Pandemic Brings Financial Challenges for Churches

John David van Dooren, Church of the Transfiguration, New York

By G. Jeffrey MacDonald
Correspondent

Collections down as much as 70 percent. Tenants struggling to pay church landlords. Steep drops in investment income that’s needed to pay monthly bills.

Across the Episcopal Church, congregations are weathering effects of a financial storm that shows no signs of abating anytime soon. As states have banned public gatherings in attempts to slow the fast-spreading coronavirus, congregations unable to pass offering plates are getting squeezed between shrinking revenues and rising costs.

“Needs are up. Income is down. It’s is the same with everybody,” said the Rev. John David van Dooren, rector of the Church of the Transfiguration, a Manhattan parish that depends on income from rental property and finds its tenants now struggling to make rent. Parishioners, meanwhile, face their own money woes and hope the church can help them.

“I’m helping parishioners pay their rent and probably will help more” by tapping a discretionary fund, van Dooren said.

From coast to coast, churches large and small are feeling financially pinched — and trying to avoid passing along the pain to families that depend on them for salaries, wages or charity.

It’s no easy task. At the Memorial Church of the Good Shepherd in Parkersburg, W.Va., offering collections are down, just as ministry costs are rising. A $1,000-a-month expense for food pantry overhead is apt to reach $1,200 or more, according to Linda Crocker, parish ministries coordinator. Needs are growing, she said, as breadwinners lose jobs and other pantries must close when virus-wary volunteers stay home. Good Shepherd’s pantry served 58 families in March, up from 34 in February. And shortages at food banks, which sell at deep discounts to pantries, mean the church must pay full retail prices for meat and many other items on its shelves.

Meanwhile Good Shepherd has been trying to continue supporting current and former staffers. A choir director and nursery attendant are not needed on Sunday mornings since the congregation isn’t worshiping in person, yet the church is still cutting checks to them, according to the Rev. Marjorie Bevans, rector.

“We’ve gone ahead and given them some money,” Bevans said, adding that the sums have been less than they would have been paid to work. “For the nursery attendant, it’s just a small amount of income but we know that she depends on it. She’s older and lives on Social Security and every little expense puts her right over the edge.”

Following the widespread closures in March. many congregations worked in crisis mode —moving worship online, preparing virtual Holy Week events, checking on congregants and sustaining church life from home offices. Now with Easter behind them, they’re hunkering down to get a better handle on financial fallout from the pandemic. As they do, they’re charting courses to sustain those who depend on them materially. They’re also bracing for tough choices ahead, especially if virus-related restrictions stretch into late spring or summer.

David Getreu, Diocese of Southern Ohio

Dioceses say it’s too early to know with any certainty how hard congregational coffers have been hit, but anecdotal evidence points to a substantial dent. For example, in the Diocese of Southern Ohio,  three churches reported offering collections to be down 30, 50 and 70 percent respectively since the coronavirus crisis began, said the Rev. David Getreu, associate for financial management and oversight.

At St. Philip’s Church in Circleville, Ohio, where Getreu also serves as rector, a 30-percent drop in giving to the offering represents only part of the new budget challenge. Oil well royalties had been delivering a reliable $4,000 to $5,000 per month, but plunging oil prices have shrunk that stream to about $2,000. Together the hit means more pressure on reserves and possibly budget cuts if the recession drags on.

To get through the current financial crunch, congregations are finding new options — and also running into roadblocks. Scores have lined up to apply to the $350 billion Paycheck Protection Program, a CARES Act initiative that gives churches a rare opportunity to get low-interest, forgivable federal loans. Funds can be used to pay W-2 employees for up to eight weeks. Loans can be forgiven if funded employees remain on the organization’s payroll for the duration.

But the process has been anything but smooth. Churches are asked to apply through banks where they already have relationships, which for Good Shepherd means waiting with no clear timetable from a local bank.

“We put in our application on the very first day [April 3],” Bevans said. “We did hear back from the bank that they were inundated with applications. And they’re getting some mixed messages from the federal government about when the money will be at our bank so that they can disperse it.”

Other congregations are also eagerly seeking PPP approval, and not just for their own applications. The Diocese of Los Angeles has 20 parish-affiliated preschools, including some that must get PPP loans just to survive.

“It all depends upon whether the federal small business [PPP] grants will come through,” said Serena Beeks, executive director of the Commission on Schools in the Diocese of Los Angeles, in an email. “With them, no [preschools] will close.  Without them, we could see a couple of closures, depending upon how long we are in this situation.”

Despite separate budgets, what impacts the preschools also impacts their host congregations. A closed preschool at any parish would mean lots of vacant space, and finding a good new tenant to occupy a former preschool can be difficult, Beeks said.

“Parishes would primarily be impacted because of the large number of shared expenses — maintenance, landscaping, insurance, parish secretary, bookkeeper… and so on,” Beeks said. “All of those would be reduced without a preschool or school to share the costs.”

Dioceses meanwhile are making various types of financial assistance available. For example, Episcopal Impact Fund, the outreach arm of the Diocese of California, has created a rapid response fund to help nonprofits facing a formidable triad: rising costs, mounting requests from clients, and canceled fundraisers. Recipients include San Francisco’s Good Samaritan Family Resource Center, which had reported that as many as 300 of the recent immigrant families that it serves were quickly running out of food.

In other examples, the Diocese of Missouri has deferred assessments, which are now due July 1, and created an emergency grant fund for parishes and mission churches that demonstrate needs for up to $25,000. The Diocese of Massachusetts also created a COVID-19 Emergency Relief Fund for congregations hard pressed to keep up with community needs. In Wyoming, the first phase of a $1 million distribution began April 1 when the Diocese of Wyoming mailed $10,000 checks to all 46 of its congregations.

“Our hope is that you will dream of ways you can make a love-spreading difference in the lives of those negatively impacted by this crisis,” wrote Wyoming Bishop John Smylie in his letter to congregations. “We are asking that you distribute these dollars within 60 days to meet the most pressing needs you currently discern.”

Whether congregations receive grants, tap reserves or make other short-term adjustments, they should resolve to keep meeting urgent human needs, according to Episcopal Church Foundation President Donald Romanik.

“Parishes that have been involved in their communities and can say ‘During the pandemic, we fed X number of people or we provided X number of vouchers’ are going to be the ones that can engage not only their members but also the wider community and say ‘We make a difference’,” Romanik said.

Many are taking that message to heart, even as revenues recede and pastoral challenges mount, such as at the Church of the Transfiguration, where two parishioners have died from COVID-19, while others have battled it and recovered. The rector said his $20,000 discretionary fund can be used to help congregants, including a number of actors, to pay a month’s rent (e.g., $900 to $1,400 for an efficiency unit) when they’re at risk of eviction.

“That fund normally lasts for a year or so,” van Dooren said. “But it could be gone in a month” if parishioners can’t find work and have to deplete savings.

The cumulative financial toll on congregations won’t be known for years, but some are already seen as vulnerable. In the Diocese of Olympia, the Rt. Rev. Greg Rickel says he’s not worried about tiny congregations like St. Nicholas Church in Tahuya, Wash., where nine people maintain a building with no mortgage and habitually make repairs without calling the diocese for financial assistance.

“That congregation is probably going to do fine,” the bishop said. “But if your answer [to paying bills] was eating up your reserves through the good times, then there ain’t nothing left in the bad times. Those are the ones I’m worried about. It doesn’t matter what size they are.”

Congregations that aren’t self-sustaining could soon be looking at big changes. When Romanik speaks with bishops in New England and Rust Belt dioceses, they categorize one third of their congregations as being on “hospice care” insofar as they depend on diocesan subsidies, he said. Another third is deemed “marginal” rather than financially sustainable.

“The ones that are on hospice care are definitely in danger of closing,” Romanik said. He expects their subsidies will be eliminated and closures could be imminent.

Some that survive will have fewer, if any, choices. Those that had been considering a merger discernment process may not need to bother. “They will have no choice” but to merge, Romanik said. And because most churches have less than three months of cash reserves on hand for a rainy day, he said, consequential decisions might not be far off.

Though circumstances vary, every congregation is being urged to ask members to support the church financially at this time. This will be difficult for congregations that didn’t ask when times were good, Rickel said.

“For many, that will be new,” he said. “They’re going to have to do it in the midst of this crisis. That’s not going to be easy, but it’s going to have to be done.”

 

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