Church Finances

Usual and Customary Rule-Of-Thumb Ratios

for Church Finances

(These are “estimates” not really “rules”—miracles can happen, and every church is different—these are general figures as a first start in estimating.

One of the courses I teach at Indiana Wesleyan University is “Church Leadership.” (A remake of the old “Church Administration” course that later morphed into “Church Management” before becoming the current title, “Church Leadership” though the content is just about the same). In that course we spend a week on church finances (I know, I know—too little time for such a vast subject—the story of the teaching life!). During that week students learn about church budgets along with a light introduction to ratios and accounting terms.

Which brings me to this column. You can help me. Considering your own real-life situation how do these ratios work? What would your “audit” of this information produce? What would you adjust or change or disprove?

1. ANNUAL INCOME: 1000 Times morning worship attendance

Annual income for a church usually averages about $1000 per person attending, counting everybody (even children). A church of 100 usually has about $100,000 income a year. This, of course, will change with inflation in the future.

2. CAPITAL CAMPAIGN MAXIMUM CAPACITY: Double giving over 3 years.

The usual maximum “extra money” a church can raise over the regular giving for a major three-year capital campaign is equal to its regular income. Thus a church of 150 attendance, with regular tithes and offerings of $150,000 a year, usually has a maximum capacity of raising an additional $150,000 a year over the next three years for a capital campaign—a total of $450,000 for the three years drive for additional money.

3. LOAN CAPACITY: Three times annual income.

A church can usually borrow up to three times their annual income (sometimes denominational “banks” will permit 3X income +10%) . Thus a church of 500 with an annual income of $500,000 usually has a cap on their borrowing of about $1.5 million. Of course even this figure is affected by how much they raised in their capital campaign, if they have other debt, and the growth patterns of a church.

4. SPACE UTILIZATION: 2-1-1 (50% CE; 25% worship; 25% other)

Generally if a church is building the “whole enchilada” at once (worship & CE/youth) the breakdown of square feet needed for each is 2-1-1—that is half the square feet go to CE-youth, one fourth to worship and another ¼ to “overhead” (miscellaneous offices, storage, hallways, restrooms, etc.)

5. OPTIMUM SEATING RANGE: 60-80% of capacity.

A church filling more than 80% of the available seats is too crowded and will often decline in several years if they do not build a new building or add more services. On the other end, a church with less than 60% of the seats filled is demoralizing and creates an atmosphere of failure. Ideally a church would be expandable so that 60-80% of the seating is always filled.

6. CONSTRUCTION COST PER SQUARE FOOT: $80-$140 SF

Construction costs are almost impossible to estimate. They depend on such a varied environment and other factors. If a church is willing to build a pole barn with lots of donated materials and they do almost all the work on their own they might build for less than $25 sq. ft. One could build a beautiful church for more than $200 Sq. Ft. But as a starter figure try $80-$140 SF

7. NAVE SEATING TO PARKING SPACES RATIO. Minimum 4:1

Usually a church will be required to have one parking space for each four seats in the nave or worship center. Some strict zoning will require 2:1 (though you can usually get a variance). IN other places where there is no zoning at all you can simply dump gravel out front and park any way you wish.

8. SF PER PERSON: Worship@20SF/pp CE@30SF/pp

How many people can fit into a room 8’X16’ before they feel crowded? Well, it depends doesn’t it? In Zimbabwe they might have a church averaging 50 in that space—2.5 square feet per person! In the USA an 8”X 16 classroom would start to feel “maxed out” with 10-12 adults. Of course the SF required varies for age and activities. A nursery for babies needs more SF per person than a classroom for older adults who sit in rows. Youth ministries with their varied facility needs can make them one of the highest per person SF consumers in the church. CE space is seldom utilized at full capacity simply because there is often one crammed class in one spot while another down the hall with five people in it who refuse to move!. Changing worship patterns now allocate more SF to the “stage” or “back stage” in worship so worship SF requirements per person are actually going up. So, where to start estimating? Try these minimums: Worship space @ 20 SF per person and CE-youth space at 30 SF per person—counting in “overhead” like hallways, boiler rooms and restrooms. I bet you’ll have to raise these numbers in real life, though. The 20-30 SF budget gives a church a baseline place to start. You’ll then have to revise these (usually up) depending on your situation and culture.

Using these figures, a church wanting to seat 150 in their sanctuary will probably need a minimum of 3000 SF. Put a narthex, restrooms, and stage along with 150 people in a building of 3000 SF (55’ X 55’) and they’ll be jammed!. Get the point? You can start with the 20 SF minimum per person for worship space, (and 30 SF for CE) but you’ll probably wind up closer to what most architects will tell you right off the bat—both these figures are 10 SF too low.. they will eventually wind up being 30-40 SF.

9. Cost triangle SF X Q –SE = $

A church building coasts something. How to reduce the cost of a church building? You must fiddle with one of the three major factors: Square Feet, Quality, or sweat equity. That is, if a church wants to reduce the cost of an estimate on their dream they must either reduce the size, reduce the quality, or do some sweat-equity work on it like painting or other construction.

So, what do you think? What changes would you make in this list?

So what do you think?

To contribute to the thinking on this issue e-mail your response to Tuesday@indwes.edu

November, 2001. Revision suggestions invited. May be duplicated for free distribution provided these lines are included.

Other "Thinking Drafts" and writing by Keith Drury -- http://www.indwes.edu/tuesday

MY RECOMMENDED LIST OF BOOKS ON CONSTRUCTION AND BUILDING

(Most are available at http://www.amazon.com

Acoustics in the Worship Space Scott R. Reidel / Paperback / Published 1986

· Firm Foundations : An Architect and a Pastor Guide Your Church Construction Lance Moore, et al 1999

· Successful Church Building Robert Knowles, Reinhard Koch (Editor) 1996 (Expensive)

· A Comprehensive Guide to Church Construction Joseph R. Miller

· Building for Effective Mission : A Complete Guide for Congregations on Bricks and Mortar Issues (Kennon Callahan Resource Library for Effective church Kennon L. Callahan / Hardcover / Published 1997 ($10-15)

· Church Without Walls Thomas S. Goslin, Donald A. McGavran (Illustrator) / (Less then ten bucks)

· Firm Foundations : An Architect and a Pastor Guide Your Church Construction Lance Moore, et al / 1999 (About $20)

· Planning and Building Church Facilities Gwenn E. McCormick / About $30 1993

· When Not to Build : An Architect's Unconventional Wisdom for the Growing Church Ray Bowman, 1992 (less than $10)

· A Comprehensive Guide to Church Construction Joseph R. Miller /( $50-$60)

· The Lord's House : A Guide to Creation Careful Management of Church Facilities Frederick W. Krueger / 1995 (About $25)

· Places for Worship : A Guide to Building and Renovating (American Essays in Liturgy) Marchita B. Mauck / 1995 (Cheap)

· Church Architecture : Building and Renovating for Christian Workshop James F. White, Susan J. White

· Churches and Chapels : A Design and Development Guide (Butterworth Architecture Design and Development Guides) M.T. Purdy

· Effective Use of Church Space : Church Building in a Time of Energy Shortages and High Costs Ralph L. Belknap