April 25, 2013
What's Next: Will Church Bonds Make a Comeback?
Tight lending conditions may renew interest on a wider scale.
Editor's Note: This is the final post in a guest series from Dave Travis' book, What's Next?:2012 Edition. The first posts addressed church finances, financial accountability, the use of interns and residents, and outsourcing work. Travis is CEO of Leadership Network.
Church bonds have been around for many decades. Most of the time, they proved to be a reliable system of financing construction-type projects. Occasionally, a prominent scandal or failure would decrease enthusiasm for them.
Bond financing also tends to rise when banks set tight conditions and higher interest rates. For the first part of the last decade, credit availability was widespread. But things have changed.
With interest rates so low for fixed income investors, there is rising enthusiasm for churches to get back into the bond markets for building projects. Some of that will actually be driven by church members that are willing to finance the construction project in this way, in exchange for a fixed return higher than they are earning on other investments.
This development currently applies to a few churches and constitutes a "mini movement" at best. Yet this renewed interest could represent a spark that could grow into a fire.
Learn more about the legal aspects of church bonds and other financing vehicles in Pastor, Church & Law, Volume 1: Legal Issues for Pastors by Richard R. Hammar and on ChurchLawAndTax.com.