Expansion and Recession and Layoffs and Downsizing and Economy and Employment and Fundraising and Facilities and Churches and Philanthropy

Churches look for ways to pay off construction projects planned before recession took toll on collection plates

May 25, 2009

The Greek Orthodox families of central Indiana worked for 10 years to build their new gold-domed church in Carmel,  but  they aren't finished sacrificing.

The 500-family congregation now must pay off the $9 million building, just as the recession and stock market collapse have  wiped out some families' ability to make good on pledges.

"We wish, maybe, we hadn't got caught building in this time," said the Rev. Anastasios Gounariss, pastor of Holy Trinity Greek Christian Orthodox Church. "I'm just convinced that through faith, dedication and persistence, we'll get through this."

What debt-burdened churches like Holy Trinity really need is cash.  In Indianapolis and around the country, congregations that expanded before the recession are now taking drastic measures.  A number of churches say they've instituted budget cuts that have resulted in layoffs, salary reductions and giving less money to local charities.

The budget cuts come at the same time they're asking members to dig deeper  to cover construction debt, or putting projects on hold.

The Lake Institute for Faith and Giving, part of Indiana University's Center on Philanthropy, is tracking reports of layoffs around the country. Executive Director Bill Enright said the recession seems to cause the most pain at fast-growing, suburban congregations.

Though evidence is anecdotal, Enright believes these churches' money woes are worse than their leaders let on.

"My sense sense is that the stories have yet to be told," he said. "We have yet to learn how deep those effects may be."

Collection plates are probably lighter across the board, but Enright said not all houses of worship will feel the same degree of pain. Most are either in a survival mode—hanging on despite shrinking membership—or working just to maintain their base, he said.

In other words, "If you have no boom, you have no bust," said Mark Chaves, a Duke University sociologist who conducts the National Congregations Study, a comprehensive survey.

The proliferation of so-called megachurches over the last 30 years reflects a consolidation trend, not an increase in the attendance rate, Chaves said. "It's about people moving from smaller, medium churches to bigger churches."

Suburban boom

Indianapolis has seen its share of impressive church expansions.

In August 2008, Grace Community Church in Carmel finished adding a second 1,600-seat auditorium and student ministry wing. The work was part of a $28 million capital campaign.

St. Paul's Episcopal Church on North Meridian Street finished a $14.5 million expansion and renovation in late 2007.

East 91st Street Christian Church in Castleton has done $9.5 million in construction since 2006, including two years ago adding a foyer and expanding its sanctuary to hold 2,400 people. Construction on a 46,000-square-foot children's wing stopped midstream in January.

Now those fast-growing churches are cutting expenses and trying to turn pledges into cash.

"We've gone through some fairly significant budget and staff cuts," said Bill Tindall, senior warden at St. Paul's. He declined to go into detail about the number of layoffs, but said it equated to three or four full-time employees.

St. Paul's is one of three Episcopal churches in Indianapolis that has its own endowment established by Eli Lilly, grandson of Col. Eli Lilly, the founder of the pharmaceutical firm.

The $25 million endowment provides 65 percent of the church's $3.2 million annual revenue. Now the budget also includes debt service on an $8.5 million bond.

Because the endowment's value dropped 30 percent in 2008, St. Paul's will give less cash this year to homeless shelters, urban schools and other causes, Tindall said.

The expansion allowed St. Paul's, the largest Episcopal church in central Indiana, to grow to about 1,000 members. That makes it worthwhile, he said. "While it's causing some short-term pain, when we look back 10 years from now, or 100 years from now, we're going to be very happy we did it."

All-encompassing

East 91st Street Christian Church tries to cover under one roof as many facets of life as possible.

Its 5,000 attendees have access to a basketball gym, common areas, day care, and a teen rec room.

The congregation's sanctuary now holds 2,400 people, who can choose between services set to pipe-organ music, or a contemporary rock band.

A children's wing, which is more than half complete, promised even more: separate worship halls for school-age children, a courtyard playground, and an area for disabled and autistic kids that includes a bounce pit.

Construction stopped when it became clear fund raising was going to slow down. Several members who'd made major pledges couldn't fulfill them, church administrator Kevin Hart said.

"We try to do everything that we can without incurring debt," Hart said.

A recent drop in regular donations led the church to lay off eight of its 60 employees this month. Hart said church leaders plan to press ahead in trying to reach a three-year campaign goal of $12.6 million—money that would allow them to finish the children's wing.

He said they discussed mothballing the project, "but there are people who have not been affected by this economy."

Church first

For religious families, giving to the place of worship is always a top priority. The Center on Philanthropy has found that religion nets 33 percent of all the money individuals donate each year. Religious causes also have a track record of weathering recessions with small declines in giving.

This one might be different, however.

"We don't really think we're in a normal recession," said Una Osili, interim director of research. The center is using 1974 as a benchmark because that was the last full year steeped in recession until 2008.

In 1974, religious giving declined 5.4 percent.

That kind of drop would be quite a shock to a church like Grace Community.

So far, weekly donations from its 5,000 attendees are level with 2008, but church leaders are accustomed to doing far better. The church has enjoyed so much growth that a mere flattening led to cutting the $8.2 million budget down to $7.4 million this winter.

"We just didn't get the uptick we thought we were going to get," said John Jurgensen, pastor of administration. The church reduced salaries to avoid laying off any of its 100 full- or part-time employees, he said.

Grace had intended to pay cash for its $28 million construction and renovation, but as much as $1.5 million in pledges won't be fulfilled, Jurgensen said. That means the church must take on unanticipated debt. Further construction—renovating the original sanctuary—will have to wait.

Holy Trinity Greek Christian Orthodox Church proceeded with its northward migration from 40th and Pennsylvania streets to western Carmel, in part, because it's  growing.

"This building went up because of the blood, sweat and tears and sacrifices of a lot of people," said Gounaris, who led the first service on Christmas Eve last year. The brand-new sanctuary is topped by a Byzantine dome.

The congregation pledged $7 million and took on a mortgage for the $9 million project. When some of the pledges were not fulfilled, Gounaris said, new donors stepped forward.

But challenges remain. Classrooms for Greek language and Sunday classes are roughed out, but building them will require additional fund raising.

Gounaris hopes to find additional sources of income, perhaps by renting out space for events or for day care.

He noted that Holy Trinity has added a third date to its annual September festival.

"We'll probably be depending on our Greek festival more than ever," he said.

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