When Should Your Church Borrow Money?

Modern Church Leader feat. Nathan Elson
When Should Your Church Borrow Money? feat. Nathan Elson on Modern Church Leader

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When Should Your Church Borrow Money? 

Does your current growth plan require money that your church doesn't have?

Have you ever considered taking on debt to grow your church?

It's not uncommon for these questions to elicit strong responses. Often, the answer is motivated by a burning desire to help their church make a wise decision that will help them fulfill the great commission.

Before a church makes a choice, debt should be thoroughly evaluated. One should not act impulsively without taking into account the costs and sacrifices involved.

If God has a plan for a vast project, He will also help make it happen. Prayer should be part of every decision the church makes, like borrowing money or investing.

Paul's letter to the Philippians was addressed to the believer, but it is equally pertinent to the church. Paul emphatically stated, "My God will meet all of your needs according to the riches of his glory through Christ Jesus"(Philippians 4:19). God will provide His church with all it needs.

Church loans for expansions may be tremendously beneficial when combined with prudent budgeting and honest leadership.

When it comes to a church's mission or projects, debt is not necessarily harmful and can assist the church in its progress.

However, it is crucial to understand that the Bible does not advise every church to take out a slew of debts to fund their mission.

The question of whether a church should take on debt is frequently asked by church leaders and staff, but it is not always easy to answer. That's why we're bringing Nathan Elson, an expert from this perspective, to help us unpack this concept. 

“Growth could be numbers. It could be an impact. It can be different things."
-Nathan Elson

Nathan Elson is the Chief Marketing Officer and Executive Director of Marketing and Business Development of CDF Capital. This fully Christian-funded company has assisted over 800 churches with over $2 billion in loans since 1953. It's an independent lender that aids churches in the construction of structures, the acquisition of property investment, and the implementation of restorations and improvements.

His influence has been felt in multinational corporations, Christian denominations, software, high-tech research, local churches, and small businesses. He specializes in branding, product launches, and building marketing programs from the ground up. Nathan’s passion is for people, including the people who do marketing.

If you would want to know more about how God used them in this area of finance, listen to the podcast by clicking on the link below.

By the end of this episode, you will learn:

  • The financial considerations involved in borrowing money
  • The indications of a financially stable church
  • How to know if your church is ready for a loan
  • A financing ministry that provides payment options to churches
  • How Christian investment has aided the growth of the church
  • And so much more…

Here’s a glance at this episode…

[11:09] We have a very high emphasis on the health and growth of churches. In fact, our tagline is helping churches grow.

[13:52] We're a ministry. We're not-for-profit banks or credit unions when we don't have owners and shareholders. We try to funnel all of that as much back to the investors who use us as an investment vehicle for what they do.

[19:29] Ideally, a church will come looking for capital before they decide they actually need the capital.

[23:43] What we found in churches, even through the pandemic, but churches that we serve, giving hasn't waned. 

[31:28]  Growth could be numbers. It could be an impact, it can be different things. What we've realized over the years is that it's not just about money. You can throw money at a ministry and it might accomplish zero. 

[31:49] You can have all the money and still shrink as a church. There are 1000s of churches out there that have millions of dollars in the bank, and they have healthy giving every week, attrition, attrition, attrition, and then not have an impact. And there are churches out there that have nothing that barely pays their bills. And they're setting the world on fire for Jesus.

[32:20] That's why we don't focus on the church itself; we focus on the leaders of those churches. Because ultimately, while we're giving a loan to an organization, we're doing it because of a relationship with a human being.

[33:10] We have three things, right, we have the financial capital, which is investments and loans, then we have something called leadership capital, an idea which is basically pouring into the lives and helping leaders be better leaders. And we do that in cohorts and connectivity, and events, and content. And then we have what we call spiritual capital, which is the spiritual lives of those we encounter.

[43:10] One of the conditions of being human is we will fail because if we didn’t we would not need Christ to begin with. The whole purpose of Christ is because we can’t do it on our own. 

[43:41] We have to overcome things in order to grow.

podcast transcript

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Nathan Elson (00:00):
... Right. You can have all the money and still shrink as a church. There's thousands of churches out there that have millions of dollars in the bank, and they have healthy giving, yet every week, attrition, attrition, attrition, and they're not having impact. And there's churches out there that have nothing, that barely pay their bills, and they're setting the world on fire for Jesus.

Narrator (00:27):
Welcome to the Modern Church Leader, where you'll hear executive pastors share practical tactics and strategies that churches are using right now to thrive in our digital world and advance the kingdom of God. Here's your host, Frank Barry.

Frank Barry (00:43):
Hey, guys, joined by a great guest today, Nathan Elson. How's it going, man?

Nathan Elson (00:48):
Good. How you doing?

Frank Barry (00:50):
I'm doing amazing. It was great catching up prior to starting to record.

Nathan Elson (00:55):
Yeah.

Frank Barry (00:55):
So this is our first time meeting, but we have so many kind of personal connections and relationships that are similar, so it feels like we should have known each other a long time ago.

Nathan Elson (01:05):
Yeah. I'm actually surprised we haven't crossed paths given the immense overlap of our Journeys. So that's kind of cool.

Frank Barry (01:12):
Absolutely. Absolutely. So kind of while we're jumping in, we do this show, it's Modern Church Leader. 90% of the time we're talking to church pastors and senior leaders at churches, but you actually work for CDF Capital as their chief marketing officer, but you have a church background.

Nathan Elson (01:31):
Yeah, yeah.

Frank Barry (01:31):
So I'd love to hear a little bit about your journey over the last, I don't know, 10 years, maybe 20 years. You can start wherever you want. You can go all the way back to child.

Nathan Elson (01:42):
Yeah. I don't know. A winter's day in mid seventies in Vallejo, California. No. So my journey to where I've gotten has been quite interesting, because my career hasn't just been a straight line. So when I graduated college back in the nineties, right before I graduated my senior year-

Frank Barry (02:01):
Back in the nineties. [crosstalk 00:02:03].

Nathan Elson (02:02):
Back in the nineties. It's 30 years already. It's just crazy. So I gave my life to Christ my senior year of college. So I was on a very distinct path prior to that, and then when that happened, it was very disruptive-

Frank Barry (02:18):
Were you... Was your path ministry? Were you like-

Nathan Elson (02:20):
No, no, no. Not initially. So I was a competitive debater in college, and I won a lot of debate tournaments. I was ranked very high nationally, and I was on a path in academia. So when I graduated college, of my graduating class, the people that I graduated with, there's about 30 of us with the same degree in emphasis. I'm the only one that's not a lawyer or a professor, including my wife. That's how I met my wife, and I'm the only one that's not a lawyer or professor. So I was on that path.

Nathan Elson (02:48):
And when I gave my life to Christ, I got disrupted, and I decided to go, "Well, I should go do ministry stuff, because that sounds like a thing to do." But when I graduated college, I got a full-time job, and then went to full-time ministry. And so I was bivocational for a great part of my career. So I had these two trajectories going on. I had my professional career, and I had my ministry career, and I started off in children's ministry at the church I was saved at, a youth ministry, college and career, associate pastor, teaching pastor, and eventually went off to other churches.

Nathan Elson (03:20):
And at the same time, I was a full-time employee somewhere growing my career. And so as I was going through these two paths, I went and got a business degree, and got a degree, went on to seminary after that, and then did these things. And so I always had a role in ministry and church that separate from how I paid my bills. And so I worked in churches between 400 and 800. I worked in different states, different churches, and after my kids were born, and we're trying to figure out our future, I actually got an opportunity to go up to Washington State and work at an organization that's now called Faith Life, that used to be called Logos Bible Software. They make Logos Bible Software. And I got asked to go up there and to run e-commerce-

Frank Barry (04:02):
Which every pastor on the planet uses. So everyone would be familiar with it.

Nathan Elson (04:04):
Every pastor on the planet [crosstalk 00:04:05] like to or not, they use it, because that's what's out there. If they want to do a Bible study on their iPad, that's what they're going to use.

Frank Barry (04:11):
Yep.

Nathan Elson (04:12):
And so I got asked to go up there and run e-commerce and run marketing, and while I was up there, I served at three different churches, one church about 100, one church about 300, one church about 16 people. So my last season up there, I stepped in and helped the church plant. And it was about 16 people. It was awesome. Very small church. We're still really close to the couple that planted it. It was fantastic.

Nathan Elson (04:40):
And in midst of that, I got an opportunity. This is back in 2013, I got an opportunity for the first time to have a job at a church that can be my job and my ministry, and through that I was asked to go down to Rock Church in San Diego and be on their executive team, and oversee Sundays, worship, and marketing, and social media, PR, kind of the public persona, and I had a really cool title there. It was pastoral director of interaction and communication.

Nathan Elson (05:13):
So basically, everything that was public that happened filtered through my team, my team that I had. And it was cool. We did amazing things back then. It was an awesome season to be down in San Diego with Miles and the team down there, because we were doing-

Frank Barry (05:30):
San Diego is a great place to be. So I understand.

Nathan Elson (05:32):
It was. And we were doing some really innovative things. It was right when [inaudible 00:05:37] Mingo Palacios, who's down in La Jolla now, who pioneered this thing called micro church, where we're putting church in parking lots, standing out with a screen, a projector, and a speaker, and a little internet hotspot, and streaming church into parking lots.

Frank Barry (05:52):
Wow.

Nathan Elson (05:52):
We were doing multi-site at the time. We were doing broadcasting to the Navy. We were just doing all sorts of cool stuff, and figuring it out, and having a lot of fun, and that was really awesome. Oh, and it really scratched two itches for me, because I'm very pastoral in nature. I've been an ordained minister since 2002. Ministering to people has been a huge part of my life and my existence. When I first became a Christian and decided to go to ministry, my dad told me I was wasting my opportunity to go to law school to go into ministry, and didn't agree with it.

Nathan Elson (06:24):
When I took the job at CDF Capital in 2015, my dad was concerned because it meant I was no longer going to be in a church, because that had become such an integral part of my life. And my dad to this day, still not a believer, but he went from, "You're wasting your life in ministry," to, "What do you mean you're no longer going to work in a church?"

Frank Barry (06:42):
Right.

Nathan Elson (06:43):
And through that experience, I gained two levels of experience. I learned how to be a pastor in increasingly better ways, and I had had gone from being an employee to middle management, to director level management, to executive of a leadership that culminated at the Rock at both. I was an executive level position, and I was a pastor at the same time. It was phenomenal. Amazing people, amazing teams.

Frank Barry (07:10):
And just for context, just for listeners, because some people may or may not know the Rock Church in San Diego, give us the 30 second how big was the Rock, how many locations, all that kind of stuff.

Nathan Elson (07:26):
When I got there, two locations. When I left, five, depending on how you counted, between 18,000 and 25,000 people every Sunday. Easter of 2015, which was my last Easter there, we had 50,000 people come to services on Easter weekend.

Frank Barry (07:43):
Wow. Wow.

Nathan Elson (07:43):
It was just big. Big church, yeah.

Frank Barry (07:45):
Big operation, I guess. I wanted people to know the context of your journey pastoral as well as kind of businesses kind of stuff at this big kind of megachurch where there's a lot going on. It's a big operation.

Nathan Elson (07:57):
Yeah. And just in my vertical, which was only 1/5 of the church's operations, I had a team of 40 employees and over 2000 volunteers. Now, these weren't just volunteers that showed up sometimes, these were committed volunteers showing up every week. And so it was just a massive vertical there. It's a huge organization, and they do such phenomenal stuff. And for me, what I really appreciated about the Rock is their emphasis on evangelism, because there's hundreds of people that give their life to Christ at the Rock every weekend, has been like that since it started, it's like that today. It was just a really cool experience to be part of that, being there, helping put Sundays together, and then seeing Pastor Miles say, "Give your life to Christ," and people flocking to the stage and saying, "I want to do it." Over and over again that never got old.

Nathan Elson (08:50):
But through that experience, God started tugging at my heart, and started tugging at my heart in very unique ways. And what I realized as my time there waned, and I started transitioning out, God made it very clear that my next season in life wasn't going to be ministry in a church. It was going to be ministry to churches, and I had no idea what that meant. Great, I'm going to go be a church consultant. I'll do leadership consulting or communications consulting for churches, and teach them what I did at Rock. Fantastic. It's going to be great.

Frank Barry (09:20):
Right.

Nathan Elson (09:21):
My first thing I did after I left Rock Church, I went to go work for a tech startup and rebranded them. So it had nothing to do with church, had nothing to do with faith, had nothing to do with anything. The guy who ran it, who owned it, was a member of Rock, friends of Miles. When I decided to transition out, he found out, called me and said, "Hey, come help me while you're figuring out what you're going to do." And after that process, I got asked to interview at CDF Capital multiple times. And I'm like, "I don't want to go do what they're doing. It's just not my thing." Eventually-

Frank Barry (09:53):
Yeah. You're like, "I'm not..." It's a totally different thing. I mean, I guess the startup thing was pretty different, but even going into lending and investing, it's a whole nother way outside of being a pastor kind of thing.

Nathan Elson (10:07):
Yeah. And I even told myself, "I don't want to wake up every morning and have to go sell investments. If I was going to do that, I'd have gone work for Charles Schwab or something after I went to business school.

Frank Barry (10:17):
Right.

Nathan Elson (10:18):
But God kept tugging at my heart about it, and so I said, "Okay, I'll talk to them." And I had one conversation. I'm like, "Hey, this is kind of interesting." Had second conversation with them, and eventually, I joined the team in December of 2015. And at the time it was called Church Development Fund, and what I was hired to do was to rebrand it. So I got to be part of a team working with the CEO and the board to rebrand it, and that's when it became CDF Capital. And I've been there six years now, and it's been a fantastic journey because of what CDF Capital represents.

Nathan Elson (10:51):
And I know maybe one person listening to this actually knows who we are. So what CDF Capital is is a ministry. We're a 501(c)(3) qualified ministry. So we're not a for-profit, we're not a bank, we're not a credit union. We are an independent lender. And what we do is we sell investments to individuals, and to businesses, and to churches, and we take that money, and we only lend it to churches for them to build buildings, buy property, and renovate their property. And so we have a very high emphasis on the health and growth of churches. In fact, our tagline is, "Helping churches grow."

Nathan Elson (11:33):
And we've been around since 1953, we were founded here in Southern California, and we have helped over 800 churches buy property or do projects, and have lend out over $2 billion. And every single one of those dollars was funded by individual Christians, churches, and Christian businesses. And so it's really cool to be in an environment where I can tell anyone who invests with us where 100% of their money is going, and what it's doing.

Frank Barry (12:01):
Right, right, right. [crosstalk 00:12:03].

Nathan Elson (12:02):
I can say, "Hey [crosstalk 00:12:04]."

Frank Barry (12:04):
Just for my understanding and for the listeners, you have Christian people and organizations, churches, businesses, individuals, who will partner with you guys and invest money, say, I don't know, some Christian kind of focused business says, "Oh, I want to give you guys, I don't know, $10 million. I'm going to invest it, and then you guys are going to take that money and go lend it to churches and faith-based kind of ministries that need capital for something." I think building a building is probably the most common, or maybe renovations to their building.

Nathan Elson (12:45):
Right.

Frank Barry (12:46):
So they want to go do something, and then you loan that money out, and then it comes back with some sort of interest, and then you kind of... The people invested make a return on that kind of thing.

Nathan Elson (12:55):
Pay back. Yep. Absolutely. That's exactly how it works, and it's not complicated.

Frank Barry (13:02):
Yep.

Nathan Elson (13:02):
And since we are ministry, we don't have shareholders who we have to turn a profit for. We don't have to gouge prices to make money, if that makes sense. We're able to give a fair rate of return to our investors, and give a fair rate on a loan to churches and ministries. And so the way it really works is we have a certain amount that we have to operate off of, and we have what's called a spread, and we have a modest spread. We're not looking for a massive spread. We try to keep our spread in a certain spot that covers our operational expenses and allows us to grow.

Nathan Elson (13:40):
Because we don't have a surplus at the end of the year, our cap of what we can lend out doesn't grow. And in order for us to have more churches, we need that to grow. So we try to have a surplus at the end of every year, so our cap grows, and then we go from there. And so we try to balance that out. Now, we don't give rates to churches that are outrageous, but based upon their credit rating, and what they get at a bank, we can usually either match it or beat it. But again, we're a ministry, we're not a for-profit bank or a credit union, and we don't have owners and shareholders. We try to funnel all of that, as much of it back to the investors, who are using us as an investment vehicle for what they do.

Frank Barry (14:25):
Yeah, yeah, yeah. I mean, it's a great kind of circle of Christians being able to help other Christians in a [crosstalk 00:14:34], right?

Nathan Elson (14:34):
Absolutely. Yeah.

Frank Barry (14:36):
So it's like, hey, somebody, or some business, or even a church is doing well financially. They want to invest that money in a way that goes directly to helping the big church in some ways, and you guys are a lending facility that kind of makes all [crosstalk 00:14:52].

Nathan Elson (14:51):
Yeah.

Frank Barry (14:51):
So it's really cool. I mean, and I agree. I don't think a lot of people even know that kind of thing exists.

Nathan Elson (14:58):
No. Correct.

Frank Barry (14:59):
Let alone CDF Capital, you guys individually, but just that concept of a Christian organization who's both helping on the investment side, but also lending to churches and helping churches grow, and that full circle happening.

Nathan Elson (15:16):
And the cool thing about it is that I love telling this story, because people always have the same reaction like, "Well, that's really cool." Because we do pay a fair rate of return. If you go to our website and look at our rates, you're going to see that they're really competitive with other institutions, and we do that because we can. Because we're not trying to make a profit, and so what I found when I got to CDF Capital, back to my personal journey, is that rather than ministering in a church, I'm now in a place where I'm interacting with church leaders across the United States on a constant basis.

Nathan Elson (15:49):
And I get pour into church leaders, and because I have a background in church, because I've been in churches of 16, and I've been in churches of 20,000 in leadership roles, I understand how churches are structured, how they work, the dynamics, the leadership plateaus you get to, and those different things. And so it's very helpful that I have that background, because I find myself in conversations with pastors and executive pastors of churches all the time. And the fact that I understand what they're going through, and what they're dealing with, just helps in the conversation. So it's great.

Frank Barry (16:26):
Yeah. 100%.

Nathan Elson (16:26):
And so that's why the shortest I can make my journey is I went from ministering in a church, to ministering to churches, and it's been a great, great experience for me.

Frank Barry (16:37):
Oh, man. It sounds like a fun journey.

Nathan Elson (16:41):
Yeah, it's been great.

Frank Barry (16:42):
You've gotten to do a lot of stuff. You've got to mix the two worlds together, and you're kind of in this spot that you get to keep doing that in a sense. You get to kind of do the marketing thing, and kind of do it from a real business perspective, but you're still serving churches, and using your pastoral background to... Pastors like to talk to other pastors, and like to talk to people that can really understand the journey and the experiences, and we get that even at Tithe.ly.

Frank Barry (17:11):
People like to know that a large part of our staff is either all really active, or volunteering, or was at one point working for a church in a pastoral role. And I don't have anything near you, but my first five years out of college, I was a youth pastor, and so I get it to an extent, and I'm super active in my church, and it matters, right? When [crosstalk 00:17:34] churches.

Nathan Elson (17:34):
It does matter. It does, because if you've spent any time working in a church on a pastoral level, it's completely different than even volunteering at a church or being an employee at a church. There's an extra level of criticism, and this is very biblical. The Bible says, "If you're going to call yourself teacher, if you're going to call yourself pastor, you're going to have an extra level of emphasis on your life. There's going to be extra criticism. There's an extra burden that you carry."

Frank Barry (18:02):
Yeah. I was just thinking burden. There's an extra you carry something [crosstalk 00:18:05].

Nathan Elson (18:04):
Yeah. And it was interesting. Pastor Miles at Rock Church used to say this all the time when he talked to pastors, "You have a certain amount of stress and a certain amount of notice by the enemy being a church of 500. A church of 1,000 is a whole nother level of that, but you want a church of 15,000, 20,000, that's a level of stress, scrutiny, and exterior stuff that you're not prepared for. That you may want it, but it's completely next level, because it's not a linear growth."

Nathan Elson (18:43):
So when it comes to church, the problems of a church of 200 aren't linearly different of a church of 400. They're algorithmically different. So it exponentially changes, but [crosstalk 00:18:56].

Frank Barry (18:57):
I've got triplet nine year old boys.

Nathan Elson (19:01):
Oh my gosh.

Frank Barry (19:02):
And it's like the difference between one kid versus three kids, or someone that has three to five, they're very different. It's not like you just, "Oh, I've added a kid." And then you add three all at the same time. And I don't know, it's off the charts, but I get it, because I get it very, very personally.

Nathan Elson (19:19):
Well, that a lot. That's great, and I have two kids, one boy, one girl, so I'm good.

Frank Barry (19:24):
Yeah. So tell me from a real practical... So CDF Capital, you guys lend to churches. When do churches come looking for capital, come looking for money, and how do you guys help them through that process?

Nathan Elson (19:43):
Well, ideally, a church will come looking for capital before they decide they actually need the capital. And what I mean by that is that there's certain financial things that have to be in place for a church in order to make them bankable. It's like the legal [inaudible 00:19:58] in our business. Are they bankable? And a way to look at it would be, "Are they credit worthy?" And so ideally, it'd be early on the process, but it never is. So it's usually a church has found a building, already signed a deal with a contractor to renovate their building, or-

Frank Barry (20:14):
And they don't have the money lined up yet?

Nathan Elson (20:16):
Or they're paying a rate they don't want to pay on the loan they already have, and they want to get it refinanced, because that usually happens when a new executive pastor or a new business administrator goes into a church. First thing they do is they look at the debt and say, "If I can refinance this, I'm going to save us so much money." So that's usually when it happens, when there's some sort of event in the church to cause them to look at their existing debt, or if they have an opportunity to purchase a building, or if they have an opportunity to renovate, or have a need to do is usually when they're looking for capital.

Nathan Elson (20:48):
And for us, we just enter into a collaborative process with them. We have some markers that we look at, and we gather the information from them, and based upon those markers, we can tell them pretty early on a process. And basically, even if it's unverified, we can tell them, "Hey, based on what you gave us, this is where it's kind of landing."

Frank Barry (21:06):
And what would that be? What are the general things a church should need? Because I'm thinking of someone watching this, and maybe it's their first time, or they're thinking about it, or whatever.

Nathan Elson (21:15):
Sure.

Frank Barry (21:16):
What are you guys going to look at in terms of lending to a church? Weekly giving, or yearly giving, and how that's trended over time, and I don't know, other [crosstalk 00:21:26].

Nathan Elson (21:25):
Those things are all important, but the two most important ones that we look at are what's called debt capacity ratios and loan-to-value ratios. So basically, if you have a loan-to-value that's below 80%, no matter where you go, CDC Capital, a bank, a credit union, wherever, that's going to be more favorable, because that means that the asset that is being purchased or being financed is worth a more than a loan to a point where there's some recovery that can happen if something goes wrong, which we never want that to happen.

Frank Barry (22:02):
Right.

Nathan Elson (22:03):
And the same thing for a house, right? So if you go to buy a house, and you don't have a 20% down payment for your loan, you end up paying more for the loan, because the ratio is bad. So it's the same thing, right? That's one thing we look. The other [crosstalk 00:22:18].

Frank Barry (22:19):
What kind of capital do they have to do the down payment, that's part of the equation.

Nathan Elson (22:23):
Part of it.

Frank Barry (22:23):
It's money up front.

Nathan Elson (22:24):
Yeah.

Frank Barry (22:24):
And so what percentage of the property, let's say if they're buying, are you guys financing?

Nathan Elson (22:31):
We'd like to finance as little as possible for it. So I can't get into the specifics for that, but just now it gets to a residential mortgage would be kind of the starting point. But there's deals we have where we we'll finance more for the right situation, or we'll finance less for other situations. And that's just because of how we're structured, and what we can do. Because again, we're an independent nonprofit lender, and we don't have strict lending rules. We can actually look at each church independently and see, "Hey, where's this church trending?"

Nathan Elson (23:09):
So we do look at giving. We look at attendance. We look at not just raw numbers of giving, but how many giving units are in the church. And that's something that's kind of in church in general, especially for you guys, that's something that you guys probably talk all the time. Not how many people show up to church, but how many different families are actually giving at your church? Which is whatever you want to call that, we call it giving units.

Frank Barry (23:32):
Yeah. Yeah. Giving units. Absolutely. Yeah. Hugely important. Every church should know that.

Nathan Elson (23:38):
Every Church should know that. In fact, that's more important than attendance, because at church these days you have no clue what your attendance is. Zero.

Frank Barry (23:44):
Right. Yeah. Especially in a post COVID world church is online.

Nathan Elson (23:48):
Right. You really don't know.

Frank Barry (23:49):
And all the crazy that every church is suffering through.

Nathan Elson (23:52):
Right. But you do know how many people are giving every week.

Frank Barry (23:57):
Yep.

Nathan Elson (23:58):
And what we found in churches, even through the pandemic, the churches that we serve, giving hasn't waned. And in fact, a trend that we've noticed, and this is more anecdotal than it is scientific, is that while the giving units have been stable and in some cases have grown, the churches we help, the attendance seems to have gone down. Because what's happening is a person still gives to their home church, and the church they identify with, but they may go to another church this Sunday, or they may be out of town and do something else. They may watch online. They may do this.

Frank Barry (24:29):
Yeah. They're watching online. I feel like the watching online thing is probably the most, or they've just gotten comfortable being home.

Nathan Elson (24:38):
[crosstalk 00:24:38] be at home.

Frank Barry (24:38):
And so they haven't quite made it back in the door. So the church doesn't know.

Nathan Elson (24:41):
Right. [crosstalk 00:24:43] know.

Frank Barry (24:43):
[crosstalk 00:24:43] don't know if the person is attending via an online service.

Nathan Elson (24:46):
Yeah. And so we look at ratios of how many people give, and can support the debt, how much the debt will be a part of their monthly expenses, and basically, so that's debt to income ratio. Are they bringing in more in giving than they're going to be sending out in expenses?

Frank Barry (25:11):
Right.

Nathan Elson (25:12):
So we look at all of that. Every church is different. There's no thing, but we have these basic thresholds that are kind of, "Yeah, we can't help you at all unless you fix these things." And then there's, "We could help you. We just don't know. We'll have to talk about it." And then there's, "Yeah. Most likely we might be able to help you. So let's talk." So there's kind of three buckets we put churches in when we interact with them, and we never just turn a church away from the conversation. We try not to, even if we know that there's an unlikely chance that we might not be able to help them now, we try to help them of figure out what they need to do to get the financing that they need, whether it's from us or someone else.

Frank Barry (25:51):
Yeah, that's awesome.

Nathan Elson (25:52):
Because down the road, they may be able to tell someone about us, or we may be able to help them.

Frank Barry (25:57):
Yeah.

Nathan Elson (25:57):
And there were some churches we'll just take a flyer on. This church plant in San Diego that was gifted a piece of property, it needed significant renovation. They were a year into, had no financial history, but we saw what was going on in the church, and we took a flyer on them. Five years later, they're extraordinarily stable. They can more than handle the debt that they have, and in fact, they're looking to expand more. So coming back to us and saying, "We have these other projects. Can you help us with it?" And because we fostered that relationship early, they're coming to us first instead of going to a local bank, or going to another lender, or going to whomever.

Frank Barry (26:35):
So that's interesting. Just from a church maturing and growing, money is a big deal.

Nathan Elson (26:48):
Money is a big deal.

Frank Barry (26:49):
You need money to do things, and I think this is a full generalization, so I don't know this for sure, but just in my own kind of talking to churches over the years, most churches just rely on weekly giving.

Nathan Elson (27:02):
Right.

Frank Barry (27:03):
So where is giving, and I run kind of on a cash budget, like how much came in on Sunday, and so what do I make per month, and what does that let me do? And then that kind of constrains their ability to kind of think about growing or where am [inaudible 00:27:24] next? Because I'm kind of like, "This is all I have. I have to live within my means." And that's obviously very solid thinking in the sense of you don't want to get yourself in trouble, or do anything that's going to put the church at harm, but then you describe this scenario where it's a church plant, they're gifted this thing, and they need money, and they want to go out and take on some debt to make it all happen.

Frank Barry (27:49):
I don't know. Just in your experience, your six years there, your church life experience, when should a church start thinking about bringing on debt to grow? It's a pretty random question, but how [crosstalk 00:28:04]it is?

Nathan Elson (28:05):
It is, and it's a good question, and it really comes down to the leaders in the church, and not just the pastor, but the elder board, or the deacons, or whomever is that voice speaking to the pastoral staff, and the lead pastor, or the senior minister, or the executive pastor about the constraints of that church, because debt is a vehicle to accomplish certain things, and that's it. So this isn't consumer debt. It's not like you and I going out, and doing something, and saying, "I don't have the money for this, but I want to do it anyway. So let's go do it." Debt when it comes to organizational debt, it can be a very good thing. And the reason being is because it allows for certain things to happen while other things are taking place.

Nathan Elson (28:52):
So there's situations where a church would want to take on debt, even though they may have the cash, because they can put that cash to use for other things, and handle part of the organization on debt, usually property, because the debt and the property are tied together. And they can use the cash that they have to actually do ministry, and then service the debt easily there, because at the end of the day, they may be paying more long term for it, but what they're getting out of it is different. And that's really where helping churches is such an ethereal thing, right? Because there's no one situation that's going to be identical to anyone else's.

Nathan Elson (29:26):
You can have the same church, two campuses, and have it be vastly different situations. One campus, yeah, get some debt. The other campus, no, don't get debt, because it has to do with location. It has to do with congregation. It has to do with personality. It has to do with function. It has to do with other things. So really the conversation should start very early on in the process. And the process should start with the question is, "What are we trying to accomplish?"

Nathan Elson (29:50):
I'm a big fan of Simon Sinek You start with the why. Why would we even do this? And there's been times where we've talked to churches, and they've come to us and said, "We want a new building. We want to grow and do this." We take a look at what they had and said, "You know what? You can spend a third of that, change what you have in this way, and you're going to get far more, better result out of it than buying this building over here." Because it's on the wrong side of the freeway, or it's facing the wrong way, or it's going to cost way too much to renovate, right?

Frank Barry (30:20):
Right.

Nathan Elson (30:21):
So it's really situational with things with that. So I'd say the conversation needs to start as early as possible, but go back to what we talked about beforehand. This is really why we do things the way we do, because we're not interested in getting that loan from a church. We're interested in having a relationship with the leaders of those churches. And if that leads to a financing relationship, then great. We've got capital. You have a need. Let's talk about it. But we would rather see churches not have debt. So one of the biggest points we celebrate is when a church pays off their loan.

Frank Barry (30:54):
Pays it off, yeah.

Nathan Elson (30:56):
Right. Because that's great, because it means two things for us. One, we can put that money in another church and helps someone else, and two, we did what we set out to accomplish.

Frank Barry (31:05):
Right. And inherently, if the church paid the debt off, then they in at least a portion of what they were doing achieved what they were headed for. Right?

Nathan Elson (31:16):
Absolutely.

Frank Barry (31:18):
Maybe it looked different by the end, because I don't know what the terms are, but theoretically, if they paid the debt off, it went well. What they set out to do went well.

Nathan Elson (31:27):
Absolutely.

Frank Barry (31:28):
Church is blessed, and growing, and things are going well, the investors get their return.

Nathan Elson (31:33):
Yeah, exactly. Whatever growing means.

Frank Barry (31:36):
Right, exactly.

Nathan Elson (31:37):
Right. Because I don't know what growing means for your church.

Frank Barry (31:39):
Healthier in some way.

Nathan Elson (31:40):
I don't even to the church I attend. Right. Exactly. Because growth could be numbers. It could be impact. It could be different things. And what we've realized over the years is that it's just about money. You could throw money at a ministry, and it might accomplish zero, and what our former CEO, Dusty, used to say... We just went through a CEO transition. What dusty used to say is that money alone in the kingdom of God doesn't accomplish anything. Right?

Nathan Elson (32:04):
You can have all the money and still shrink as a church. There's thousands of churches out there that have millions of dollars in the bank, and they have healthy giving, yet every week, attrition, attrition, attrition, and they're not having impact. And there's churches out there that have nothing, that barely pay their bills, and they're setting the world on fire for Jesus. And there's everything in between. Right? And so you really can't [inaudible 00:32:33] this is the magic formula.

Nathan Elson (32:36):
That's why we don't focus on the church itself. We focus on the leaders of those churches, because ultimately, while we're giving a loan to an organization, we're doing it because of a relationship with a human being, not because it's not a faceless organization talking to another faceless organization swapping debt or whatever, but it's a person who's leading people that has a vision that they believe God gave them for a community, for a purpose, and that purpose is to see people come to Christ, because that's the great commission. That's what we all should be striving for in ministry. And can we get behind that? Can we use debt effectively to help that? If we can't, what can we do?

Nathan Elson (33:22):
And that's why we don't just focus on the debt side of it. For us we have three things, right? We have the financial capital, which is investments and loans. Then we have something we call leadership capital, an idea which is basically pouring into the lives and helping leaders be better leaders, and we do that and cohorts, and connectivity, and events, and content. And then we have what we call spiritual capital, which is the spiritual lives of those we encounter. Because one thing that's not happening is that organizations like us aren't caring about the spiritual lives of the leaders of these churches. They're not caring about putting people in relationship with each other, so that they can grow stronger.

Nathan Elson (33:59):
And one of the loneliest things you can be is a lead pastor, because you think you're on an island by yourself, and you really can't have friends in the church if they're looking at you for the leadership, so you got to find it elsewhere. So we do everything we can through prayer networks and everything to pour into the special lives of people. And everything we do, whether it's a loan, or it's an event, or it's a piece of marketing, has that mix of all three of those things. It has a mix of the leadership, and the spiritual, and the financial, and we believe when it all comes together for a church leader and a church, the results become transformational in the kingdom of God, and we call that transformational capital. That's really what we focus on. How can we help that church leader lead their church and transform their community? At the end of day [crosstalk 00:34:43].

Frank Barry (34:42):
Yeah. I love that. Like I [crosstalk 00:34:44]. Yeah. Like I said before we were chatting, I know my home church is starting to kind of beat around the bush on getting a building, and what that looks like, and all this kind of stuff. And as soon as we're chatting, I'm like, "Oh, man, they got to..." They may be talking to go guys already, but I'm going to go ask them and be like, "You guys got to talk to CDF Capital." Because I just love the kind of spirit of the work that you guys do, and how you approach it.

Nathan Elson (35:12):
Yeah. And much like Tithe.ly, and where you guys come from, and I've been familiar with you guys since you guys started, it's not about the transactions you guys are facilitating. It's about what that represents in a church and in a nonprofit. It's about how that connects people with the resources to the ministries and the churches that they love. Well, we just take that one step further. We're not asking for donations. We're saying, "If you have money that you're going to invest somewhere, invest it with us, earn a return, and help a church get built. Help a community get transformed."

Frank Barry (35:48):
Just quickly on that side of the business, how do you guys get... And you're the marketing guy, so you're at the kind of center of getting the word out both to the individual, or the church, or the business looking to invest money, as well as the lending side. But how do you get in front of people looking to make investments?

Nathan Elson (36:12):
That is the magic question. I actually have on my office in our building, I'm at home right now, I have a unicorn in a glass jar, and that unicorn's name is Conversion, because that's the marketing unicorn. Anyone who does marketing wants to convert.

Frank Barry (36:32):
Yep.

Nathan Elson (36:34):
And that's really what I'm after there. Getting out in front of people is really easy, and anyone who's in marketing, let me tell you how easy it is to get in front of people. You pay money, you get in front of people.

Frank Barry (36:45):
Right, yep.

Nathan Elson (36:46):
It's that simple. It's not hard. Marketing as a discipline is very simple. You identify the audience. You figure out where they are. You figure out how they consume information. You provide your advertisements, or your materials, or whatever in that medium, and they learn about you. What's hard is doing it in a way which gets them to take action. Two actions, one, positive action to say, "I want to learn more." And the second positive action is, "I want to engage."

Frank Barry (37:16):
Right.

Nathan Elson (37:17):
Right. And that's the hardest part. It's not hard to get a lot of people to be interested in what we do, but it's really hard for them to take a positive action. Because as we were talking earlier, I can't create a need. You can have the biggest heart for what we do and not have a dime to invest.

Frank Barry (37:35):
Right. Yeah, yeah, yeah. Yeah. Getting somebody... Well, getting the right person, it's the right audience, to your point.

Nathan Elson (37:40):
Right audience, the right time.

Frank Barry (37:41):
And then getting them to write the check, right? To actually make the investment.

Nathan Elson (37:46):
Right.

Frank Barry (37:46):
There's a long journey from finding the person [crosstalk 00:37:50].

Nathan Elson (37:49):
It is. And so what we found is that if we focus on that and that alone, we're not going to win. We're just not. We pay fair rates. If you go to our website, CDFCapital.org/rates, you can see what we pay. I can't legally tell you about them, because I'm not licensed to sell securities, but go there, read it, see what it's about, and see what we're doing. But I can't go to 10 people randomly and say, "Hey, invest with us," and have them be able to invest with us, because I don't know their financial situation, how liquid they are, if they have another investment that's coming up for maturity.

Nathan Elson (38:26):
So we have to be constantly presenting ourselves, not just to individuals who may invest with us, but to church leaders who may need our services in ways that keep us top of mind. So when there is an event where they become eligible to use our services, they think positively enough of us, and then that event triggers action. So it can take 5, 6, 7, 8, 10 years from someone to first hear about CDF Capital, and then being in a position to buy an investment from us. And the same thing with church leaders.

Nathan Elson (38:59):
So the way we do it is we produce a ton of content, and when I first got to CDF Capital, I asked two questions, "Who are we going to talk to, and what do they want to know?" And since we couldn't answer those questions, we figured out who we wanted to talk to, and then we went to them and asked them, "What do you want to know?" Literally, we just said, "Tell us what you want to know." And then we wrote content about that. And it's crazy. We wrote one article, and it's a great article, but it's a simple article. It's 32 verses or something like 30 verses on biblical stewardship.

Frank Barry (39:37):
Love it. Yeah.

Nathan Elson (39:38):
And we're the first ones to write an article like that, just put verses together on biblical stewardship. We get between 15 and 50,000 hits a month on that article, and we wrote it five years ago.

Frank Barry (39:47):
Wow.

Nathan Elson (39:48):
And every single one of our competitors has copied our article and put it on their website, because it draws so much attention, and that's what we do. We just talk to people and say, "What do you want to know?" And then we tell them, and so it attracts the attention to us. And what we got to get better at is the hard ask, "Now that we have your attention, can you take this positive step for us?" But we're fortunate enough where that positive step doesn't have to be an investment all the time. It can be sign up for our prayer network. It can be refer us to someone who you know. It can be just keep us in mind. Let us talk to you. So if you ever get to that point, come back to us. And so that's going to be our biggest challenge for growth over the next three, four years is finding more and more people to invest with us, because our industry is being disrupted right now. Robinhood just went public. You have Acorn. You have crypto. There are so many other vehicles to invest.

Frank Barry (40:42):
Crazy. There's just craziness going on.

Nathan Elson (40:42):
And then buying a time certificate from an organization like us, where your money is tied up and doesn't come to maturity for a period of time. So we've got to find ways to bridge that gap. And for us the hilarious thing about it is for the past 30 years that we can track, our demographic hasn't changed. We track the ages of our demographic against this curve, and for the past 20-ish years, our average investor age has been the same age for 20 years.

Nathan Elson (41:14):
That means as people get older, people slide into it, and that has to do with the type of investments we have, which are more cash managed things than growth things. And we know that. So we just got to figure out how to move forward and attract more people into relationship with us, so we can go help more churches, because we don't need the capital just to get the capital. We need the capital because there's some church out there that has an opportunity to buy a building and grow, and if we can't help them, no one is going to.

Frank Barry (41:42):
Yeah. Yeah. You want to fund it. Well, man, we could keep talking forever, because I could go off now into your time at the Rock, and how you did marketing there.

Nathan Elson (41:50):
Yeah.

Frank Barry (41:50):
So we're going to wrap it up here. I want to ask you three quick questions though.

Nathan Elson (41:56):
Sure.

Frank Barry (41:57):
Just for the listeners. I love giving people info, giving people ideas on how they can keep learning. So first one, who is somebody that you've been most influenced by kind of in your I'll call it professional career? But you've kind of done pastoral and business, so you can answer that however you wish.

Nathan Elson (42:20):
Yeah. So that was really interesting, because it's going to be a little offbeat, and for me, it's there's a very famous quote that's become really more popular recently and it's, "Try hard, or try fail. Try harder, fail better," or something of that nature. The author that wrote it, and I can't believe I'm blanking on his name right now, which is killing me because I quote him all the time. He was kind of a dissonant writer. He wrote about the human condition.

Nathan Elson (42:54):
And so one of the biggest influences on me has been philosophers and writers who write about the human condition, not necessarily from a Christian standpoint, but from other standpoints, and what that quote... What I've realized, and this is actually a very biblical thing, but this has been a huge influence on me, is that this idea of failure we've missed in American culture. We see this idea of failure as being this completely negative thing, but the reality is even the Bible teaches us that failure is our natural state. One of the conditions of being human is that we will fail, because if we didn't, we wouldn't need Christ to begin with. The whole purpose of Christ is because we can't do it on our own.

Nathan Elson (43:36):
And so for me, just these authors that write about it and write about it as a natural state, but when they do it, they lament it. They say, "Well, we're all failures. So might as well not even try." That mentality I look at it and go, "No, no. If our natural state is failure, then we need to celebrate that." So anyone who's written on failure, anyone who's written on the human condition, where we have to overcome things in order to grow, to me has been heavily influential for me. So I would say don't just look to businessmen. Don't just look to Christian leaders. Look to [inaudible 00:44:11] whether you agree with them or not, whether they are coming from a perspective that you enjoy or not, read about the human condition. Read about what it's really like to be human. And if you want, I have a specific book, Hans Frankel. I'm actually [crosstalk 00:44:27].

Frank Barry (44:26):
That was y next question. Give me your favorite book of all time.

Nathan Elson (44:30):
Hans Frankel wrote a book about his time in a concentration camp in Germany, and how he realized that the people that were doing things to him were human beings as well. And it's just a phenomenal, phenomenal book to read when it comes to the human psychology, and how the brain works, and how we do things.

Frank Barry (44:51):
Amazing.

Nathan Elson (44:52):
So that'd be a book to read.

Frank Barry (44:56):
All right. Last one. Last question.

Nathan Elson (44:58):
Yeah.

Frank Barry (44:59):
Currently your favorite podcast?

Nathan Elson (45:02):
That's a really interesting question there. My current favorite podcast is actually The Bill Simmons Podcast, because I love sports, and I find Bill Simmons completely hilarious, but there's on The Ringer Network they have one that's part of their NBA podcast called The Real Ones, and it's Raja Bell, who used to play, and I'm from LA, and he used to drive Kobe Bryant mad. And while I like the Lakers, they're not my favorite team. I'm a Clippers fan. So anyone who drove Kobe Bryant nuts was great.

Frank Barry (45:33):
Gotcha.

Nathan Elson (45:35):
And there's a story. Kobe was an amazing guy. He'd done a lot for sports in Southern California, and my daughter has benefited from the work he did, but it's a really fascinating podcast, because it deals with the human side of being a professional athlete, especially in the NBA. And you see there's a theme here.

Frank Barry (45:55):
Right. Right. [crosstalk 00:45:55] called? Tell me what it's called again.

Nathan Elson (45:56):
It's called The Real Ones on The Ringer Podcast Network.

Frank Barry (45:59):
Got it.

Nathan Elson (46:00):
And I love it, because it deals with the human psychology of being a professional athlete. And so there's a theme here, but marketing book, for anyone in marketing as a side, it's called Contagious by Jonah Berger, a University of Pittsburgh researcher. Read it. It's about six years old, but it's still amazing. So that's the business book there as a last salvo. Contagious by Jonah Berger.

Frank Barry (46:26):
That's the business book. Man, Nathan, this has been awesome. Where should folks go to find out more about CDF Capital?

Nathan Elson (46:31):
CDFCapital.org.

Frank Barry (46:32):
Easy, love it.

Nathan Elson (46:34):
Easy peasy.

Frank Barry (46:34):
CDFCapital.org. Like I said, I will be sending you the admin info for our church. Man, this has been a great show. Thanks for your time. Thanks everybody for watching, for listening, and we'll catch you guys again next week.

Nathan Elson (46:49):
Thank you so much, Frank. Appreciate it.

Narrator (46:51):
If you enjoyed this episode of The Modern Church Leader, consider sharing it with the pastor or minister you think would benefit the most from listening to this conversation. You can send them to Modernchurchleader.com, or share this episode directly from your podcast app. Be sure to subscribe for free on YouTube, Apple Podcast, or Spotify, so you never miss an episode, and we'll see you again next week with another conversation here on The Modern Church Leader.

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When Should Your Church Borrow Money?

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When Should Your Church Borrow Money?

Discover the truth about borrowing money as a church and when it make sense for you

Show notes

Listen on your favorite podcast app:

When Should Your Church Borrow Money? 

Does your current growth plan require money that your church doesn't have?

Have you ever considered taking on debt to grow your church?

It's not uncommon for these questions to elicit strong responses. Often, the answer is motivated by a burning desire to help their church make a wise decision that will help them fulfill the great commission.

Before a church makes a choice, debt should be thoroughly evaluated. One should not act impulsively without taking into account the costs and sacrifices involved.

If God has a plan for a vast project, He will also help make it happen. Prayer should be part of every decision the church makes, like borrowing money or investing.

Paul's letter to the Philippians was addressed to the believer, but it is equally pertinent to the church. Paul emphatically stated, "My God will meet all of your needs according to the riches of his glory through Christ Jesus"(Philippians 4:19). God will provide His church with all it needs.

Church loans for expansions may be tremendously beneficial when combined with prudent budgeting and honest leadership.

When it comes to a church's mission or projects, debt is not necessarily harmful and can assist the church in its progress.

However, it is crucial to understand that the Bible does not advise every church to take out a slew of debts to fund their mission.

The question of whether a church should take on debt is frequently asked by church leaders and staff, but it is not always easy to answer. That's why we're bringing Nathan Elson, an expert from this perspective, to help us unpack this concept. 

“Growth could be numbers. It could be an impact. It can be different things."
-Nathan Elson

Nathan Elson is the Chief Marketing Officer and Executive Director of Marketing and Business Development of CDF Capital. This fully Christian-funded company has assisted over 800 churches with over $2 billion in loans since 1953. It's an independent lender that aids churches in the construction of structures, the acquisition of property investment, and the implementation of restorations and improvements.

His influence has been felt in multinational corporations, Christian denominations, software, high-tech research, local churches, and small businesses. He specializes in branding, product launches, and building marketing programs from the ground up. Nathan’s passion is for people, including the people who do marketing.

If you would want to know more about how God used them in this area of finance, listen to the podcast by clicking on the link below.

By the end of this episode, you will learn:

  • The financial considerations involved in borrowing money
  • The indications of a financially stable church
  • How to know if your church is ready for a loan
  • A financing ministry that provides payment options to churches
  • How Christian investment has aided the growth of the church
  • And so much more…

Here’s a glance at this episode…

[11:09] We have a very high emphasis on the health and growth of churches. In fact, our tagline is helping churches grow.

[13:52] We're a ministry. We're not-for-profit banks or credit unions when we don't have owners and shareholders. We try to funnel all of that as much back to the investors who use us as an investment vehicle for what they do.

[19:29] Ideally, a church will come looking for capital before they decide they actually need the capital.

[23:43] What we found in churches, even through the pandemic, but churches that we serve, giving hasn't waned. 

[31:28]  Growth could be numbers. It could be an impact, it can be different things. What we've realized over the years is that it's not just about money. You can throw money at a ministry and it might accomplish zero. 

[31:49] You can have all the money and still shrink as a church. There are 1000s of churches out there that have millions of dollars in the bank, and they have healthy giving every week, attrition, attrition, attrition, and then not have an impact. And there are churches out there that have nothing that barely pays their bills. And they're setting the world on fire for Jesus.

[32:20] That's why we don't focus on the church itself; we focus on the leaders of those churches. Because ultimately, while we're giving a loan to an organization, we're doing it because of a relationship with a human being.

[33:10] We have three things, right, we have the financial capital, which is investments and loans, then we have something called leadership capital, an idea which is basically pouring into the lives and helping leaders be better leaders. And we do that in cohorts and connectivity, and events, and content. And then we have what we call spiritual capital, which is the spiritual lives of those we encounter.

[43:10] One of the conditions of being human is we will fail because if we didn’t we would not need Christ to begin with. The whole purpose of Christ is because we can’t do it on our own. 

[43:41] We have to overcome things in order to grow.

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