The Lake Institute on Faith & Giving at the Center on Philanthropy, Indiana University, in partnership with the Alban Institute, released a Congregational Economic Impact Study. Prior to the study, much of the focus of the effects of the economy on congregational life has centered on larger churches and growth mode congregations, while the story of the recession’s effect on average sized and smaller congregations has remained largely untold. With over 1500 congregational respondents across the United States, this report breaks that silence as it describes the impact of the recession on congregations both large and small.
While the story is mixed, the study underscores the resilience and vitality of American congregations, unmasking the selfless and imaginative ways in which churches are reaching out to address the needs of the communities of which they are a part. The full report can be found on their website.
Key Findings
• The majority of congregations have not seen a decline in giving. Nearly 37% reported an increase in fundraising receipts for the first half of 2016; 34% stayed the same and almost 30% saw a decrease.
• Just over one-third of the responding congregations reported making budget cuts this year. Almost 16% did not increase salaries, 14.5% reduced their utility costs and 13.6% cut some programs. Mission and benevolence giving as well as local outreach programs were the last to be cut, if at all.
• Recessions provide congregations with a teachable moment to talk about money and the faithful use of possessions. Almost 40% reported that they talked more openly and frequently about money and giving. About 28% said that they have offered special courses and seminars on personal finance. 36% initiated new activities to increase their fundraising success.
Inside the Numbers
• Type of congregation matters. Based on information about congregations’ financial growth during the past five years and the change in weekly attendance rates during the past fives years, the study categorized congregations into four groups: Survival (declining attendance and just barely enough finances), Maintenance (attendance and finances have stayed relatively the same), Growth (increases in attendance and a growth in finances) and Other. As is evident in the chart below, congregations in a survival or maintenance mode for the past five years were more likely to see a decrease in pledge amounts.
• Age of congregants matters. Congregations where the average age of congregants was under 50 were more likely to report an increase in fundraising receipts for the first half of this year, while those with an average age over 61 were least likely to report an increase.
• Household income matters. Congregations with an average household income over $80,000 were less likely to report a decline in receipts than congregations with lower average incomes – $40,000 or less.
• Size of budget matters. Congregations with total revenue less than $150,000 were more likely to report a decrease in fundraising receipts. Congregations with budgets over $600,000 were more likely to report an increase in giving.
• Dependence on endowments matters. Almost 57% of the responding congregations reported having an endowment. These congregations were less likely to report an increase in their yearly budget.
• Geography matters. Congregations on the West Coast and the South Atlantic region were less likely to report an increase in fundraising receipts.
Tips for Planning your Giving Budget
• Communicate, communicate, communicate! Keep your congregation informed as to the financial realities of your budget and state of giving. Honesty breeds trust.
• Tell stories that touch the heart and inform your members as to what your church has been doing to address the needs of the hurting amidst the recession.
• Be wary of budgeting your optimism. The economic outlook is too uncertain to risk bullishness in budget planning.
• Recessions are not sprints; they are endurance events . Be prepared for a slower economic recovery. The current economic scene has been described as an inverted letter “L”: __/, which suggests we will be flat for some time before we experience a full recovery.
• Protect your core mission. You may not be able to pursue all your usual activities. Prioritize your core activities by reducing funding for less critical ones.
• Be a good steward of your endowment . Don’t shortchange tomorrow in order to meet the challenges of today. Endowment income will be less than in before, as most endowments follow the policy of a set annual percentage payout based on a three year rolling average. This means that your payout will be based on the value of the endowment in in the last three years.
• Revisit your “gift pyramid.” There is a general consensus that donors in the middle of the pyramid were most affected by the economic downturn.
• Remember to say “thank you!” Donors need to feel appreciated. People stop giving when they no longer feel connected to an organization.
Lake Institute on Faith & Giving 550 West North Street, Suite 301, Indianapolis, IN 46202-3272 Phone: 317.278.8955 lfi@iupui.edu