A church capital campaign is a carefully choreographed series of events that encourages an ongoing offering for a given period of time above and beyond the current giving of tithes and offerings. A proper capital campaign is biblical in precedent, spiritual in nature, and produces both spiritual and financial fruit.
What a Capital Campaign Is
Many churches have the misconception of what a proper capital campaign is and what it is not. A capital campaign is a process that is designed to help raise money for large capital projects such as construction, renovation, the purchase of expensive items such as vans, organs, stained glass, or playgrounds, or for debt retirement. A properly run capital campaign will effectively raise money from within (and potentially outside) the congregation through giving that is above and beyond the current tithes and offerings. Most importantly, a capital campaign is at least as much about spiritual growth as it is about raising money.
What a Capital Campaign Is Not
What a capital stewardship program is not, is a high-pressure sales pitch used to fleece the sheep of their money. In fact, the focus of the campaign really is not on money per se, it’s on communicating a biblical need exists and how God meets that need through the proper stewardship of the time, talents, and treasures He provides through His people.
The Three Pillars of a Capital Stewardship Campaign
A capital campaign should not be based solely on an emotional appeal, but should be a balance of three foundational elements. When God created man He gave him his mind, emotions, and spirit. To maximize its spiritual and financial success, the campaign must successfully address each of these three facets of man in proper proportion. Therefore, the three pillars of a successful capital campaign are intellectual information, emotional excitement, and spiritual truth.
Pillar #1: The Mind
The people who are asked to give to the church’s campaign must intellectually understand and agree with the biblical need that is being met as a result of the campaign. Facts and figures on what the church needs to do, why it needs to be done, and how much it will cost must be provided. Additionally, the campaign must also clearly communicate how the members are expected to participate. This information should satisfy the rational mind by removing as many intellectual impediments as possible. Successfully addressing the issues of the mind leaves it free to act in concert with the emotions and spirit. Much of the information that is required for this part of the capital campaign will be supplied by the information from a needs and feasibility study.
Pillar #2: The Emotions
While the focus of a capital campaign should not be an emotional appeal alone, the emotions do need to be brought into balance with the mind and spirit. Generally speaking, emotions are easily stirred up and swayed, sometimes reversing with little cause. For this reason, emotion must be balanced with the other two elements, as emotion alone will not endure for the long haul of a capital campaign.
A strictly emotional appeal may produce a quick flurry of money and commitments but will soon fade away, just as fireworks quickly flame out after a spectacular start. Those people who are quickly and easily swayed by an emotional appeal to give will, with equal ease and speed, become emotionally attached to other things such as a new car or boat, a new boyfriend or girlfriend, a new house, or other affections. And when the heart settles on another object of affection, it generally takes the wallet with it. For this and other reasons, the campaign must address all three sides of man over a period of several weeks in order to develop a commitment that will stand the test of time.
Pillar #3: The Spirit
The final pillar of the stewardship campaign is spiritual. Like a three-legged stool, all three legs are needed for it to work properly. Of the three equal pillars, this one is perhaps a little more equal than the others. Ultimately, a stewardship program is not really about money, it’s about helping people make an appropriate faith response to meet a need, as God has equipped them. (See 2 Corinthians 9:8) There are more than 2,000 verses that deal with money and possessions, so there is no lack of material with which to educate and exhort your members.
As the church moves through the various phases of the capital campaign, the people will be called to make a faith response. The Scriptures tell us that, “Faith comes by hearing and hearing by the Word of God.” Everything needed to teach someone about stewardship comes straight from Scripture. The church’s challenge is to both proclaim it and model it in a way that is understood and applicable to the lives of the people in the congregation. The ultimate goal for the campaign is for people to prayerfully consider how the Spirit of God moves them to participate in giving and then to cheerfully give in accordance with His prompting.
Capital Campaign Phases
A capital campaign is comprised of 5 phases, not all of which are readily visible to the public. The two initial phases of the campaign involve recruiting, selecting, organizing, training a capital campaign committee, and doing the background work to prepare for the public phases of the campaign. The next phase is the public phase, the one that the church body most visibly notices and what most people think of when talking about a capital campaign.
It is during this public phase that the church capital campaign committee provides information, builds excitement, and provides the spiritual equipping to help bring people to an understanding of the need to build and how they will participate in the campaign to meet that need. A campaign is usually capped off with a Commitment Sunday or banquet to collect the pledge commitments and to celebrate what God has done, and will do, in the church. Finally, there is a short administrative phase and then the long-haul of the ongoing collection of pledge contributions, accounting, follow up, and new member assimilation into the campaign.
Five Capital Campaign Phases
As described above, a capital campaign is typically broken down into several phases. The time to complete each phase is dependent on the size and organization of the church.
- Planning & Recruiting 3 weeks – 6 months
- Equipping & Preparation 5 – 10 weeks
- Public Phase 5 – 8 weeks
- Receiving Commitments 1 to 3 weeks
- Collection & Follow-up 3 years (Typically)
The phases can go as quickly as the church can move or take as long (within reason) as it must. The 2nd phase will take at least 5 weeks for a very small campaign and 10 or more weeks for medium to larger churches. A longer period of time is usually less stressful and more effective than trying to cram it all into a few weeks. A longer preparation phase also gives the church more time for the critical task of donor development.
Once the church moves into the public phase, events need to stay on a more rigid timeline. This phase of the campaign is a carefully choreographed time that is intended to maximize the effectiveness of your preparation. For most campaigns, recruiting, preparing, and equipping the stewardship committee should start at least 4-6 months or more before the church wishes to be in front of the congregation with the public phase. Doing so will make the whole process much easier, less stressful, and generally improve the overall quality of the campaign.
What You Should Expect from a Capital Campaign
Most churches should expect to experience most or all of the following in a professionally run campaign:
- Spiritual growth and increased faith.
- A pledge commitment of 1 to 3 times the current annual income in tithes and offerings.
- A greater understanding of God’s perfect plan of providence and stewardship with a corresponding dependency on His Word.
- An increase in normal tithes and offerings of 10-15 percent. (This may dwindle over time if stewardship principles are not taught on a regular basis).
- A greater sense of unity and purposefulness in the congregation.
It must be noted that a primary presumption of a capital campaign is that the church has a good idea of what it wants to build, why it needs to build, and what it can afford. If the church cannot definitively answer these questions, it is premature to run a capital campaign. The “what”, “why” and “how much” of the building program are critical requirements for the intellectual and spiritual components of your campaign. Trying to run a campaign without these critical components is like trying to run your car with missing spark plugs.
The Financial Benefits of a Church Capital Campaign
Over the past several decades, thousands of churches have executed professionally facilitated capital campaigns. Historically speaking, churches have typically raised between 1 and 3 times their current tithe and offering income over three years through a purposeful and professionally facilitated capital stewardship campaign. This is in contrast to fundraising which provides more modest revenue to the church from the sale of goods or services.
Ignoring for the moment the tremendous spiritual benefits that result from a capital stewardship campaign, there are at least six ways a church building program will financially benefit from a capital campaign.
- Some churches may use a capital campaign to begin a savings program in order to pay cash and avoid debt.
- Some churches, in order to expand the scope of the building project, may opt to augment their borrowing capacity with additional funds from a capital campaign.
- Some churches, without the necessary cash to begin a building program, may use a capital campaign to help raise the necessary cash to cover up-front expenses and/or necessary cash buffer prior to securing a construction loan.
- Some churches will choose to use a capital stewardship campaign to pay off the debt as quickly as possible.
- A capital campaign provides a fund from which a portion of the higher mortgage payments may be paid until the congregation and giving grow to meet the payment.
- A capital campaign may be required by the lender in order to qualify for a loan.
Capital Campaigns and Debt Reduction
Let’s consider again our example church from the previous chapter which had $500,000 per year income and look at what happens when the entire proceeds from a capital campaign is applied to debt reduction.
Debt Reduction Example
In that example, it was determined that conventional lending guidelines would indicate that a maximum safe debt for the example church might be $1,500,000. Given historical precedent from other capital stewardship programs, it would not be unreasonable to expect this church to raise between $500,000 and $1,500,000 over the next three years in a professionally facilitated capital stewardship campaign. If we took a conservative viewpoint and said the church raised only 1.5 times its current income (which is more typical in the post 2008 economy), at the end of three years the church could retire as much as $750,000 of the $1,500,000 debt by applying 100% of the proceeds from the campaign to reducing principal. During this same time period, the church will have reduced its principal balance by at least another $127,703 through its regular monthly loan payments, leaving an unpaid balance of $571,101 after only 3 years. (This assumes on time mortgage payments and additional annual payments from the capital campaign applied against the principle of $250,000.)
Speed of Debt Retirement through a Capital Campaign
As shown by this example, the combination of regular payments plus the proceeds from the capital campaign has enabled the church to retire just over one-half of the debt by the end of the three-year campaign. Of course, if the church raises more money in its campaign, then the remaining debt is reduced correspondingly.
It seems reasonable, therefore, to expect that if the church can retire half of its debt in three years, it should certainly be able to retire the remaining half over the next four years. In fact, if the church were to continue with its regular payments and then run a second campaign with similar results to the first, it would easily pay off the loan balance in 6 years and have some seed money for the next building program already in the bank.
Being optimistic, I believe the church will grow numerically and financially over the period of paying off the debt. This is supported by a study of churches that showed 80 percent experienced growth after completing the building program. Increased attendance should translate into increased offerings which should allow the church to retire its debt even more quickly.
Being practical, I also realize that many churches will elect to augment their building budget with some of the proceeds from the campaign or use some of the campaign income to help service debt, either of which would leave less of the proceeds for debt reduction. This notwithstanding, the principle is still a valid one.
The church in our example executed a second stewardship campaign that was a non-stop continuation of its first campaign. That campaign paid off the remaining debt and put money back into a building fund account for future renovation or building programs. Hopefully your church will be considering its next expansion plans before the end of seven years, which is certainly a very good reason for becoming debt free as quickly as possible!
Becoming debt free in seven years or less begins with the concepts discussed earlier about knowing what is needed and what can be afforded. The church needs to do this before getting too far into a building program, and then put a plan into place to make it happen. Part of the financial plan for any building program should include a plan to retire the debt in a timely fashion.
Benefits of Hiring a Consultant
Many churches elect not to hire outside help for a capital campaign. For the vast majority of churches, this decision is often to their financial loss. Conventional wisdom and anecdotal evidence indicated that churches that use a professional campaign consultant/coach raise, on average, twice as much as churches that self-deliver their campaign. While there are exceptions to every rule, my personal experience confirms that churches inexperienced in capital fundraising which do not use outside consultant typically raise about 50 percent less in their fundraising than those who do get professional assistance.
Do-It-Yourself Capital Campaign Failure
In 2010 I had an opportunity to put this to the test. A church that had been in discussions with me about a capital campaign elected to do it themselves. My initial fact-finding indicated the church could likely raise $1,000,000, and the church only needed $900,000 to make the numbers work for their project. About 8 months later the church called me. Their campaign had not performed as they expected, raising just over $470,000, and they wanted to know if I could help them meet their goal.
The Power of Using a Church Capital Campaign Consultant
I had never had the opportunity to do a “do-over” campaign for a church, but was confident we could improve their results. Long story short, we ran a “second wind” campaign and raised the total to just over $800,000. While not quite double, and perhaps not as good as they could have gotten doing it the right way the first time, I believe this fairly represents the difference between well intentioned and well qualified campaign leadership.
As this demonstrates, it is to the church’s advantage to hire a capital campaign consultant to assist with the fundraising. Any increase in the cost of the campaign due to hiring a consultant is certainly offset many times by the increased giving that results from this assistance.
When Should the Church Run a Capital Campaign?
With few exceptions, the answer to this question is generally “as soon as possible.” In the post-2008 economy, a capital campaign may be required by the lender, or may be required to provide the necessary cash on hand and cash flow to qualify for a loan. The money raised before construction can either be used to reduce the amount of money the church needs to borrow or to increase the scope of the building program. How this money is utilized depends on the church’s interpretation of financial stewardship, and of course, the church’s unique situation.
Finances are the biggest limiting factor in most building programs. If planning to build in three years or less, now would be the appropriate time to start becoming financially prepared. As it is written in Ecclesiastes 3:1, “To everything there is a season, a time for every purpose under heaven.” The scriptures also direct us to consider the ant who, “Prepares her food in the summer and gathers her provision in the harvest.” (Proverbs 6:8)
The bottom line is that the church needs to be financially prepared when the season of building comes upon it. Too many churches struggle, or even fail for a time, because of lack of timely preparation. There are several reasons to execute a stewardship program well in advance of building.
- A building program and capital campaign are both complicated and time-consuming events, and both deserve undivided attention.
- By starting sooner rather than later, the church will have more money with which to build.
- The increased giving to the building fund may be factored into the loan calculations, potentially increasing the amount of financing the bank may offer.
- A demonstrated pattern of giving to a building fund improves how lenders rate the risk in lending to the church. This can potentially improve the loan rate and terms.
- A capital campaign creates a sense of excitement and unity.
Another consideration for the timing of a campaign has to do with the time of the year. There are times in the year when, in the typical church, a campaign is more effective than others. The church should take care to organize the campaign around holidays, vacation times and other church events that might compete for the time and attention of the staff and/or members.
Retiring Debt Is More Expensive Than Avoiding It!
An important point to note is that a dollar given in advance of the building program is more valuable than a dollar given to reduce debt. For every dollar of debt that the church assumes in a building program, it will cost significantly more than a dollar to retire it. For example, at a 6.5% interest rate, every dollar of debt will cost $1.25 to retire if the loan is paid off in 7 years. If the church takes 20 years to retire its debt, every dollar borrowed will end up costing the church $1.79 to retire.
Questions to Ask When Preparing for a Capital Campaign
Two important questions that need to be asked of the membership as it prepares for a capital campaign are these: (1) Who gives to the church building fund in a capital campaign, and, (2) Who pays the mortgage every month? The bottom-line answer to both these questions is that the congregation does.
If the congregation has the option of giving a dollar now to avoid debt, or giving as much as $1.79 to pay off a dollar’s worth of debt, which would they rather do? It comes down to paying a dollar today or as much as two dollars later.
Would your members rather contribute $1 now to avoid having to borrow it, or pay $1.79 later to retire $1 worth of debt?
This logic, however, does not apply if the church is electing to use the capital stewardship funds to extend the scope of the building program instead of retiring debt. In this case, the capital campaign merely permits a larger project to be built than would otherwise be possible but does little or nothing with regard to retiring the debt more quickly.
Definition of Fundraising
Not to be confused with a capital stewardship campaign, which is a purposeful long-term offering, fundraising is a shorter-term program (or series of programs) in which money is given in exchange for goods or services provided with the profits going to the church. Fundraising events come in a variety of different shapes and sizes from candy bars, bake sales and chicken dinners, to car washes and rent-a-youth.
Benefits of Fundraisers
Fundraisers are a good way to keep financial needs fresh in people’s minds. It also gives the church a way to encourage members to approach people outside the church to ask them to help with the building program. Through fundraisers, the congregation and community are given multiple opportunities to contribute financially to the building fund. Don’t think, however, that this type of fundraising will replace a capital stewardship program.
Capital Campaigns vs. Fundraisers
The most effective way of raising money for the building program is through the determined, sacrificial, weekly giving by the congregation through a purposeful capital stewardship program. Fundraisers can raise money for the building program; however, fundraisers will not be the primary source of funding a new church. After all, it takes a lot of candy bars or spaghetti dinners to pay for a church.
Fundraisers are great ways to raise money for various aspects of the building program including new furniture, sound systems, stained glass windows, new audio/visual equipment, or things that the church may need to purchase that may not be in the building budget. And it goes without saying that the church always has the option to apply the proceeds from the fundraiser to the building cost with the goal of either reducing the amount of money the church needs to borrow in a construction loan or retiring debt more quickly.
In summary, a capital campaign is the most effective way of raising money and reducing the amount of money the church needs to borrow, and/or helping pay the loan off as quickly as possible. Fundraising is no substitute for a capital campaign, but is a complementary strategy that, when used in conjunction with a capital stewardship campaign, will enable the church to raise the most money possible for this important work.
(This article is excerpted from Chapter 7 – Capital Campaigns & Fundraising, Preparing to Build, by Stephen A. Anderson)