Dealing With Debt

Written by Rod Irvine in category 
June 29, 2023

Dealing with Debt

Recently I was in another state and went to a new church one Sunday. It turned out that they were in the middle of their annual end-of financial-year vision series. The pastor spoke enthusiastically and gratefully about how the church family, by their generosity, had reduced debt on their building from over $6 Million to a bit over $1 Million in ten years. Good on them! This is a significant achievement. It is not the easiest issue in church life to reduce debt. So what principles come to mind when addressing this subject?

I had to grapple with this subject a couple of times in my work as senior minister of Figtree Anglican Church in Wollongong. When I arrived in 1987 the parish had a debt of over $200,000 That had been incurred to fund a new building that had been constructed a couple of years earlier. That does not seem much in today’s dollars but was a formidable amount then and was a millstone around our necks for the next seven years. Fortunately the process of raising the money and making repayments had been set in train prior to my coming and all I had to do was keep the machinery working till we finally paid it off and had a celebration party.

Over a decade later I was the one initiating and presiding over the debt process when Figtree parish embarked on a $5.5 Million building programme. The congregation gave magnificently but the building cost far exceeded our ability to complete the project debt free and a debt of around $2.6 M was incurred. When I left some years later I bequeathed this burden to my successor, Ian Barnett, who led the completion of the process of paying off the loan.

There are some pastors who feel that all debt is bad and will not embark on a project unless it can be accomplished without borrowing. Of course this is a laudable aim. However, sometimes a church may be so strangled by property concerns that to address this issue may require a building campaign and a loan as was our case at Figtree. I do not believe this sort of debt is wrong. What I would advise against very strongly, is debt for paying operating expenses, staff salaries for example. That is a slippery slope to financial shipwreck.

Another important issue is the attitude of the congregation to debt. In any family or electorate or group of people there are some who have no problem embracing debt and are quite happy to kick the can along the road into the future as far as repaying the amount is concerned. There are others who view debt as an oppressive yoke and are highly motivated to get the money monster off their backs.

With these ideas in mind, the key principle to remember is that ‘money follows vision’. Yet debt doesn’t seem very visionary. So it is extremely important to demonstrate clearly how debt fits in with the broader vision of the church. It is a great mistake to pay off the debt and hope that the loan repayments will automatically still keep coming in and can be used for future purposes. Generally parishioners will be happy church debt is paid off and may throw a party but won’t keep giving at the old rate unless there is a compelling reason to do so. Thus it is important to have the next exciting gospel oriented, life changing, vision fulfilling project, clearly before the congregation. Then you can point out how the debt is not an end in itself but the impediment to the realization of the church’s dreams. You need to be able to say, “look what we hope to do next after the debt is paid off. Look at how lives will be transformed.’

Recognizing the contrasting views about debt, I advocate having half a dozen projects to present to the congregation each year. If the church has a building debt, I would also have repayment of the debt one of the projects each year. In that way the debt can be chipped away culminating, in a final major assault when it is has assumed a digestible bite-sized chunk.

To conclude, the critical point to re-emphasize is that money follows vision. It is vitally important to show how the repayment of the debt will take a millstone off your neck so you can pursue the next exiting stage of ministry. For more on raising resources for ministry see my book Giving Generously. https://givinggenerously.com/