(see Graph 1). So what effect has the financial crisis of the last few years had on the local church, and how has the local church responded?
Comparing the financial health of their congregation now to what it was in 2005, there has been a significant increase in the proportion of churches that say their financial condition is now “Tight, but we manage”—41% now compared to 30% in 2005. There has been a corresponding decrease in the percentage of churches that say their financial health is “good” or “excellent”—37% now compared to 45% in 2005. On the other hand, a slightly smaller percentage of churches say they are in some or serious difficulty—23% now compared to 26% in 2005.
When asked, “How would you assess the impact of the 2008—09 economic crisis on your congregation’s income?” one in five (21%) pastors say church income “declined a lot.” Another 42% reported that their church income “declined a little.” However, the negative effect of the crisis was not experienced by all congregations. One in five (21%) Nazarene churches in the United States reported “no significant change in income” as a result of the crisis. Another 8% reported a decline at first, but that their church income “has since rebounded.” A surprising 8% say income in their congregation has grown (see Graph 2).
Graph 3 below gives some indication of the way congregations are managing the financial crisis. Most churches avoided using staff layoffs or furloughs to manage the crisis, but 8% of those churches with 100 or more in average worship say the financial crisis did indeed have a major impact on staff layoffs and furloughs, and another 18% felt a moderate or minor impact. Only 1% of those churches with less than 100 felt a major impact because of staff layoffs or furloughs, but that’s probably because many of these churches are only staffed with a senior pastor.
On the other hand, salary cuts or freezes were used by one-third (38%) of the churches under 100, and by twothirds of the churches with 100 or more in worship. In fact, salary reductions or freezes were the most common way for larger churches to deal with the financial crisis.
More than half of all churches said that the financial crisis had at least a minor impact on the funds they had available for mission and benevolence. Mission and benevolence may include local church programs as well as giving to the World Evangelism Fund, district and educational support, and even general contributions to the Pensions & Benefits Fund. While larger churches felt the impact of reduced mission and benevolence funding, for those churches with less than 100 in average worship this was the most common way used to manage the financial crisis. This area of church finances may be one of the only ways in which the local church feels some control over their cash outlays. The mortgage needs to be paid, or the bank will repossess the church property. The utilities need to be paid, or they will get turned off. There is a visible, immediate impact if the staff is not paid. On the other hand, deciding not to hold VBS or to give less to the World Evangelism Fund—while these are good ministries, the impact of not having them is not immediately seen or felt.
Many churches have also put off building projects and capital improvements. In fact, more than half (61%) of those churches with 100 or more in worship indicated at least a minor impact to capital campaigns or improvements because of the financial crisis. Some churches also decided to tap savings and investments to weather the crisis. While there are probably a lot of churches that don’t have much in savings or investments, 39% of smaller churches and 49% of larger churches suffered at least a minor impact on the church’s savings and investments.
The financial crisis is felt by the local church because of its effect on individuals and families within the church (see Graph 4). Almost every church (96%) with 100 or more in worship indicated that there were members within the church who were impacted by unemployment—more than half (61%) said the impact was moderate or major. The percentages in churches with less than 100 were not quite as high, but 80% of churches said unemployment had at least a minor impact on its members. Most churches also received requests for cash assistance. The combination of decreasing financial resources and increasing requests for assistance has surely made this time period difficult for many local churches to manage financially.
In general, pastors of larger churches perceived more of an impact from the financial crisis on the operations of the church and on their members. While churches of all sizes have used a variety of methods to manage the impact of the financial crisis, large churches seem to have more options to reduce staff and/or salaries, tap savings, and postpone building projects or improvements, so that 61% reported at least a minor impact on the church in three or more areas, compared to 37% for smaller churches (see Graph 5). On the other hand, 27% of churches under 100 in worship said that the financial crisis did not impact their church in any area (zero), compared to only 14% of churches with 100 or more people.
Graph 6 shows that the financial crisis did not impact members in 12% of churches with less than 100. It is obvious that as church size decreases, there are fewer individuals who might be affected by job layoffs, but smaller churches may also be more likely to have a membership consisting mainly of seniors (retired), or to be located in more rural areas where the economy was not affected as much (such as farming communities). Still, 55% of smaller churches and 79% of larger churches said the financial crisis affected their members in at least three of the four areas listed.
Although the survey did not ask about the ways in which the local church might have tried to increase giving, it’s easy to imagine that many individuals and families have given sacrificially to help their local church weather this financial storm. So, how has your church managed the financial crisis?
Kenneth Crow (now retired) formerly served as the manager of the Nazarene Research Center (now Research Services).