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Welcome to the unSeminary podcast. Today we’re talking with Mark Briggs, the Executive Vice President of Ministry Lending at CDF Capital. CDF Capital is dedicated to helping churches solve problems and bridge the financial gap often faced when trying to expand and reach more people. Mark has been with CDF for over 20 years, helping churches finance their dreams and overcome financial barriers. 

What is God calling your church to do in its community? Don’t miss today’s episode, full of coaching on how growing churches can prepare financially for greater impact.

• Start early. // Wherever growing churches find themselves, Mark advises that one of the best things they can do to set themselves up for success is to start thinking about their space and financial needs early on. Even if a church is still portable, if they know they want a permanent location down the road, connecting with a financial partner and seeking advice from experts in the field will help a church to prepare in the years leading up to a launch.
• Transparency and trust. // The importance of transparency and trust between churches and lenders can’t be emphasized enough. Mark explains that CDF Capital wants to help churches have realistic expectations about their expansion plans and what they will take to achieve. They begin by having open conversations about financial health, attendance and growth numbers, savings position, and overall capacity in order to gain a better understanding of where a church stands and what it can afford. Then they recommend where a church needs to be in order to handle the scope they’re considering. Bring in experts, but go into conversations with eyes wide open, understanding that this isn’t going to be an easy process. 
• Be open about struggles. // When a church is honest about their financial struggles and ministry challenges, it allows lenders to provide the best possible guidance and support. If your church is in a difficult season in an area, such as a leadership issue or a declining trend, it may be better to wait to expand until you’re in a better place rather than putting additional pressure on the situation. Find a lender that wants to have a partnership and be transparent so they can really see what is going on and make recommendations.
• Income and debt. // When talking with churches, one of the things CDF Capital looks at is a church’s total amount of debt in relation to their income. Once a church has debt up to four times its annual income, it can put too much pressure on them. Another thing CDF looks at is the expense coverage ratio which looks at all of your income and expenses and then layers on a debt payment. Ideally they would like to see an expense coverage ratio of 105-110% with some buffer. Another thing to consider is what is the percentage of your income that is used for debt? Mark recommends not getting higher than 20-25%. Have conversations with your lender in advance so they can help you wean your budget to a place where it can support your growing facilities.
• Have a conversation now. // CDF Capital has field team members around the country who are available to talk with you about what to consider before going into an expansion project. Contact them for a free consultation to determine what your next steps are.

Learn more about CDF Capital and talk with a member of their field staff. Plus check out the Bonus Deep Dive: Current Best Practices in Operational Reserves for Your Church with Steve Carr mentioned in the podcast.

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Thank You to This Episode’s Sponsor: The Giving Church

As a church leader you know that your ability to execute your vision comes down to Staffing, Facilities and Programming. All of those needs are fueled by one thing: Generosity. The Giving Church, led by Generosity Coach and Founder, Phil Ling, has worked with nearly 1000 churches of all sizes in over 40 different denominations and raised over a billion dollars to fuel ministry. Don’t run out of fuel for your ministry. Transform your ministry with innovative capital campaigns and leadership coaching.

Visit thegivingchurch.com/unseminary for a FREE PDF, 5 Ways To Grow Your Church Giving.

Episode Transcript

Rich Birch — Well, hey everybody. Welcome to the unSeminary Podcast. So glad that you have decided to tune in today. You know every week we try to bring you a leader who will help and inspire you, and today we’re super honored to have Mark Briggs with us. He’s the Executive Vice President of Ministry Lending at CDF Capital. This organization, if you’re not familiar with them, they were founded in 1953 with a single vision and mission of helping churches grow. They, really, there was a significant barrier at the beginning that was around in church expansion, that was around financial need. But over the years, they’ve really grown from being more than just a lender. They really want to come alongside and help and support churches like yours as you wrestle through these kinds of issues. And so, we’re honored to get Mark on the phone to have this conversation today. Mark, welcome. So glad you’re here today.

Mark Briggs — Happy to be here. Just a fan of your ministry and how you serve churches, and I’m just hopeful that what we talk about can be an encouragement and maybe give some good insight to your listeners.

Rich Birch — Hey, super honored that you’re here, Mark. Why don’t you tell us a little bit about your background? Give us your, how do you intersect with CDF Capital? How does that fit into the overall picture?

Mark Briggs — Yes, I’m proud to have been with CDF Capital for going on coming close to 23 years. And I never thought I would work in one place so long. I did local church ministry, surprisingly youth ministry for close to a decade ahead of that.

Rich Birch — Love it.

Mark Briggs — I mean, that’s the very natural transition, youth pastors to…

Rich Birch — To lending.

Mark Briggs — …lending millions of dollars. I mean, who would you want to entrust more with those kinds of dollars?

Rich Birch — That’s fun.

Mark Briggs — But by God’s leading, I was able to get into the organization in a marketing role because again, there was no direct line from what I was doing. And as I started to grow in my role and my understanding of what we did, even back then before it was our stated mission, our organization wanted to help churches grow. And I saw the unique way that we did.

Mark Briggs — I’ve always loved, not in the love of money way, but I’ve always just been drawn to finance. I like numbers, I like just thinking about how to make that kind of stuff work. And I’ve been accused of being a tight wad in my younger years, but I’ve grown through that. But I also love the church. I was in local church ministry, loved so much about it, but it just wasn’t a place where I saw myself being planted my whole life. And I actually went into it a little more reluctantly. The churches I was at primarily in Arizona at the time, had some great success. And that’s kind of how I knew I wasn’t a lifer. I think I like to see things get done.

Rich Birch — Right.

Mark Briggs — And when you’re in ministry, you do a lot of things, but there’s so much unfinished and you’re always looking at how do we work on that? And so, through the years I’ve worked primarily with a church as a field team member where I would be out and I would walk alongside of them. They would say, here’s our problem. And we would talk about how we could help with that solution.

Mark Briggs — And one of the things, Rich, that again, I never thought I’d be drawn to that, but one of the things in this that has just kind of blossomed in the way we do what we do is I just love walking alongside of leaders and just making it to where they don’t have to be alone. They don’t have to repeat mistakes others have in the past. They don’t have to be just overwhelmed by this, but to be a partner to help them through just such a crucial process has been great. So I love the relational part. I love the strategic part, and the kingdom part is what makes it worthwhile for me. And so done that for a while. The last five years or so, I’ve actually led our team who does that. They work with hundreds of churches across the country, and help them basically finance the dream. And so I loved being able to do that. And again, I loved working alongside the churches. And I wasn’t sure how I liked making this transition, but in the same way, I love coaching our guys who do the same thing. And so that’s given me a lot of fulfillment though I do miss at times being on the campus and walking with them and figuring out those problems. So that’s kind of how I got to where I’m at.

Rich Birch — So good. Well, listeners, dear listeners, I want to let you behind the screen, demystify a little bit. I’m hoping today, I know so many of us, if you’re in a growing church, if you’re trying to reach the community, there is always this gap. There’s this gap. We have to generate more space somehow. We have to figure out how we’re going to create places where people can come and connect with the message. And oftentimes that comes with a financial gap, where we’re like, man, I’m not sure how do we make all this happen? And we frankly might get nervous about reaching out to an organization like CDF Capital. It’s like we’re people people, we’re vision people, and it’s like, oh man, Mark even said he was a tight wad when he was younger. How am I going to call this guy? And so I’m hoping by the end of today’s conversation that you’ll know, man, our friends at CDF, they really are in your corner and they want to help you solve problems and we want to help that.

Rich Birch — So Mark, let set up a scenario that I’m hearing a lot these days with the churches I’m talking to. So we’ve come out of covid, we’re through that, and it feels like, okay, we’ve settled out our giving. Feels like, okay, we’re kind of through all of that craziness. But man, we look around, we’ve gone from two to three services, we’ve added people where our kids’ ministry is starting to push in. We’ve taken on new ministries that we weren’t doing before. Maybe we’re doing more community engagement stuff now and we’ve got square footage issues. Man, what do I do? Who do I call? Where do I start? What’s your look at that as somebody from the ministry lending point of view?

Mark Briggs — Yeah, that’s a great question. I would say when they’re thinking that, not that it’s already late, but it’s never too early to be asking those questions because it’s going to take years, oftentimes. I mean, there are exceptions where something may come up, but even if you’re able to buy a building in three or four months, it could take a year to build it out depending where you’re at and to what level. But I think I would affirm that in the church to say, I’ve seen what happens when you have a permanent space. I know it’s important. And so it’s not too early to have that conversation. And so I think the next steps would primarily be just really understand what God’s calling your church to. I mean, there’s some churches, and I say this as someone who finds this building, there’s some churches that aren’t meant to be as large or maybe the leadership structure and maybe they want to just plant churches. So you just need to decide, first of all, what do you think God’s calling you to do in your community? And then if you’re convinced, hey, we need a place of permanence, a permanent location, I think really that comes down to knowing your community, knowing where you want to be.

Mark Briggs — But I think it’s never too early, even if you don’t have that place nailed down, to connect with the financial partner. And I obviously believe in what we’re doing and we’d love to help you. But whether that’s us or someone else, try to understand what your capacity is. Because a lot of churches, especially if it’s a younger church, Rich, they’ve started, they’ve been pouring into their community, pouring in their growth. A lot of times these churches are trying to just get their tentacles into the community and it’s just off their radar of what does it look like to be owners? What does it look like to change your budget there and everything else?

Mark Briggs — And so I think connecting with someone, it could be another leader who’s gone through before or even again, we’ll do that for free. Just walk you through what are the things that you need to be thinking about ahead of even finding that facility. And then once you’ve found a place, I think that conversation’s even more important because you could certainly talk to experts on the space going, what can we do? Will that fit? I mean, there’s times if, like Rick Warren would say, you don’t want the shoe determined in the size of the foot, so you don’t want a place so small you’re not going to be able to grow. But if you’re able to find a place of size that you go, we can grow here. Then, along with what can we afford, which us or some other lender may be able to help you with, you need to talk to those experts, architects, planners, who can go, can it work for us? That’s the introductory step. But again, what I love about what we do is we don’t mind being a sounding board three years before you do something because we know there’s a lot of different directions that could go.

Rich Birch — Yeah, that’s good, that’s good. That’s good. Even just basic advice like, Hey, friends, even if you’re not currently working with CDF Capital, whoever your lender is, whoever your financial, these are our friends, reach out to them, engage with them, have the conversation. Let’s drill into that – understand your capacity. So let’s say I’m, okay, I’m going to reach out to you. I want to have that conversation. Help me bullet point through some of the high level questions that I should be thinking about to prepare even for a conversation like that, that I could get ready to be ready to talk you through where we’re at, to get a sense of what are some of those things you’re commonly asking, questions you’re commonly asking churches as they think about their capacity?

Mark Briggs — Sure. Some of it is looking at some of their just attendance and growth numbers. I don’t think we’re often doing a ton of consulting on here’s the size of building. I think a lot of leaders, they know where they’re at in their town, they know what they’re looking at. I think where we can be the reality check, not in a discouraging way. You know, one of the things you’ve probably heard me say even in our conversations is just, we just don’t want you to get so far over your skis where you’re kidding yourself. Because there’s times these dreams are really big and we don’t want to crush them, but we want to make sure that the expectations are right. And so I think when we’re talking to a church in those early days, you know again, what we would do, we’re highly consultative. I mean, we’re not looking, I mean obviously money makes ministry. It helps fund it. But early on, we want to help churches grow and be that trusted partner.

Mark Briggs — And so we would just, our field people can with a few questions on their financial health, how they use their money, what their savings position is, what their capacity is in the church, we can get a pretty good idea quickly of that kind of capacity. And so there’s that early round. And then in successive conversations, we would gather their finances. And oftentimes we’re willing to run ’em through as if they’re asking for a loan. I mean, we will use that time and expertise, and we have a team of people who can do that because we just recognize how important it’s for a church, not only to recognize where they’re at now, but we can coach them and say, but you’re… almost every time, Rich, they need more than they can afford. And so what we do, we also just kind of coach…

Rich Birch — Shocker.

Mark Briggs — Crazy! It’s always, everything doesn’t usually cost less or go quicker. It costs more and goes slower. But we can kind of say, here’s where you would need to be in order to handle the kind of scope that you’re considering. And so those are the first questions.

Rich Birch — That’s good.

Mark Briggs — But just really dialing in to whether or not they’re ready. If they’re too young, usually under two or three years we’ll talk to ’em, but we highly discourage ’em from doing anything permanent when they’re still figuring out who they are. And so those are some of those first steps.

Rich Birch — That’s good. That’s good. There’s some good benchmarky kind of things to think about there. Talk us through. So the interesting thing, I face these problems. I’m like, okay, I’m thinking about, man, maybe we need to add some more space on, or maybe we need to renovate or we’ve got these 10 acres behind. Should I add a new auditorium? And so then I’ll go and talk with an architect and start talking with them. And maybe give them a few thousand dollars and they come up with an incredibly beautiful drawing. I’m like, that’s amazing. But then how does that connect into the process? Are there any dangers we should avoid in that? And obviously we love, there’s lots of great people who do this…

Mark Briggs — Wonderful.

Rich Birch — …for a living, so we’re not demeaning that industry by any means.

Mark Briggs — Yeah, and I think that’s where I don’t think you want to go alone into that process where you’re paying someone to say, Hey, design us what we want. I mean, there’s benefits to that if you know how to stage it out or what they could go call phase it out. But architects are essential, and I don’t want any hate mail, but often they aren’t excited about, Hey, let me do a generic low-cost building that’s going to be small and get you on the site in an unexciting way. That’s not generally their bent. And so I think if they have some understanding of programming what they’ll need, architects can work with them on that. But I think the church really having some understanding from a financial partner or someone consulting with them on what they can handle responsibly that really you want to really give them a tight funnel through which to work with. Because Rich, there’s, I could give you a lot of stories. There’s times in my career where I’ve come to a church and they’ve spent a couple of years with a plan, with a dream in mind. They even have pictures on their wall and they go, Hey, can we do it? And there’s times when they’re not even halfway there. I mean…

RIch Birch — Right, right.

Mark Briggs — And that’s a credibility issue for leaders and their church. I mean, we want to help set you up for success to where your church doesn’t get attached to a vision that’s untenable. And so I think bringing in those experts, but you just have to have realistic expectations. And it’s not a downer per se. I guess we can get into more later, but I’ve just seen many churches who when they get in that spot, end up borrowing a lot more. And while it can work, it can be devastating if the stars don’t align. And so I think that’s the first step when you’re walking through, is having a team to look at it with eyes wide open. But also understanding that it’s not going to be an easy process.

Rich Birch — Right. Yeah, that’s good. Well, and there’s a piece of that – friends of ours at Risepointe, they’re a firm that helps churches, design firm. And I know one of the things I love about them, just as people, is they’ll do these analysis where they’ll end in a church’s facilities and talking through all that stuff. And they’ll say it, he’s talked about it publicly – the church assumes, Hey, we’re going to build a bunch of new stuff, which you would think as a designer…

Mark Briggs — Yes.

Rich Birch — …they’re incentivized to say, great, let’s build a bunch of stuff. And he said, you will not believe how many times I’ve ended up in conversations saying, I don’t think you should build anything. Don’t do that. Let’s…

Mark Briggs — That’s great.

Rich Birch — …add another service. Or instead of doing this whole big thing, what if we made these four small changes that are actually not changing the envelope? And that’s the kind of partner you’re looking for, someone who’s saying…

Mark Briggs — Absolutely.

Rich Birch — …Hey, let’s try to make some wise financial decisions. Can you give me a sense of the kind of typical scope, size of church that you guys work with? What is that, if there’s churches that are out there that are thinking about these kind of questions, what does that typically look like? And I know typical, that’s a hard question. I understand.

Mark Briggs — It’s a good one. And there’s exceptions. We’ll have churches of 300 or we’ll have churches of, I mean we actually have a churches of over 10,000. But I had say the sweet spots that 500 to 1500. Again, that the elasticity can be on either side of that because sometimes when you get into the more mega, larger mega churches, a lot of those roles are professional and the consultative piece, they don’t need as much of. I still think we can add value to them, and we have. But I think it’s those churches, they’ve been in launch phase, they we’re trying to get that first building or we’re trying to make the first and second phase work, but they don’t just pay everyone. Getting through that stage, it’s probably the most exciting time in a church’s life, having worked in and been a part of a megachurch. But it’s a time when you got to make your resources go as far as possible.

Mark Briggs — So you may have an executive pastor or even volunteers until you get to that point. And I think in those cases for us, that’s when we can bring a whole wealth of just experience and advice to ’em that can help round out where they’re at and help them get to that next step. But again, we’ll have partners we’ll work with through many stages, even mega mega. And there’s a high level of trust, but what we find is they get to a certain point where some of the consultation, it’s just they have more of that in-house, so to speak.

Rich Birch — Right. Okay. That makes sense.

Mark Briggs — So that’s the range. I hope that’s not too long to answer, but hopefully…

Rich Birch — No, no, no, that’s good. That’s super helpful. And yeah, I get that. And I can see one of the things I love about CDF is, and hopefully this is coming through, friends, that this idea that you’re coming alongside churches and trying to have these conversations, it’s more than a transaction. It’s, how do we try to have a transformation? We know that there’s something happening in your church that is bigger than just you’re taking a loan and building something or launching a campus or whatever. This is going to have an impact. And on the other side of the table, you want people who are friendly lenders, more than friendly lenders really are partners in this. How would you, from your side on kind the lender side…

Mark Briggs — Sure.

Rich Birch — …let’s say that we’re, I’ve got a relationship with a lender, maybe it’s CDF, maybe it’s somebody else, and maybe things aren’t going quite as well, or I’m wondering, I’ve got these early questions, I’m like, man, I’m seeing some things happening in our numbers that I’m wondering about. Should I try to hide that? That’s maybe too softball of a question, but what should I do? I’m a little freaked out because I’m like, man, things aren’t maybe looking as good as they were when we first set in on this. Interest rates are going up, employment, and I’m seeing people lose their jobs. We’re seeing maybe some stuff happen in the donor community. At what point should I really look to say, Hey, you know what, I should reengage with my lender, have this conversation.

Mark Briggs — Good question.

Rich Birch — What would you suggest?

Mark Briggs — Well, yeah, and I can’t speak for most other lenders simply because they may go, oh, red flag, these guys are seeing some declining trends in this area or that area. I think for us, I mean our whole mindset, even if we never have a loan, and it’s actually as a sidebar, that’s one of the reasons I’m really loving our team and our direction now because there’s many different paths our churches can take. And we just want to, we’re not going to do everyone, and we want to just make sure that those we talk to, we can leave them better in a better situation. So if they’re in that situation, my encouragement is, one, if you’re with a lender that you can trust who knows you, and again, I have some bias, obviously, it’s going to help you on the backend because if you hide something from ’em and then you squeak by, there may be, I mean, this is a principle in a lot of life, right?

Rich Birch — Yes.

Mark Briggs — There may be expertise or input that they could have given you that could have kept you from that place where three years from now, you can’t hire any more staff and you desperately need a couple of positions, but you wanted yes, more than you wanted maybe the right thing for your church and ministry. And so I just think our bias, and there’s others who are similar, is I tell our guys and they tell our churches, is not what do we want to do or what’s the most we can do? It’s how can we help this happen in the best way possible? So we’re looking into solutions with them. And so I think find a lender that is going to have that partnership in mind, and it’s a long-term thing.

Mark Briggs — The other part of that, Rich, that is assumed is they can’t wait another year or two or three because that’s terri… That’s not, I mean, that’s the last thing a leader wants to hear, especially post covid when they’ve been at the mercy of not owning their facilities, or whatever, or having space issues. But man, I’ve seen many churches rush into situations where if they would’ve just waited, seasoned a little more, worked through a leadership issue, waited for a declining trend to flatten or get better, they’re just in a lot better place. And the toll it takes on those leaders can mean they get out of ministry, end up leaving that church just so much pressure. So I’d say be transparent, and if that doesn’t serve you well and they look at you a whole different way then you may have the wrong partner, but honestly they may just be telling you the truth and what you can handle. Does that make sense?

Rich Birch — That does make sense. Yeah. You know, it’s interesting. This is one of those areas where I feel like pastorally one-on-one, we coach our people in one way, but then when we think about our lenders, if I can be totally honest, we think about our lenders in a different way, right? And so we would think about, Hey, I want to help the people in my church to have a reasonable debt load. And a young family might come to us and say like, Hey, we’re thinking about a mortgage. And standard advice is do not take all the mortgage that they will give you.

Mark Briggs — Right.

Rich Birch — Don’t do that. But then we turn around and we go to a lender and we’re trying to figure out how do we take on the biggest debt possible because whatever, we need a new kid space or whatever it is. And that’s a red flag for sure. Are there any ratios on that side that we should be thinking about? Are there rules of thumb around too much debt? And I realize every situation’s different, but are there things like that, even just size of debt that we should be avoiding?

Mark Briggs — Yes. I think I can give you some good feedback. I will say one more thing before I forget, Rich, is I mean honestly, and I take this approach with those I work with. If the church is hiding things from you, the lender’s going to generally know if you’re being evasive.

Mark Briggs — Right, Yes.

Mark Briggs — And I say hiding, I don’t mean the worst of intentions, but if churches are open, I’ll have churches go, Hey, we struggled here. We struggled here. Then you just move forward going, the trust level is high.

Rich Birch — Absolutely.

Mark Briggs — And I actually think it serves them better in any of those situations. Some of the ratios, I’ll say this, these have been tested because about a decade into my work there, a little less than that actually before the financial crisis, around 2008 to ’10, we made some decisions that weren’t great for churches. We said yes. We were not wanting to be say no, we weren’t wanting to be perceived as not having vision or not being behind the church. And so after we had many churches struggle deeply, we went back and did a deep dive into what we should have done. A lot of these ratios just really crystallized. We used them before, but we saw the ones that mattered. And so the statement, I’ll joke around with churches is we’ve made more bad decisions on church lending than many lenders out there. And it’s kind of a fun way to say, we want to learn from our mistakes.

Rich Birch — Yes, yeah, yeah, yeah. That’s great.

Mark Briggs — And so when churches trip a couple or more of these, it often ended up with issues. Could the stars align? Yeah. But I think one of the big ones that we would look at, I mean it’s a pretty standard one is the amount of debt in comparison, your total income. We call it debt to income. It’s really creative title. But generally you go, you don’t want to be a whole lot more than three, maybe three and a half if you’re in growth mode. And once you get over four times your annual income, that’s just tough. Maybe you’re on a rocket ship or there’s some other outliers that can help. But that’s one that whenever we go over that without a way to mitigate that very clearly, it can put just so much pressure on a church. So if their annual income’s a million, loaning more than 4 million may be tough.

Mark Briggs — And frankly, if they’re spending a lot of money in other things, loaning ’em more than 2 million, maybe too much. But that’s one to look at. Three is usually where you want to be. Another one we’ll look at is we call it expense coverage ratio. It’s basically if we look at all your incoming expenses and we layer on a debt payment, we can take out whatever the rent payment is. And what we want to see is we want to see that you can cover your expenses with your income. That would be an expense coverage ratio of a hundred percent. I mean, really we would like to see 105, 110 with some buffer. Banks, traditional lenders will often want to see 120.

Rich Birch — Right.

Mark Briggs — We’re a ministry lender. We understand churches aren’t, most churches in growth mode aren’t sitting on that kind of margin. And so especially when it’s a pretty daunting step, will we do some for less than a hundred? Yes. But again, their growth curve, I’m doing hand signals for those in the audience.

Rich Birch — Yes.

Mark Briggs — Their growth curve, their trends, their capacity to make changes should they not grow as much. Those are factored in. But that’s another big one. If we see that in the red, like under a hundred, we go, can they handle this? And again, we’re as consultative as we are as directive, and so we try to walk ’em through that. And so the other one we typically look at, and this is a really good one, is what’s the percentage of your income that you use for debt? And so with young churches getting in their own new building and stretching, that can be up to 30%, 33%. We’ve done more. Again, I’m a little embarrassed that we have done more because it’s just a lot on a church. And so usually we recommend, and more mature churches aren’t going to be a lot closer to this, but we recommend try not to get higher than 20 or 25% because we recognize, I’ve looked at the pie chart of expenses. If you have 40, 50% go to staff, 10% missions, operations and those things that everything else in the church is 10% percent, you suddenly don’t have a whole lot of room. If you’re spending more on debt, then you’ll end up having little for mission, little for staff. And again, it’s your balance. And one thing I’ve noticed through the years Rich, is it’s easier to do a loan of expansion often for a younger church than a older established church. Seems counterintuitive.

Rich Birch — That’s interesting.

Mark Briggs — But the older established churches, especially the debt-free ones, praise God they’re debt free, but what do they do? Their staff budget gets really bloated. They go, we’re never giving below 15% missions because that’s what it says in scripture. They kind of go, they have all these convictions, but then making that adjustment, new leader comes in, they start growing, and they have 70%, 80% of their money committed, and it’s a tough adjustment. So that’s how that ratio kind of folds into the reality of churches.

Rich Birch — That’s good. Just help me sharpen my pencil on those…

Mark Briggs — You bet.

Rich Birch — …how those two, those last two connect with each other. So totally debt to income, understand that. Expense to coverage ratio in that a hundred, 110 would include the current debt service in that number. That would be, so if you’re, whatever, if you’ve got some sort of existing mortgage, maybe you’re paying that off, you’re on the last five years of that and you want to build something new that would be included in that 110, 120%.

Mark Briggs — It would. It would be all your existing expenses plus whatever expenses you’re taking on. So if you are in an existing building already, you’re just going to add on. If you’re renting something, then provided that lease ends, you’re going to be replacing that. And then what we’ll do is we’ll back out any one-time expenses you paid for a consultant or some of these other things. And so one of the things we’ll coach people on, not to get too far ahead, is just if we’re having this conversation, Rich, three years in advance and we know it’s going to be a big step, you’re going to go from 10% of your money going to facilities to 25, 30, that’s not a change you want to make in a year. And so if churches are really looking ahead, they’re looking at how to get, I’d say wean their budget to that place. And so maybe make some incremental steps in next year’s budget and the one after and try to discipline your budget to where you’re getting it ready. And that makes it a lot more absorbable once you get there.

Mark Briggs — And we look for other ways to structure it where it can be, but we want to know that we’ve been in the place where we go, Hey, if you build it, they will come. I mean, everyone at one time or another thinks that, and there’s certain situations you can almost predict it, but wow, we want the churches, if it doesn’t materialize, we don’t want ’em to be strained to where they can’t carry out their mission.

Rich Birch — Yeah, totally. Literally just this week was in a conversation with the church that I’m coaching with and we were talking around, it was literally this exact issue. And I said, over the years, because I’ve been involved in multiple of these deals, situations where we’ve ended up taking on debt and all that, and one of the things I’ve tried to live by is let’s not make a decision that anyone outside of this room is going to have to solve long-term. So functionally, it’s like if we’re going to take on a mortgage, this leadership team should be able to structure their thinking around, can this group of people actually be the people that are going to pay this thing off? If it just is based on our kids are going to have to sort that one out 30 years from now, they’ll have to figure that one out. Man, that’s an inappropriate decision. I just don’t think we should do that. I think we’ve got to be wise and make the decision that. And I understand people leave and change, I get that. I understand.

Mark Briggs — Right.

Rich Birch — But it’s like let’s look at the current leadership team, make some decisions that are saying, okay, where do we picture this thing in 10 years? Or is there a possible that we could do this? Not, again, it gets back to that don’t take on as much debt as everybody will give you. Let’s try to be wise with those. That’s super good. I love that even that idea of, hey, we want to make sure that that debt load stays below 30% of our income. Because I really think anything even in that lane, even in that range, man, that’s where you end up with that borrower is slave to the lender. It’s like, gosh, man, that is just a significant, that’s a…

Mark Briggs — You don’t want to end there. You definitely don’t want to end there, but for a time. And that’s where we are looking. If they’re going to end there and they’re not a high growth church, we wouldn’t want to go there. And so.

Rich Birch — Yeah, yeah. That’s good. That’s good. That’s super helpful. While I’ve got you, another, this is a maybe inappropriate question to ask someone…

Mark Briggs — Sure.

Rich Birch — …who’s in financial issues around church, might be a curve ball from left field. Rates – the rates just keep going up. We’re wrestling with that. What are you saying to churches these days? What should we be thinking about on that front? How should that weigh into our decision-making?

Mark Briggs — Yeah, that’s a great question. Our whole, I’m going to just say our church world, I mean it’s true of our society. They’ve gotten, I was going to say drunk on, they’ve gotten accustomed to a rate environment that is historically low and it’s not sustainable.

Rich Birch — Yes.

Mark Briggs — And even in my working life, rates have always gone down in my time working with CDF Capital. When I started, it was in the eights and nines and tens, and it just kept going down. And our team has a new reality and talking to churches. And that affects that next phase because, as you know, costs aren’t getting cheaper. It’s just this weird area, but the cost of money is growing. And so an example of that is if we have churches who have loans that are up for a rate adjustment a year or two, we’re trying to come alongside of them early. And there’s ways it could be to our detriment because you kind of worried they’ll look around because they want a lower cost, but we’re saying, you got to prepare. Because we want them to thrive and they can’t. on short notice with the short runway.

Mark Briggs — You probably want to assume, and again, different lenders are different, but you should just be assuming eight, maybe in the mid 8s, just plan for the worst on interest rate when it comes from an adjustment. And while that may, if churches have become dependent on it, that’s not great. Maybe this is that opportunity to say raise some, I mean, maybe it’s time for some sort of initiative or campaign to go, pay down the money while it’s cheap, and set yourself up for later. And that could be a great result of this. But we’re coaching them that while there are forecasters who think it could go down in the next couple of years, no one has the crystal ball and they should be planning that it’s going to be there. Here, especially in that next year or two. Past that, I mean, it’s anyone’s guess. But…

Rich Birch — Right.

Mark Briggs — It’s tough. But use it as an opportunity to go to your people to say, Hey, we want to set up our church to not have to pay as much interest now and into the future. How can we do that.

Rich Birch — Well, and I would think, listen, I know on the fundraising side, paying down debt is hard money to raise. That is difficult money to get out and say, Hey, let’s do, but this might be one of those windows…

Mark Briggs — Yes.

Rich Birch — …where actually that might not be the case. I think you could build a case as a leader, as a part of an overall campaign around, Hey, let’s try to pay this thing down because we know everyone, because people see it in their own, their mortgages or whatever, if they’re refinancing, all that stuff. Yeah, man, this is a big difference. If we could try to do this, now would be a time for sure. So appreciate that. I know that’s a curve ball question around…

Mark Briggs — It’s very appropriate.

IRich Birch — ‘m sure you get it all the time.

Mark Briggs — It’s very appropriate. And I think the other piece of it, if I can say one more thing, Rich, which be that…

Rich Birch — Yeah, absolutely.

Mark Briggs — …as churches when we were saying we’re doing that loan, 10 years ago, we wouldn’t have been saying, Hey, get ready to pay things down. I tend to think, Hey, get a percentage of your budget you’re okay with it being mortgage. And as you grow, keep it at that. Just pay down your debt. I mean, don’t hand it to the next generation as large. And even now is what I was saying earlier, look ahead what it’s going to be. And the fundraising part is absolutely essential. Where there was a time years back where there’s times we would lend almost every dollar they needed, which is kind of embarrassing…

Rich Birch — Wow. Right.

Mark Briggs — …but we’ve learned from that. And if churches don’t have that investment, their people don’t have that investment, and it’s just a different relationship. That’s what I would encourage. Use it as an opportunity to just have less debt through leveraging whatever is at your disposal to do so.

Rich Birch — Yeah, that’s great. Well, I’m getting to that phase of my ministry career, and I sense you are as well, that man, I keep thinking about this question, man, how do we leave this stuff better for the next generation? What can we do? How do we structure this stuff now so that the folks that are coming after us, it’s easier for them. They’re able to focus on, and this is one of those areas, I think we’ve got to think very carefully around how do we structure the finances. Well, this has been great. What a fantastic conversation. I really am thankful for your time today. I want to point people to reach out. You said earlier, I want to double check something you said earlier, you said you’ve got field staff who actually would be willing to have these conversations with churches…

Mark Briggs — Yes.

Rich Birch — …even if it’s early. Tell me about that. How do we access that? How do we start those conversations?

Mark Briggs — Yes. We have field team members. They cover the country based in Cincinnati, Portland, Atlanta, Colorado Springs, Southern California, and Kansas City, if I didn’t say that. Yeah. And so on our website, you can go under leadership and it’ll point out which of those team members are. I wish I had, maybe we make the link available, but…

Rich Birch — Yeah.

Mark Briggs — They are, I would say this team, again, I’m biased, but the way we’ve built the team is to where you can talk to them and they don’t need to go, well, let me call someone and get some answers. They’ve worked with a lot of churches, they’ve helped ’em through a lot of seasons, and they can be extremely helpful, even in a short convo, Hey, this is where we’re at. This is how much money we have, this is our income, this is our size. These leaders can really be helpful to get you thinking about some things. And if we need to go to a deeper level, we can bring some of our underwriting team into it. We obviously want to make it, have it make sense, but we want to be an encouragement to churches. We want to be openhanded, and we don’t have that scarcity mindset. But if we can help your church take a little bit different of a path because of some clarity you had from the beginning and you say time, money, expectations, that means the ton to us as a team. And so if we can be helpful in any way, we’d love to do so, Rich.

Rich Birch — Well, friends, I love the CDF Capital folks. Every time I interact with people in this organization, I’m struck by their deep care for the local church. And so I would heartily endorse. You should reach out to them – just cdfcapital.org. You can see, we’ll put links in the show notes there. If you’re thinking about construction stuff, if you’re thinking about purchasing, if you’re thinking about refinance, all, any of those kinds of things, take Mark’s advice. You cannot come too early. I’m sure they get calls all the time where they’re polite people, but on the other end of the line, they’re thinking, man, I wish these people would’ve come to us a year ago, two years ago. So let’s reach out now. Now’s a great season to reach out. Give ’em a call and start the conversation. Even if it’s just a niggling thing in the back of your head, like, man, I think one of the trip wires I’ve said on the church growth side, do a lot of coaching on church growth, is when churches go from two services to the three services on Sunday mornings. I’ll say to them, that’s a stopgap measure.

Mark Briggs — It is.

Rich Birch — That usually… you’re going from 50% of your services are non-optimal to two thirds of your services are non-optimal. You are probably going to need to do something – launch a campus, build a new building, do something. And so if you’ve tripped over that or even considering that third service, now’s the time to reach out to CDF Capital, talk with them. So yeah, that’s great. Well Mark, any final words just as we wrap up today’s conversation?

Mark Briggs — Yeah, I would say, and again, we steer away from being too heavy handed or commercial, but I think what makes it possible, what we do, Rich, is we have close to 10,000 individuals and churches that have, Hey, we have money sitting in a bank doing whatever, and they can park that with us until they need it, and they will help us help more churches grow. In this lending environment there’s less lenders that are loaning because there’s less dollars in the marketplace. And we’re trying to be responsible and get ahead of that. And I would be remiss, we’re talking about wherever we are, we would answer any questions. And again, if people are interested or be open to that, we’d love to have a conversation because you could earn a really good rate and you could know that those dollars are being used to help a lot of churches get in permanent facilities. These last couple of years, we’ve set records with how many churches we’re helping have their own home. And so I’d be remiss if I didn’t say that. We’d love to invite, if there’s anyone out there interested, we’d love to talk to you.

Rich Birch — Love it. So good. And we’ve done an episode in the past. We’ll link to the show notes about that side of what CDF does.

Mark Briggs — Yeah.

RIch Birch — We’ll make sure that… Because friends, if you’ve got, that’s a very good point. If your church even has some excess income, you’ve got a rainy day fund, you’ve got whatever you call it…

Mark Briggs — Just reserves even. Yeah.

Rich Birch — Yeah. Whatever you want to call that, you’ve got that fund somewhere. You should think about putting it with CDF Capital because not only will it, you’ll get a good rate, but then on top of that, you’ll also be helping other churches. So…

Mark Briggs — Absolutely.

Rich Birch — Thanks so much, Mark. I appreciate you being here today. Give us that website address again where we want to send people if they want more information.

Mark Briggs — Yes, it’s cdfcapital.org.

Rich Birch — Thanks, so…

Mark Briggs — cdfcapital.org.

Rich Birch — Thanks for being here today.

Mark Briggs — Thanks, Rich. Pleasure to be here.