Posts Tagged ‘church loan’

Yesterday, I talked about how technology can bridge the accountability gap that separates donors from beneficiaries, and in the post I shared that I would write 3 blogs showing how such examples can be used. This is the first of three posts.

Have you ever experienced listening to a member of  a church, or nonprofit organization, who can’t clearly articulate the mission or the impact of the organization?

Maybe the experience came as a friend asked you to donate money to support a charity. Or maybe, it happened when someone invited you to church, or as a friend described why they volunteers their time.

In many cases, these experiences are awkward attempts to tell the story of an organization. However, because most of these stories are told by volunteers or members, they often miss the true power of sharing the core mission and impact of an organization.

Given this experience, many organizations are now turning to technology to help them to:

  1. Tell the Story- Using their own words and images (pictures, blogs, videos, etc) (more…)

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Pie Chart


According to GuideStar, giving to nonprofits has remained fairly consistent with giving patterns in 2010.  There seems to be a slight increase, but many donors are still concerned about their personal income and the economy.

The pie chart to the right shows that 44% of nonprofits surveyed have shown an increase in giving, over the first 6 months, compared to 2010. While 25% have see no change, and 30% have seen a decrease.

In its report, GuideStar also noted that the larger the nonprofit organization, the more likely they were to see growth in income (the 44% listed above).  For example, 57% of organizations that spent more than $3 Million showed an increase in giving for 2011 over 2010. While only 34% of organizations that spent less than $250,000, showed an increase.

This information can be helpful to plot where your organization is in its fundraising, operating, and donation cycle, and I would encourage you to read the full report at www.guidestar.org

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If the economic recession has taught nonprofits anything, it is the need to have multiple income streams to help stabilize income and operations.

Prior to 2008, many congregations and small nonprofits lived on the receipts of their donors.  In strong economic years, this is not a problem- income is up and thus donations were up.  However, the same cycle is disastrous  when the nation’s economy falls- income goes down and thus donations fall.

Given this boom- bust cycle, it is smart to look at how nonprofit and church organizations can stabilize their income. Every context is different, but the diagram below provides a general outline of how to create multiple income streams:

Diagram showing annual fund income sources

Multiple Income Streams

The above model presents the type of incomes that many small nonprofits already receive:

  • Donations to the  annual fund are usually the largest of these sources (typically over 50%) (more…)

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Many churches rely on volunteers to keep their financial records, with mixed success.  I recently was working with a church for a loan application, and after seeing their financial reporting, I suggested, “You might want to consider hiring a nonprofit bookkeeper.”

Woman holding a calculator


The pastor’s response, “Where would I find one that I can trust?”

I didn’t have a perfect answer for the church, as I was not located in their region of the country, but I did suggest that the church could check with a few CPA firms or other churches in the area for a suggestions.  In addition, I found a great article on the nonprofit website Blue Avocado, which offers a free test that churches or other nonprofits can use to see if the bookkeeper really knows their stuff.

Here is a sample question, from their blog post “Nonprofit Bookkeeping Test”:

Which of the following are typically included in the bank account reconciliation?
a) Bank service charges
b) Outstanding checks
c) Deposits in transit
d) All of the above

To view, or take, the full test, click the link above the question.

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Does your church need a loan? If so, then this post may help you prepare to talk with a lending agency or financial ministry like Church Extension.

Just like any business decision, the leadership of your church should do its research and learn about they type of legal agreement that it is required for a loan.  Unlike home loans, which are somewhat familiar to many of us, churches are considered commercial entities, and thus they are required to have commercial loans.

When you are ready to ask for a loan, typically, you will provide the following items:

Andreas Kuschner

  • Income and Expense reports for the past 3 years, plus for the current year to date
  • Recent Balance Sheet
  • Property Value and/or the value of other collateral that you will use to secure the loan
  • Statistics– Avg. Worship Attendance, Participating (Active Membership), and the # of Giving Units in your church
  • Purpose of the loan (property purchase, construction, etc)
  • Amount needed for the loan (Bid for construction, etc)
  • Amortization Period for the loan- 5, 10, 15, 20 years
  • Cash on Hand for the project (similar to a down payment) (more…)

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