In a Sunday sermon, pastor Larry Perkins stood in his church's family-life center and preached to the children in his congregation: Believe in yourself and your future. Never give up the dream that God planted inside you. Never allow failure to stand in the way of success.
The next day, Perkins sat next to his attorney before a bankruptcy official, explaining why his Mission Road Church of God in Christ was unable to pay the $1.6 million it owed the bank for construction of the family-life center in Oviedo.
What was once unheard of — a church declaring bankruptcy — has become increasingly common in this recession as declining collection-plate revenues make it harder to pay the bills.
In addition to Mission Road Church, Agape Assembly Baptist Church in Pine Hills and its economic-development ministry also filed for Chapter 11 bankruptcy last month. The church, which is in foreclosure, listed assets of $6.5 million and debts of $6.6 million.
Agape pastor Richard Bishop did not respond to requests for comment. But according to bankruptcy records, he took out mortgages of $4.9 million on his Pine Hills church and $770,500 on his "parsonage" in 2004. The bankruptcy records show the church's income declined by more than half in only two years — from $764,990 in 2008 to $303,849 in 2010.
In the past year, an estimated 100 churches filed for bankruptcy, including the oldest black church in DeKalb County, Ga., and Robert Schuller's 10,000-member Crystal Cathedral megachurch in California. And churches aren't the only ones — a Boynton Beach synagogue filed bankruptcy last June.
"Churches are going through a very difficult time, but to actually file for bankruptcy is extremely unusual," said Simeon May, chief executive for the Texas-based National Association of Church Business Administration.
Some churches got caught up in the heady days of the 1990s and early 2000s when megachurches proliferated. The money spent on church construction and expansion more than tripled in 10 years, going from $2.8 billion in 1993 to $8.6 billion in 2003, according to the U.S. Census.
Church congregations were part of the same society that wanted supersized houses and the easy loans that made it possible, said John Farina, associate professor of religious studies at George Mason University in Fairfax, Va. In the competitive marketplace of religion, bigger was better and the way to get bigger was to offer members more for their weekly contributions.
"The easy money and the temptation to spend more money than you make affected the churches just like the culture," Farina said.
Limited reserves
Bankruptcy isn't always a case of churches living beyond their means. Churches often operate without large cash reserves. Their mission, as Christian organizations, is to use the money they collect to help others, not to "bury the gold" in a big bank account, said Marc McMurrin, executive director of operations for Northland, A Church Distributed, in Longwood.
"It's a tension between what is the right business decision and what is the right ministry decision," he said. "You need an emergency fund, but you want to put as much resources as you can into the kingdom."
In the past few years, Northland has had to cut its staff from 125 to 75, eliminate programs and postpone a capital campaign because of a drop in contributions from its 10,000 members, McMurrin said. Northland's $43 million building was half paid for when it opened in 2007, but the church can't ask its members to help pay off the church's mortgage when so many are having problems paying their own mortgages, he said.
In hard economic times, there is only so much a church can do to reduce expenses, and only a few ways it can make more money. The Worship Center Church in Pine Hills raised $7,000 by raffling off gift baskets of donated items to offset some of the decline in its Sunday collections, pastor Frank E. Thompson said.
But there's a limit to how many of those fundraisers you can hold, Thompson said. He had to halt plans to open portable classrooms for an after-school program at his church because of a lack of money to pay for the project.
The biggest problem for churches in this recession, Thompson said, was a change in the relationship between banks and churches. In the past, lenders were more willing to work with churches facing financial troubles. Banks knew churches were good investments with relatively little risk of default. Foreclosures were rare, and bankruptcies were practically unknown.
But in this recession, bank consolidation meant fewer local banks with less personal connection with pastors. And those bigger banks were themselves in trouble.
"When churches needed funds, they could go to the bank and say, 'We need a loan,' " Thompson said. "That option is completely gone."
***
GJ - I don't mean recruiting at the Masonic Lodge, although ELS retired President George Orvick did that in his last parish.
The WELS officials get their Cornerstone buddies into a congregation. They do a study (for how much money?) and conclude - "You need to spend millions on your building." They offer to raise the money for a huge fee. The congregation will grow just because of the expansion.
Hoo boy - the smell of fresh plaster and carpet glue will bring them prospects running to join, especially when they see the feminist hymnal. A year or two later, the voters complain that the congregation did not grow from adding to the debt!
The Shrinker consultants, vacationing in the Bahamas, say over their cell phones, "What? Can't hear. Bad reception. Sorry."
