Is it considered normal for a church to take out a loan?

[567234ta]

It just doesn't seem like a good idea to me, is this common practice? I know of a church that is planning a huge building and trying to get a loan from a bank to do it.

 

[Macrina]

I don't believe it's uncommon.

 

[JCFantasy23]

It just doesn't seem like a good idea to me, is this common practice? I know of a church that is planning a huge building and trying to get a loan from a bank to do it.

Just curious on why you think it's a bad idea? I don't know much about it myself.

 

[ebia]

It just doesn't seem like a good idea to me, is this common practice? I know of a church that is planning a huge building and trying to get a loan from a bank to do it.

I don't think it's that unusual. Why do you have a problem with it?

 

[brightmorningstar]

I know of churches that do, and churches that trust God will provide ... and He does.

 

[567234ta]

It just seems like a bad idea to stretch the finances to a point that if they don't collect enough from the members they may lose the building. i have seen situations like this before and the building goes up for sale.

i was raised to save up for something before i bought it. The donations from the members would be going to pay interest on the loan. It just seems like it would be better to stay put and save until the amount needed is acquired.

 

[ebia]

It just seems like a bad idea to stretch the finances to a point that if they don't collect enough from the members they may lose the building. i have seen situations like this before and the building goes up for sale.

i was raised to save up for something before i bought it.
The donations from the members would be going to pay interest on the loan. It just seems like it would be better to stay put and save until the amount needed is acquired.

Would you apply that to buying a house?


In our case we borrowed to purchase a rectory (ie a house for the minister and his family). The cost of renting a similar building was as high as the cost of servicing the loan, so saving that money first would be impossible.

 

[brightmorningstar]

I agree that it would be better to secure the finances. Unless of course one had 'heard' from God in which case the church should step out in faith.

 

[noroses4u2c]

The churches I've gone to had a building fund where they saved up the money for building costs.

 

[567234ta]

Would you apply that to buying a house?


In our case we borrowed to purchase a rectory (ie a house for the minister and his family). The cost of renting a similar building was as high as the cost of servicing the loan, so saving that money first would be impossible.

i would apply that to buying a house also but only on myself. I got into a situation where everything seemed great. bought a house for 135k put 35k down, had about 65k in savings. I put quite a bit of money in the house hoping for a good return on it. 911 happened and everything went down hill from there. i ended up selling my house for 117k, my savings was gone, walked away with nothing because in this time my marriage fell apart and i got a divorce also.

It was a blessing for me in the form of an education though. when things got hard and i had trouble making payments the bank showed me no mercy. they saw it as an opportunity to make more money in the form of late fees, finance charges and everything they could.

At one point i realized they had been double charging me for my taxes on escrow, they owed me about 4k in what i had overpaid. it took 3 months to finally get it, in that time even though they owed me they were still charging me each month for being a month behind with exorbitant fees.

Contacting them is a nightmare, i spent hours on the phone going thru automated systems just to be hung up on, finally get an agreement with a promise from me that i would pay a certain amount on a certain date and they would waive something. i hold up my end, send in the payment as promised, get the next months bill and even more fees are there.

Call again, no record of any agreement to waive anything. over and over again. I would hate to have anyone go thru what i did.

Once you get behind in one thing, they are like sharks, any credit cards i had saw i was late so they jacked up interest rates on me also even though i wasn't late with them. I do believe that if God has spoken to someone to do something they should do it, without question, but sometimes we hear what we want to hear.

 

[jpcedotal]

hmmm...I know our church buys CDs and has savings accounts...there is interest there, so I will go out on a limb that taking out loans are no worse.

Both are wrong in God's Law though....

 

[Citanul]

The churches I've gone to had a building fund where they saved up the money for building costs.

That's not always feasible though. If there's a pressing need for building to be done then it may be better to take out a loan (say for 5 years) rather than wait those 5 years to save up the money and only then start building.

 

[ebia]

That's not always feasible though. If there's a pressing need for building to be done then it may be better to take out a loan (say for 5 years) rather than wait those 5 years to save up the money and only then start building.

Or (as in our case) take out a loan that will eventually lead to you owning the building, or spend the same money on rent and end up owning nothing. Even assuming that a suitable rental property is available (not a given by a long shot in our town).

 

[Archivist]

hmmm...I know our church buys CDs and has savings accounts...there is interest there, so I will go out on a limb that taking out loans are no worse.

Both are wrong in God's Law though....

I'm trying to figure out where the Bible prohits a church from having a mortgage. The Old Testament does speak of usury, but that involves the lending of money--usually at exorbitant interest rates--not the borrowing of money.

The Church I attend is slightly over 40 years old. We have paid off three mortgages during that period that covered the cost of our original building and two additions. We owe about $450,000 on our current mortgage, which covered the cost for our gym, kitchen, daycare center and youth and adult Sunday school rooms. The current mortgage was originally for slightly over $1,000,000; we expect to have it paid off in another 5-7 years. If would have been difficult for our congregation to raise $1,000,000 to build this latest addition, particularly given that building costs would have continued to rise so by the time we would have raised the money for construction we wouldn't have been able to build the building we wanted.

I think were churches get into trouble is not in borrowing money, but in borrowing more than they will be able to repay.

 

[Texas Lynn]

Sure, for capital improvements like buildings, it happens every day. If you are in a church that's a member of a denomination, denominations have specific rules about how much, when, etc., and higher-ups have to greenlight it. I'm United Methodist and our procedures are specific. We prefer member churches move toward financial solvency, but there are some unique situations. For instance, some new churches or churches in poor or rural areas are considered "missions" and the like and are supported by the denomination financially. Of course, we don't let those in that situation take on $500,000 mortgages without a proven track record and so on, either.

I'm sure you're familiar with televangelists who harrague their followers for donations. The late Oral Roberts once famously claimed unless he was able to raise X amount of millions, God was going to "call him home" (the claim also referred to an image Roberts claimed to have seen of a 900 foot tall Jesus, leading one market-savvy white rapper to call himself "MC 900 Foot Jesus," but I digress). No wonder Senator Charles Grassley sought to audit televangelical ministries known to play fast and loose with their finances.

I suspect most churches fall somewhere between the rigid denominations in this area and the freewheeling televangelists, and if you're in a "Non-Denominational" church it's hard to tell which way yours leans if you're not in the know. Some Nondenominationals are good and some are bad in this area. Of course, in some, if you ask questions about such things, in some churches, your sincerity is questioned. Often these are churches where the minister's son is the music minister and so forth; These are the kinds of churches to run, don't walk, away from.

But a mortgage for a building? Very much a standard operating practice.

Of course, we should note, as recently as 100 years ago, a good number of Protestants in the U.S. viewed being in debt as sinful, perhaps with an exception for a mortgage. It was even considered sinful for individuals to carry debt in many cases. Some older country songs even allude to that. Joe Bageant addresses it in his book Deer Hunting With Jesus.

Now few would deny the present debt status of many folks is excessive, and some right wing types even still today say going bankrupt is a sin.

But again, if the church has a reasonable expectation of being able to pay off a mortgage, getting one is generally no ethical quandry.

 

[Texas Lynn]

I know of a church that is planning a huge building and trying to get a loan from a bank to do it.

Of course, the bank is going to thoroughly assess whether or not they think the church can pay it back, too. They're not going to cut a check when it's not a sound business decision to do that, unless perhaps the bank officer is in the church and biased in their favor, which is perfectly legal if ethically questionable.