Debt and Ministry          0126-02                ZZall

                                                                 - - - Rejoice in the Lord always ... again I say Rejoice !!! - - -

                          TO: Interested Ministries                                                                                       FROM: Jim Bramer, Retired Auditor-CPA 
                                                                                                                         Matt: 9:37                   FILE: 0126-02/all

Debt and Ministry                                                                                           Originated:   November 1997                                           

            Below is a hypothetical Online Email thread (THRD) between any one of the following MFTeam members: PAT (Ministry Chief Executive), LEE: (Ministry Volunteer Treasurer), or FRAN: (Ministry Computer Bookkeeper) and   Click here and go to List of threads (THRDs) at


            I would like some perspective from you, Jim, about the whole topic of a Ministry incurring debt with the whole idea of a Ministry having appropriate "Interest Expense." Please provide some of your perspective on this topic.


        This can be a philosophical (and perhaps spiritual) sensitive topic, Pat, and I commend you for addressing it.
        Foremost, I believe there is in fact such a thing as "RIGHTEOUS" Ministry Debt. This, of course, means that there is often "RIGHTEOUS" Interest Expense. You will notice, of course, that I have emphasized the word "RIGHTEOUS" as I hope to point you as a Ministry to use debt in the right way and for the right purposes.


            Sounds like we are on the same page, Jim. I also believe that "RIGHTEOUS" debt is a resource with the prospect of it being either a TOOL (blessing) or a TYRANT (curse). Please proceed with your views of this.


            Ok, Pat ....let me display some Ministry uses of debt, or credit, and we will go from there.

Ministry OPERATIONS Debt .... Short term.

        >> Vendor consumer buying via charge accounts; or the Ministry goes to the local store and adds to their charge accounts, or it gets a phone or utility bill that it is expected to timely pay. A few Vendors offer discounts if you pay in less that 30 days.
        >> Use of Plastic, or Credit Cards; again, usually used like charge account for consumer buying purposes; the Ministry pays timely and incurs
NO Interest Expense. Please Go Here  for further issues about this topic.
        >> "Line of Credit" at your   Credit Union   if prudent to do so.

         Ministry Land Building Debt .. Mortgage or Long term.

    The Ministry judiciously acquires tangible assets which we refer to as L)and B)uilding and E)quipment (LB&E) ... usually by making a down payment and then paying off the balance in monthly installments of principal and interest; often over a period of years. The lender has an equity interest in the LB&E property until it is paid for, etc. Link Here for more LB&E matters.

            A> Mortgages Payable  -   Acquisition of Land/Buildings and/or Improvements.
            B> Equipment Contracts -  Acquisition of Operating Equipment/Vehicles.
            C> Equipment Leases - The Ministry makes lease payments for the agreed
                 time and it becomes owner after the last payment.


            Per yours for a Church found Here, you have been an advocate of Ministries concluding their Financial Policies and placing them in writing. Please share what you have gleaned regarding Ministry Policies on the subject of "Debt." Then please give us more of your perspective.


        The 'shall we borrow money for the Ministry' issue is extremely subjective. Like so many things, the borrower needs to know the mind of the Lord.


        1> As to Finance Policies .... gleaning from same has resulted in the following very generic references to "Debt": a> Any borrowing from external sources will be limited; Credit Cards will be paid within 30 days. b> As would a prudent business man, we may borrow (certain leases are borrowing) to fund purchase of certain equipment or vehicles. c> As would a prudent business man, we may borrow to acquire certain land/buildings and/or improvements. d> As would a prudent businessman, we may borrow from certain internal sources, like Board Discretionary, or SetASide Funds, to acquire capital assets.
        2> Of the kinds of debt referenced above, the philosophical issues mostly have to do with borrowing money to acquire land/buildings and/or improvements. Again this is very "Ministry Personal", Pat, but I am impressed with the 'prudent businessman' term in the preceding gleanings. To me this implies that it is OK when done prudently. Of course, 'prudent' includes some surety about paying off the debt as an realistic integral part of the ongoing Operating Expenditures. See comments below.

                     RE: Acquisition of Land/Building and/or Improvements

             A> If your Ministry is largely Facility dependent (like Camp/Conferences, Churches and Schools), please carefully review the philosophy of having the vast majority of your money on hand before you buy, or build. I know, I know ---- it is advocated as the ideal way to go, but most of us would not have our personal residences today if we adhered to that exact approach.
              B> Usually there is merit in exchanging Facility 'lease/rent dollars paid out' for 'mortgage debt dollars paid out'. Not only are you more 'maintenance' accountable with your 'own' property, but when you acquire such items, you are making an investment in tangible assets. A long term investment in property is generally prudent due to our present dollar inflation rate.

                     RE: Equipment

         It is desirable to pay for most tangible equipment via the current operating Budget; especially for something that is usable for three years or less ... not only due to it wearing out, but also due to the need for technological improvements. Such Budgeted payments take the form of either one time equipment purchases, or installment payments. Of course, sometimes these assets are purchased as a result of Non Operating Budget Special Project endeavors.

3> Philosophically, I also have a concern that the users of the Facility (which may last something like 20 to 30 years) should pay their fair share. This, of course, is done when current Campers and Parents/Students, for example, pay current fees that cover operating expenses that include Debt Service. And, of course, current church members pay their share of having a Facility. It seems best for each generation to shoulder the Facility cost burden.  Please  Go Here for more input on this.

4> During most of the 1980s, I was the Treasurer at a Credit Union called  E)vangelical C)hristian C)redit U)nion - ECCU. As a Christian Ministry, it is only logical that  ECCU  must continue to be satisfied that DEBT can be "RIGHTEOUS", and that ECCU's Ministry and Human Being members could/should borrow money for appropriate purposes.

- - - - C A U T I O N - - -

  • 5> Extremely important ..... please don't miss this! Obviously, Operating income MUST be stable and prudently designed in advance in order to have realistic income in order to pay for the Operating expenses plus DEBT servicing, etc. Or, in other-words, the monthly payments must be a realistic percentage of the monthly budget, etc. It takes an act of faith in the Lord to provide for this future income.


            Thank you , Jim ...... let us 'chew' on all this and we will get back to you.


                    ECCU = Evangelical Christian Credit Union
                         LB&E = Land, Buildings and Equipment
                         MFT or MFTeam = Ministry Finance Team

    The bulk of this writing originated in November 1997 and was   . UPTD: January 03, 2010