Every new business venture starts with great enthusiasm, but many soon fail. The U.S. Small Business Administration reports that three out of ten new businesses fail within two years, and only half survive five years. Experts cite numerous reasons for business failure including planning, location, staffing, and sales. But most reasons can be boiled down to two: poor management skills and lack of capitalization.
Starting and sustaining a successful church-based program similarly requires good management and adequate funding. In addition to creating a vision for the work, designing the program, planning for the personnel needed to operate it, and imagining ways to nurture the culture of the congregation to make it most effective, it is necessary to secure the money needed to begin and to keep going for the long term.
The two-stage process of locating startup funds and then developing the long-term resources actually requires one prior step: developing a realistic estimate of the costs.
The Gospel of Luke records that Jesus told a parable in which he compared the cost of following him to a construction project. “For which of you, intending to build a tower, does not first sit down and estimate the cost, to see whether he has enough to complete it? Otherwise, when he has laid a foundation and is not able to finish, all who see it will begin to ridicule him, saying, ‘This fellow began to build and was not able to finish’” (14:28–30). It’s one thing to begin a new program; it’s another to be able to continue it over time. Estimating the costs of establishing and sustaining a program will prevent the embarrassment of a well-intended but short-lived venture. A business plan that projects income as well as expenses over that time will round out the projection.
A goal without a plan is just a wish. Based upon the initial budget developed for the program, a spreadsheet may be produced that projects costs over several years under categories such as personnel (salary and benefits), administration (office, computers, etc.), recruitment, other program expenses (meetings, conferences, etc.), and a contingency fund. Expected costs should be matched by projected revenue. For instance, if the church receives startup funds from a grant or one-time donation, it needs to account for replacement of those funds in future years. The church may begin to build savings into its budget right away that will soften the blow in future years when the church has to pick up more of the cost of the program. These ideas are discussed in more detail below, but the key is to project income as well as expenses over a designated period.
One way to go about estimating costs is to request budgets from churches that conduct similar programs and then estimate your own costs off of those numbers. However you arrive at a budget, be sure you have estimated high enough, even if you add additional contingency funds to cover unexpected expenses. When seeking startup funds—whether from the church’s own ministry fund or from other sources, having a sound estimate of the costs will strengthen the case and build credibility with funders.
Churches that want to begin a new program may believe they have the congregational culture and key leaders to make it work and yet still have a difficult time finding the initial financial resources to fund it.
If the church decides to add a new program that needs additional funding, the challenge to the congregation may be too steep to move forward without securing startup funds that will help establish the program and give the church time to build financial capacity to sustain it. Potential donors sometimes have a difficult time understanding a program in theory. When they see it in action and realize its continuing value to the church and its mission, they are more likely to give to sustain it. But getting off to a good start is crucial. Ideally, a horizon of three to five years of funding will give the church the best chance of building the capital necessary to self-fund the venture.
Depending upon the amount the church is able to allocate to the program, some or all of the startup costs may be need to be sought from various sources. The church may, for example, have the money to provide the compensation costs but need help with program or logistical costs—or vice versa. Sharing the cost between the congregation and a funder will give all parties a greater sense of investment in the program. With that in mind, we lift up for consideration two possible sources for initial funding: individuals and foundations.
A congregation may have a member who possesses the personal resources to provide startup money. This is the model that helped to begin a residency program at Second Presbyterian Church in Indianapolis. Visionary church members, Tom and Marjorie Lake, believed in the idea and provided an initial gift to help pilot the program. Once the program was well established, they gave addition funds to endow it in perpetuity. The Lake Fellows, as their residents are known, have proven the wisdom of that generous act.
Senior pastors generally know best whom to approach with this idea, and they are usually the best ones to make the “ask.” Sometimes these individuals are known to have long-established high net worth, but sometimes an individual may have had a recent “liquidity event,” such as the sale of a business or property that may leave the person with tax consequences that might be minimized with a significant charitable gift in the same year. People with wealth in the church often look for opportunities to do something spiritually significant with their material blessings. You can count on their being approached by philanthropic arts, health, and educational organizations for generous donations. The church should see itself as a prime candidate for helping potential donors act on their desire to be good stewards of God’s gifts.
Foundations may be open to making grants to congregations that advance their goals. When researching foundations for the purpose of making proposals for grant funds, it is important to investigate the history of their grant making, the parameters they have established for funding, and the procedures they require for consideration.
Some churches have foundations of their own that might be tapped for startup funds. One church that has begun a residency program received a grant for its program from its own foundation. The foundation makes grants for mission enterprises of and through their own church, and they deemed pastoral residency to be just that, a mission endeavor of the congregation. Few of these church foundations are set up to fund other churches, but they are perhaps the first place to look for possible startup and ongoing funding of a residency program in the church the foundation is attached to.
Family foundations are becoming more common as wealth is passed from one generation to another. People of means in local communities who have established these foundations are sometimes more flexible in their grant making than larger, more seasoned foundations. They might be interested in providing startup funds for something locally that they can see and experience up close.
Building the capital necessary to begin and sustain a program requires creativity and persistence. The best strategies are those that work best for each congregational culture. Consistent, ongoing attention to the work of securing adequate resources is critical to long-term viability.
This article is adapted and excerpted from Preparing the Pastors We Need: Reclaiming the Congregation’s Role in Training Clergy by George Mason, copyright © 2012 by the Alban Institute. All rights reserved.
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Preparing the Pastors We Need: Reclaiming the Congregation’s Role in Training Clergy
by George Mason
Amid the widespread discussion about “the future of the church,” an important point is sometimes overlooked: tomorrow’s church will depend to a great extent on the new pastors of today who will serve and guide our churches in the years ahead. George Mason’s Preparing the Pastors We Need: Reclaiming the Congregation’s Role in Training Clergy makes a timely intervention, asking us to redefine pastoral leadership by analyzing how, in fact, pastors are made in the first place.
Projects that Matter: Successful Planning and Evaluation for Religious Organizations
by Kathleen A. Cahalan
Projects That Matter is a primer for project leaders and teams about basic project planning and evaluation. Intended for the nonexpert, the book introduces readers to the five basic elements of project design and describes in detail a six-step process for designing and implementing a project evaluation and for disseminating evaluation findings. Project leaders in congregations, colleges and seminaries, camps and other specialized ministries, and other religious settings will find Cahalan’s guidance clear and invaluable.
The Business of the Church: The Uncomfortable Truth that Faithful Ministry Requires Effective Management
by John W. Wimberly
Pastors are called to be not only leaders with vision but also managers of congregational systems, says John Wimberly in The Business of the Church. Drawing on his thirty-six years in ordained ministry, Wimberly weaves the realities of congregational dynamics and faith-centered purpose together with practical, proven approaches to business management, helping readers avoid common pitfalls and put into practice effective techniques of congregational management. The author’s conversational writing style and many real-life examples make what is for some a seemingly complicated, mysterious topic an engaging and easily applicable read.
Winning Grants to Strengthen Your Ministry
by Joy Skjegstad
Ministry leaders possess the compassion, creativity, and knowledge about community needs that grant funders appreciate. Yet ministry groups are often less experienced than other types of nonprofit organizations in discerning which funding to seek, understanding how to build relationships with funders, and putting together proposals. This book by experienced grant-proposal writer Joy Skjegstad offers a pathway to strengthening new and existing ministries.
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