Tag: charitable contributions

Recession, the domino effect, and churches

dominosOne of the things I learned while I attended seminary in Texas was that dominoes are for more than lining up and knocking down.  Be that as it may, we’re headed for an ecclesiastical domino effect brought to us by an economy in recession — a recession, we were told today, that started a year ago.  Like those cascading dominoes, the economic effects radiated out from the subprime mortgage crisis, to investment banks, to real banks, to automobile manufacturers, to homeowners, and now to the religious community as well.  

In an informal poll conducted October 15, 2008, I asked the question, What impact is the economic crisis having on your church?  

  • 17% said it was having no effect.
  • 42% said their church offerings were down.
  • 22% said their church was cutting spending.
  • 17% said their church was cutting their budget for 2009.
  • 2% answered “other” which I take to mean the economy is having an effect I did not list.

In other words, 83% noted a negative impact of the economic crisis on their church.  Spin that out to missions offerings, local ministries supported by churches, and parachurch groups whose support comes from churches and their members and you have the makings of a religious financial reordering.  Robert Parham of Ethics Daily noted today that denominations from Episcopalians to Presbyterians to Baptists are facing budget shortfalls, staff layoffs, and programs cuts all due to decreased revenue streams.  Not only are regular contributions down, but investment income has been cut as the stock market plummeted in recent weeks.  

What does all this mean?  I think there are several implications:

  1. Churches, parachurch ministries, and individual church members are all affected by this economic tsunami.  Our church’s stock holdings have declined over $40,000 in a few weeks, losing almost 50% of their value.  
  2. Fewer dollars will be available to support the local church, and fewer dollars will be sent on to denominational headquarters, and parachurch ministries.
  3. Some faith-based organizations will go broke or be downsized, succumbing to economic forces that cut off credit and squeeze contributors.  
  4. Hard ministry decisions will be made as budget shortfalls loom.  The local church will pass along this economic reordering to denominations and parachurch ministries which will also cut staff and programs to the bare essentials.  
  5. Organizations that survive will not be the largest or the most well-known.  Organizations that weather this economic storm will be those that can adjust quickly and rally supporters while still maintaining their core mission.  But that may not include denominational headquarters which might be viewed as more bureaucratic than independent or church-based ministries.  
  6. Theologies of ministry may get reimagined as choices are made between feeding people physically or feeding them spiritually.  Those are not always exclusive choices, but may be in this economy.  
  7. New voices will emerge from the wreckage of old models.  With waning influence and declining budgets, the 80’s culture wars will seem oddly out of place in the face of real human need.  New champions of Christian compassion will be heard above the din of religious posturing.  The Millennial generation will lead this new non-dogmatic activism.  
  8. More volunteers and new movements will start new ministries, jumping into the void left by budget cuts in government, secular helping organizations, and older Christian programs.  
  9. Christians will reorganize themselves across denominational lines, cooperating and collaborating with other faith groups and secular agencies to achieve common goals at the local level. 
  10. Decentralized, local grassroots efforts will spring up replacing top-down denominational campaigns.

The wreckage of the consumer age may yet usher in a new concern for doing good in God’s name.   As economic conditions worsen, we could also see a cascade of compassion in the name of Christ.  That’s a domino effect we could live with for a long time to come.

Economic fallout hits churches

If you understand the current economic meltdown, your are lightyears ahead of most of us.  Basically, we have a serious, global economic collapse underway.  News from financial markets from Brazil to Shanghai to London to New York was all bad today.  All the indicators are pointing in the wrong direction — job losses, unemployment, credit crisis, bank insolvency, unregulated securities, and the list goes on.  People who understand this are worried and furious that this house of cards has collapsed of its own greed and manipulation.  

Churches are not exempt from the economic fallout.  Here are some of the impacts that await us:

 

  1. Retirement accounts lose value.  The stock market has fallen 30% in the past year.  In real terms, if you had $30,000 in your retirement account, you now have about $21,000.  And, you might have lost more if you had stock in Wachovia, accounts guaranteed by Lehman Brothers, or Fannie Mae/Freddie Mac you lost even more.  Loss of investment principal will delay retirement for some, or make life in retirement more difficult. 
  2. Unemployment increases.  760,000 jobs have been lost in 2008.  More job losses are on the way with bank mergers, financial institution failures, and the ripple effect that tight credit has on business capital.  
  3. Increase in cost of necessities, decrease in discretionary spending.  Consumer spending is already declining as people wisely start to hold on to what they have.  More will do the same, and because our economy runs on ‘borrowing and spending’ versus saving, fewer sales will be made, stores will close, factories will shut down, and we might actually approach deflation, or a shrinkage in the money supply in the market.  
  4. More people in need of basic services.   The social services director for our county told me that they have more requests for help now than their staff can keep up with.  Watch for this to increase as more people need help with food, medical care, transportation, housing, clothing, and jobs.  This presents an opportunity for churches to feed the hungry, clothe the naked, care for the sick, and do the very things Jesus instructed us to do.
  5. Decline in charitable giving.  Charities (substitute “churches” here) are already reporting decreases in contributions.  Churches are not exempt from the crunch many will find themselves in.  
  6. Limited financing/refinancing options.  If your church needs financing or refinancing you might run into difficulty due to tight credit conditions.  Think about delaying  your plans for building or remodeling.  As a local businessman told me today, “This is not a good time to have debt.”  
The economic turmoil we are in does have some positives, however.  Tomorrow, “The Upside of the Economic Downturn.”  See you tomorrow.