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Is the Church in a Recession?

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by | 2 May, 2011 | 0 comments

The sun rises over Antioch Christian Church (Canton, Georgia).

By Kent E. Fillinger

Financial experts disagree on the economic status of our country. Have we rebounded from the recession or are we preparing for a second dip? The economic impact has been unevenly felt across the country and in churches.

Two years ago, I wrote an article titled “Sustaining Ministry in a Shrinking Economy” for the megachurch issue, so it seemed valuable to assess the current financial state of the churches in our survey by examining several economic indicators. Strap on your financial seat belt, break out your calculator, and get ready to review a detailed financial portfolio of the churches in our study.

Overall Giving Picture

Increased giving to the general fund is a good economic indicator and could be evidence that the economy is headed in the right direction, that people are regaining their giving confidence, or that people are learning to trust God more with their finances. “At least one out of five American Christians gives literally nothing to church, parachurch, or nonreligious charities,” according to several national studies reported in the book Passing the Plate: Why American Christians Don”t Give Away More Money by Christian Smith and Michael Emerson. The remaining Christians give, on average, about 3 percent of pretax household income as annual donations to all religious and charitable causes. (By comparison, nonreligious Americans give an average of less than 1 percent of their income to charitable causes).1

General fund giving in the megachurches surveyed increased 5 percent to $6 million per church last year after two straight years of no growth. General fund giving to emerging megachurches maintained its three-year average of $1.9 million per church. The large churches experienced a 2 percent increase in giving last year, hiking their church giving average to $1 million. The story was similar in medium churches, which saw average giving increase 3 percent to $519,000.

Building Fund and Capital Campaign Giving

The slumping economy has forced many “shovel-ready” projects to be put on hold for a while now, but last year the surveyed churches demonstrated a revival in giving to building funds and capital campaigns. Megachurches on average experienced a 17 percent increase in building fund or capital campaign giving, going from an average of $584,000 in 2009 to $685,000 last year. (But in 2007 the average was $1.6 million per megachurch.)

Emerging megachurches took a 19 percent hit on building fund and capital campaign giving last year, to a lower average of $262,000 per church. By comparison, in 2007, the average emerging megachurch received $600,000 in this area of giving. On the positive side, large and medium churches both saw their giving grow in this regard. Large church giving rose 14 percent and medium church giving to building funds and capital campaigns grew 35 percent last year.

Average Weekly Giving Per Person

Weekly per person giving (that”s general fund giving divided by average weekend worship attendance) increased among three of the four church size categories last year.

After taking a slight dip in 2009, the weekly per person giving average in megachurches rebounded to surpass 2008 levels, but still fell short of 2007, prerecession giving figures. The average megachurch attendee put $26.77 per week in the offering plate last year. The average weekly giving ranged from a high of $40.66 per person at one megachurch to a low of $12.93 per person at another.

Emerging megachurch attendees were the most generous givers last year, with average weekly per person giving of $27.48, a 16 percent increase from 2009. Giving at emerging megachurches ranged from $76.30 per person to $13.31 per person.

Large churches also saw weekly per person giving increase in 2010, to an average of $26.63, a 50-cent per person increase from the year before. Average weekly giving ranged from $42.28 to $15.59.

Medium churches experienced a decline in average weekly giving of more than a dollar per person, to $25.60. Average giving ranged from $39.28 per person to $10.66.

Actual Giving vs. Budgeted Need

For the first time, churches were asked if total giving met their overall budget, exceeded it, or fell short of it. Almost two-thirds of the megachurches met or exceeded their overall budget last year, meaning 36 percent of megachurches fell short in 2010. It was a difficult 2010 for the emerging megachurches, as just over half (51 percent) fell short of their overall budget. The remaining emerging megachurches were evenly divided, with 25 percent exceeding their budget and 24 percent meeting their budget.

More than half of the large churches met or exceeded their overall budget last year, while 44 percent of the large churches fell short. The majority of the medium churches (55 percent) failed to meet their budget last year. Twenty-three percent of medium churches exceeded their budget, while the same percentage met it. Overall, the giving at 44 percent of the churches surveyed fell short of their overall budget last year.

Ministry Spending Habits

The largest percentage of churches in each of the four size categories actually increased ministry spending last year.

In the megachurch category, 44 percent of the churches increased their ministry spending last year (the same percentage as 2009), 40 percent kept ministry spending flat, and 16 percent decreased ministry spending.

The emerging megachurches saw 43 percent increase ministry spending, 38 percent decrease such spending, and 19 percent maintain the same level.

The large churches mirrored the megachurches and emerging megachurches: 42 percent spent more, 30 spent the same, and 27 percent cut back on ministry expenses.

The majority of medium churches””58 percent””increased their ministry spending last year; that was the largest percentage increase of any category. But 40 percent of the medium churches reduced their ministry spending last year, leaving only 2 percent that neither raised nor lowered spending.

Staffing and Spending

Staffing levels stayed largely the same among the churches surveyed.

Among megachurches, 41 percent of the churches maintained the same level of staffing, while 36 percent increased staffing, and 23 percent made staff reductions.

Almost half of the emerging megachurches maintained their staff size in 2010, while 29 percent decreased staff, and one-fourth added staff.

Half of the large churches held steady with staffing levels, while 25 percent added staff, and 25 percent reduced staff.

In the medium churches, 60 percent kept their staff sizes status quo, 24 percent increased, and 16 percent eliminated some staff positions.

Among all of the churches surveyed, the lowest percentage of the budget spent on church staff was 16 percent for a large church, while the highest percentage was 70 percent in both an emerging megachurch and a medium church. A Fact2008 study indicates a typical U.S. Protestant church spends 45 percent of its total budget on staffing, and the churches in our survey reinforced this statistic.

Megachurches and medium churches spent the highest percentage of their budgets on staff, an average of 47.2 percent. Emerging megachurches spent an average of 45.4 percent on staff, while large churches invested the least, 44.4 percent.

A January 2010 Leadership Network study identified churches that spent 35 percent or less of their total budget on staff costs as churches with a “lean staff.” That study found 1 of 7 churches (14 percent) surveyed had a lean staff. Of the 234 churches in this survey, 34 churches or (14.5 percent) would be classified as having a lean staff model. Large churches in our survey had the largest percentage of lean staffs, 19 percent, while megachurches had the lowest, 7 percent.

Debt

Many churches have counseled their attendees not to overspend, to live simply, and to avoid debt, but these same churches have not always practiced what they have preached. Over the past decade, many church leaders, like some business and government leaders, made significant financial decisions based on overly optimistic projections of continued economic health, anticipated future growth, and strong giving. Unfortunately, many of these churches now have significant levels of debt and are facing economic challenges that will linger for decades.

For example, “Since 2008, nearly 200 religious facilities have been foreclosed on by banks, up from 8 during the previous two years and virtually none in the decade before that, according to real-estate services firm CoStar Group, Inc. Analysts and bankers say hundreds of additional churches face financial struggles so severe they could face foreclosure or bankruptcy in the near future.”2 The same article noted, “Churches ran into trouble after borrowing to build bigger houses of worship needed to accommodate growing congregations in once-booming housing markets.”

The combined total debt for the 177 churches in our survey that reported this figure was $756.7 million, an average of $4.27 million per church. If you take the average debt for each size category and multiply it by the number of nonreporting churches in each size category, the total overall debt for these 234 churches is an estimated $935 million.

Stop and look at that figure again. The total debt of less that 250 Christian churches and churches of Christ is almost $1 billion.

The average megachurch has a debt load of $8.2 million, which is $1.5 million less than in 2009. This equals $1,826 of debt for every man, woman, and child who attends a megachurch in a given week.

The emerging megachurch may be in the greatest economic danger, given the slow to no growth rate in attendance and general fund giving, combined with the highest level of debt per person of any of the size categories. The average emerging megachurch is $4.8 million in debt, which translates to a debt load of $3,498 per person.

The large churches” average debt remained at $2.3 million per church for the third consecutive year. This indicates these large churches are spending the dollars that are coming in to pay for today”s ministry expenses and not directing additional dollars to pay for yesterday”s financial decisions. The large churches have the second highest per person debt load, an average of $3,133.

Finally, the debt load of the medium churches decreased by almost 10 percent last year, to an average of $872,000 per church. The medium churches” debt load averages $2,449 per person, which is significantly lower than in the emerging megachurches and large churches, but much higher than the average megachurch.

Making Changes

We asked, “What shifts have you made in your church”s operations, budgeting, or stewardship during the current “˜Great Recession” that you will likely continue even if the economy recovers?” The top three responses were: a greater use of volunteers instead of paid staff, an increased emphasis on financial training classes, and more electronic giving options.

Coming Attractions

The surveyed churches are also heavily invested in financially supporting outreach ministries. On average, these churches invest 14 percent of their annual budgets in missions and ministries outside the church. Medium churches dedicated the largest percentage of their budgets to outreach (14.7 percent), and megachurches devoted the smallest (13.1 percent). The percentage of the total budget allocated to outreach ranged from 2 percent in a large church to 40 percent in a megachurch and an emerging megachurch.

Between one-fourth and one-half of the churches surveyed said they intend to invest more of their church budget beyond their congregation through local or global ministries this year. Almost 60 percent of the churches said they had a churchwide financial emphasis designed to help the poor or needy in 2011, and seven megachurches plan to give more than $1 million each to mission causes this year.

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12010 Large Church Finances and Staffing Report, Leadership Network, Warren Bird, 9.

2Shelly Banjo, “Churches Find End Is Nigh,” The Wall Street Journal, 25 January 2011, online report.

Kent E. Fillinger is president of 3:STRANDS Consulting and associate director of projects and partnerships with CMF International, Indianapolis, Indiana.

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