Reframing the debt-reduction campaign

By Joel Mikell

The right approach can recast a church’s vision and pave the way for future growth.

A few years ago, something I read in an article really caught my attention: “Donors don’t give to pay down debt.” I agree; asking people to give because the church has debt rarely — if ever — inspires sacrificial giving.

However, having been personally connected to dozens of debt campaigns which raised in excess of $170 million, it’s clear that people will give sacrificially to address the issues and restrictions caused by debt.

By their very nature, debt campaigns bring attention to something that happened in the past. The reality is, most churches carrying debt are doing so from a past ministry need which resulted in expansion, renovation or some other ministry-focused project. The real challenge in raising funds for debt reduction or debt retirement is connecting the debt campaign to future ministry opportunities.

Timing is key
To decide whether or not it’s time for a debt campaign, a church leader is well-served by asking five questions:

1. Has our debt had a negative impact in any way on our ability to meet current operational needs?
2. Has our church been forced to cut back or restrict ministry resources to service the debt?
3. Has the debt had a negative impact in any way on our ability or willingness to start new, relevant ministries?
4. Could the money currently being spent to service a debt obligation be re-appropriated to new ministries — ones that could inspire and encourage our church, and possibly attract new families?
5. Is there a mixed message being sent with respect to the manner in which our church is responding to debt, and how the membership is challenged to view and manage personal debt?

If you answered “yes” to any of these questions, then addressing the debt is imperative.

More common than you might think
In the past two years, about 80 percent of the campaigns our firm has conducted have involved debt, either as the primary focus or a significant one. Prior to 2008, these represented closer to 30 percent of our firm’s work.

We believe the reason for this drastic increase is twofold. First, many of our church clients simply didn’t have a choice. High mortgage payments — paid through the general budget — often created a giving deficit and took away any margin. As overall church giving plateaued or decreased between 2009 and 2011, debt campaigns were a means of survival in many churches.

Second, many churches have conducted debt campaigns in the past several years in an effort to position themselves for future growth. Rather than moving ahead with expansion projects in a soft market, it has simply made sense to pay down the debt now, and be in position to move forward as the market recovers.

Today, we’re beginning to see a shift in the direction the wind is blowing. While we’re still seeing a good number of campaigns for debt reduction, more churches are beginning to move forward again with building projects — renovation, expansion and multi-site locations.

The appeal is simple: As with any capital campaign, a debt campaign is an opportunity to recast the church’s overall vision. It paves the way for future expansion and new ministry opportunities. A debt campaign sets a good example; it encourages families and individuals to be debt-free, and teaching them how to live with margin is practiced in many churches we work with.

Joel Mikell is president of RSI Stewardship in Dallas.