The question of how to know if you need a capital campaign is something that stumps many churches. One of my associates called me last week with this question. He has a church that is attempting to raise dollars and they wanted to know if they should have a capital campaign or not. My answer to every answer is, it depends! Without more information it is impossible to give a good answer. So…
My question back to my associate was twofold. First, what is the churches annual operating budget? The next question was, how much do they need to raise? The answer to these two questions determines whether or the church needs a capital campaign or not. It also determines what kind of capital campaign they need.
In May of 2011 I wrote a blog post entitled, “The Rule of Thumb on Debt Reduction.” Here is in part what I said about debt reductions and capital campaigns. I wrote…
“While it is difficult to give set in stone advice since every churches situation is different we do have some basic rules of thumb as we counsel clients on debt reduction. These three broad rules can give you guidance if all you are raising funds for is the payoff of your loan and nothing else. If the debt load is…
- Less than 20% of your annual operating budget then pay it all out with a line item in the budget. Remember this is simply a rule of thumb. It might be that that amount of funds put into your budget could create more stress than you would like. If you are currently in a campaign and project that by the time the campaign ends you will be at this point I would move to start putting some money for debt in your budget. Easing into a debt line item is much easier than simply cold turkey adding thousands of dollars to your monthly budgetary needs.
- More than 20% but less than 50% of your annual operating budget then put it as a line item in the budget AND run a small campaign to address the debt. Our advice here reflects first the demands of banks to want to see a church aggressively addressing their debt. Also our advice is that if the amount is smaller then a small campaign can address the debt. We typically utilize this rule of thumb if the debt can be repaid in twelve to eighteen months. We can help you develop a small campaign to address this need.
- Greater than 50% of your operating budget consider a full three year campaign to wipe the debt load out completely. A capital campaign will increase the amount of revenue you bring in and thus relieve the pressure of putting all of the debt into the budget. We advise our clients at the front end to tell donors that the plan to pay for the project entails back to back campaigns. I have one client who is on his fourth consecutive three year campaign and will have another after this! Capital campaigns allow you to raise more money, meet loan requirements easier and pay off the loan faster. We would still recommend that a line item be placed in your budget to help position you better with banks and to help pay off the debt faster.”
Similar rules apply when it comes to deciding to do any campaign AND what length of campaign you need to run. So, let me expand upon the above and give you some guidelines that can be helpful. If the amount needed to be raised is…
- From 0% to 20% of your annual operating budget you might be able to do that with a simple giving plan. The smaller the amount the more likely you could do one super Sunday offering and raise what would be needed. However if the amount climbs above 5% of your annual operating budget or more than one week’s average offering you will need to think longer. It might take a month to three months to pull off. We can help you with that!
- From 20% to 50% of your annual operating budget you might be able to do that with a one year capital campaign. People can give more if the giving period is stretched out over time. One year campaigns can be effective if you know how to set them up properly. We can help you do that!
- Over 50% of your annual operating budget you should think of a longer period for your capital campaign. The more money you need the more time you will need. Think about your own finances. Can you write a check for thousands of dollars at one time? Most of your members are in that boat. So the longer you give them to give the more than can give. Thus the more you can raise.
The question is not can you raise whatever amount you need. The question is how long will it take you?
The steps above are guidelines. Every guideline carries with it exceptions. Do you know how to recognize those exceptions? Do you know how to put a plan together that will lead to success? We do! Call us today!
Mark Brooks – The Stewardship Coach