Our previous Special Report revealed that nearly half of Protestant churches in the United States are taking on building projects because of growing attendance or aging facilities. In this part of the study, we learn how churches are going to pay for these building needs, or how they plan to get by when facing a shortage of cash.

Already In Debt
Half of the churches (52 percent) in our study are in debt. One third of these churches carry a mortgage, making mortgage debt the number one type of borrowing. Bank loans (also known as lines of credit) are second, and just one to two percent utilize bonds or a second mortgage.

Church size has a dramatic correlation to borrowing (see Graphic 1). Large churches are more than twice as likely to be in debt as small churches. Nearly nine in ten (87 percent) large churches are in debt compared to just one-third (37 percent) of small churches. It's also interesting to note that since 2001, the percent of large churches in debt has jumped significantly, increasing from 67 to 87 percent.

Churches with debt allocate, on average, 14 percent of their annual budget to pay off their loans (see Graphic 2). This equates to an average annual amount of about $55,000 for all churches. Small churches allocate 15 percent, medium size churches 14 percent, and large churches 8 percent of their annual budgets.

More Borrowing Planned
Churches may not get debt-free any time soon. One in three churches (30 percent) are planning to take on new loans in the next 18 months. Two thirds of these are growing churches where attendance has risen in the past five years. Mortgages and bank loans will continue to be the preferred choice of financing.

The average amount of financing planned by all churches is $581,000. Small churches expect to borrow $125,000, medium-size $219,000, and large churches $822,000. The three main reasons for borrowing are new construction (66 percent), building renovation/repairs (40 percent), and parking lot expansion (21 percent).

Instead of borrowing, one in five churches (18 percent) plan to conduct capital fundraising campaigns in the near future. Large churches (27 percent) are three times more likely to be entering a capital fundraising campaign than small churches (8 percent). Nineteen percent of medium sized churches are planning a capital fund drive.

The average goal for capital fundraising campaigns is $885,000 per church, 52 percent greater than the average amount churches intend to borrow. The average fundraising goal for a large or growing church is $1.9 million.

The Study
Between January and March 2004, 1,926 surveys were mailed and 296 were returned, for a response rate of 15 percent. With a sample this size, results are considered accurate to within plus or minus and 6 percentage points.

John C. LaRue, Jr. is vice president of Internet research and development at Christianity Today International. Previous Special Reports can be found at www.yourchurch.net. Send questions to yceditor@yourchurch.net.