Before financing a church or school construction project, leaders need to determine what their organization can realistically afford. That starts with reviewing financial performance, cash flow, debt, giving or enrollment trends, and long-term operating costs. A reliable financial foundation helps leadership establish a responsible construction budget, earn donor confidence and avoid costly redesigns later.
When I sit down with a church or school considering a building project, one of the first questions I ask is simple: “What’s your budget?” You might be surprised how often the answer is, “We’re not sure.”
There may be a strong vision for what the organization wants to build. Leadership may know that enrollment is growing, ministry needs are changing or existing facilities are no longer serving the organization the way they should. But before we can have a productive conversation about what to build, we need to understand what the organization can realistically afford.
That’s why I believe the question churches and schools should ask before “How do we finance our building project?” is “Are we financially prepared for a successful building project?”
To explore that question, I recently sat down with Brian Axtman, Director of Business Development & Client Chief Financial Officer at Triun3. As a trusted Catalyst partner, Brian works with churches and schools on organizational and financial strategy. Our conversation reinforced something I’ve seen throughout my career: getting clear on your numbers early doesn’t limit your vision. It gives you a realistic path to achieving it.
Start With What Your Financial Trends Actually Say
One of Brian’s first points stuck with me; organizations sometimes allow hope to become part of their financial strategy. There’s nothing wrong with believing enrollment will grow, giving will increase or a new facility will create new opportunities. Vision and optimism are incredibly important, particularly for mission-driven organizations.
But when you’re making a multimillion-dollar capital decision, those expectations also need to be supported by data.
When Brian evaluates an organization’s readiness for growth, he looks at several years of financial performance and organizational trends, including:
- Giving
- Budget versus actual spending
- Attendance and engagement
- For schools, enrollment and retention
He also considers outside factors like:
- Interest rates
- Demographics
- Competition
Together, those indicators provide a much clearer picture of where an organization is headed than any single year or projection.
I’ve seen the construction side of this play out more than once. An organization may expect enrollment to grow significantly, but the previous several years tell a different story. That doesn’t mean the project can’t happen. It means we need to understand that disconnect before designing a building around growth that hasn’t occurred yet. Financial clarity gives you a starting point based on reality.
Which Financial Reports Should Church and School Leaders Understand?
Churches and schools rely heavily on volunteers, and those volunteers are often incredibly generous with their time and talents. But as an organization grows, so does the complexity of managing its finances. There’s an important difference between keeping the books and understanding what the numbers mean for your organization’s future.
Brian recommends that leadership teams understand three fundamental reports:
- Statement of financial activity: tracks income and expenses
- Statement of financial position: provides a snapshot of assets and liabilities
- Statement of cash flows: shows the money coming into and going out of the organization
You don’t need to be an accountant to serve on a church council or school board. But if you’re considering a significant capital investment, leadership should understand the organization’s overall financial position and its ability to take on additional expenses or debt.
How Much Can Your Church or School Afford to Build?
Financial readiness doesn’t mean giving up on an ambitious vision. Often, it means finding a smarter way to achieve it.
Brian and I saw this firsthand on a project we worked on together. The organization initially had a wish list that resulted in a project of approximately $17.5 million. Once the team took a closer look at the organization’s financial health, donor base and overall infrastructure, it became clear that taking on a project of that size wasn’t sustainable. The answer wasn’t to abandon the project. Instead, we asked: What do you really need now, and what can come later?
That’s where phasing can be a valuable strategy. Rather than trying to accomplish every part of the vision at once, phasing allows an organization to prioritize its most immediate needs while planning for future growth. In this case, the first phase was ultimately brought to roughly $8 million and designed so additional pieces could be added over time. Before that first phase was even complete, the organization was already discussing the next one.
That’s an important distinction, financial readiness isn’t about finding reasons to say no. It’s about finding a responsible way to say yes.
When Should Financial and Construction Partners Get Involved?
Earlier than you might think.
A construction team can spend significant time developing a $12 million, $15 million or $17 million vision only for the organization to learn later that its financial capacity is closer to $8 million.
When financial and construction partners are involved early, those conversations can happen together. Your financial advisor can help establish a responsible investment range, while your construction partner can evaluate what that budget can realistically accomplish. That may mean adjusting scope, identifying opportunities for multi-use spaces or developing a phased approach that allows the facility to grow alongside the organization.
Getting your financial house in order first can feel like adding another step to an already long process. In reality, it can prevent significant delays later. Establishing a realistic budget upfront can save months of redesign later if a project ultimately exceeds what the organization can afford.
Financial Clarity Builds Trust
Financial readiness matters to another important audience, too, your donors.
When someone makes a significant gift to a church or school, they’re not simply investing in a building. They’re putting their trust in the organization responsible for bringing that vision to life.
Brian sees a clear connection between financial transparency and donor confidence. When donors understand where an organization stands financially and trust how its resources are being managed, they can feel more confident supporting the next big vision.
As Brian said during our conversation, “Successful capital campaigns happen when donors are confident in how you’re handling your business and the decisions that you’re making.”
Clear financial reporting, realistic planning and transparency give donors confidence that leadership has a plan and understand where their money is going.
Is Your Church or School Financially Ready for a Building Project?
Before moving forward, ask your leadership team:
- Do we understand our financial performance over the past several years?
- Are giving, enrollment and/or attendance trends supporting our growth assumptions?
- Does leadership understand our cash flow, assets, liabilities and existing debt?
- Do we have a realistic idea of what we can afford—not just what we want to build?
- Are our financial and construction partners involved early enough to help shape the plan?
If you can’t confidently answer yes to those questions, that doesn’t mean your project can’t happen. It may simply mean there is some groundwork to do first. That groundwork can ultimately make the path forward much clearer.
Getting clear on your numbers doesn’t limit your vision. It helps create the path to make it possible.
Ready to start planning your building project?
Catalyst Construction helps churches and schools move from early vision to a realistic, buildable plan. Connect with Catalyst to start the conversation.
Want a clearer picture of your organization’s financial health?
Triun3 helps churches and schools strengthen their financial management and better understand where they stand today. Connect with Triun3 to learn more.
This is Part One of Catalyst Construction’s The Financial Roadmap to a Successful Church & School Construction Project series.
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