plea for $900,000 and end up seeing giving of $2,400,000 virtually overnight.

What was ironic and kind of sad was this (emphasis added):

Interestingly, large churches were more likely to report being under financial duress than were small churches, even though their budgets were not down as much percentage-wise. Among churches of 250-plus adult attenders, 71% of these leaders said the economy had affected them negatively, compared to 55% of smaller bodies. Perhaps clergy who work at larger churches feel the tightening more painfully because, in aggregate terms, their larger budgets account for a decrease in a greater number of total dollars.

The types of churches most likely to say their budget was down included charismatic denominations, black churches, Southern Baptists, congregations located in the Northeast, and those whose pastors earn less than $40,000. Among the most likely groups to report a “very negative” impact of the economy were multisite congregations (i.e., churches that meet in more than one location). Overall, 16% of these churches said the economy had been particularly harsh, compared with 6% of other large churches.

Enough is never enough I guess. The bigger your budget, the more it seems like you are always on the edge. When you start getting into gigantic buildings, multiple buildings, staff that numbers in the dozens, huge overhead and huge fixed costs (and probably a huge amount of debt to service), that monkey is never off your back. Anyway, I thought the report was interesting and yet another sign of how money, salaries, overhead, budgets really dominates the life of the church in a very unhealthy manner. Think how freeing it would be to gather where in a cheap building or a home with virtually no fixed overhead costs. Then when the economy goes south you can worry about sharing what you have with those in need instead of worrying about the bank calling your mortgage or having to layoff staff.

A million here, a million there...pretty soon you are talking real money!

In the times of rapid economic expansion and easy credit that we are paying for now, many people and businesses overextended themselves with debt. Unfortunately, that also holds true for many churches, including quite a few megachurches and other larger congregations that find themselves in foreclosure or with half-finished building projects. I read an article about church foreclosures recently and the numbers being thrown about were disturbing. I work in banking and financial services, so talking about millions or billions of dollars doesn’t faze me, but even still I found the topic of this article disturbing. Here are some quotes from the article Boom-years borrowing hits churches (even the title is distasteful).

In 2006, construction began on the congregation's (Metropolitan Baptist Church) dream complex in Largo, Md. - a $30 million campus with a 3,000-seat church, an education center and an 1,100-car parking lot.

Seabreeze (Church in Huntington, Calif.) spent about $12 million on a new complex that was completed in 2007. But a drop in donations, partly due to a rift between the pastor and some church members, forced the church to renegotiate for an interest-only mortgage. Stoffel said Seabreeze hasn't missed a payment, yet the mortgage is far from the church's only debt. The church also owes $1.2 million - due this year - on bonds that helped finance the project, and must repay a $200,000 loan that a couple took out on their house to help Seabreeze cover its costs.

The 3,500-member Pentecostal church (New Life Anointed Ministries International) near Washington needs a couple million dollars to finish its new $19 million complex. Construction stopped last spring when New Life's lender said it would make no new loans to the church, Reeves said…"We now have children who don't have classrooms to get into, adults who have to go to an overflow room," Reeves said.

Millions of dollars to build churches, likely to replace existing buildings, that are sitting empty for the majority of the week? Even if your local body could afford to service that debt, is it wise to spend eight figures on a building? Using a simple calculator, a $1 million loan at 6% interest over 30 years is a monthly payment of about $6000 or over the course of a year about $1400 a week. If an average family gives $50/Sunday (which I think is high), you need 28 families to give every week without fail just to service a note of $1,000,000. Tell me that doesn’t have an impact on preaching and ministry to know that before you pay your pastor or support missionary #1 or pay the light bill or anything else, you need (given a family size of 4) 100 people to come every week just to pay the mortgage note. Little wonder churches have turned to the business world to find marketing and leadership strategies. Servicing millions in debt is a full time job!

How far we have come from a simple gathering of our Lord and His disciples in a borrowed room to today and million dollar gleaming edifices. Is this progress?

(I have a couple other posts about this issue of churches and building debt here and here)