Thursday, December 22, 2011

Churches Going Bankrupt

When I was in college I became an intern at one of America's largest churches. When the internship ended three years later, they hired me full time for an additional two years. I enjoyed my five years serving that mega church. I was exposed to innovative ideas and saw how those ideas could be put into practice if a church had the financial and manpower resources to make them happen. I also had the opportunity to rub elbows with some of the most visionary Christian leaders in the nation at that time. Their ideas and passion continue to impact my ministry more than 20 years later.

However, as I moved through my time in that church, I had a growing uneasiness about the size and scope of how mega-churches operate. That local church could only do the things they did because of the unique mix of personalities of the senior pastor and key staff members. That mix is not easy to reproduce. They were also dependent on endless amounts of money that their popular pastor raised from a growing television audience. Televangelists are not nearly as popular today as they were twenty years ago. They were also dependent on a lot of "feeder churches" in the surrounding area that kept supplying the people that made the rapid growth possible.

There came a time when I realized that the mega-church was not for me. That does not mean that I am "anti-mega church." I continue to think that mega-churches have a vital role in doing very unique things that smaller churches are unable to do and denominations and para-church organizations are not in a position to do. However, I realized back then, and continue to believe, that there are inherent weaknesses in mega-churches that sheer size makes almost impossible to overcome. In many ways small and medium sized churches are healthier than some mega-churches.

One of the challenges that mega-churches face is overhead. A small church often has a building that is paid for. If that small church is also a historic church, it may have trust funds designated to keep the building in good repair. This significantly lowers the percentage of the budget that a small church must devote to physical overhead and allows small churches to weather economic downturns more easily. Mega-churches, on the other hand, seem stuck in ongoing cycles of building expansion, normally funded through borrowing.

An article in the December 17 issue of World magazine pointed out that many mega-churches with mega-mortgages are now in financial trouble. While part of those difficulties are simply a result of the current economic situation, perhaps a larger issue is that those mortgages paid for buildings that were simply too large and expensive to begin with. World magazine reported that "since 2008 more than 200 churches and other religious organizations have faced foreclosure." The article goes on to say  that "in the decade before 2008, church foreclosures were rare, averaging less than 10 per year." These foreclosures "tend to take place with larger churches, larger sums of money, and greater attention by the media."

Many of those mega-churches have declared bankruptcy as they made their way to eventual foreclosure. Some, such as the Crystal Cathedral in Santa Ana, California, had as much as $50 million in debt. The idea of a church declaring bankruptcy and walking away from its obligations is more than a financial decision. It speaks to the wisdom and spirituality of leaders who led such churches into these huge amounts of debt. It reminds me of 1 John 2:15 "Love not the world, neither the things that are in the world. If any man loves the world, the love of the Father is not in him." Leaders of all sized churches would do well to consider this truth as we lead our churches to expand. Growth is good if it is laid on a good foundation. But growth fueled by worldly ideas will produce exactly the results that we are now witnessing.


  1. very good thoughts

  2. Good words Terry. We are not to get in debt. The word says alot about debt. PVBC built our addition without loans --granted we are not 100% finished but when God wants it finished he will provide--not the bank. Also I might add that mission teams from North Carolina provided the labor--see God was providing that too. God is Jehova Jira..our provider. Thanks

  3. Recently a large church in our community was forced to sell their building and go portable. It was due to the mentality of get what is needed in the driveway & let's make payments. That formula is killing churches. I've been blessed to pastor a church on a cash economy. If we can't pay cash either we don't need it or God isn't in it. We are debt free and can do more than most larger churches in our region. One caveat I'm bi-vocational they only thing they can't afford is a full time pastor. It's tough at times... but God is blessing.

  4. This is some very good stuff written here...
    I certainly would love to get with you and collect more thoughts on this.

  5. Once a church becomes obligated to the world through greater and greater debt, it becomes a weight of difficulty that feels like the proverbial "millstone" around the neck. In the first church where I served, to pay off the debt early, all pastoral and staff members took a cut in pay so that the extra could go to the mortgage. We reduced expenses and paid off the debt in half the time it was due.

    I see churches all the time become more a slave to their debt - even in the small churches that say they're stepping out in "faith" by incuring greater debt. They want to do more but they end up simply enslaving themselves to the bank for the "borrower is servant of the lender."

  6. Chuck,
    Sorry to hear that, sadly, it is happening more and more all the time.

  7. Maggie,
    PVBC's fiscal responsibility has been one of it's strengths through the years. Keep up the great work.

  8. Michael,
    Small churches following the bad example of large churches will only result in a mega-mess. Though some things larges churches do can set a good example for other churches to follow, their poor example in the area of debt will be the downfall of many. Thank for pointing out this important point.

  9. Thank you! A New England church (not with GMBA) tripled its congregation in 10 years. In recent years, a property purchase pushed their mortgage from $2 mil to $5mil. The yet-to-be-built "santuary" needs $10 mil. down ($5 mil raised so far), with another $16-20 mil mortgage needed to complete everything. (A large assumption is that selling the old property will pay off the existing $5 mil; commercial property in that area has sat for 2+ yr.) As a long-time church goer, I wonder what is "faith" and what is "bad arithmetic"? In 10 years, the congregation will have gone from $2 mil to a $16-20 mil morgtage ... from approx 500 seats to 1100 seats. I've always tithed, and that habit has taught me and my wife to be conservative with money. If I tripled my income, would I sell my $200k home for a $2 mil home? No!
    All numbers aside, Dr. Dorsett, how does one discern the difference between FAITH and BAD ARITHMETIC? (Ezra 2:12,13 ff. seems to say something about "downsizing" our expectations about earthly buildings ... true?)

  10. I am familiar with the church that you are referring too. I believe they have a great pastor and I pray for God's richest blessings on them. I know that some of their growth has been fueled by people moving to the state and also by another large church nearby that has gone through troubles. If they build on the assumption that those two avenues of growth will continue, they will probably end up in trouble.

    It can be hard to discern the difference between faith and fantasy. But Henry Blackaby taught us years ago that we can know the will of the Spirit through:
    1. The Word
    2. Prayer
    3. Circumstances
    4. The body of Christ

    When all four align together, then we know the Spirit is moving. But if we are having to kick doors open, then we should continue to do the last thing God clearly told us to do until He clearly tells us to do something different.

    Hope that helps and praying for you and your church right now in my morning devotion time.

  11. Is it unreasonable to think that as a member of a church, I am personally liable, morally, for the entire debt my congregation takes on, even if it exhausts all my assets in the event of default? Viewed this way, supporting church indebtedness is a sobering thing.