Should churches go into debt? This question often elicits passionate responses from people at various points on the yes/no spectrum. The passion is often driven by a desire for their church to make the best decision to advance the gospel in their community and around the world.
And this is a good thing.
DEBT IS NOT A SIN, BUT THE BIBLE ISN’T EXACTLY A FAN OF DEBT
This point needs to be made at the start. Some treat taking on debt as sinful. It’s not, at least on its own.Psalm 112:5 tells us, “Good will come to the one who lends generously and conducts his business fairly.” God would not reward someone (the lender) who is knowingly participating in the sin of another (the debtor).
1. Be cautious about bringing a church into debt. Proverbs 22:26-27 says, “Don’t be one of those who enter agreements, who put up security for loans. If you have nothing with which to pay, even your bed will be taken from under you.”
When considering debt, we are to be extremely cautious. We do not want to find ourselves in a position where we can’t afford the payments.
2. If you do go into debt, your congregation will be burdened. Proverbs 22:7 says, “The rich rule over the poor, and the borrower is a slave to the lender.”
The lender has authority over how you use your money—at least the portion the lender gets. Even if a church wants to use that amount of money for something different—like international missions, a benevolence fund, or a local outreach—the freedom isn’t there to do so. And this burden will hang over the congregation until the debt is repaid.
3. Debt provides another opportunity to sin. Psalm 37:21 says, “The wicked person borrows and does not repay, but the righteous one is gracious and giving.”
The Bible is clear about the obligation of debt. Payments are required. The Bible refers to those who do not repay their debts as wicked.
If your church is in no financial position to take on debt—thus defaulting on payments—it could hinder your public witness. Not only this, it sets a bad example for those you lead. Because of this, we revert back to the first message—be cautious about going into debt.
And remember, these principles apply to both personal and church debt.
DEBT CAN HINDER MINISTRY
One of the greatest concerns about a church’s debt is that it can cause a church to miss out on unanticipated ministry opportunities.
Debt tightens a church’s budget. The money needed for debt repayment is already committed. You cannot use it for anything else. If an unanticipated ministry opportunity arises that requires funding, the church may have to say no because of a lack of margin, not a lack of desire.
Debt can also create tension in the church. I’ve seen church members get in heated conversations over the topic of church debt. Like most money topics, debt has the ability to create a wedge between members. This tension can erode a church’s ability to move forward.
Finally, debt can discourage generosity. Financing large projects through debt can create distance between church members and the project. There can be a decreased sense of ownership and mission.
And debt repayment doesn’t typically encourage generosity, either. Getting members engaged on the front end of a project is usually the best way to encourage generosity for the endeavor.
DEBT CAN ADVANCE MINISTRY
Now, debt is not always detrimental to a church’s ministry. At times, it can help the church move forward. And since most of the time church debt centers on facilities, let’s begin there.
Buildings have their capacities, and there are times when buildings get too full. A church building that is too full on a regular basis can discourage guests, limiting the church’s impact. A new or expanded facility can significantly help.
Sometimes a church can’t wait three to five years for the completion of a capital campaign. A loan can help advance the ministry much more quickly.
Debt can also assist a church with an unexpected crisis, assuming a quick payoff from promised funding such as an insurance policy. Taking on the bare minimum amount of debt to get up and running after a storm damages the church facility, for example, can sometimes be necessary.
CHOOSING DEBT IS A SERIOUS DECISION
If your church does opt for debt, you’re making a weighty decision. The Bible makes this clear. Here are four questions to help you assess whether it is right to take on debt.
1. Is the debt for a ministry need or want? “If you build it, they will come” is the wrong philosophy. Debt is not the time to take shots in the dark, hoping for a positive outcome.
2. Can we pay off the debt quickly? Once again, this is not about a hope. Can you actually pay off the debt in a timely manner? If the debt payoff requires a huge increase in giving over just a few years, it’s best to wait.
3. What is the budgetary impact? Will this debt cause us to be on the financial edge? Will we need to reduce ministry budgets to account for the payment?
4. What are our other options? Debt should not be a first resort. It may be easier, but that doesn’t mean it’s wiser. Consider all your options before diving into debt.
Debt is not a sin. But it is a burden. Before entering into a loan agreement, churches should be fully aware of the consequences of debt. Make sure you weigh the burdens of debt against the blessings it can bring.