Reaching Your Goals!
How much building can you afford?
Remember—a capital stewardship campaign is not designed to tell you if you should build, but to demonstrate how you can. Proceeds from a capital campaign can help you qualify for a larger loan and a building that meets your needs more adequately.
DETERMINE YOUR FINANCIAL POTENTIAL
- Do this early in the building planning process.
- Define space needs, establish project goals, and adopt a realistic budget.
- Communicate your financial parameters to your architect clearly and firmly.
NOTE: Without substantial capital assets (such as a building to sell) most churches should consider a project that does not exceed 6 times their budget income.
ESTIMATE YOUR BORROWING CAPACITY
(Estimates based on normal circumstances)
- You may borrow up to 75% of the appraised value of the project.
- You can borrow up to 2.5 times the church’s annual undesignated income.
- Monthly debt service should not exceed 25-30% of monthly income.
MEASURE THE AFFORDABILITY OF YOUR PROJECT
- Available Building fund reserves.
- Real assets that could be liquidated, such as buildings or property.
- Current mortgage interest rates.
- Receipts from a Capital Stewardship campaign.
- Successive capital campaigns to further underwrite the project.
- Community and church growth rates.
- Potential for phased development/construction of the project.
ESTABLISH A WORKABLE FINANCIAL PLAN
- Calculate total resources available for project.
- Adjust construction schedule for maximum savings.
- Anticipate probable cash flow to minimize financing costs.
- Explore interim financing from local banks and other sources.
- Consider interest costs of interim financing in total project cost.
- Share your financial plan with your architect—his expertise will help you create the best project for the funds you can provide.