Capital Planning for Churches

HELPING LEADERS BECOME

B E T T E R S T E WA R D S .

CAPITAL PLANNING for Churches

Presented by: Association Reserves

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Table of Contents CAPITAL PLANS 101: WHAT THEY ARE. WHY YOU NEED ONE 4

SUSTAINABILITY OF FACILITY STEWARDSHIP AT YOUR CHURCH

“We’re an old church; we just replace things when they break.”

Many of our churches across the nation are older — but what drives some to thrive while others can’t seem to survive?

This is the common response when I ask church leaders throughout the nation about their long-term capital planning strategy. While this statement might b e t rue for many worship facilities, for many years, that doesn’t mean it’s the wisest form of stewardship for a church’s physical assets.

By Matthew C. Swain, RS

PROACTIVE & PENNY-WISE

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We know a few things about the future: 1) that it will come, and 2) it probably won’t be exactly what we expect.

In this spirit, we counsel our house-of-worship clients to be proactive by preparing for the repair and replacement expenses that are both inevitable and predictable. But, we also counsel them to be wise.

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By Matthew Swain, RS

INTENTIONAL PLANNING, PRACTICAL ACTION: COST-EFFECTIVE STRATEGIES FOR MANAGING INFRASTRUCTURE

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New buildings are a lot like new cars — they don’t usually require a lot of upkeep, at first, to keep them operating.

The problem with new buildings, however, lies in the myth that I hear year after year from clients: It’s new, so it doesn’t need to be maintained right now. (Even clients with older buildings tend to forget that just because an asset is working, that doesn’t mean we ignore it until it stops working).

By Matthew Swain, RS

By Matthew C. Swain, RS

THE SPIRITUAL BENEFITS OF CAPITAL PLANNING

ROADMAP TO A SOUND FINANCIAL FUTURE 7

Mater Dolorosa — a Passionist retreat center in the San Gabriel foothills, in the city of Sierra Madre near Los Angeles — is a sacred place whose spiritual work depends on some decidedly material things. Mission-style buildings, a stunning outdoor Stations of the Cross, and many other physical improvements set the stage for lives to be changed in faith.

To help preserve the beauty and soul-changing power of the places in their care, Mater Dolorosa’s board and staff rely on a professionally prepared capital plan.

By Dan Hotchkiss

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For many years, a congregation in the central valley of California, the breadbasket of America, thrived by serving a cross-section of the American population — from migrant workers to white-collar business professionals and everyone in between.

Through the first few decades of its existence, the church always seemed to get by with no big property surprises.

As energy continued to get more expensive, however, the budget became more strained and could not keep up with the levels of use to support the congregation’s Sunday worship and various weekly activities, from Bible studies to day-to-day operations.

By Matthew Swain, RS

Capital Plans reveal the true cost of building ownership. Spend 8 minutes with Robert Nordlund of Association Reserves to get a big-picture understanding of Capital Plans.

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What they are.

Why you need one.

By Matthew C. Swain, RS

Did you know?

Capital plans reveal the true cost of building stewardship. Fortunately, the science, standards and legislation behind creating plans of this nature has been developed to maturity throughout the United States in the world of Association-governed communities. To board members and owners of condominiums and planned-unit developments, the report is known as a Reserve Study, and industry professionals can earn a Reserve Specialist (RS) certification.

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“We’re an old church; we just replace things when they break.”

This is the common response when I ask church leaders throughout the nation about their long-term capital planning strategy. While this statement might be true for many worship facilities, for many years, that doesn’t mean it’s the wisest form of stewardship for a church’s physical assets.

At a glance, waiting for building components to fail — such as roofs and asphalt — might seem like a sound strategy. Financial resources are devoted to ministry while physical assets simply sit in the background and fulfill their intended purposes.

It’s only when building failures start to occur that the issue comes to light. These failures come as a “surprise,” despite the fact that the remaining useful life and replacement costs of the major components can be predicted with great reliability.

Often, those charged with overseeing the church’s physical plant are unsure of what assets should be in a capital plan. Fortunately, a national-standard, four-part test is available to determine which expenses should appear in your church’s capital plan component list.

The component must: • Be a church maintenance responsibility • Have a limited life • Be predictable (otherwise, by definition, it’s a surprise, which cannot be accurately anticipated) • Be above a minimum threshold cost — often between .5 percent and 1 percent of a church’s total budget.

This limits capital components to major, predictable expenses.

Within this framework, it’s inappropriate to include lifetime components, unpredictable expenses (such as damage due to fire, flood or earthquake), and expenses more appropriately handled from the operational budget or as an insured loss. churchexecutive.com

It’s certainly true that capital assets are easy to forget about. A new roof — depending on the type of construction — can last 15, 20 or even 30-plus years. AC units and boilers run on thermostats and normally require little attention. Vehicles can be driven over asphalt parking lots for many years without a second thought.

However, a reactive approach typically equates to expensive deferred maintenance — leaky roofs, causing mold and interior damage; AC systems failing catastrophically in the summer heat; boilers needing hard-to-find replacement parts in the dead of winter; and parking lots riddled with potholes and trip-and-fall hazards.

Imagine a church with a 30-year-old roof in late December. Inevitably, it seems, that roof will leak right before the Christmas Eve service. The result is an unnecessary waste of time, talent and treasure.

Capital planning means: • Knowing when the roof will reach the end of its useful life, and • S etting aside the right amount of money to offset the accumulated roof deterioration.

The reward for being proactive is being in a position to replace the roof before it fails.

Planning to replace a roof when the weather is right; obtaining a professionally specified replacement system to include all appropriate water-proofing details; having time to review a set of competitive bids; and, ultimately, scheduling the work around worship, meeting and other activities held on-site will result in the most efficient use of time, talent and treasure, along with the least amount of disruption to the day-to-day life of the church.

Capital asset deterioration can be expressed in the form of currency by factoring in the remaining useful lives and replacement costs of all components on the component list. In the above equation, “% Funded” provides a clear and scalable indicator of how financially prepared your church is to make necessary repairs to its buildings, where 100-percent funded is ideal.

3) Funding plan The final result — the funding plan — identifies how much money needs to be set aside “in Reserve” each year. Since most organizations start off at less than the ideal 100-percent funded, the funding plan might require stable monthly contributions to reserves that are large enough to avoid last-minute fundraising campaigns. The goal, over time, is to move the church in the direction of being more than 70-percent funded.

What exactly is a capital plan?

A capital plan is a vital tool that will improve stewardship of your church’s physical assets. A professionally prepared capital plan will be customized to your facility and contain three key results.

Capital plan results

1) Component list The component list serves as the foundation of every capital plan. It outlines the scope and schedule of all major, predictable repair and replacement projects. Some of the most influential items might include roofing, painting, asphalt, flooring, HVAC systems and restrooms.

2) Reserve fund strength The reserve fund strength is a calculation that compares how much money has already been set aside “in reserve” to the capital asset deterioration that has already occurred.

% Funded = Reserves ($) .

Accumulated capital asset deterioration ($)

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A capital plan reveals the true cost of properly maintaining the buildings that have been entrusted to church leadership. Knowing the truth (and responding to it) is a foundational concept of the Christian faith; it’s wise to apply that same approach to the stewardship of a church’s physical assets.

Since the remaining useful life and replacement costs of the church’s major components are all reliably predictable, it would be foolish to characterize most building failures as “surprises.”

Establishing a strong reserve fund takes time and fiscal discipline.

The benefit of creating a capital plan is that your church has a sound evaluation of both its physical and financial condition, as well as a prudent course to properly care for and maintain the property.

In the long run, your church will be rewarded with efficient use of time — and stewardship dollars — so the focus can be on the true mission of the church: preaching the Good News!

Matthew Swain, RS, is Worship Facilities Specialist at San Diego-based Association Reserves. [ www.ARCapitalPlans.com ] He is a certified Reserve Specialist and has been preparing capital plans for non-profit organizations across the country for more than a decade. Swain currently serves as the national representative for AR Capital Plans worship facility clients.

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PROACTIVE & PENNY WISE

As time passes, the RUL of each component naturally decreases. Since outside factors (such as the quality of materials, workmanship, weather conditions and preventative maintenance) can all have mitigating effects on RUL, the rate of the decrease might or might not correspond to the number of passing years.

However, we can clearly define an item with a Remaining Useful Life of “zero” years as having reached the end of its Useful Life.

The Capital Plan also serves as the church’s cash flow management plan, crafted to provide funding that allows for “timely” repairs and replacements. “Timeliness” in a Capital Plan means making a repair or replacement within the year when a component’s RUL reaches “zero” years.

By Matthew C. Swain, RS

The end of a component’s Useful Life (UL): 3 failure categories There are three general ways components reach the end of their Useful Life (UL). Understanding these differences will help you make a wise and appropriate decision about executing the project in a “timely” manner, per the Capital Plan schedule, or — wisely — deciding to wait.

Examining repairs and replacements for houses of worship We know a few things about the future: 1) that it will come, and 2) it probably won’t be exactly what we expect.

In this spirit, we counsel our house-of-worship clients to be proactive by preparing for the repair and replacement expenses that are both inevitable and predictable. But, we also counsel them to be wise.

When your capital plan shows a component has reached the end of its “useful life,” it should simply be replaced — right? Not necessarily.

A “leaking” roof has clearly failed and requires immediate attention.

But, what about those outdated restrooms which are still quite functional?

Should we postpone repairs to a cracking parking lot, or should we schedule to resurface it right away?

Let’s begin by reviewing some basic concepts A church needs to know the condition of its major capital assets to wisely and cost-effectively budget for their eventual replacement.

This foundational information is communicated in the Capital Plan’s Component List. The “scope” of a project is communicated by the project’s Description and Replacement Cost ($).

In the example below, it’s easy to see that the scope of work for sealing the asphalt ($8,000) is significantly less than resurfacing ($150,000).

The “schedule” of repairs is communicated by a combination of Useful Life (UL) and Remaining Useful Life (RUL). The UL is an estimate — measured in years — of how long the component was designed to fulfill its intended function. The RUL is an estimate — also measured in years — of how much longer the component will perform its intended function.

#1: Catastrophic failures This category includes components whose intended function is essential to the health, safety or comfort of people. Boilers, fire alarms and AC systems might — based on observed age and deterioration — have reached the end of their Useful Lives, but could still be serving their intended functions.

However, they could fail “at any time” and cause significant expense, disruption or liability exposure. As such, it is wise to make repairs and replacements in a “timely” manner, as opposed to waiting for a catastrophic failure to occur. #2: Slow, gradual failures Asphalt, paint, fencing and roofs fall into this category. The component might be at the end of its Useful Life but still be serving its intended function due to mild weather, low use, enhanced maintenance, or simply good fortune. There might be an opportunity to delay this repair project, on the condition of annual inspections and re-evaluation.

However, in the case of wood painting and asphalt seal coating — where the repairs or replacements protect the underlying construction material — “timely” repairs are essential! Delays in these cases might void a warranty or cause significantly increased future repair or replacement expenses. #3: Obsolescence Components facing technological or aesthetic obsolescence have Useful Lives that outlast their “value.” The shag carpet in the fellowship hall, the dated appearance of the elevator interior, and the ancient message board with press-on lettering are good examples. Even though the RUL might have reached zero, waiting for the component to actually fail has little consequence. People can survive a week, months or years until the item is repaired or replaced.

However, while the church can generally postpone these types of repairs after the RUL has reached zero, deferring indefinitely is usually not in the best interests of any organization that wants to remain relevant in the eyes of its members, and wants to be appealing to visitors.

Everyone loves saving money, cutting back, and reducing expenses.

However, sometimes there is a tendency to focus on the wrong things, which makes it easy to neglect the larger picture.

Understanding the different ways a component serves the mission of the church — and the implications of its eventual failure — helps church staff make wise decisions. It is crucial for a church to be aware of all the components in its Capital Plan that have reached the end of their Remaining Useful Lives and make wise, informed decisions about when (or when not) to embark on the repair or replacement project.

Matthew Swain, RS, is Worship Facilities Specialist at Calabasas, CA-based Association Reserves. [ www.ARCapitalPlans.com ] He is a certified Reserve Specialist and has been preparing capital plans for non-profit organizations across the country for more than a decade. Swain currently serves as the national representative for AR Capital Plan’s worship facility clients.

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The spiritual benefits of capital planning

By Dan Hotchkiss

Each year, thousands of people come to Mater Dolorosa in search of spiritual enrichment. Mater Dolorosa — a Passionist retreat center in the San Gabriel foothills, in the city of Sierra Madre near Los Angeles — is a sacred place whose spiritual work depends on some decidedly material things. Mission-style buildings, a stunning outdoor Stations of the Cross, and many other physical improvements set the stage for lives to be changed in faith.

To help preserve the beauty and soul-changing power of the places in their care, Mater Dolorosa’s board and staff rely on a professionally prepared capital plan.

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ased on a detailed inspection of each element of the facility, the capital plan enables Mater Dolorosa to set aside enough each year to indefinitely fund expected maintenance.

Like many other institutions, Mater Dolorosa once took a much more casual approach to maintenance funding. Ron Brown, a long-time board member, recalls: “They had a couple hundred thousand in the bank and thought they were doing fine. But they were not fine. There was no real plan. It took some time for people to see how much we actually needed to be putting into our reserve fund.”

Starting around 10 years ago, that began to change. After much discussion, Mater Dolorosa’s management and board decided to invest in a capital plan conducted by Association Reserves, a company with a 30-year history of doing similar plans (known as Reserve Studies) for churchexecutive.com

condominium associations. Matthew Swain, RS, the company’s national representative for Worship Facilities, inspected each of Mater Dolorosa’s buildings and outdoor assets, estimating the useful lifespan of each component, the number of years remaining, and the cost of renovation or replacement.

The plan lists each significant component of the Mater Dolorosa buildings, outdoor improvements, and major equipment: air conditioners, refrigerators, carpets, laundry machines, restrooms, guest rooms and barbecue grills. For each component, the plan indicates how much Mater Dolorosa should have in its maintenance fund, and how much it should set aside each year, to be prepared for the eventual cost of renovation or replacement.

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The eastern section of the main building, for example, has a tile roof that measures about 10,600 square feet and was installed in 1995. The 2015 capital plan reports that the roof should last about five more years.

At that point, it will need to be renovated at a cost of around $74,200. To be prepared for this, the plan advises Mater Dolorosa to hold $63,600 — or 30/35 of $74,200 this year — in its maintenance reserve fund, and to add another 1/35th of the expected cost (or $2,120) each year in order to stay fully funded.

And that’s just one roof!

Adding up all the numbers for each of some 200 components yields a truly frightening grand total. In Mater Dolorosa’s case, the fully funded balance — as of July 1, 2015 — was about $2 million, with a recommended annual contribution amount of $230,000.

Mater Dolorosa has fully funded its maintenance reserve for a decade now; but, as Ron Brown recalls, such clear-eyed estimates came as a shock when they were first presented. “Without a capital plan, an organization could find itself pushing ahead on a new capital expenditure when, in fact, it can’t afford the property it has already.”

Elizabeth Velarde, administrator for Mater Dolorosa, agrees and says a professional capital plan represents a significant expenditure in an otherwise stringent budget. “But it has proven many times over to be a worthwhile management tool for retreat center staff,” she adds. “We have a site inspection-based study conducted every several years, with no-sitevisit updates performed annually in between. Association Reserves has made that possible with attractive update packages.”

Having an outside, professional opinion about maintenance costs has made it easier for the retreat center to set aside adequate funds.

In working with Mater Dolorosa, Association Reserves has learned about the difference between a religious retreat and the associationgoverned communities where it earned its reputation. “Retreat centers use assets longer than a typical residential or commercial property, primarily because they don’t have the high level of traffic,” explains Certified Reserve Specialist Matthew Swain, RS. The estimates of useful life for such components as carpets, conference room fixtures, and retreatant room furniture have been adjusted accordingly.

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On the other hand, outdoor facilities play a proportionately larger role at Mater Dolorosa, where the contemplation of God’s creation is a central part of the retreat experience.

“Many churches find it more comfortable to ignore ongoing deterioration than face up to the daunting shortfalls that a capital plan could reveal,” Swain points out. Church leaders might assume that future capital fund drives will pay for maintenance costs, or worry that having too much money in the bank might hamper capital fundraising.

But, as Brown points out, “major donors are sophisticated” — and they increasingly expect to see a plan for the care and sustainability of the facility. A professionally done capital plan reassures donors that their gifts will be well used.

“Last year, we completed a major renovation of our Stations of the Cross, which was made possible by a million-dollar fund drive,” Velarde says. “So, having maintenance funds set aside didn’t hamper our fundraising efforts for this very important capital project.”

Dan Hotchkiss is a freelance writer and consults with congregations and other mission-driven groups from his home near Boston. He is the author of Governance and Ministry: Rethinking Board Leadership, which has helped hundreds of churches, synagogues, and non-profit organizations to streamline their structure and become more mission-focused and effective. churchexecutive.com

Sustainability of facility stewardship at your church

By Matthew Swain, RS Each year, through blistering summer heat and winter’s icy blast, the church’s roof deteriorates a little more. The carpet in the narthex and office becomes a little more worn and tired.

The boiler, air-conditioning and elevator continue to age. The parking lot begins to crack.

Real property — the buildings in which we worship, study, and gather together in fellowship and prayer — is expensive to build and to maintain. To own property is to tie the congregation, financially, to a money pit.

Many of our churches across the nation are older — but what drives some to thrive while others can’t seem to survive? One mark of those that thrive is that of good maintenance, which must be budgeted and planned.

This is called sustainability.

No matter the size of your facility or your campus — or if your congregation owns real property, buildings of any shape, size, age or condition — a Capital Budget Plan is a must!

The church budget itself is an exercise in faith The vast majority of congregations are funded through at-will donations, not dues. Leadership must keep this source of funds in mind when creating and updating the annual budget. Wise use of these funds can help a church thrive for generations, while short-sightedness can paint a false façade over an otherwise bleak picture.

Leadership is charged with setting a sustainable course for the congregation. We do that, in part, by setting up an annual budget.

Incorporating the results of the Capital Budget Plan into the annual budget is the next step once the Plan has been created. This Capital Plan and annual budget should then be openly discussed, presented and clearly communicated to the membership, so those actually paying for the budget understand where their dollars are going.

Of course, big dollars will be spent repainting exteriors, replacing heating & air conditioning systems, and replacing roofing, among others.

However, these projects are not always visible to the member, nor are they always understood to be important to the member. By bringing these to the forefront of the budget conversations leadership has throughout the year, your church can be more prepared and can reduce the overall amount of time and budget dollars spent on maintaining these vital facilities so that you can focus on the core purpose of your parish.

Sustainability encompasses managing our resources wisely, so that our staff, parishioners and guests continue to be well-served by the facilities that have been built to serve the mission, and so that future generations are set up for success. churchexecutive.com

How sustainability is achieved There are many avenues for the pursuit of sustainability; but, one of the low-hanging fruits — often missed in the budgeting process — is sustainable budgeting for our major, predictable capital repair and replacement projects. Depending on the variables, this Capital Plan might be simple enough for one lay volunteer to prepare, or it might be complicated enough to require a team of experts to compile.

Once the physical and financial analysis has been completed and the results are in, this is but step 1 down a road to a financially successful congregation that can focus the most of its time, talent and treasure to preaching the good news and making disciples.

We must never lose sight of this end goal of sustainability as we improve the financial and administrative side of the church. The business aspects of the church are there to support, uplift and sustain the relational aspects of the church — both in fostering connections among the community of believers, and fostering the connection between believers and our Creator.

Matthew Swain, RS, is Worship Facilities Specialist at Calabasas, Calif.-based Association Reserves [ www.reservestudy.com ]. He is a certified Reserve Specialist and has been preparing capital plans for non-profit organizations across the country for more than a decade. Swain currently serves as the national representative for Association Reserves’ worship facility clients.

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Intentional planning, practical action Cost-effective strategies for managing infrastructure

By Matthew Swain, RS New buildings are a lot like new cars — they don’t usually require a lot of upkeep, at first, to keep them operating.

The problem with new buildings, however, lies in the myth that I hear year after year from clients: It’s new, so it doesn’t need to be maintained right now. (Even clients with older buildings tend to forget that just because an asset is working, that doesn’t mean we ignore it until it stops working).

Every year, as a part of capital budget plan preparation for clients across the United States, I find myself on dozens of roofs. I climb up on rooftops as a part of my inspection to evaluate predictable capital assets for churches, inspecting building envelopes and mechanical systems, interiors and parking lots, among others.

While conducting these inspections, all too often, I find a lack of preventative maintenance being done. Usually, these are simple tasks that are easy to build into the regular operations of the church, when anticipated. When up on roofs, I find drains clogged with leaves or pine needles. The wood fascia show peeling paint, and wood is rotted due to years of being ignored. When left to fail, these simple tasks often build up a backlog that makes it difficult to catch up once a well-intentioned volunteer or employee notices the issues.

Just as your new car comes with a maintenance schedule, all buildings should have a maintenance schedule. The difference between a new car and a new building is that you often have to create a maintenance plan for your building, while your car comes with a few boilerplate plans from the manufacturer (depending on driving conditions) and is included free of charge in your owner’s manual.

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Why a maintenance roadmap matters so much Every church that owns a building, or buildings, should have a maintenance plan in place. A maintenance plan identifies short-term, recurring non-capital expenses that should be completed on some sort of regular schedule (weekly, monthly or quarterly) to help achieve the most life out of your building infrastructure. This planning document should spell out costs and tasks, along with their frequency, and will guide your finance committee to more accurate annual budgeting.

By proactively maintaining your infrastructure (planning rather than reacting), your church can spend smaller dollar amounts on a regular cycle to help items such as roofing, wood surfaces, and HVAC systems last their intended design life, and possibly extend their life.

Too often, churches engage in reactive “maintenance,” which really isn’t maintenance at all. By choosing to not have a maintenance plan, or by choosing to ignore or cut that budget because of other fiscal constraints, your church is setting itself up for emergencies, both in terms of your facilities and your finances. A clogged HVAC filter causes the HVAC system to work harder than necessary, thereby increasing energy use (and the monthly bill), as well as over-taxing the system. This over-use of the system will often push the unit to premature failure.

One of the biggest causes of roof leaks is simply ignoring regular maintenance. More often than not, when I climb the ladder to inspect roofs, I find clogged gutters and drains, which lead to premature failure of the membrane where the dirt and leaves sit, eventually leading to leaks, including interior damage and mold. The simple, inexpensive task of getting a maintenance team member up on the roof, clearing away the debris twice a year (before and after rainy season), as well as hiring a tree-trimming firm to keep the branches of adjacent trees back off the building are much less costly than repairing the membrane around the drain. They’re also easily scheduled in advance, whereas it’s much more disruptive to move worship, administrative staff or Sunday school classes to avoid a room filled with mold and damaged drywall.

An act of stewardship Maintaining facilities and budgeting adequately for maintenance is a crucial link to successful capital budget planning. When the property that supports the ministry is well-maintained, missions, ministry, education and community are all sustained by preventing emergencies and disruptions that can easily be avoided.

As stewards of the dollars and infrastructure that drive God’s work on this Earth, we, as churches, need to be forward-thinking, intentional and realistic. Our prayers should be focused on praising His Glory, not trying to put off an emergency that can easily be avoided.

Matthew Swain, RS, is Worship Facilities Specialist at Calabasas, Calif.-based Association Reserves [ www.reservestudy.com ]. He is a certified Reserve Specialist and has been preparing capital plans for non-profit organizations across the country for more than a decade. Swain currently serves as the national representative for Association Reserves’ worship facility clients. churchexecutive.com

Roadmap to a sound financial future

By Matthew Swain, RS

For many years, a congregation in the central valley of California, the breadbasket of America, thrived by serving a cross-section of the American population — from migrant workers to white-collar business professionals and everyone in between.

This particular parish was built back in the 1960s, outgrew existing spaces, and added buildings in the 1970s and 1980s, as many congregations did during this time. Renovations of existing spaces were completed as problems were identified, from the occasional new flooring project to volunteer Saturday painting work parties.

Through the first few decades of its existence, the church always seemed to get by with no big property surprises.

Leadership engaged the services of an engineering firm to evaluate energy use campus-wide. This survey helped them identify two key elements of high energy use and waste: lighting and HVAC systems.

Furthermore, the survey helped identify high-use areas for each of those components; this was helpful, as they knew the funds were not readily available to simply replace old light fixtures and HVAC systems throughout the campus.

Armed with this valuable information, leadership changed the church’s financial course and embarked on a major site-wide, multi-year project that will set up the parish with a much stronger financial footing for decades to come.

Information drives savings Reducing energy use and maintenance costs gave the parish the buying power to pursue a photovoltaic solar collection system designed around a new energy footprint for the campus (based on planned replacements of all the energy-wasting fixtures and systems throughout the campus).

Through installation of the solar system, on-bill financing through the local energy provider, replacement of lighting to more energy-efficient bulbs and fixtures — as well as replacement of high-use HVAC systems — the parish was able to drastically reduce the energy purchased from the electricity grid. Savings from lower energy costs helped fund replacement of moderate-use HVAC systems, further reducing energy use.

This energy reduction plan was crafted in tandem with a capital plan from Association Reserves. The capital plan identified not only all the assets involved in the energy reduction project, but all the major, predictable capital projects throughout the site, from roofing to parking lots, carpeting to audio/visual systems. Having this financial plan in place and updated annually gave leadership the confidence to move forward in a way that balances upgrades to the campus, while also setting aside a prudent amount of funds each year to offset deterioration.

As a result, future leadership teams will have a source of funds and a plan for keeping the campus lean financially, which makes the most of the funds entrusted to them that support the mission of the church — preaching the gospel and making disciples.

As energy continued to get more expensive, however, the budget became more strained and could not keep up with the levels of use to support the congregation’s Sunday worship and various weekly activities, from Bible studies to day-to-day operations.

The Achilles heel of the parish was finally coming to the fore. Systems installed 30-plus years ago simply use a lot more electricity than those available today; but of course, those available today cost money, and the parish had no capital plan in place to prepare for these costly assets’ eventual failure and replacement.

The parish was struggling financially to keep up with its 52 separate HVAC units, with only 14 being less than 30 years old. Those that hadn’t been replaced since the buildings were constructed had far outlived their typical useful life, but it would cost at least $350,000 to replace them all at once.

Embracing a proactive solution Rather than ignoring the problem, leadership took a step back and looked at the problem from a wider angle. Then, they tackled the issue head-on!

Where many parishes would simply “band-aid” indefinitely, or take up a special collection to fund a new unit each time one failed, this group pondered the site as a whole and came up with a very novel approach. churchexecutive.com

While leadership must never become complacent and simply rely on old data, the plan and infrastructure are now in place, allowing the church to move forward on a path that reduces the amount of time and dollars needed to run the campus efficiently, and in a way that truly serves His good work!

Matthew Swain, RS, is Worship Facilities Specialist at Calabasas, Calif.-based Association Reserves [ www.reservestudy.com ]. He is a certified Reserve Specialist and has been preparing capital plans for non-profit organizations across the country for more than a decade. Swain currently serves as the national representative for Association Reserves’ worship facility clients.

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