The auctioneer tried everything he could to increase the bid. But in the end, the pews sold for $25 apiece.
We watched as the contents of this Missouri church emptied out during the auction. The church itself closed a few weeks ago, a victim of declining attendance and daunting fixed costs. Our cameras (for a documentary on the state of the church) caught this church’s last gasps.
This sad scene is becoming increasingly common across the country, as the old financial models no longer work for many churches. The shrinking tithes and offerings can’t cover the two major expenses–personnel and buildings.
THE SUSPICIOUS PUBLIC
I’ve lost count of the number of times that people have told us, “Churches just want your money.” They’ve picked up on the financial pressures facing most churches today. They do understand that ministry requires funding. But they intuitively smell something foul about how many churches’ offerings are being used.
They are accustomed to evaluating the effectiveness of non-profit organizations. They are aware that charities that do the most with donors’ dollars keep their administrative costs relatively low. For example, the American Red Cross spends 8 percent of its revenues on administrative and fundraising expenses. World Vision spends 14 percent. Compassion International spends 16 percent.
Comparatively, what do churches spend on personnel, buildings and administration expenses? Those items consume 82 percent of the average church’s budget, according a study from the Evangelical Christian Credit Union.
You could argue about comparing a church’s expenses to a public charity’s expenses. But the enormous disparity is striking, especially to the public. It’s made worse by looking at how churches allocate funds to direct ministries. According to the ECCU study, churches use 3 percent of their budget for children’s and youth programs, and 2 percent for adult programs. Local and national benevolence receives 1 percent of the typical church budget.
When you look at it this way, is it any wonder the public questions the church’s return on investment?
IMPLICATIONS FOR THE FUTURE
What does this financial squeeze mean for the future of the church? To right-size personnel costs, churches are increasingly looking to volunteers to carry ministry roles once held by professionals. And the idea of bi-vocational ministers is making a return to the American landscape.
With buildings, churches will be forced to consider becoming better stewards of brick and mortar. More congregations will need to combine under one roof. The Mormons, by the way, figured this out long ago, housing multiple congregations in one building. They simply coordinate their worship and program schedules.
Also, some churches are already succeeding at dispersing their people into small congregations that meet weekly in homes, restaurants, and other free locations. Then all the small congregations meet once a month for a larger worship time–in an economical rented public space.
And, in order for the church to be the church in a more meaningful way, congregations will need to re-prioritize their budgets to emphasize direct forms of ministry that givers will agree directly respond to Jesus’ two Great Commandments.
In the end, all of this financial pressure may just lead to a healthier, true-to-mission church.
While I agree that congregations need tio better spend their money, your comparisons are way off. How can you compare charities that have millions in donations with a congregation that takes in only 40, 000 to 60, 000 in donations. Of courses their percentages are lower.
Dave, the smaller churches you mention are closing because their admin costs are killing them. Our documentary crew watched small churches fail that were spending over half their income on the building. It’s simply an unworkable and irresponsible use of the Lord’s resources.
Totally agree with you Thom. Whether you make $40,000 or 40 million, your expenses should not exceed your income. The early Christians had meetings at people’s houses and outdoor venues that cost NO MONEY and were more effective than churches today.
As a pastor, I agree with much of what you are saying here. I do second this disagreement mentioned by Dave here. I support children through World Vision and yet have never received a call from anyone on staff there. I don’t expect to.
And yet the congregational expectations for relational contact demand a much higher staff ratio in the local church. It is not a fair comparison. No one from Compassion International is going to counsel my marriage. They don’t need anyone on staff for that.
I do think that creative ideas for churches to spend less on building and admin is a good idea. But perhaps there are better conversations. Maybe the church buying a cash flowing mall and using a portion of it for their meeting space would keep the costs down. It would force the church back in to the center of real life with others. Isn’t that where we were supposed to be all along?
Our church costs nearly half a millon dollars to run on admin, tech, maintenance and wages. It is a large property with two houses, two pastors, a smallish auditorium, large central carpark, privately managed roadworks, kitchen, multiple meeting rooms, low maintenance gardens, outreach gymnasium in a obscured location that no one would ever just waltz into. Most ministry work is volunteer run and additionally volunteer funded such as a very basic food delivery network and international dontations for the destitute. Some youth programs are paid for and christmas programs are church funded. We rarely seem to meet budget and there are always repairs; somehow speaker systems always seem to die. There are alot more costs that get unaccounted for with volunteer labour and spontaneous donations. Half a million bucks doesnt really see the the poor, the imprisoned, the sick, the persecuted or isolated. But the church is alive I suppose, just, and not really at risk of dying at this point. It was expected to grow in numbers though but in two decades it never really has.
The church used to be a small building on a main road, parking on a busy street, a little kitchen, no garden, very little tech and alot cheaper. But there still wasn’t extra money for mission work, it was still all volunteer funded with volunteer labour. Budgets were kept to the minimum back then. But also less people turned up. It was moved in the momentum of the media rich mega churches 20 years ago with aspirations of big things.
And it started off big, conventions, music, elderly respite care, popular sport participation and all sorts of special programs…but our ministry output has lowered significantly to an embarassing bare minimum and costs have increased dramatically. Most focus on paying bills now, family carers who volunteer like my grandma are rare. Average retirement age has increased. Both parents work now and alot. Young people have increased competitive pressure to succeed and survive and most won’t afford a house. House prices have grown three times faster than wages in our area. I think the decision makers of the past did not foresee the maintenance burden and living costs future generations are dealing with now.
No easy answers; but yes we need to prioritise love, care and support in the “centre of life” above all else. We all need to find all new ways of operating and be fluid and flexible.
Neither Paul, nor any of the other apostles, ever spoke of constructing buildings as places in which to worship. Building programs are a manmade concept which operate outside of the clear examples set forth in Scripture. Had Christians followed the teaching of the Scripture there would be no budget issues or administrative expenses. Unfortunately, believers followed after a business methodology and it has been a disaster.
Churches have fallen into bad habits about how they spend their money. It’s born from by practices where staff are central to everything that happens and all church initiatives.
However, the idea that the Red Cross or any other charitable organization should keeps it’s overhead costs down is actually equally destructive. The video below changed my thinking on this and might help expand these thoughts. If we demanded that charitable organizations spend more money on advertizing they’d make more money to help people. By juxtaposing overhead as “against actual help” it handicaps earning potential for the Red Crosses of the world who could make more money for others.
As for the church, I’m pretty certain ROI for a the Red Cross or Group Publishing or the Riddle Group is a very different thing when seen through lens of the kingdom. God’s math is always counter-intuitive.
http://www.ted.com/talk/dan_pallotta_the_way_we_think_about_charity_is_dead_wrong.html
“God’s math”? Really? God uses a different mathematical system now? If this is what church leaders are thinking, then church budgets really are in trouble.
Plus, how do you know “God’s math is always counter-intuitive”? You just made that up, friend.
Jeremy – I’m not smart enough to make it up. It’s borrowed from Phillip Yancy. Grace doesn’t add up, leave the 99 and follow the 1. that sort of thing… but things for taking me literally 🙂
Jeremy – any other thoughts aside from taking one point completely out of context?
Hey Mark, I agree with most of what you’re saying. Spot on, actually. (I’ve seen that Ted talk and I think it’s great.) However, I tend to disagree when folks make statements that presume they know what God is thinking. It sounds dogmatic to say God’s math is ALWAYS counter-intuitive. I’ve heard a lot of Christians make inferences they claim are incontrovertible, but are really just their opinions. So I usually dismiss those arguments because they can’t be substantiated. I don’t like that one statement of yours, but I’m willing to bet you and I agree more than we don’t.
I interpreted what Thom is saying as an argument that churches are spending too much money on buildings and staff, instead of focusing on what really matters (loving God by loving people). Regardless of how that compares/contrasts with charity budgets, it’s definitely a subject worth talking a lot more about.
Best to you, bro.
And those of us who are church staff on salary, Red Cross which I volunteer for only has a few paid employees very true, in scale we only have 2 FT and 2PT staff, I work over 40 and more like 60 hours for these children to help them know God. If my salary was cut, i wouldn’t make mortgage on my house and bi-vocational ministry would bring a severe lack to my ministry. If i had to focus on having another job then that takes away from the focus on the ministry, we would have to cut half our programs for teens and kids thereby possibly denying them the word of Christ. Our church has a strict policy of charging little to nothing for people to attend studies, camps, or other programs so that money does not hinder their relationship with God. So we do take a lot in donations and we use every penny to make sure no one is denied the word of God because they didn’t have the money. Those admin expenses go towards discretionary funds which help us pay for those who can’t afford our low cost programs and go towards funding the free VBS we hold, and the books for our studies so that there’s no reason a person cant’ come.
I also question the study as a medium to large church, how the programming budget on a med church is 20% but on a large church it’s 4%. That makes no sense. After looking at the report and then our own church budget I can say we spend at least 2/3 of our given money on ministry and programming needs. Also after interning at a small church which meets elsewhere it is so hard to find places to have things like programming in free spaces that meets the needs of those who are both attending and facilitating. Also many free spaces are not safe enough for children with disabilities or not accommodating enough so we have to turn them away.
It breaks my heart to see people assume we misuse that which is given as Tom said “In the end, all of this financial pressure may just lead to a healthier, true-to-mission church.” To think one of our own, the founder of Group who we rely on for so many resources that we have to use administrative money to purchase his materials, thereby fund his company, so we can in turn take it to the people and offer the same materials we had to buy from TOM to the people for free, while he encourages people through his blog to stop spending and to cut these things. so we can be a “real” church.
It really puts a perspective on my week as we enter day 2 of Kingdom Rock VBS which we offer to the community for free by paying for it in our budget costs, that we aren’t being a church “true” to Christs mission on earth according to the man we had to buy the materials from.
Lisa, thank you so much for your thoughts. My point is not to advocate trimming your paycheck or your direct ministry. If your church is allocating 2/3 of its income to direct ministry, that’s tremendous! Please understand that admin costs do not include program costs, including curriculum. Since the study shows that the average church spends just 3 percent of its budget on children’s and youth programs, don’t reduce your VBS budget! Keep on faithfully serving the children and families in your community!
In the LDS church even the pastors are volunteers – our neighbor is a Dentist and a Bishop (like a pastor) in his ward (about 250 families) and there aren’t any paid staff except for a janitor part time in their building (which houses 3 wards. The level above his is a group of 12 wards and their administration is all volunteer as well.
He told us that he was called to serve and it is for from 2 to 5 years typically and the last Bishop was an executive at HP so clearly it can be done. His kids seem to miss him though as he works many evenings counseling people or in meetings.
I’m sure that the captain of the titanic was probably a nice guy but I dont want to get on board. My point is just because you can show your working hard doesn’t mean that it’s the best use of resources. I think if Christ was to return today the money changers are the pastors and most dont even have a clue. I’m not saying they are bad people but Christs mission wasnt to give them jobs its to feed the poor and love them. In our church we happen to have 2 retired pastor’s 1 has been on 3 cruises and a Hawaiian vacation in the last year. I dont begrudge him but I’m a christian no wonder non christians think we’re phoneys. I’m sick of christians and there saying one thing and doing another. I spoke to a member who was speaking of how tough the economy was on him and he was broke. The next week he wasnt at church I mentioned we missed him he said they had gone to there condo for the week. Thats the kind of nonsense that makes us liars we talk about helping people but we take in 500 thousand and spend almost 400 thousand on staff. Christians need to wake up there are much better ways to support what we have been called to by our savior. This is not to say all pastors are bad or even the ones that maybe unaware of what I would call poor Stewart’s. The point is our Lord called us to be light to the world read Matthew 25: 31_46 the sheep and the goats (when did we see you hungry) its time for a rival and its not what most church staff think.
If you’re being overworked its time to recruit more help. We all have a gift and something to contribute to the body of Christ. I’m pretty sure that there are others at your church that can effectively do what you do so that if need be you can go find a job outside of the church and relieve the church budget so that less will be spent on your salary and more on actual supplies and materials.
True but using large corporations has examples and only showing part of the story is just wrong. These churches are the heart of many of these communities that are also dying. While I agree that these congregations need to re-focus on mission , it is also true that they have been left to die but more affluent suburban and emergent churches that, while looking good doing “mission-like things”, are spending their funds doing things that upper middle class people like to do but really do nothing to help those really in need or do ministry with people.
This small churches are doing real ministry, helping through changing times, changing communities and changing perspectives. Sorry, but give us one percent of the money spend of all of these seminars and conferences on doing “new” ministry and those of us doing ministry here in the Rural US and I know we can keep these mission places open.
I have been involved for many years with producing our church budget on an annual basis….and this exact issue always rears its ugly head by a few who just see the trees without seeing the forest….(I know this because thats the way I used to see it)
Many churches are closing because they are simply- spiritually dead….yes some have closed because of misused finances, but the real epidemic and cause is… spiritually dead= no people/no finances.
Which is a whole other article to write about.
We always have a few who say every year “We need to spend more on missions and ministry”…and I have to say to them “Thats a great idea, Now are you willing to do the volunteering and work to get this new funded idea off the ground?” and the answer is always the same…(no).
You see, just because you draw an imaginary line between “Payroll….Operating expense… and ministry/missions, doesn’t mean they never intersect one another.
Example- Mr. and Mrs Jones are having very personal martial issues or someone is having children issues, or loss issues (really any issue would do)… Who are they going to reach out to or call at the church?, more than likely one of the pastors….so now that “salary” is a “ministry”…and this scenario is so broad- very broad through out the entire church….even your sermon you listen to on Sunday morning by a salaried position, is now a personal ministry.
In other words, just throwing money at something does not make it a better, more improved, or a beneficial ministry or mission…It takes PEOPLE and unfortunately those who want to sit back and just direct the money from budgets to particular areas only to complain about “percentages” ….Are the least amount of help for volunteering to make ministries or missions viable.
For the record, I am not a church paid employee…I am a volunteer who happens to own my own business, and I happen to be good with finances.
Our church has been very blessed with being completely solvent while many churches around us have closed. We have expanded over some tough years and currently have no debt with a surplus of funds.
Comparing the percentages to organizations like Red Cross is like comparing apples and oranges…Churches are not just bank accounts with a few paid employees ready to write a check for supplies when needed…Churches are real, working, breathing, living people willing to not just dispense money, but to talk to, visit your house, support you at a time of loss or death, pray with you, pray for you, its endless what a church can do…while Red Cross is good…I don’t think you will see them supporting you during a personal death in your family.
Churches (people) are not perfect by any means…and yes some have done things to discredit their reasons for existence….But I would hate to imagine this world without them.
Perhaps they are closing not because they are spiritually dead, but because they are intellectually dead. Christianity doesn’t have the captive audience it once had, and nones are the largest growing segment of the population. It’s simply going to get harder and harder to get people to buy utter nonsense as fact.
I completely disagree with your spiritually dead= no finances ideology. There are plenty of church that are spiritually dead and bring in millions a year, because they do nothing but teach prosperity Gospel and lies that people want to hear just to get more bodies in the church to pay tithes and offerings. These people are being led astray and many of them will never have truly given their lives over to Christ. However, there are ministries with only run down looking buildings to their name, but they’re out there casting out demons and praying healing over the sick and happen to raise just enough money to feed the homeless. Apostle Paul didn’t have much money and lived on the generosity of others, but he was able to do more in the name of Christ than any of these big named, big budget churches.
I really appreciate the point Barry makes about (at least some of) what a salaried employee does IS ministry. Thats an excellent point to keep in mind when looking at percentages spent on salaries/facilities vs. programming and ministry.
Great point Barry. Thank you so much for your thoughts. Saying that charities like the Red Cross only spend 8% on admin and salaries is very skewed and misleading. While they did only spend about 9% on admin and fundraising efforts last year (which equates to about $300 million by the way), that only accounts for the salaries of upper-management, administrators and fundraisers. The billions they spend on programs each year that further their mission includes paying people to accomplish those programs. These figures can be excluded from the “admin” category because the Red Cross understands it takes dedicated people to accomplish purpose. To turn around and then lump all church salaries into the “admin” category is disingenuous.
Thom, being bold is often the lifeblood of a blogger…you’re good at it. We readers often miss your golden nugget due to our defensiveness. Sometimes your bold comparisons and thus your analysis misses the mark. However, be bolder and continue your relentless pursuit to prophetically challenge us as leaders. A nail must be engaged with a hammer…hit us well!
Most successful churches are doing at least 20% to missions(excluding outreach/evangelism events). Church isn’t the same as Red Cross or World Vision. Little bit of apple/oranges. Yes they’re not-for profit but churches have more responsibilities than WV or RC (not ripping those organizations) Most churches need some sort of building, need at least some staffing and to pay those people. If churches have buildings that serve the community via food, or programs like Upward there’s really no monetary value on that, but you can’t say its that bad. So buildings aren’t all bad but obviously they shouldn’t be everything. I think the Mega-church era has faded and will be rare and we will see more church plants and house churching movements but still with some sort of “home base” type of church setting because people don’t want to deal with their own teens/children
They didn’t need buildings and staff in the New Testament Church, so why do we? Could it be we are building OUR church not HIS church?
it seems today we are not a church unless we have a building and a paid professional who does all the important ministry and runs the show.
We have convinced ourselves without these, God cannot save the world.
This is true. Small groups are quickly becoming the way The Church is headed. At least for us it is. We’re done with “fatty layers” of admin costs and big salaries pools and vacations. We are The Body. All of us. Small groups without a huge “temple” is exactly how God wants it.
Actually, at least some NT churches did have paid staff. See for instance 1 Cor 9:14, 1 Tim 5:17-18, 1 Peter 5:3. The reality is that a bivocational pastor cannot by definition devote as much time to ministry. That’s not to say a church can’t function that way, but the impact is significant.
As far as buildings, do we NEED them, in the sense of them being indispensable? No. But having been a part of three young churches that had no building, I can say with experience that a building can enable ministries that are difficult at best without a dedicated and appropriately sized home. I won’t apologize for wanting a building large enough to have Sunday School for all ages.
You are comparing apples and oranges. Red Cross spends 8% on overhead. Many churches if only counting admin costs probably don’t spend much more. You are counting building and staff as overhead for church, but not for non-profits. Unless a pastor only spends their time doing administrative work, then they should be counted as programming, not admin. Same with building. A church building that has a 400 sq foot office but 10,000 sq foot building should be considered 4% of building costs as admin. And even those are partially going toward programming not all admin.
I am all for making church budgets missional documents and showing people why they spend what they do. But suggesting that most churches are 82% admin is misguided at best.
Adam, I agree public charities and churches are indeed different. But admin costs for charities are indeed inclusive of staff and buildings. Here’s a definition from Charity Navigator, the watchdog agency that provided the figures I included in my post:
“Administrative Expenses: This measure reflects what percent of its total budget a charity spends on overhead, administrative staff and associated costs, and organizational meetings.”
I clicked through and read the article which actually suggests that churches have lower than average administrative costs when compared to non-profits. Non-profits on the whole are encouraged to keep below 15%. But churches averaged 6%. So they are being very efficient and should be commended for that, not told they are spending too much.
But I think the problem with your analysis is that churches are no longer the central place for missions (local and international). I know my church encourages people to give directly to missions agencies and does not run any local benevolence ministries. That is because they believe that local non-profits that are cross denominational and focused are better at doing that than they are. Same with international aid. So our church intentionally does not have a large missions budget because we want people to have direct contact with those groups and does not want to simply be pass through (or inefficiently run missions or outreach)
As I talk with others, that is more of what most churches that I know do. The size of the church matters and the denominational affiliation matters. But churches are getting out of the types of work that non-profit ministries do.
It is not misguided Adam. I have seen more than one survey that showed most churches spent more than 80% of their income on themselves.
There is definitely truth here. Churches need to constantly evaluate how they allocate their resources. Facility and personnel costs are definitely the big ones. But churches that are dying because of these costs seem to also just generally be dying period. I have seen a church struggling that sold their property and parsonage in favor of a smaller facility and no parsonage. It kept them alive, saved them money, but they are still struggling and not growing.
I would also add that comparing churches to public charities is faulty. The church isn’t a charity. it’s the church. it has a different purpose and mission. i understand why the comparison is drawn, but it’s not comparing 2 of the same things.
I brought up public charities in this discussion because the public is accustomed to evaluating the admin costs of charities. And the public tends to question similar expenses in church spending, whether it’s an apples to apples comparison or not.
the tricky part of this is that there is a lot more tolerance for mediocrity in the church.
But the problem is that you are NOT comparing similar expenses. You are comparing only the administrative and fundraising costs of other charities to ALL “personnel, buildings and administration expenses” of churches. For example if you look at personnel expenses for the Red Cross (see http://www.redcross.org/images/MEDIA_CustomProductCatalog/m16040150_2012_fiscal_year_auditedFinancialStatementDocs.pdf) it is true that the personnel costs (salaries, wages, and benefits) for administration and fund raising are only $195,078 out of a total expense budget of $3,345,133, but the costs for all personnel are $1,728,451! Your comparison would be valid only if the church’s personnel were to spend all of their time on administration and fundraising.
Having grown up in the church (literally, as a PK in the parsonage next door), I remember seeing my dad try and manage the church budget when he had trouble with a checkbook. Nothing against the ministry, but I do know first hand (now that I am on the other side of the pulpit) that many ministers go into the ministry with very little idea what a budget consist of and how to allocate the monies collected. Because of this, there tend to be many inefficencies. This is where mega-churches have an advantage-they can usually either hire or have, as a member, someone with a strong financial background. On the flip side, I feel, due to the downturn in giving, many churches are forcing themselves to learn the hard way. I have seen a recent trend in my city of smaller churches merging or smaller churches sharing a building with another church. I feel there is hope for the smaller church, it just may take some longer than others
Thankyou Thom! Our church just sent out questionnaire on some of these
Issues. I like your ideas!
Sharing the building is a good one!
It’s scary being an hourly employee at a church and seeing the budget. We we feed the community and support local and international missions. We also give scholarships to youth camps and just had a week of VBS that was free of charge to the kids. The oven we use to cook food to feed the community just needed a part that cost several hundred dollars. I order cleaning and restroom supplies and cringe with guilt when I do. Because when I look at the budget I see the church savings dwindling.
Thanks for the article.
Church buildings and church personnel costs should be counted as part of program cost not separate from it – if 15% of the pastors time is with youth then 15% of costs of having a pastor should count there, if 20% is pastoral care, then 20% of costs of having a pastor should be counted as for the program “Pastoral care” – etc.
That’s what I was thinking too. We have paid staff at our church whose entire job function is active ministry.
And you probably have a majority of attendees who are passive in ministry because the professionals run the show.
But the downsizing doesn’t come without a sufficient amount of whining from parishioners who have been spoiled and feel entitled to large, pr