"Kingdom Resources Funding Kingdom Growth"
During the late 1990’s and early 2000’s, the most common form of church financing transitioned from bond financing to conventional bank financing. This was primarily due to the willingness of commercial banks to partner with local churches and ministries by offering more competitive financing terms than what was historically offered by the same lenders. These Christian and mostly secular regional and national banks offered lower fees and shorter fixed rate terms (1 – 7 Years), which were very appealing at the time to most Christian ministries. Unfortunately, many of those conventional lenders were not able to weather the “Credit Crisis” that began at the beginning of 2008 and have either stopped lending and/or called due many church loans.
Over the past few months we have seen a reemergence in the popularity of Church Bond Financing offered through Christian Investment Banks as a primary means to fund the facility needs of the local church. In fact, we have seen many Christian investors around the United States pull their investment assets out of Wall Street and put those investment funds into “Main Street” through holding cash and/or shorter term investments such as Certificates of Deposit, thus increasing the amount of Christian capital that is available to be utilized to fund Kingdom growth.
We have also learned some tough lessons over the past few months. One of the most obvious lessons has been the benefit of a long term fixed interest rate ranging from 25 – 30 years long. This is a typical feature of bond financing, while most conventional lenders generally only offer a fixed mortgage interest rate for 1 – 7 years. Just as the same lesson has been learned by most home owners when they found that their adjustable rate mortgage (ARM) had adjusted up, many Christian ministries have also seen how a multiple percentage point increase in interest rate negatively impacts their fiscal budget and makes it very difficult to continue to fund essential ministries and outreach programs.
Another essential lesson has been the Biblical Principle of using Kingdom resources to fund Kingdom growth. Bond financing programs allow the church congregation and friends of the ministry to personally invest & fund (and receive the financial benefit from the mortgage) the expansion of the Kingdom through the growth of the local church. Not only do the local church members have the opportunity to invest and partner with their local church, but Christian investors throughout the United States also regularly invest and partner with the local church as they expand their worship facility. This is Biblical Stewardship & the synergy of Kingdom resources at its best.
Recently, Church Mortgage Solutions had the opportunity to serve a medium-sized church in Washington by structuring an internally placed bond program for the construction of a new worship facility. It was a huge blessing to the church leadership & all who were involved to witness the faithfulness and excitement of the congregation to take advantage of the unique opportunity to financially partner with their local church by funding the expansion of the Kingdom of God. Not only did the congregation rally around the opportunity to financially investment into their “local church”, but as did many other Christian investors; not a part of the congregation, had the privilege to stand side-by-side in financing the expansion of the Kingdom through the construction of a new church facility. Currently, this church project has been completed and the church is now holding services in their new worship facility.
A bond finance program is fairly simple to understand. In short, the local church issues a mortgage backed security (bond) with the assistance of a “Church Bond” Security Broker/Dealer. The bond issue is registered with the necessary state and federal agencies that provides oversight and regulation. The individual bonds are then purchased by members of the church, friends of the ministry & Christian investors throughout the United States. For their purchase, investors receive interest payments & the return of their initial “face value” investment over time. Investment timeframes vary based upon individual investors retirement and/or investment goals. Also, all investor relations (bi-annual interest payments, bond maturities, tax documents, etc.) are handled by a trust company rather than the issuer – church. This component allows the church the ease of having an intermediary between investors and the church so that the church can focus on ministry rather than investor issues.
Through bond financing, we as Believers have the privilege of financially participating in the expansion of the local church and the Kingdom of God. For additional information, please visit www.ChurchMortgageSolutions.com under the header “Resources” you will find an article named “All the things you need to know about Church bonds”.
Posted June 17, 2009
By: David Dennison |
