Inflation will also noticeably impact churches that are or were planning to be building new facilities or investing in other capital expenditures. These actual costs likely will far exceed the original budgets for these projects and will cause many churches to delay such projects.
While most churches do not have loans with variable rate interest, many churchgoers do. Those who financed a home with a variable rate mortgage or home equity line of credit have seen their monthly payments soar. Similarly, credit card interest rates have also risen dramatically. A growing number of Americans are carrying a credit card balance and the high interest rates mean they are making little progress paying them off.
One silver lining to inflation is that social security recipients have received a nice raise in January. These faithful givers should add to their regular giving throughout the year. Similarly, workers who get larger cost-of-living pay increases will be able to tithe more. However, as seniors and workers spend these additional dollars. They could continue to promote further inflation.
Potential Recession
While economists are divided on the future of the U.S. economy, most expect at least a mild recession in late 2023 or early 2024. To get inflation under control, the Federal Reserve has increased interest rates rapidly to slow the economy down.
On the surface, that sounds like it is only distantly related to churches. But to achieve what the Fed wants in returning the economy to stable ground, it will cause churches some pain. An economic recession cannot occur without decreasing the number of people employed and reducing the number of hours that hourly employees are working. When their income goes down or disappears between jobs, giving to church will decline.
The good news is that unemployment is at incredibly low levels today, so most people who are laid off will be able to find new jobs if the recession is short-lived. Also, severance pay can delay the impact on churches.
One or two wealthy churchgoers can change the trajectory of a church’s finances with one gift. Many small business owners who had done well in recent years have been able to be generous. That opportunity will likely be smaller for many of these owners this year. Already caution is increasingly the mentality of many businesses. Orders are slowing and companies are trying to reduce inventory to not be stuck with it when the economy slows down. Wealthy investors had little profit from financial markets in 2022 to share with their church, and the impact of a recession could extend this period of little or no investment profits.
Pastors and church leaders can’t know exactly what the economic future will be, but they should prepare now for a potential recession. As we learned with the pandemic, there are some unknowns we are unable to prepare for, however we can trust in the Lord and take steps now to weather financial storms that may come our way.
