How are local churches funded?

Factual Questions
1

I’m seeing more churches closing because of dwindling membership.

How are local churches funded? I know there’s the donation plate passed around during service. Some people tithe regularly. Is that really enough to pay a pastor, secretary, and other expenses?

Does the affiliate organization provide any funding? I’d guess Church of Christ, Southern Baptist, Methodist and Catholic etc. operate differently?

I haven’t heard of any Church bake sales since my childhood. I can remember some members donating work. A plumber for example might make minor repairs to the bathrooms. These activities may help but they aren’t major sources of funding.

Churches used to provide a parsonage and could pay the pastor less. Today’s pastors have to earn enough to rent their own home and support a family.

2

Most churches are indeed locally funded, even hierarchical churches the expectation is the local churches be near financially solvent on their own. In the Catholic Church it’s even explicitly part of canon law that it’s expected that dioceses insure that their ordained priests are financially supported, and that obligation is then passed on to the expectation that local parishioners provide enough local support to fund the priest’s upkeep and other obligations.

Tithing is probably more than you’d expect, but it is absolutely the case that many churches in American are going through solvency issues. There’s a long term generational decline in church attendance and church membership, and this is gutting church finances. I would suspect a lot of churches disproportionately rely on “whales”, local wealthy people that are passionate and willing to cut big checks. But I think all the smaller donations add up too. A lot of churches also end up being named in wills of their deceased members, there was a minor scandal a few years ago when it was found out a diocese in West Virginia, the Bishop was living like a King. It ended up that years ago a wealthy older woman bequeathed some oil well assets that had been in her family to the church when she died, these were all located in Texas. So this relatively impoverished West Virginia diocese eventually started collecting royalty payments from a lot of productive wells in Texas, which became even more lucrative in the last 10 years or so. Some bequests like that have long income timelines and can help churches remain viable for many years.

3

I’m a member of a fairly big United Methodist Church in suburban Chicago, and was on the church board for several years, so I have a limited amount of inside knowledge.

Yes, the budget is pretty much entirely funded by donations made by the congregation. If a church is fortunate, they may have had a few wealthy and/or generous members, who have willed significant amounts of money to the church.

A lot of parishes which have older buildings may own their buildings outright, which removes things like mortgages from their operating budgets. On the other hand, if the building winds up needing signficant renovations or repairs (as ours did), it can be a serious financial crisis for the parish. We had a multi-year fundraising program, with a lot of individual tactics (not quite “bake sales,” but close) to build up the nest egg which was needed for the renovations.

If a church is a member of a larger denomination, there might be some funds available to help struggling congregations, but generally, the cash flow goes the other way – individual parishes are expected to give a certain amount of money each year to the broader denomination, to assist with its operating budget. If, due to declining membership, and the commensurate decline in financial resources, a UMC parish is in dire financial straits, odds are high that it will end up having to close, or merge with another parish.

Our church is big enough, with a big enough congregation (and budgetary resources) that we have two full-time, salaried pastors (a senior pastor and a junior pastor), plus several other salaried employees (music director, church secretary, etc.). Conversely, I have some friends who are UMC pastors at small churches in rural Indiana – they are paid, but not very much, so they wind up having other weekday jobs to pay their bills, and they sometimes work as pastors for multiple parishes.

My understanding is that, in the case of the Roman Catholic Church, the diocese (the regional authority) usually is the owner of the church properties, rather than the local parishes. As church membership declines in many areas, many Catholic dioceses in the U.S. have been closing or consolidating parishes, often to the dismay of parishoners, though they often have very limited ability to fight against such closings, because the decision-making is being done at the diocese level.

The OP mentions Southern Baptist churches – denominations like the Southern Baptists are far less centralized than the Methodists or the Catholics, and the individual parishes are even more autonomous (and, thus, probably even more reliant on their own members to fund their budgets).

4

I have never attended a church that was part of a hierarchy, so I am not sure about that. All the ones I have attended are 100% independently locally funded. My current church will publish their budget to the members yearly. No plate is passed. You can place money/checks in a box in the back or tithe online.

I am sure that in a lot of churches, much of the budget is made by 20% of the members.

5

We still do, literally, “pass the plate” during the offertory portion of weekly services*, but the vast majority of our members do their giving online now.

*- We haven’t been able to hold in-person worship since last March, though we are planning to be back in the building for worship by this summer.

6

A lot depends on the specifics- for example Catholic priests in my diocese don’t need to be paid enough to rent a place to live ( and certainly not enough to support a family ) since every parish has a rectory and even priests who are not officially assigned to a parish are “in residence” at one parish or another. The funding for most parishes comes strictly from donations - in mine, $5K in donations came in during the summer weeks , more the rest of the year and much more during Christmas and Easter although that was pre-COVID and it has certainly dropped. The diocese will usually consolidate parishes that are struggling although that is probably in large part because the area is Catholic enough that there are at least five parishes within walking distance of my house and at least seven more within a 20 minute drive. In areas where the churches are more geographically distant my understanding is that wealthier parishes end up subsidizing poorer ones

7

My friend was essentially a founding member of a small local church and it was entirely funded by tithing and member donations. They needed a place to worship, which started out in members’ homes, moved to a rented store. Ultimately, they settled into an arrangement renting a Seventh Day Adventist Church on Sundays. The SADs had a declining membership, some financial troubles, and they were using it on Saturdays only, so both churches benefited financially from the arrangement.

Another church near me seems to rent out its parking lot from what I can tell. They have a parking permit system and one of the local government agencies directs its employees to park in the church, thereby saving the agency’s parking lot for constituents. Again, this seems to be a mutually beneficial arrangement. I know that church also relies on a member that owns a landscaping company for all its landscaping and snow clearing needs.

I still see churches having thrift sales, fairs and such that probably raise some money. I doubt that’s the big revenue source though.

8

This reminds me: a small source of revenue for our church is renting the facilities for other groups. We’ve had another church rent our sanctuary for their services, we’ve had a kids’ theater camp group rent out a big chunk of the building for their summer drama camp, etc.

9

Some still do, though I think it’s less common. I suspect it’s more common in smaller towns, though I can’t back that up.

10

I imagine that both Catholic and Anglican churches rely a good deal on investments and legacies.

The Church of England certainly owns a good deal of rental property. Each church is expected to not only pay its own way but make a contribution to the Bishop and their staff. Building costs are usually found from donations and the barometer for the £thousands needed for the roof is a common sight. One problem of having a long history.

No money comes from taxation, either for stipends or maintenanc.e

11

The United Church in a small community I lived in a few years ago was doing quite fine financially. They had a solid congregation, and good outreach to the rest of the community who did not necessarily attend. They put on many events in the community hall that was next door to the church (on church property).

Then the national organizational body, located in Toronto (a few thousand km away) decided that they would like some cash, and sold the entire church property with no consultation whatsoever with the local congregation or community. Sold it to a developer who closed the community hall and cut the surrounding forest.

They closed the only church in the town, and eliminated the community hall which had stood there for more than 50 years. But they got their 30 pieces of silver.

12

Here in the US there are a number of older churches that own valuable property. I don’t know how that works out in the hierarchal structures that control the local churches, but there are plenty of independent churches that have been around well over a century and own properties that have become very valuable over time. Sometimes these properties are cemeteries. But without more fungible assets they may not have much, renting out church space will not bring in large amounts of money, and selling a cemetery can be done but brings about a host of problems in the dealing with the relatives of the deceased and the costs involved in reburial.

The Catholic church owns a lot of property in this country and they are shutting down individual churches that just don’t have the same kind of local membership they used to. Rhode Island, where I live has the highest percentage of Catholics among US states, but churches are still shutting down as so few of these Catholics are actually practicing anymore or have discovered (or not) whether their belief in the afterlife was true.

The Episcopal Church in this country, whatever way that is related to the Anglican Church, I don’t know the details, does a little better than some Catholic congregations do as far as participation since they make it a bit easier, often poaching Catholics as the ‘Catholic Lite’ church. I imagine some of these are among the oldest churches in this country and are very well endowed financially on an individual basis but I have no idea how much they are affected by the larger hierarchal church.

ETA: And we also have a number of very rich churches based on their excellent marketing effort for donations that often makes specific people quite wealthy, That’s a whole other topic in itself.

13

Also the money that church’s collect isn’t taxed, and neither is their property. So they can get by on a smaller level of funding than that a business.

14

Marriages and funerals: there may be fees or expected donations associated with these.

15

At least for our church, parishoners aren’t charged for use of the sanctuary for those ceremonies, though it is expected that the families provide payment for the music director, if his services are requested. If non-parishioners ask to use the sanctuary for a wedding or a funeral, we’ll generally allow it (space and time permitting), and charge them a fee for its use, but it’s not a particularly big source of money.

16

When our church was building a new building, space was included for a day care center, which is a non-profit that contributes to the church. We did have to loan them money during the height of the pandemic, but overall it’s been a good net contributor. Otherwise, it’s passing the plate and legacy contributions.

17

There’s an picaresque independent church near me that is very popular for weddings. My friends got marries there and when my wife asked them why they chose that church to get married at and the answer was “Because they would”. His wife was non-practicing Catholic, he was non-practicing anything, and a lot of the churches left are getting choosy about who they will allow to get married at in their church. There are plenty of other places to get married though.

18

The first marriage I solemnized as a representative of the Universal Life Church was a response to local traditional churches’ refusal to consecrate the marriage of a couple who were cohabiting and not church goers. They approached all the local churches and each offered to wed them if they would live separately for some period, join the church, etc. They could not afford, nor did they desire to do any of those things.

I performed their wedding, then 8(?) more over the years. My weddings were all outdoors.

19

I’m guessing that this was meant to be “picturesque”?

I’ve heard of a few churches which, thanks to their looks and/or location, host a lot of weddings for non-parishoners. I would imagine that, for those churches, it can be a significant source of income, but they’re probably the exception to the rule.

20

Yeah, that was weird. But ‘picaresque’ is a word so it didn’t trigger the spell check.