How do Churches Make Money?
Are you wondering how do churches make money? We see them grow in numbers and fame. Although there has been a significant decrease in the number of churchgoers in the past decade, the COVID-19 pandemic strengthened their faith instead of weakening it. Many are returning to in-person religious attendance.
It might interest you to know that, aside from gathering several believers, many churches are also rich. This money comes from different sources and is used to fund their activities.
The lockdowns in some areas of the world prevented people from going to church, therefore there is a lack of tithes. However, even before the pandemic, there was already a decline in contributions as it is reported that only 5% of the churchgoers gave tithes in the US alone.
How do Churches Make Money?: Diversification
So, how do churches make money? To cover its expenses and finance its activities, the church must go beyond the expected tithes from members. With fewer people partaking in the practice, they have to look for other sources of income for their respective churches.
And like in business, the ministries need to rely on many traditional and alternative sources of income. Diversification is the key to creating more stability. That means the church leaders can focus more on accomplishing what they have been called to do when they don’t have to worry about funding those ministries.
Tithes and giving are always inconsistent for the churches, like in any non-profit. There is no way you can predict the ebb and flow of donations. However, with several alternative sources of income, there is more predictability and security.
Top Sources of Income for the Church
A large portion of the churches’ money comes from pledges, offerings, donations, and contributions. Beyond offerings, the church is also financed by donations from members and visitors gifts and contributions.
This is the most basic form of funding for churches. It is not only traditional but also a standard system established by the church.
Most churches already have an estimate of what they can expect from plate offerings based on what the members have given in previous years. However, changes happened when in-person services were stopped due to the pandemic.
Why is it effective? For the members, this traditional way of giving is a tangible connection to the church, and there is some ritualistic nature to them.
In response to the restrictions on in-person attendance in religious activities during the pandemic, many churches set up online campaigns to replace traditional in-person giving. There are many available platforms they can use like Tithe.ly, EasyTithe, Givelify, Paypal, Pushpay, and SecureGive. So far, these platforms provided the congregation an option to give online.
There is a long-standing debate on why and how much people should give to the church. But even if some members of the congregation do not embrace this concept, some members are regularly giving to the church.
Tithing always comes with commitments to give. Several churches conduct annual pledge drives to source funds. The members usually pledge what they can give and often increase their pledge over the last year.
For example, the Theodore Parker Unitarian Universalist Church in West Roxbury, MA has launched its 2022-23 Pledge Drive to support the church’s operating budget.
Another way the church makes money is by organizing giving around holidays or special events. It does not take much effort to brand campaigns with a seasonal or holiday theme. People are more than willing to contribute during this time.
Giving does not have to be about holidays. Churches also organize end-of-school-year fundraising to fund improvements for the church gymnasium or playground to honor the graduating students perhaps.
Churches also ask for sponsorships for any number of activities or products associated with faith. Many congregations would allow specific contributions to communion flowers or special pieces of furniture like pews.
Sponsorships may not be big alternative revenue sources for churches. However, they provide value or offset some costs that the church would otherwise incur. Plus, many people appreciate the connection to a particular cause.
Sometimes when somebody passes away, they often want to leave the monetary assets they leave behind to still support the causes they promoted when they were alive. This usually happens for devoted members and the church is always a top priority.
It is included as a source of church income when a member leaves a will to donate. In the event of their death, a portion of their sources will be donated to the church.
One way for the church to be financially stable is doing church fundraising as it supplements the efforts they have done so far. Taking on new projects or ministries may require funding that would be far beyond their budget. But this does not stop the church as there are other options available to get funding.
Targeted Ministry Campaigns
It is not a bad thing for the church to ask the congregation to fund specific needs when they have already given so much. However, it can be a legitimate concern, and asking frequently can be off-putting.
But for a legitimate cause, it is bound to be successful. If the congregation has already agreed that the endeavor is part of its mission, its success is already guaranteed. It is also motivating for several people to contribute to a specific ministry.
There is a difference between targeted giving or fundraising and a capital campaign. However subtle it might be.
Fundraisers can be for any particular cause, big or small. The church can raise money for replacing the HVAC system or a youth mission.
Capital campaigns, on the other hand, are used in beefing up the overall resources to cover many missions of the church. They ensure that these endeavors are not interrupted and anticipate future needs.
Another great way the church does to supplement its coffers is through events. People love celebrating, and an event can generate church revenue. It can be anything from festivals to themed events. A church-wide or ticketed dinner is a simple way to do it.
Regular events have the potential to grow in popularity and become successful over time. Aside from the admission tickets, they can also generate money with raffles or silent auctions for donated items.
Some churches have plenty of spaces for Sunday school and Bible studies. Enterprising church leaders use these rooms during weekdays for many services, including counseling services and childcare.
The church can sell different products to earn a profit. For example, starting a small book store can be a lucrative venture. In the 12 months to July 2021, the revenue from religious press was $379.1million.
Aside from books, there are several products the church can sell, including artwork and baked goods. Selling items people want can benefit the church financially. It also encourages people to spend time at the church.
The church can also get its funding through trust. But there are grants and certain restrictions on this. One is registered as a non-profit organization and establishes a board of directors.
Most government grants, which are public funds, are prohibited from supporting religious activities, but there are some faith-based federal and state grants that can.
Aside from focusing on generating funds from individuals or events, the church also uses the assets they have. By leveraging their existing resources for financial gain, they add another income stream to their funds.
By investing their savings, the church can get the most return on what they have. But they have to take a different approach with this one.
Since the money comes from the members, the individuals handling the funds need to be extra careful. That means understanding the level of risks. They cannot invest in stocks , for example. They consult financial advisors to help them get the most of their investment and ensure that they comply with all laws.
Many churches rent their extra property to make money for church activities. They use these properties to generate extra funds for the church. Depending on the size of this property, they rent them for events, co-working spaces, or business premises.
Certain laws apply to renting out. For example, federal law requires any tax-exempt entities to use the premises exclusively for appropriate purposes. It prohibits the church with tax-exempt status to conduct business on the premises. However, the church can charge for the use of facilities as long as it is within the mission of the church.
Churches can engage in a business activity that is not related to its religious mission. But the income from this source is subject to taxation though. It is a good alternative source of income as long as it does not impact the tax-exempt status of the church.
Donations in Kind
While there are plenty of ways on how the church augments its income. There is also another way, and that is to offset costs. The congregation is composed of people with different skill sets. Some churches have volunteers who do the administrative tasks pro bono. There are groups of men who do the housekeeping.
Instead of paying for these services, the church can save the money because the members gift the church with their knowledge or services
Churches have ways to increase their income streams. Most churches rely on philanthropic gifts, but they are not guaranteed income. Therefore, they look for alternative sources of income to establish a sustainable fund for the church activities.