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On the surface, the question of whether to finance a building project with borrowed money or capital fundraising appears obvious. How can you argue against capital fundraising? It's interest-free money! Another advantage of a capital campaign is that it requires a clear presentation of the church's vision and encourages individual participation through sacrificial giving. It is an opportunity for spiritual renewal, forcing members to deal with the question, "What part does God want me to play?" It encourages us to listen to God's voice and follow him. For many people the biggest obstacle to trusting God is money. The best way to have victory over the control of money is to give it away. The act of sacrificial giving is counter-cultural and represents an act of faith that draws us closer to him. Finally, capital campaigns avoid covenants typically required by lenders which restrict the financial operations of the church.

While this list of fundraising benefits is compelling, the church lending market is alive and well. Why? There are very good arguments for borrowing money to fund your next building project. Scot Proud, a vice-president at Bank of America, points out that there are risks associated with all fundraising campaigns. "It is important for the church to make sure that capital campaigns are successful. If a campaign is perceived to have missed its predetermined objective, it can cast a shadow over the entire project that will cause the church to doubt its vision and adversely affect the future of the project." An ill-timed or poorly-conducted capital campaign could have this effect.

Borrowing makes sense in light of the escalating costs of building projects. Usually, borrowed money is necessary just to get a project off the ground. Pledge drives and fundraising activities can blossom with fruitful harvest when church members see the land, design plans, architectural models, and construction activity already underway. It makes a statement of commitment from church leadership to the members that inspires giving. The loan can then be repaid with the proceeds from the campaign.

Saddleback Valley Community Church used this strategy with a slight twist when it constructed its interim worship facility. The church obtained financing to construct enough of the building to obtain a certificate of occupancy. When the capital campaign was conducted, the building was already under construction. There was great excitement in the church and the members responded to the challenge. Rather than paying off the debt, however, Saddleback used the proceeds to enhance the building and place options on surrounding land that would ensure room for growth in the future.

Timing is key. A well planned campaign can take six months or more to execute. If you can afford to wait, then a campaign may be your best option. Suppose you've just started looking at options for relocating and building, and a piece of contiguous property becomes available for immediate purchase. If the church has adequate cash flow to service the debt, it is much easier and quicker to put a loan in place than to organize a capital campaign. If the church has already established a good banking relationship, lines of credit can already be in place to fund initial deposits. The remainder of financing can be secured during the due diligence work associated with the acquisition.

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