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Three Presbyterian entities offer an informational webinar on balancing church assets and liabilities

Managing your church’s balance sheet is crucial to financial stability

by Nancy Crowe for the Presbyterian Foundation | Special to Presbyterian News Service

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Understanding what your congregation has and what it owes is important. So is timing, said the presenters of “Assets and Liabilities: Managing your Church’s Balance Sheet,” a May 23 webinar.

The webinar was sponsored and organized by the Presbyterian Foundation, New Covenant Trust Company, and the Presbyterian Investment and Loan Program. You can view the full webinar here.

Robert Hay, Jr., the Presbyterian Foundation’s Senior Ministry Relations Officer for the Southeast, walked participants through a sample congregational balance sheet. This included:

  • Assets, which are checking and savings accounts
  • Long-term assets, which are investment and endowment accounts
  • Current liabilities, which are payroll and accounts payable
  • Net assets, which includes the general operating fund, unrestricted/reserve, designated funds and permanently restricted funds.

A second sample balance sheet added fixed assets, such as property and buildings, and long-term liabilities, such as a mortgage payable to the Investment and Loan Program, and a building equity fund under net assets.

A church’s largest asset is often its property, Hay said, though property and other fixed assets don’t need to be included on a balance sheet unless there is debt.

Some church financial leaders deem investing too risky, he said. While prudence is appropriate, “being good stewards means maximizing what we have been given.”

Hay recommends these books by Edd Breeden, a Presbyterian pastor: “The Church Treasurers Manual 2020,” “A Handbook for Church Treasurers” and “The Volunteer’s Audit Guide for Churches and Other Non-Profits.”

Handling debt

How you manage your church’s liabilities depends partially on timing, said Jim Rissler, CEO of the Presbyterian Investment and Loan Program. A long-term liability extends repayment beyond one year, while a short-term liability is to be fully paid within the next 12 months. Some projects can’t be put off, he noted.

Churches should evaluate whether a new debt would fulfill a long-term goal or be for short-term financial relief, and whether it’s a one-time or recurring situation. Also determine how the church planned for and will manage the debt.

Naturally, the biggest question is: How much debt can we handle?

Rissler outlined four factors to consider:

  • Significant debts in the operating budget in the last three years
  • If giving is strong and consistent
  • If reserves are in place
  • If drawing on those reserves is sustainable.

A capital idea

When your congregation is up against a need that might require a loan, don’t overlook a capital campaign.

“It’s important to know what you might expect if you have a capital campaign, and also what you might be giving up by not having one,” Rissler said.

The best time to have a capital campaign is during the excitement of a new project, when donors can see and experience the effects of their gifts, he said. Visible renovations, or a new boiler in January, are examples.

Rissler also noted a capital campaign conducted by a professional capital campaign consultant typically brings in 2 to 2.5 times the operating pledges. By comparison, internally run capital campaigns generally bring in only 1 to 1.5 times the operating pledges.

Other considerations: Don’t commingle capital campaign funds with other funds or the operating budget. Also, if the capital campaign funds are going to be used within two to three years, don’t invest those funds where the principal value is at risk and may fluctuate, he said.

And be transparent with the congregation about how much time and money the project will require.

“There should be no surprises,” Rissler said.

When change happens

A good rule of thumb is to completely or mostly pay back a loan with two, three-year campaigns, said Clare Lewis, Senior Vice President of Sales and Marketing for PILP. It’s not recommended to move the debt service into the operating budget until the debt service is approximately 10-13% of the operating budget.

But then the pastor leaves. The church splits. Financial leadership turns over.

The debt is still there.

Look carefully at what’s changed, Lewis advised. For example: Has the church increased the operating budget too much? Have pledge receipts decreased? Did the church follow through on a planned second capital campaign?

To mitigate this, consider a debt reduction campaign, perhaps with a mission component or small project to generate interest. Refinancing, with an appropriate balance between managing the debt service and managing the debt, can be another solution.

Assets and timing

James Carey, Director of Investment and Portfolio Management Services for New Covenant Trust, said investment outcomes depend on a long-term mix of assets in a portfolio.

“Match your duration to when you need the money,” Carey said.

These options range from conservative income (one to three years) and balanced (three to seven years) and balanced growth (seven to 10 or more years). The key is to maximize returns while maintaining safety and liquidity, Carey said.

It’s also important to know upfront about fees and expenses, and document each account’s purpose, goal and timeline in a written Investment Policy Statement.

And seek professional assistance as appropriate.

In addition to New Covenant Trust Company, resources include the Financial Review Checklist, your Ministry Relations Officer, your presbytery and synod staff, the Church Financial Leadership Academy (access code PCUSA) and Stewardship Navigator.

Nancy Crowe is a writer, editor and animal wellness practitioner based in Fort Wayne, Indiana. She is a graduate of Louisville Presbyterian Theological Seminary. Send comments on this article to Robyn Davis Sekula, Vice President of Communications and Marketing at the Presbyterian Foundation, at

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