For the week of June 13, 2005

Guided Capital Campaigns
By: Tom Bandy
Every statistic, and every experience, verifies the fact that professionally guided capital campaigns always raise more money than internal campaigns designed and led by amateurs. But how do you know if your capital campaign needs a professional?

The rule of thumb is that any manageable, mission-driven, capital debt should cost no more than 20% to maybe 25% (in a really vital church) of your annual budget. In other words, debt service to pay interest and principal should never be more than 20-25%. On the other hand, any truly mission-driven debt that costs less than 5-7% of your annual budget for service should be manageable simply by the stewardship of your spiritually growing adults.

So … if you think that your total mission-driven debt will cost more than 5-7% of your annual budget to service, forget about just borrowing from the bank or denomination. Hire a professional. Even after you pay them their fee, you will still net more money than if you did it on your own.

What if your anticipated debt is a maintenance-driven debt, rather than a mission-driven debt? Never let a maintenance-driven debt take more than 15% of your total annual budget. People are much less motivated to give to maintenance-driven causes. And if that anticipated debt is over 3-5% of your budget, don’t just borrow from the bank. Hire a professional.