Church Development Fund Loans and Congregational Health
Church Development Fund president Doug Crozier says the biggest risk in church lending is not the economy but moral and leadership failure. The article explains how CDF works with Restoration Movement congregations, how it handles struggling borrowers, and why relationships with church leaders shape its lending approach.
- CDF held about 450 loans worth $650 million for Restoration Movement facilities in 41 states.
- Crozier said moral failure in the pulpit is a greater loan risk than economic downturns.
- CDF uses forbearance agreements and early intervention to help churches avoid deeper financial trouble.
by Darrel Rowland
It’s not weakness in the stock market or real estate sales that concerns Doug Crozier the most about whether churches can repay their loans from the Church Development Fund.
It’s weakness of the flesh.
“This current economic scenario scares me, but my biggest risk in making loans to churches is moral failure in the pulpit, not economic bad times,” says Crozier, CDF president.
Church Development Fund’s Lending Relationships
The Church Development Fund, based in California, currently has about 450 loans worth $650 million for Restoration Movement facilities in 41 states. Most are church buildings, although the list includes a handful of schools and one retirement home. Despite the shaky economy, fewer than a dozen CDF churches are having trouble making their payments, Crozier said. “We have a unique relationship with our borrower, in that we know the church, we know the pastor, we know the leadership,” he said. “So our delinquency rates and our foreclosure rates are a lot lower than what you’d find in the regular market because we know our borrower a lot better. Bankers just don’t have the same relationship with their church borrowers that we do. That’s all we do is church financing.”
When churches do run into financial trouble, CDF can extend a “forbearance agreement” in which full payments don’t have to be made for six to 18 months. In some cases, churches write weekly checks so they don’t face that big payment at the end of the month. “We have seen increased delinquencies, but not to the magnitude the regular commercial market has seen,” Crozier said.
The Church Development Fund has never foreclosed on a church in its 55-year history, although about seven times since the late 1990s it has accepted a deed in lieu of foreclosure, he said. Most of those stemmed from moral or leadership failure, he said.
Even then, CDF tries to lease the property back to the church for awhile to see if they can still make it. “Usually by the time it gets to that point, there’s not much of a church left,” Crozier said.
A Ministry Partner, Not Just a Banker
Legally, CDF is a “church extension fund,” which allows the company to operate as a nonprofit—and avoid the kinds of fees and bonuses that drive up costs in the commercial banking world, said Crozier, a former commercial banker himself. The U.S. has about 50 such funds, including one for most of the major denominations. CDF operates exclusively with Restoration Movement churches; its regional offices all have ordained Christian church/church of Christ ministers on staff. That means CDF staffers usually are familiar with the churches and leaders they are dealing with, Crozier said. “We tell our churches, we don’t want to be your banker, we want to be your ministry partner.”
Relatively few congregations are turned down for a loan because CDF’s prequalifying process weeds them out before they formally apply. “We want to see a good, healthy, vibrant congregation. We want to see a growing congregation, We want to see one that can service their loan from day one,” he said. “We’re underwriting leadership.”
The dollar value of CDF’s loans has exploded almost nine-fold in the past 12 years.
“Our growth has really been fueled by the growth of the Restoration Movement across America, said Crozier. “It’s really all four corners of the country, it’s not just Sun Belt. We’ve got growing churches in all sectors of the United States.” According to Crozier, of the brotherhood’s 116 churches averaging more than 1,000 in weekly worship attendance, CDF has been involved with 73; he said of the 48 averaging more than 2,000, CDF has touched 23.
Calling Early When Financial Pressure Starts
Crozier said a key to churches avoiding trouble is acting early. Last fall, he got a call from a church anticipating difficulty making its payment in March. The loan was restructured and a problem avoided. “That’s what we communicate to our borrowers,” he said, “if you feel the slightest bit of pressure, call us, let us come in and help you.”
Darrel Rowland is public affairs editor of The Columbus Dispatch and an adult Bible fellowship teacher at Worthington Christian Church.
