top of page

What is the Difference Between Church Capital Campaigns and Fundraising?

Church Capital Campaign

Definition of a Church Capital Campaign

A stewardship campaign is a carefully choreographed series of events that encourages an ongoing offering for a given period of time above and beyond the current giving of tithes and offerings. A proper capital campaign is biblical in precedent, spiritual in nature, and produces both spiritual and financial fruit.

What a Capital Campaign Is

Many churches have the misconception of what a proper capital campaign is and what it is not. A capital campaign is a process that is designed to help raise money for large capital projects such as construction, renovation, the purchase of expensive items such as vans, organs, stained glass, or playgrounds, or for debt retirement. A properly run capital campaign will effectively raise money from within (and potentially outside) the congregation through giving that is above and beyond the current tithes and offerings. Most importantly, a capital campaign is at least as much about spiritual growth as it is about raising money.

What a Capital Campaign Is Not

What a capital stewardship program is not, is a high-pressure sales pitch used to fleece the sheep of their money. In fact, the focus of the campaign really is not on money, it’s on communicating that a biblical need exists and how God meets that need through the proper stewardship of the time, talents, and treasures He provides through His people.

Capital Campaign Phases

A capital campaign is comprised of five phases, not all of which are readily visible to the public. The two initial phases of the campaign involve recruiting, selecting, organizing, training a capital campaign committee, and doing the background work to prepare for the public phases of the campaign. The next phase is the public phase, the one that the church body most visibly notices and what most people think of when talking about a capital campaign.

It is during this public phase that the church capital campaign committee provides information, builds excitement, and provides the spiritual equipping to help bring people to an understanding of the need to build and how they will participate in the campaign to meet that need. A campaign is usually capped off with a Commitment Sunday to collect the pledge commitments and to celebrate what God has done, and will do, in the church.

Finally, there is a short administrative phase and then the long-haul of the ongoing collection of pledge contributions, accounting, follow up, and new member assimilation into the campaign.

Five Capital Campaign Phases

As described above, a capital campaign is typically broken down into several phases. The time needed to complete each phase is dependent on the size and organization of the church.

  1. Planning & Recruiting                   3 weeks – 6 months

  2. Equipping & Preparation              5 – 10 weeks

  3. Public Phase                                   5 – 8 weeks

  4. Receiving Commitments              1 – 3 weeks

  5. Collection & Follow-up                 3 years (Typically)

The phases can go as quickly as the church can move or take as long (within reason) as it must. The 2nd phase will take at least five weeks for a very small campaign and ten or more weeks for medium to larger churches. A longer period of time is usually less stressful and more effective than trying to cram it all into a few weeks. A longer preparation phase also gives the church more time for the critical task of donor development.

Once the church moves into the public phase, events need to stay on a more rigid timeline. This phase of the campaign is a carefully choreographed time that is intended to maximize the effectiveness of your preparation. For most campaigns, recruiting, preparing, and equipping the stewardship committee should start at least 4 to 6 months or more before the church wishes to be in front of the congregation with the public phase. Doing so will make the whole process much easier, less stressful, and generally improve the overall quality of the campaign.

What You Should Expect from a Capital Campaign

Most churches should expect to experience most or all of the following in a professionally run campaign:

  1. Spiritual growth and increased faith.

  2. A pledge commitment of 1 to 3 times the current annual income in tithes and offerings.

  3. A greater understanding of God’s perfect plan of providence and stewardship with a corresponding dependency on His Word.

  4. An increase in normal tithes and offerings of 10-15 percent. (This may dwindle over time if stewardship principles are not taught on a regular basis).

  5. A greater sense of unity and purposefulness in the congregation.

It must be noted that a primary assumption when launching a capital campaign is that the church has a good idea of what it wants to build, why it needs to build, and what it can afford. If the church cannot definitively answer these questions, it is premature to run a capital campaign. The “what”, “why” and “how much” of the building program are critical requirements for the intellectual and spiritual components of your campaign. Trying to run a campaign without these critical components is like trying to run your car without spark plugs.

The Financial Benefits of a Church Capital Campaign

Over the past several decades, thousands of churches have executed professionally facilitated capital campaigns. Historically speaking, churches have typically raised between 1 and 3 times their current tithe and offering income over three years through a purposeful and professionally facilitated capital stewardship campaign. This is in contrast to fundraising which provides more modest revenue to the church from the sale of goods or services.

Ignoring for the moment the tremendous spiritual benefits that result from a capital stewardship campaign, there are at least six ways a church building program will financially benefit from a capital campaign.

  1. A church may use a capital campaign to begin a savings program in order to pay cash and avoid debt.

  2. Another church, in order to expand the scope of the building project, may opt to augment their borrowing capacity with additional funds from a capital campaign.

  3. Some churches, without the necessary cash to begin a building program, may use a capital campaign to help raise the necessary cash to cover up-front expenses and/or necessary cash buffer prior to securing a construction loan.

  4. Others will choose to use a capital stewardship campaign to pay off the debt as quickly as possible.

  5. A capital campaign provides a fund from which a portion of the higher mortgage payments may be paid until the congregation and giving grow to meet the payment.

  6. A capital campaign may be required by the lender in order to qualify for a loan.

Capital Campaigns and Debt Reduction

Let’s consider an example church which has $500,000 per year income and see what happens when the entire proceeds from a capital campaign is applied to debt reduction.

Debt Reduction Example

Conventional lending guidelines indicate that a maximum safe debt for the church might be $1,500,000. Given historical precedent from other capital stewardship programs, it would not be unreasonable to expect this church to raise between $500,000 and $1,500,000 over the next three years in a professionally facilitated capital stewardship campaign. If we took a conservative viewpoint and said the church raised only 1.5 times its current income, at the end of three years the church could retire as much as $750,000 of the $1,500,000 debt by applying 100% of the proceeds from the campaign to reducing principal. During this same time period, the church will have reduced its principal balance by at least another $127,703 through its regular monthly loan payments, leaving an unpaid balance of $571,101 after only 3 years. (This assumes on-time mortgage payments and additional annual payments from the capital campaign applied against the principle of $250,000.)

Speed of Debt Retirement through a Capital Campaign

As shown by this example, the combination of regular payments plus the proceeds from the capital campaign has enabled the church to retire just over one-half of the debt by the end of the three-year campaign. Of course, if the church raises more money in its campaign, then the remaining debt is reduced correspondingly.

It seems reasonable, therefore, to expect that if the church can retire half of its debt in three years, it should certainly be able to retire the remaining half over the next four years. In fact, if the church were to continue with its regular payments and then run a second campaign with similar results to the first, it would easily pay off the loan balance in six years and have some seed money for the next building program already in the bank.

Being optimistic, I believe the church will grow numerically and financially over the period of paying off the debt. This is supported by a study of churches that showed 80 percent experienced growth after completing their building program. Increased attendance should translate into increased offerings which should allow the church to retire its debt even more quickly.

Being practical, I also realize that many churches will elect to augment their building budget with some of the proceeds from the campaign or use some of the campaign income to help service debt, either of which would leave less of the proceeds for debt reduction. However, the principle is still valid.

The church in our example executed a second stewardship campaign that was a non-stop continuation of its first campaign. That campaign paid off the remaining debt and put money back into a building fund account for future renovation or building programs. Hopefully, your church will be considering its next expansion plans before the end of seven years, which is certainly a very good reason for becoming debt-free as quickly as possible!

Becoming debt-free in seven years or less begins with the concepts discussed earlier about knowing what is needed and what can be afforded. The church needs to do this before getting too far into a building program, and then put a plan into place to make it happen.

Part of the financial plan for any building program should include a plan to retire the debt in a timely fashion.

Benefits of Hiring a Consultant

Many churches elect not to hire outside help for a capital campaign. For the vast majority of churches, this decision is often to their financial loss. Conventional wisdom and anecdotal evidence indicated that churches that use a professional campaign consultant raise, on average, twice as much as churches that self-deliver their campaign. While there are exceptions to every rule, my personal experience confirms that churches inexperienced in capital fundraising which do not use outside consultants typically raise about 50 percent less in their fundraising than those who do get professional assistance.

Do-It-Yourself Capital Campaign Failure

In 2010 I had an opportunity to put this to the test. A church that had been in discussions with me about a capital campaign elected to do it themselves. My initial fact-finding indicated the church could likely raise $1,000,000, and the church only needed $900,000 to make the numbers work for their project. About eight months later the church called me. Their campaign had not performed as they expected, raising just over $470,000, and they wanted to know if I could help them meet their goal.

The Power of Using a Church Capital Campaign Consultant

I had never had the opportunity to do a “do-over” campaign for a church, but was confident we could improve their results. Long story short, we ran a “second wind” campaign and raised the total to just over $800,000. While not quite double, and perhaps not as good as they could have gotten doing it the right way the first time, I believe this fairly represents the difference between well-intentioned and well-qualified campaign leadership.

As this demonstrates, it is to the church’s advantage to hire a capital campaign consultant to assist with the fundraising. Any increase in the cost of the campaign due to hiring a consultant is certainly offset many times by the increased giving that results from this assistance.

When Should the Church Run a Capital Campaign?

With few exceptions, the answer to this question is generally “as soon as possible.” In the post-2008 economy, a capital campaign may be required by the lender, or may be required to provide the necessary cash on hand and cash flow to qualify for a loan. The money raised before construction can either be used to reduce the amount of money the church needs to borrow or to increase the scope of the building program. How this money is utilized depends on the church’s interpretation of financial stewardship, and of course, the church’s unique situation.

Finances are the biggest limiting factor in most building programs. If planning to build in three years or less, now would be the appropriate time to start becoming financially prepared. As it is written in Ecclesiastes 3:1, “To everything there is a season, a time for every purpose under heaven.” The scriptures also direct us to consider the ant who, “Prepares her food in the summer and gathers her provision in the harvest.” (Proverbs 6:8)

The bottom line is that the church needs to be financially prepared when the season of building comes upon it. Too many churches struggle, or even fail for a time, because of lack of timely preparation.

There are several reasons to execute a stewardship program well in advance of building.

  1. A building program and capital campaign are both complicated and time-consuming events, and both deserve undivided attention.

  2. By starting sooner rather than later, the church will have more money with which to build.

  3. The increased giving to the building fund may be factored into the loan calculations, potentially increasing the amount of financing the bank may offer.

  4. A demonstrated pattern of giving to a building fund improves how lenders rate the risk in lending to the church. This can potentially improve the loan rate and terms.

  5. A capital campaign creates a sense of excitement and unity.

Another consideration for the timing of a campaign has to do with the time of the year. There are times in the year when, in the typical church, a campaign is more effective than others. The church should take care to organize the campaign around holidays, vacation times and other church events that might compete for the time and attention of the staff and/or members.

Retiring Debt Is More Expensive Than Avoiding It!

An important point to note is that a dollar given in advance of the building program is more valuable than a dollar given to reduce debt. For every dollar of debt that the church assumes in a building program, it will cost significantly more than a dollar to retire it. For example, at a 6.5% interest rate, every dollar of debt will cost $1.25 to retire if the loan is paid off in seven years. If the church takes 20 years to retire its debt, every dollar borrowed will end up costing the church $1.79 to retire.

Questions to Ask When Preparing for a Capital Campaign

Two important questions that need to be asked of the membership as it prepares for a capital campaign are these:

(1) Who gives to the church building fund in a capital campaign?

(2) Who pays the mortgage every month?

The bottom-line answer to both these questions is that the congregation does.

If the congregation has the option of giving a dollar now to avoid debt, or giving as much as $1.79 to pay off a dollar’s worth of debt, which would they rather do? It comes down to paying a dollar today or as much as two dollars later.

Would your members rather contribute $1 now to avoid having to borrow it, or pay $1.79 later to retire $1 worth of debt?

This logic, however, does not apply if the church is electing to use the capital stewardship funds to extend the scope of the building program instead of retiring debt. In this case, the capital campaign merely permits a larger project to be built than would otherwise be possible but does little or nothing with regard to retiring the debt more quickly.


Definition of Fundraising

Not to be confused with a capital stewardship campaign, which is a purposeful long-term offering, fundraising is a shorter-term program (or series of programs) in which money is given in exchange for goods or services provided with the profits going to the church. Fundraising events come in a variety of different shapes and sizes from candy bars, bake sales and chicken dinners, to car washes and rent-a-youth.

Benefits of Fundraisers

Fundraisers are a good way to keep financial needs fresh in people’s minds. It also gives the church a way to encourage members to approach people outside the church to ask them to help with the building program. Through fundraisers, the congregation and community are given multiple opportunities to contribute financially to the building fund. Don’t think, however, that this type of fundraising will replace a capital stewardship program.

Capital Campaigns and Fundraisers

The most effective way of raising money for the building program is through the determined, sacrificial, weekly giving by the congregation through a purposeful capital stewardship program. Fundraisers can raise money for the building program; however, fundraisers will not be the primary source of funding a new church. After all, it takes a lot of candy bars or spaghetti dinners to pay for a church.

Fundraisers are great ways to raise money for various aspects of the building program including new furniture, sound systems, stained glass windows, new audio/visual equipment, or things that the church may need to purchase that may not be in the building budget. And it goes without saying that the church always has the option to apply the proceeds from the fundraiser to the building cost with the goal of either reducing the amount of money the church needs to borrow in a construction loan or retiring debt more quickly.

In summary, a capital campaign is the most effective way of raising money and reducing the amount of money the church needs to borrow, and/or helping pay the loan off as quickly as possible. Fundraising is no substitute for a capital campaign, but is a complementary strategy that, when used in conjunction with a capital stewardship campaign, will enable the church to raise the most money possible for this important work.

(This article is excerpted from Chapter 7 – Capital Campaigns & Fundraising, Preparing to Build, by Stephen A. Anderson)


bottom of page