Church Design & Construction

Time is Running Out for a Fall Church Capital Campaign

2009-06-12T13:31:00.003-04:00

A church capital campaign is not unlike the Christmas play - you begin to prepare months in advance to have the best and least stressful outcome.

The right time to be in front of your congregation for a fall capital campaign is after school is back in session and before the holidays. This provides a smaller window of opportunity for that 6-7 week time of preaching, teaching, and support building than a spring campaign.

If you plan to be raise money this fall, you should begin to organize and prepare your capital campaign team starting before the end of June. This will enable your church to achieve the best results with the lowest stress. Every week that your church delays from this point forward increases the effort and stress of a capital campaign.

For more information on capital campaign timelines, download the PowerPoint presentation on www.OurCapitalCampaign.com.

Church Financing - Still a Tough Market

2009-06-02T15:28:00.004-04:00

Churches continue to have difficulty getting the financing they need for buildling or relocation. We have seen any number of churches that should be able to get financed turned down by lender after lender. Many churches that are getting turned down for financing today could have been financed a year ago with exactly the same financial statements. The biggest impediment to financing is inadequate cash flow - not enough money left after expenses to service a mortgage. Unlike previous years, lenders are not willing to wager that the church will reduce discretionary expenses to service a mortgage or increase income because of growth. Today, lenders want to see 6-12 monts of financial history showing a cash surplus sufficient to cover a mortgage.

Many churches are qualifying for loans, they're just qualifying for significantly less than last year, and less than they need for the church plans they have. For churches that cannot qualify for as as large of a loan as they need in order to build, they need to raise the difference in cash.

There are three things that a church can do to improve cash flow. The church needs to apply a sharp knife and cut expenses, it needs to faithfully preach and teach about giving and stewardship, and it needs to run a capital campaign (which will also help with coming up with the cash difference between what they need and what they can borrow).

Cutting expenses is difficult, but a necessity for many who want to build. Trimming expenses and increasing income and cash on hand through a capital campaign is the financial answer to many of today's church financing problems.

How To: Estimate a Church Building Program Budget

2009-05-09T14:48:00.008-04:00

"What man would build a tower without first counting the cost?? - Jesus

Millions of dollars every year are wasted on church building plans that churches cannot afford to build. Many churches let the church building project define the budget, instead of letting the budget drive the design of the church. This simple transposition of steps in the process takes a toll on churches in terms of cost, time, effort, enthusiasm, and support for the project.

Design is part of the building process. Counting the cost does not mean sending your plans to the builder for an estimate. Counting the cost means understanding what you can afford before you begin. There are a great number of church building plans available, and any number of church architects that will create more, but knowing what you can afford is a necessary step before you concern yourself with design.

In my book, Preparing to Build, I discuss this in great length, but below is a basic formula that any church can use to get an first approximation of their budget for a building program.

There are 4 basic variables in determining your budget. Those 4 variables are added together to determine the preliminary budget. Often, early in the process, the church will have to use estimates for these values and refine them later in the process.

The four variables:

Cash on hand: This is the amount of money available which can be applied to the building program. This would include whatever amount of money in checking, savings, money market or CD's you want to use.
Money you can borrow: The maximum that any church can borrow in a loan or bond program is 3-4 times its current income; and is often less. Borrowing ability is based primarily on cash flow, not the value of assets.
Money you can raise from the sale of assets: This may be your current location (if you are moving), a parsonage, or real estate. If you owe any money on the asset you are selling, it will be the net cash to the church after paying off the debt.
Money you can raise before construction: This is typically money raised in a church capital campaign. In a 3 year capital campaign, churches typically raise between one and three times the current amount of their annual tithes and offerings, with around two times income being the average.

Our formula then becomes:

Cash on hand ___________

Money that can be borrowed _____________

Money from sale of assets _____________

Cash that can be raised before construction _______________

Your budget _____________________

If your church needs assistance in answering the budget questions and/or defining what it truly needs to build, I would suggest downloading this pdf file about a Needs and Feasibiltiy Study.

If your church needs a capital campaign, we can help. Our church capital campaign consultants can provide everything from a full-blown capital campaign to a do-it-yourself capital stewardship campaign that you run in-house.

Raising Money From Outside the Church

2009-05-09T14:23:00.002-04:00

A reader asked about how a church capital campaign can reach outside the church to get money from the community. This is a good question, and I will try to give a clear answer.

The quick answer is that a church capital campaign is not the best tool for obtaining financial support from the community. The reason being that the campaign is strongly based on a Kingdom need and God's provision to meet that need through His people; an approach that will find little traction with most folks outside your church and faith.

Getting support from the community takes a somewhat different approach, and is much more like a grant writing effort than a capital campaign. The similarity to a campaign is you will be creating a case for support. This case for support, however, will focus on the ministry of the church and its measurable impact in the community. It will also be much more extensive, objectively detailing what you do and giving a qualitative analysis of how you have impacted the lives of those you have ministered to, and the impact the community

Essentially, you need to tell the story of what you do and how those programs and ministries are improving or serving the community as a whole. You need to make the case and explain what effect the donation you are seeking will make in the community.

It will also be helpful to research your community, find which businesses give to local charity and religious organizations. Also, you can research if there are any local donors or foundations that support programs in the community. These two sources would be the best place to begin looking for financial support for your church, outside it's four walls.

Announcing The Complete Church Capital Campaign in a Box

2009-04-27T20:21:00.006-04:00

AMI today announces the Abundant Giving Capital Campaign, a complete Church Capital Campaign in Box.

Abundant Giving distinguishes itself from other church capital campaigns by its flexible and cost effective delivery method. Whether you are a small church looking for a DIY capital campaign you can run in-house, a full blown capital campaign consulting engagement, or something in-between; the Abundant Giving program has a offering that is right for your church.

This comprehensive church capital campaign provides detailed documentation including:

A week-by-week schedule
Detailed task lisk
Stewardship sermons & studies
Evaluation copies of Sunday school/small group lessons
Examples of materials from other campaigns
Two complete seminars on giving & stewardship with workbooks
Forms and letters
Electronic copies of the books Pastor Driven Stewardardship and Preparing to Build.
...and much more

Also included in this offering:

Professional layout of your communication materials, using your choice of any of the 250 capital campaign themes.
Digital, print-ready artwork - ready for your printer, or ours.
Your choice of three levels of support and training to insure your church has a spiritually and financially successful capital campain.

Comprehensive enough for large campaigns, cost-effective enough for even the smallest churches, all of this, and more, is offered at a refreshingly low price that makes it affordable for churches of any size. More information is available at www.OurCapitalCampaign.com.

Capital Campaign Feedback

2009-03-02T12:37:00.004-05:00

I had a status call today with a church capital campaign client this morning, and the chairperson had a most insightful and encouraging comment. The church is two weeks away from their Committment Sunday when everyone will bring their initial offerings and ongoing peldge commitments for the 3-year giving period.

His comment to me was the leadership team felt that they already had a successful campaign and that if they were to call it quits today and not take up the collection and pledges, that their campaign was worth it in terms of spiritual growth, team building, unity, and involvment of such a large part of the body. Praise the Lord, that's the way it should be; like I say, it is not about the money.

The Year of the Church Capital Campaign

2009-02-12T16:01:00.006-05:00

The banks have money to lend, they just don't seem to want to do it. This week a number of the largest banks were called before Congress who basically told them to make more of the bailout money available for loans. Some lenders have just stopped lending to churches while others are setting the bar so high, that if you can qualify for the loan, you probably didn't need it.

The money is out there, its just not as easy to get. Banks are requiring many times the level of documentation and are lending less. A year ago, a church could reasonably expect to borrow 80% of the appraised value of a completed project (80% Loan to Value or LTV), today if you are fortunate, the lenders may lend you 80% of the project cost (as opposed to project value) and some lenders are talking 60% and 65% loans.

As one lender recently stated to me, "cash flow is King, and cash on hand is Queen" What many lenders will require to see today is at least 20% of your project cost in cash and a monthly net positive cash flow that is 125% of the loan payment. These criteria make it very difficult for the church to borrow today without significant and time consuming preparation. To qualify for a loan, the church needs money in the bank and a history of positive cash flow. Most churches are not in this situation, even though they have an immediate need to build.

There are three things a church can do to prepare that will help it become qualified to borrow for construction:

1. Reduce Expenses. As the past treasurer of my church I can assure you that almost every budget can be cut, often dramatically. It's never easy, but it can be done. The good news is that trimming the expense side of the ministry requires only commitment and a sharp knife.
2. Increase Income. You need to have the largest possible gap (positive, that is) between income and expense. Increasing income through tithes and offerings is 50% of that battle.
3. Increase cash on hand. Put a line item in the budget for debt retirement even before you get a loan and put the money into savings. Add to this amount whatever you can by increasing giving and decreasing expenses.

Increasing income and cash on hand can both be accomplished through a church capital campaign. (Follow this link to learn more about a church capital campaign. Historically, the vast majority of churches have waited until they were about to build or were in the process before beginning a capital campaign. I believe that many churches that need to build now will not be able to get financing and begin construction until late this year or even this time next year because they cannot meet the new lending requirements of cash on hand and cash flow. Although the church may have equity, even cash equity, if they cannot show a history of positive cash flow, they probably will not be able to get adequate financing.

I believe that many churches are going to come to the hard realization that they cannot get the financing they need and that to qualify will take them many months of demonstrated financial change. I believe we will see a large number of churches want to enter into capital campaigns very soon so they may build next year. Remember, the banks will want to see 6-12 months of reduced expenses and increased giving (due in large part to a church capital campaign) before approving the church loan. The wise church will plan ahead and get their campaign underway as soon as possible. To this anticipated need, we are bringing on additional staff and looking at creative and cost effective ways to help churches execute their capital campaigns.

SonRise

2009-02-12T15:39:00.007-05:00

Depending on your point of view, this either has nothing to do with church construction, or it is the whole point. I was blessed with a copy of this sunrise photo taken by Bob Freeman who is a member of the capital campaign team at Metrocrest Church in Coppell, Texas. I think Bob's camera caught a glimpse of God "doodling" for His pleasure and Glory.

This image of the cross in the clouds appeared and disappeared in a matter of seconds, but serves to remind us of a couple of things.

That is by the grace of God that the sun rises anew each day, and with the new day, His grace and mercy are renewed as well.
And that soon, Jesus will return again, the "SON OF MAN COMING ON THE CLOUDS OF THE SKY with power and great glory. "

Take a moment and enjoy the SonRise.

Used With Permission - Freeman Photography of Coppell

Don't Complain About Your Church Building

2009-01-19T15:24:00.005-05:00

The next time you are feeling like complaining that your church building is too small, too crowded, too cold, too dark, or that the building is preventing you from growing, think about this picture.

This is a picture of an unregistered Baptist congregation that met in the forest for 10 years because they were not allowed to have a building during the Soviet era. This picture was taken just outside what is now Kiev, Ukraine. No matter what you don't like about your building, I would wager they would have been very thankful for what you have.

Notice the Lord's Supper table in front of the congregation. How many of our churches would have 30 or more people for a service where they had to walk to church and then stand in the snow to hear a sermon, and do so in defiance of a government that was not too keen on human rights??

Photo & story courtesy of FrontLine Missions, www.frontlinemissions.info. I urge you to support FrontLine Missions or any organization that is taking the Word into areas of persecution and oppression.

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Economic Crisis Affecting Capital Campaigns

2008-11-30T13:33:00.007-05:00

Depending on what part of the country the church is in, the current economic downturn most likely affected the results of capital campaigns that were kicking off this fall. Based on the results of our church capital campaigns that were already in the planning stage for kickoff this fall, pledge commitments received are substantially less than the estimates made before the downturn. In areas especially hard hit, such as areas supported by the big three auto makers, commitments were as little as 50% of the expected range of results. In areas less impacted, results were off as little as 15% of the expected results.

It seems people are hunkering down, holding onto their money, and avoiding long range financial commitments.

In large part, it seems that commitments are reduced more because of uncertainty as to how much worse it may get before it gets better, than to real current economic hardship.

Historically, national economic stress generally has very little impact on giving. According to research from the Giving USA Foundation, which analyzes charitable fundraising, giving increased an average of 8.4 per cent in years without a recession and by 6.2 percent in years with a recession (in current dollars, before adjusting for inflation). The average rate of change in giving during a recession is a drop of only 1 percent, the foundation reports. In the worst recession year for giving, 1974, contributions dropped a total of 5.4 per cent.

The current downturn in long term giving commitments then is most likely due to the FUD factor - fear, uncertainty, and doubt.

What this means for spring 2009 capital campaigns is anyone's guess and depends a great deal on what happens over the next few months with respect to the credit crunch, major industry, and employment. More bad news will certainly not improve the FUD factor, but we need to keep the faith. If you have a need to build and you believe that God is calling you to build, then rest in the promise that He will meet your needs. Your task then is to count the cost, separate needs from wants and go forward in faith.

Fear, uncertainty, and doubt; these things are not of God. For God hath not given us the spirit of fear; but of power, and of love, and of a sound mind. 2 Timothy 1:7

I'd love to hear how your fall capital campaign fared. Please post a reply with details of goal and commitment amounts. Your input will help other churches plan their capital campaigns.

You may also be interested in reading my October blog post, "Should churches build in these times of economic uncertainty?"

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Should Your Church Build In These Times Of Economic Uncertainty?

2008-10-02T16:25:00.006-04:00

I am hearing this question a lot these days, "Should our church build given the economic situation?" While a specific church situation may otherwise dictate, I believe that the general answer is that it should, if certain conditions are true.

Here's my premise. God is bigger than any economic crisis. He's bigger than Fannie Mae, Freddie Mac, AIG, and Wall Street. Sadly our lives don't reflect what our money reminds us. Our forefathers were wise enough to know not to trust the money, that is why they wrote a reminder to us, "In God We Trust", on every bill.

In 2 Corinthians 9:8 Paul says, " And God is able to make all grace abound to you, so that always having all sufficiency in everything, you may have an abundance for every good deed;"

And Jesus said, "Therefore do not worry, saying, "What shall we eat?' or "What shall we drink?' or "What shall we wear?' For after all these things the Gentiles seek. For your heavenly Father knows that you need all these things. But seek first the kingdom of God and His righteousness, and all these things shall be added to you." Matthew 6:31:33.

We have an abundance for every good work, - not sometimes, but always! No one is going to lose their house or go hungry because they gave to the work of the Lord with a joyful heart as they respond to the leading of the Lord. Better to trust the promises of God than our feelings about our present circumstances.

What a great witness, when the entire country is pulling back, for a church to be seen growing forward! I believe a church can, and should, step out in faith and build, regardless of the world's circumstances, if the following conditions are true.

There is a real kingdom need to build. Not "want to", "would like to", or "wouldn't it be cool if", but "you need" to build. This means you are out of room and cannot accommodate the souls that the Lord is sending your way (i.e. you either build or put out a "no vacancy" sign) or it is the long-term and deeply held conviction that you are called to a ministry that you cannot provide for in your current facilities. Your church leadership and church body as a whole need to pray long and hard about the need to build and be in overwhelming concurrence (80% of more) that you truly believe you need to build.
Your church continues to see growth (the exception would be there is just no more room to grow and visitors don't come back).
You know what you need to build and what you can afford to build, given the current finances of the church. This is best accomplished through a needs and feasibility study which will not only answer these questions, but will also be able to gauge the church's readiness to build.
Your church as started or will be soon starting a capital campaign. A capital campaign is a key element in a church building program, and should be begun in advance of the construction. The benefits of a church capital campaign are too many to list here, but one of the advantages is that it will objectively determine whether the congregation will financially support a building program.

The bottom line is this truth; Lord, Your will shall not take me where Your grace will not sustain me. God’s grace is sufficient to meet our needs and accomplish His purposes.

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Need a Church Architect or Church Building Plans?

2008-09-13T00:21:00.005-04:00

If your church is in the market for a church architect or church building plans, you will want to check out this new web portal, ChurchPlansource.com

This new portal provides access to stock building plans from experienced church architects. Visitors are able to view church building plans by building size or seating capacity. If a church desires, a free consultation to help identify the most appropriate plan for a church's needs and budget is available. If the church desires to purchase one of these stock plans, an order can be placed with the church architect that supplied the plans.

Most of the plans on the site may be purchased "as-is" from previous building programs and then brought up to local building code (for fee) either by the church architect that originally designed the plan, or by an architect of the church's choice.

As one developer put it, "this is a real blessing to the church and will save a great deal of time, and effort, not to mention money." In addition to allowing users to download preliminary plans, the site offers referrals to church building and capital campaign consultants, financing sources, and builders.

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Tips on Selecting a Church Architect

2008-06-21T19:43:00.004-04:00

If you are looking for a church architect, here are some tips that you will want to keep in mind that will help you get the right architect for your church building program.

First and foremost is that there is a difference between an architect that has designed some churches, and a church architect. Designing churches is different and working with church folks is different. What ever church architect or firm you select should specialize in churches. The church architect you select should have designed dozens or even hundreds of church plans.

Secondly, the church architect you select should have experience in designing churches that are of the size, style, and complexity of the church you need to build. Just because the firm of Dewey, Cheatam & Howe has designed a few cathedrals or edifices for mainline downtown churches, does not mean that they are the right church architect to design your multi-purpose family life center. As you search for a church architect, make sure you ask to see work from other projects of the type, size, and cost of your program.

In a Q&A session with a church yesterday, I was asked yesterday what were some general qualifications that the church should look for or consider in hiring an architect. In addition to the above tips, I suggested that they look for an architect who attends church. I even suggested they may consider asking how often they attend. The reasons for suggestion this were two-fold. For one, its always better to do business with a fellow Christian when possible. Secondly, and even more importantly, is how well can an architect design a church when they don't attend?

As a church building consultant, I have been blessed to come to know several architects who specialize in church construction. You could save yourself a lot of time, effort and money, by contacting me and letting me put you in contact with the right church architect.

For additional information on question to ask church architect candidates, you may download an excerpt from my book, Preparing to Build, in the form of an article entitled 75 Questions to Ask When Hiring an Architect.

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Don't Forget the Bibles

2008-06-12T12:00:00.003-04:00

So many details get overlooked when building a new church. As you approach the end of your church building project you will be ordering new church furniture. Whether you order pews or nice church chairs, don't forget that you will also want new pew bibles (chair bibles just does not sound right). If you are expanding ministries or Christian education you may need to stock up on study bibles or teen and youth bibles.

Whether you want KJV or a foreign language bible translation, a large number of pew bibles, make sure you get them for your opening service. If you need really large numbers of bibles you can get pallet pricing directly from the printer.

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Contracting for Church Design & Construction

2008-05-30T09:01:00.007-04:00

Which Way is the Right Way? There are a myriad of ways for a church to contract for the design and construction of a new church. Today, many churches are built by what has become traditionally known as the design-bid-build method. This is the conventional general contractor approach, where the church hires an architect to design the building, the design is sent to bid, and builders submit bids to build the building, usually at a fixed cost. This is undoubtedly the worse way for the church to contract for the design and construction of their church.

There is a growing trend towards design-build, which, while better than design-bid-build, is not the best method in terms of lowering cost and risk. In a typical design-build model the church hires a builder by who, in turn, hires an architect who does the design work for the builder. The drawback, however, is that the architect works for the builder, not the church. This can put the church at a disadvantage as the possibility exists that the builder and architect can make design decisions that benefit the builder and architect (i.e. raise their profit), and not the church. In many cases, design-build has a drawback similar to that of the conventional general contractor model, a fixed price closed book contract where the church does not know all the costs of the building program and cost savings go to the builder, not the church.

Diametrically opposed to the sequential, and somewhat disjointed, design-bid-build delivery model, is the team approach using a construction manager. The team approach integrates the church, builder and designer together at the beginning of the design process to work in parallel throughout the design and construction process. This parallel team method provides the church with a number of advantages including: time savings, less duplicated effort, a design whose cost is counted throughout the development process, and a building design that is a collaborative effort rather than the product of a somewhat disjointed and adversarial process. All of these benefits add up to significant savings in time, cost and effort while producing a superior result.

If your church is planning to build, it will greatly benefit from having an “ideal model” to emulate. In the best church construction scenario, the church will have begun preparation to build well in advance of the design and construction phases, and accomplished two very important tasks. First and foremost, it should complete a needs and feasibility in order to objectively understand what it needs to build, what it can afford to build, and how to pay for it. (A needs and feasibility study is a prerequisite step for both architectural design and raising money through a capital campaign.

The capital campaign is the second task that the church should begin as far in advance of building as possible. Among other benefits, a capital campaign will help raise money for the up-front costs of building and potentially reduce the amount of money that needs to be borrowed. It would be in the church’s best interest to get a church building consultant, either from within their denomination or an independent consultant, for both the needs and feasibility and capital campaign. Both of these important tasks will be greatly enhanced by the wise counsel and experience of an outside consultant who is both experienced and objective.

This brings us to the model that will save the church the most time and money, reduce its risk and stress, and has the highest probability of providing the best building solution. The ultimate model for church construction is one with a consultant involved early in the process to determine needs and feasibility and execute a capital campaign who is working in a team consisting of a licensed architect and a construction manager working in an open book method where all costs and accounting are open to inspection and is working for a fixed fee.

The further away the church gets from this model, the greater the potential amount of cost, risk, and time the church will experience in their church building project. It is also important to remember that there is a lot of difference between an architect (or builder) that has done some churches and a church architect (of builder).

To get the full 4-pg article that describes this in more detail, you may request a copy from the author by using this contact form.

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Church Building Plans - The New Paradigm

2008-05-14T22:46:00.005-04:00

I am really exited over the relationships we have built with a number of church builders and architects. However, the relationships I am the most stoked over today are those with 3 forward looking architectural firms (who all have a heart for the church) that I believe are driving a paradigm shift in how many churches will go through the design process.

As I have previously noted, it is possible for churches to get church building plans from previous building programs for a fraction of the cost of design from scratch. Granted, these plans need to be modified for local conditions and building codes, but the church is able to save approximately half of the cost of their church design by starting with existing plans.

There are three distinct advantages, in addition to cost savings, in starting with existing church plans:

It saves time. It is much easier (read faster) to pick out an existing plan rather than try to go through the give and take process of trying to explain it to an architect. It is much like picking out a suspect from a lineup instead of trying to describe them to sketch artist.

Using existing, or stock, building plans also allows you to get an accurate construction cost early in the process from working drawings that cost as little as $2,995 - as opposed to spending 10's of thousands (or more) to get to the same point designing from scratch, especially when the vast majority of churches cannot afford to build the plans that the architect typically provides in the first pass.

Likewise, you can start the preliminary plan approval process sooner with the city or county, again, without having to invest months and tens of thousands of dollars to get this process rolling.

In addition, existing church building plans are a definitive point for identifying what changes the church would like to make. I always say "it ain't yours 'till you mess with it", and this is certainly true of church plans. By limiting changes to interior walls and not changing the fundamental structure of the building, these changes will not make a significant impact on the overall cost or invalidate the preliminary cost estimate. Once the church has made all the red-line changes they feel they need, the architect can give them a quote on turning those uncertified plans into final, sealed construction documents, usually at 40-60% less than the traditional design process.

As a church building consultant I recommend that any church should at least investigate this option as part of their due diligence. To make it even easier, we offer a church plan search service at no cost to the church. We have a close working relationship with all three of these industry changing firms and we would be please to help you find the right church building plan for your church

Next post, I will show how this fits into a larger strategy that I consider just about the best way to design and build a church.

The Worst Way to Design & Build a Church

2008-04-12T12:07:00.004-04:00

I have seen a number of articles recently that echo what I have been saying all along, that the "traditional" Design/Bid/Build (DBB) model is not the way to build churches. In DBB, the church hires an architect to design a building. That design is then put out to bid to a number of contractors. The winning bidder then builds the church.

As explained, it seems like a good way to go, but in reality, this method will take longer, cost more, cause more conflict, and reduce the church's satisfaction with the process. What happens in almost every church building project done this way is the architect over designs the building and produces a building that the church can't afford. After the design goes to bid, the church receives multiple bids that are typically 2x - 4x what the church can afford. The design goes back to the architect to be redesigned. The revised plans go back to bid and (hopefully) a reputable builder can price the job near the church's budget. The builder then helps the church value engineer the building to bring the project within the church's budget. Once again, the changes are done by the architect, and guess what, you pay for the changes again. In fairness, what I have described is the typical experience of most churches, some architects may charge differently.

For a church that does not clearly understand what they need to build and what they can truly afford, it will most likely spend tens of thousands of dollars on plans it cannot build and then spend even more to get plans that will work for the church. The best thing would be to have completed a church needs and feasibility study before talking to an architect or builder.

A lot of architects don't like what I have to say. However, the majority of architects that specialize in churches absolutely agree with my position. A number of these offer stock church plans at huge savings and/or offer services to the church at rates that are 35-50% or more below "street price".

Many of those who are now writing articles in the church magazines decrying the traditional Design/Bid/Build model (what I have been telling churches for years) are promoting the Design/Build (DB) model for building a church. While better than DBB, DB has it's own unique potential drawbacks. In a seminar this week, I was able to help a church save between $300,000 and $500,000 by explaining how modify the way they did the Design/Build contracting for their on a $4.5M project.

In a follow-up post, I will describe the best way to contract for a church building project.

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Financial Considerations for When to Build

2008-03-31T21:25:00.002-04:00

A popular theory with some in the church is that the church should wait to build until it has raised most, or all of the cash for building. This can be a good strategy if the church is forward thinking enough to begin to accumulate cash well before it needs to build, but may be contra-productive if the church needs to build in the near future.

Some may also purport to claim that it is unscriptural to borrow, often quoting one or two verses out of context to prove their point. The truth is, that while borrowing may be less preferable than paying cash, it is not a sin as long as the church is careful to count the cost and determine a safe debt limit.

By way of example, let's consider a modest building program of $1,000,000. Accepting that construction costs have increased an average of approximately 10% per year, averaged over the past several years, then a $1,000,000 building program will cost about $100,000 more in one year. A $100,000 annual cost increase is about $8,000 per month. If a church had $500,000 and waited a year to build in order to raise all the money, it would have to raise $600,000 by the time construction began.

On the other hand, if the church were to borrow the $500,000 at 7% interest for one year, the total cost of interest would be no more than $35,000. (Actually it would be closer to $18,000 as the church would exhaust its own funds before borrowing, so it would not need to borrow the entire $500,000 until about 6 months into the project.) In the worse case, the church would pay $65,000 LESS by borrowing and building than by saving and paying cash and could save as much as $82,000.

While there are some reasonable warnings with respect to borrowing, it is not unscriptural. It would be, however, unscriptural not to be good stewards of God’s money. The church should not be like the servant in the parable of the talents who buried his master’s money in the ground to be safe. This servant was an unwise steward whom the scriptures refer to as wicked, lazy, and worthless. Like the wise servants, the church needs to make effective use of its money work.

The cost of delaying construction is also valid issue when discussing delays due to a slow decision-making process and/or unnecessary delays in design or construction. Again, every month of delay costs the church $8,000. If the process of design and selecting a builder takes 4 or 5 months longer than necessary, the church has added $40,000 of cost to the building program for no good reason.

In the final analysis, the church should not only count the cost of building the tower, but also count the cost in delaying to build.

The Biggest Mistake in Church Design

2008-01-27T15:59:00.001-05:00

As I look back over the years and hundreds of church building stories I've heard, by far the single biggest mistake made by churches in the design process is the failure to have a firm and reasonable budget at the front-end of the design process. This is a joint failure on the part of the church and the architect. Now before I get a bunch of angry emails from architects (it wouldn't be the first time) I want to say that the responsibility is primarily the church's, however, this does not let the architect off the hook, as I will explain below.

A church should have a firm budget going into the design process that is based on what it can truly afford to build. It is not the architects responsibility to help the church determine what they can afford. Sadly, however, when most churches sit down with an architect, the first question asked is "what do you want to build" and not "what is your budget" or "what can you afford". While it is the church's responsibility to know what they can reasonably afford to build, the architect has a responsibility to ask the question. However, experience shows this rarely seems to be the case. If the church does not have a reasonable budget, or any budget at all, the architect should press them to develop one. (For an in-depth understanding of how a church determines its financial ability and the appropriate formula to calculate a maximum construction budget, see my book, Preparing to Build.)

The church's financial ability will dictate how big of a building it can build; the needs of ministry will dictate how that building is laid out. It is a gross disservice (and that is being kind) if the architect does not ascertain one of the fundamental factors affecting the design - the client's budget. If the design process starts with what the church wants to build, instead of what in can afford, the church's budget must then conform to the building plans, when it should be the building plans that should conform to the budget. This is a recipe for disaster. After several months of design and, quite often, 10's of thousands of dollars, over 8 out of 10 churches end up with building plans that far exceed their financial ability to build. In this manner, millions of dollars are spent each year by churches on building plans that they cannot afford to build.

Not too long ago a builder shared with me an experience from when he spoke at a small church building seminar. In the presentation he asked the pastors how many of them came to their current church and found a set of building plans in the closet or stuck in a drawer that they couldn't build. An astounding 20 out of 22 (90%) raised their hands! When you consider that these plans probably cost between $30,000 and $150,000 each, those few churches probably spent between $600,000 and $3,000,000 on plans that would never get built.

The church must have a true and accurate understanding of what they can afford to build and that must be communicated up-front to the architect. The church should then hold that architect financially responsible for delivering plans that are within, or reasonably close to, its construction budget. In this manner, the church will not find itself paying an architect to draw church plans that won't work and then paying them to fix those same plans, which will add adding considerable time and cost to the church's design process.

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Church Building Guide

2008-01-02T23:08:00.002-05:00

Need a guide to church construction? I've put up a new web site dedicated to my book, Preparing to Build. Here's the official description,

Written by an experienced church building consultant, Preparing to Build is over 170 pages of real-world, practical information that will equip your leaders and church building committee to properly prepare for, and to execute, a church building program in a manner that will save time, stress, and money.

Reader Comments:

"Preparing to Build was an incredible value - just a wealth of information. The truth and his experience jump off the pages." - Dwight VanDaveer
"I have read your book and recommended it to our church board. I think your book is one of the best I have found on this topic." - Mark Sterk

Check out the new site at PreparingToBuild.com

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Church Capital Campaign: The Biblical Basis

2007-12-21T11:27:00.002-05:00

I occasionally run across folks that think that a church capital campaign for a building program is a bad idea. Some have even called it unscriptural, but in in my opinion, its just the opposite. Perhaps people get caught up in the terminology, but a capital campaign is really just a name for designated offering to the church building program.

A capital stewardship campaign is a purposeful giving effort for the purpose of buying land or building a building. While more structured in the process than in Old Testament times, church capital campaigns have as a biblical basis the example of building of the tent of the tabernacle. In Exodus 35, we read that Moses went to the people to take up a special offering for the building of the tent and all that went inside of it. The first principal that we learn is that God called (and continues to call) His people to sacrifice their time, treasures and talents in order to accomplish His work.

Capital campaigns also draw upon the example in the 29th chapter of 1 Chronicles of where we find King David preparing to build the temple. In this example we learn two important principles.

First is that he prepared in advance. Even thought the Lord had told David that he could not build the temple, God did not say he could not prepare, so we see him taking up an offering for the work.
The second important principal we learn from this text is one of leading by example. In verse 26, we see a "top down" approach to giving as the leaders gave first as a model to the people.

The three capital campaign principals you should take away from this post are; God calls His people to sacrifice for His work; start saving before you need to build; and lastly, giving should be modeled by the leadership of the church. Best wishes to you for your church's capital campaign.

Church Grants - Part I

2007-12-14T09:07:00.000-05:00

Many churches today are seeking church grants for a variety of purposes, including construction. According to Bernice Sanders Smoot of Saint Wall Street, there are over 600,000 churches and faith based organizations in the USA and my experience is that most of them are looking for money. With only a very few thousand faith-friendly grant foundations, well I guess you can do the math.

The bottom line is your ministry, in order to get funded by grants, must have three key ingredients and follow the golden rule if are to stand any chance for grant funding. In simple terms, the three key ingredients are: you need to have something worth writing about; you need to write about it well; and, you need to write to the right people.

Once you have these three key ingredients, you then need to follow the golden rule for grants: "He with the gold, rules." This means that you must follow the grant maker guidelines to the the letter, unless you want your proposal to end up in the trash can. Yes, I said the trash can. Over 80% of requests received by foundations are immediately rejected, largely due to not following the rules. and this is true regardless of how deserving of funding your ministry may be. You see, some faith-based foundations receive dozens or hundreds of requests per day. Grant makers don't have the time or the manpower to try to piece together your request - you follow their format and process or your request does not even get considered.

When applying for a church grant, you must be able to demonstrate the value proposition. You do this by quantifying what you have done, what the effects were, and how the money you are requesting will produce more results. Grant makers like to fund success, not just good ideas. This requires many ministries to take the time to measure and quantify their programs so they have something worth writing about. Once you have something that you can document as being worth funding, you then need to make the grant request. You need to submit according to each foundation's guidelines, and you need to write it well; get professional help if necessary. Who you submit to is also very important. Just because a foundation makes faith-friendly grants does not mean that they want to fund everything just because it is faith related. Many grant makers fund only specific types of programs, so you should to apply to those that fund the type of programs and ministries like yours.

If your church is looking for grants for ministry, stay tuned for Part II of this post which will share where to find the vast majority of the funding that goes to houses of faith and ministries. Hint: Its not from grant making foundations or the government. In Q1 of 2008 we also will be announcing where you can get a directory of over 1,000 foundations who openly accept proposals from Christian churches and agencies.

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Avoiding Budget Bloat in Church Construction

2007-12-06T07:43:00.000-05:00

Church construction projects (and their budgets) seem only to grow over time, not shrink. Here are three tips to prevent construction budget bloat.

Tip number one is to make sure you have everything in the project budget to begin with. Your project budget should be one that includes everything including site acquisition, site development, architectural design, engineering (including survey, civil and fire), construction interest, fees & permits, consulting fees, contingency and furniture and fixtures. Whatever you forget in the planning stage you will pay for later in the project, usually after you have already used up all of your budget on the things you did remember.

Secondly, make sure the budget is reasonable. Your builder should the church a complete project budget prior to construction. One of the safest contractual arrangements for the church is one that provides a guaranteed not-to-exceed price. In this agreement, the builder is responsible for underbidding, errors, and omissions. This is typically easier to do with a design/build firm, as they are responsible for both the design and construction. If something is left out or underbid, they can blame no one except themselves. Whoever provides the project budget should have some responsibility and liability for that number. For planning purposes, you should figure that your project budget (including everything) will be no less than $100-125 per square foot. Certain states and metro areas will be higher.

Finally, watch the change orders. Change orders will happen. If the changes are required due to code compliance, there is little you can do except grin and bear it (note, the building inspector does not always interpret things the same way the planning department did when they approved your plans). If the change order is because of a design deficiency, you can try to pursue the architect's errors and omissions insurer (best wishes with that) unless it was design/build, in which case you can probably make some or all of the problem the builder's. That all being true, the biggest threat however, to budget creep is often the church! Once the church has had designed just about all it can afford (and sometimes more), sometime during project construction the pastor, a deacon, or building committee member will get a "great idea" and ask the builder if they can do it. Generally the answer is yes, however, is always at a cost. It all adds up, $80,000 here, $12,00 there, and pretty soon a budget that was already tight becomes super-critical.

In summary, know what you can truly afford, design to your budget (and stop there), don't make changes once construction starts, and keep an eye on those change orders. Change orders make up a large portion of many builders profit objectives, so watch out that you don't pay more for them than they really cost.

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Architects and Church Construction Cost

2007-11-21T12:22:00.001-05:00

I had to laugh today as I was reading a Scout Merit Badge Review on the usscouts.org website. One of the merit badges which boy scouts can earn is for architecture. Under the comments section for this merit badge it says, and I quote, "...involves interviews. Be sure to ask the architects why they almost always under estimate the cost!" It's not just me saying this folks, it seems others have the same opinion!

I can think of a couple reasons why the architect's cost estimate for church construction is low. For one, they usually only deal in theory as they are not the ones actually building the building. They may consult a building cost resource (always out of date), base it on their last project, or underestimate the cost of some of their architectural "features". However, they are not on the front line every week in construction of these facilities and may not really have a grasp of the actual costs. Architects also tend to over design buildings. One of the first things most builders will do with a plan is to "value engineer" it to provided the same functionality with a simpler or more cost effective design.

Another reason is that architects usually have no liability if their price estimate is wrong. If the church budget is $1M and the best builders estimate is $1.3, the architect usually has no liability and will cheerfully redesign the building - for a fee. A wise church will insure that in the negotiation phase that any cost for redesign to make the church meet the budget that was provided is born by the architect and not the church.

By the way, if your church is building and you have boy scouts in your church, this would be a great opportunity for them to earn a merit badge.

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Church Capital Campaign Horror Story

2007-10-30T10:35:00.001-04:00

For many churches, it is the season of the capital campaign that will help finance the construction of the church building. For the world, it is the season of horror as it celebrates Halloween (don't get me started on that track). For some unlucky few, it is the intersection of both - a capital campaign that turns out to be, if not a horror, then far less the spiritually and financially uplifting event that it should have been.

As a capital campaign consultant, I hear the good and the bad about church's experiences with their campaigns. Sometimes its enough to make you want to cry, or at least cry out in anger and frustration. Today I heard from a church who spent $50,000 on [just] capital campaign services from a well known consulting firm with a short name. The church did not feel they received the the promised or necessary attention or focus of their consultant. The church soon realized that the campaign was in trouble and when they reportedly contacted the firm, they were promised printed materials and follow-up visits, none of which materialized. The end result was the church was left much on its own and raised about 25% of what the consultants told them they could raise. The church is considering asking for some of its money back, as the consulting firm did not deliver on its promised services.

I hear variations of this sad song over and over, perhaps with a different refrain, but always the same chorus; "we paid a lot of money and feel we got very little personal attention for the money spent." Over and over again I hear churches say the results did not live up to the sales pitch. Churches that were wined and dined and inundated with fancy glossy sales packages often felt somewhat abandoned when it came to delivery. A word of warning - it seems that many firms are better at marketing than performing.

Before you get the wrong idea, I do NOT mean this as a condemnation of capital campaign services. A capital campaign is an effort that produces both spiritual and financial benefit! The church will typically experience much better spiritual and financial results when it hires a consultant. An experienced consultant should be able to tailor the best practices developed from other church's efforts into a capital campaign to meet an individual church's needs. Speaking from my own experience as both a client and a consultant, the church should get experienced outside help for its campaign. There are good consultants that can deliver entire completed campaigns for less than just the consulting fee charged by some of the "big firms".

I will also say that, regardless of the size of the company, the church should not "buy the company", it should "buy the consultant" . It's important to know your consultant and how many projects he or she will be working on at the same time as your project. It is also important to know the spiritual "fit". for as it says in 1 Thes. 5:12, we are to "know those who labor among you".

If you have your own capital campaign story, I encourage you to share it as a comment to this post.