In the church there is a very simple formula that determines proper or serviceable debt load. It is the debt service to income ratio. Just like with a home buyer, this ratio should not exceed 25% of the total income going to service the debt. While that can challenging at times, it is manageable.
Certainly there are plenty in the church who believe the church should carry no debt. One of the most "braggadocios" things uttered by preachers is, "I left the church debt free." Or it is often stated by the laity, "I do not believe the church should have a debt. We need to pay off this note before we do anything else." These attitudes easily become matters of spiritual pride and can become divisive and nasty in the church.
We bought our first house in 1983, by the grace of God. Back then it was still rare for a UM pastor to own a home as the parsonage system held over from previous generations dominated the clergy housing scene. Our children were just starting school. I scraped together a small down payment, had to partner to two other families in order to buy 1/3 of the house and I rented it from the partnership paying the amount of the mortgage, PITI (Principal, Interest, Taxes and Insurance). If I had waited until I could pay cash for a house and avoid a mortgage, my children would never have grown up in a home of their own. The parsonage next door to the church was not a solution since the church had essentially 'evicted' us in order to convert that building into Sunday School space. The Housing Allowance paid in lieu of a parsonage was just enough to pay the above payment to the partnership.
I did not then, nor do I now believe we should have waited until we could pay cash to provide a home for our young and developing family. Why should the church be any different? If the church has a growing family and needs to provide additional space, should it wait until it can pay cash? If it does, at least in the experience of the UMC, it will miss years of opportunity for life changing ministry with hundreds or thousands of people. Hence, a mortgage is not an inherinently evil thing. It can actually be a good thing.
I work in another country where it is virtually impossible to secure a home loan. Most people resort to building a shelter of sticks and tin and moving on to cement and blocks and over a long period of time, as they are able to purchase materials and provide their own labor, they construct a home. It is not uncommon to see a family of multiple generations living in a home under construction for over 20 years. And we are not talking about the Winchester home in San Francisco. These are very modest and often inadequate homes. This makes me so thankful for the ability we have in the US to purchase an adequate home for families when they are young and need it the most. This is due to the possibility of securing a mortgage.
This same principle plays out in church construction in that country as well. In 2002 a US mission team helped along the construction of what has become the largest UMC in Venezuela. However, this is now 8 years later and the facility is not complete. While this church has been able to have a very effective ministry, it was so limited for so long by incomplete and inadequate facilities. How much better it would have been for them in 2002 if they could have secured a small, manageable loan and accelerated the pace of construction and therefore persons served in mission. But the opportunity was lost because of the lack of facilities.
So for a church to be able to borrow money to build a home for its growing family can be a good thing - if the debt service to income ratio is managed properly. Had that been the case in Atlanta, a congregation would not have been evicted from their church building. Any number of factors could have caused that eviction such as mismanagement, the loss of the effective pastor, a split in the congregation, a decrease in the effectiveness of ministry, the impact of a struggling economy, etc. While I certainly do not know the cause of the foreclosure, the reality is their debt service ratio was too high when compared to income.
When this occurs in the church, the first thing to happen is the elimination of ministry, then the elimination of staff, then a sense of doom and gloom that scares away even the most aggressive church visitor. As this occurs, a downward spiral continues until one can hear the death rattles in the dying body.
Therefore, it is critical for church leaders faced with a debt service to income ratio of over 25% to ask these questions:
1. Are we making the best use of our income, spending it in ways that reach the lost, grow the Kingdom and glorifies Christ through the transformed lives resulting from this ministry?
2, Can we restructure our debt to lower this debt service/income ratio? There are worse things for a family or a church family than having a 20 or 25 year mortgage.
3. Most importantly, what can we do to increase giving, not cut or underfund ministries? And this will be the focus of another article.
Increasing giving is a never-ending task in the transformational church and can be made extremely difficult in challenging economic times. But is is possible. There are too many success stories of churches doing the "impossible" to believe only in what we think is possible. After all, Jesus said, "I will build MY church."
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