If your church carries a mortgage, chances are your church is like many homeowners in Southern California, house rich and cash poor. That means your church has more equity locked into the value of your property and facility than it has in liquid assets. This disparity brings additional tension to the budgeting process. The church must provide adequate funding for what is arguably its most valuable asset after people. The safety, maintenance, utilities, mortgage, insurance, etc., are ever-increasing line items on a budget. And all too often, the donations are not keeping up to feed the facility monster and fund ministry. No wonder so many church financial teams are wondering how much of the church budget should go toward the facility. There is tension in determining how much funding is required to create a safe, clean, and distraction-free place to worship and still move forward on the mission. Here are a couple of considerations to keep in mind:
Healthy Church Percentages
Let’s start by acknowledging this is a loaded topic. If your church is outside the range, does that make it unhealthy? In the same way, being within the healthy percentage does not necessarily mean your church is healthy. There is an entire post dedicated to church budget percentages, but this post focuses on budgeting for the facility. A healthy church budget for facilities should range between 20-40% of the entire budget. That is a pretty big spread, right? For a church with a $500,000 annual budget, the facilities portion could range from $100,000 to $200,000. The variance in the range accounts for the different needs and unique situations of each church. Understanding the line items that fit in the Facilities budget helps clarify the spread.
- Mortgage – If your church carries a mortgage, this likely takes up a significant portion of the facility’s budget and will put your church further up the scale.
- Repair / Maintenance – The facility’s age and location are significant factors in ensuring enough funds are budgeted to keep up on everything from touch-up paint to door replacements.
- Landscape – First impressions are so important, and like it or not, the parking lot is part of that impression. Think about the paint on the curbs and parking spaces, leaking sprinklers, or dying trees and shrubs. These are all factors on the facilities budget.
- Mechanical (HVAC) – The average life span of an HVAC unit is approximately 15 years. The best way to maximize the life of an HVAC unit is with quarterly maintenance. Maintenance is not cheap but will pay for itself with the right vendor.
- Safety – This category should include fire alarms, fire extinguishers, background checks, security systems, outdoor lighting, etc.
- Custodial – No one wants to use a dirty bathroom that is inadequately stocked. COVID taught all of us the importance of using the right cleaner in the right places. Budget for it.
- Insurance – I could have never imagined making an insurance claim for snow damage in our Southern California desert church location, but we did. Think beyond just insurance for damage to the facility; coverage should include fraud, misconduct, and protection for the officers. This line item is not negotiable.
- Utilities – Electricity, natural gas, water, internet connectivity, etc., all come due each month. Use the prior year’s bills to project future use.
This list is not exhaustive but is a good start to determine what your church facility needs to remain clean and safe and create an inviting atmosphere for people to gather and worship. Finding your churches church’s position using this list provides the needed insight into a healthy budget range and puts you on track to create a healthy church budget.