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May 19
2017

How Should You Invest Church Funds?

Posted by: Steve Marr

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I received a question from a church board member asking for advice on investing church funds. The church was currently earning less than .5% interest and a board member was proposing to invest the funds in several stock funds that would yield a 5% return each year.

I started my discussion by ignoring the original question. Instead I asked what the funds were being held for. For example, if the funds were being held to build up cash reserves to allow debt-free expansion within five years, you should take no risk with this money. Instead, the low bank interest would be acceptable.

Additionally I asked if they believed there would be another serious recession in the next 2 to 5 years.  They thought there probably would be. My follow-up question was whether they believed these church funds would be needed to sustain the church and increase compassionate ministries during the next downturn?  Again if these funds are needed for future purposes, they should take no risk with them.

My other question was why they were accumulating funds. My usual perspective is that church funds should be invested in ministry rather than be kept in reserve unless there is a compelling reason. While I have no objection to keep some reserves for difficult economic times or to pre-save for future expenses, I’ve also seen churches build reserves above what is reasonably needed for the future.

I also asked the question about the stock broker who promised a 5% return.  I explained that almost any person gained 5% in stocks invested in the market over the past five years. I told them they needed to look at the stockbroker’s record for the past fifteen years to see how they’ve performed in good and bad economic market conditions. An expert like Warren Buffett may be able to beat the market, but very few of us can.

My perspective is that a church is different from a business or some other nonprofit organization. When I lived in Anthem, Arizona; I chaired the community’s finance committee which held over $10 million in cash reserves. However these funds would be needed over the next ten years for repair and replacement of community assets. We needed to be very conservative as we invested these reserves because we needed the funds in the near future. It is better to receive a lower return today but be assured of the capital as needed in the future.  I believe it is appropriate for a church to build some reserve for the maintenance and upkeep of buildings.  This is good stewardship in my opinion.

A business may build cash reserves to help a company during difficult economic times. Also a business may need to save in advance for the purpose of future capital or product development.  Again this would be reasonable.

A person building a retirement fund may want to have a mix of assets including stocks as well as more risky investments as a part of a long-term strategy to build funds for retirement. In this instance taking a part of your retirement money to invest with a stockbroker may be an appropriate strategy.

My bottom line to the church board member is that churches should use funds differently than other organizations.  Church funds should be deployed in accordance with the mission and vision of a church to carry out evangelism, outreach, compassionate ministry and other activities to promote to the Great Commission. 

As I ended my conversation, I challenged the board member to validate why funds were being held in reserve, ensure that the reserves were kept for the correct reasons, and to make sure they would be used effectively for the ministry of the church.

Jesus said, “Give, and it will be given to you. A good measure, pressed down, shaken together and running over, will be poured into your lap. For with the measure you use, it will be measured to you." (Luke 6:38, NIV) In the church we need to strike a careful balance between keeping a reserve and holding back funds that need to be used for ministry. I believe that the Lord teaches us to live by faith and be more concerned about ministering today rather than saving excessively for the future. This is not a license to act in financially irresponsible ways. Instead, it is a way to evaluate whether or not we have a generous heart.

I have observed churches that have held substantial sums in endowment or in other savings decline over time. Then, the funds have to be used to support staff and maintain the church building until they dwindle to nothing and the church dies.  When these circumstances occur they are very sad, and I believe the Lord is not pleased. Besides, God’s investment plan always has more to do with people than money.  

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