Are church bond issues biblically sound?

The concept of church bonds is scriptural only under certain guidelines. In Deuteronomy 23:19, God says not to lend to a brother at interest. This naturally would encompass the church. The principle of stewardship in Scripture teaches that Christians are not owners of wealth, merely stewards of God’s wealth (see Luke 16:10-13). It’s difficult to understand how we could lend money to our Master and charge Him interest on His own money. Although lending to God’s people through bonds may be biblical, charging or expecting to receive interest is not.

Financing church expansion with bonds

When a church finances expansion with a bond issue, the church is essentially borrowing from itself. Church members purchase the bonds, which means that they loan their money to the church for a certain number of years; then, when the bonds mature, the ministry pays back those who had purchased them, plus interest.¹ Although some bond issues appear to have been successful, bonds can be virtual time bombs, just waiting for disaster. There are four potential problems associated with bond issues: charging Christians interest violates biblical principles, bonds presume on the future, bonds contradict biblical giving imperatives, and bonds can intensify other ministry problems. ²

Charging Christians interest violates biblical principles. The Word of God is very clear concerning charging interest (Exodus 22:25; Leviticus 25:35-37; Deuteronomy 23:19-20). Although God’s people are permitted to charge interest to unbelievers, they are not to charge interest (usury) of any amount to their fellow believers. God promised the Israelites that if they lived by His financial standards, He would bless them in the Promised Land.

Bonds presume on the future. All too often, church bond issues are based on potentially unsound assumptions of what the future may hold. These assumptions could include the following.

1. The church membership will increase.
   
2. The financial base will grow enough for the bonds to be repaid.
   
3. There will not be a church split, pastoral change, or any other church-splitting crisis while the bonds are maturing.
   
4. There will not be an economic downturn while the bonds are maturing.
   
5. God does not have other uses for the church’s future surplus funds, such as spreading the Gospel message to the unreached people of the world.

I am not saying that churches should never step out and move in faith, but I am saying that the church leadership should be careful to distinguish between the leading of God and human presumption. God’s method calls for taking freewill offerings and then proceeding when enough has been collected; the human method is to borrow now and pay back later.

Bonds contradict biblical giving imperatives. Jesus himself said that we are to lend without expecting anything back (Luke 6:34-35). God repeatedly praises those who lend freely, expecting nothing in return (Psalm 37:26; 112:5; Proverbs 19:17).

Bonds can intensify other ministry problems. Bonds indicate a certain level of ownership, and some people who buy church bonds may feel as though they own the church. All too often, people with a large investment in church bonds are tempted to try to control the affairs of the church. In addition, if the church has unsettling problems after the bonds are sold, the people can demand their money back before the bonds mature, forcing financial hardship on the church. And if the church experiences financial problems while the bonds are maturing, there may not be enough money to pay them off at maturity. This could force a church into bankruptcy.

The church leadership of any church that is considering expansion should consider these few suggestions before making any decision regarding financing a church expansion by the issuance of bonds or by borrowing more conventionally: (1) be sure the expansion is a need and not simply a want; (2) be sure God is backing the program by letting Him bring in the funds; (3) all funds should be on hand before construction begins. If God is in it, He will provide; (4) raising necessary funds should be low key rather than high pressure. If everyone is behind the program, everyone will help with the funding; and (5) do not go into debt to obtain the necessary funds. If God is behind the project, accumulating additional debt will not be necessary.

Cautions regarding church bonds

Although bonds can, under special and specific circumstances, help a church leadership plan its financial future, there are some safeguards that must be considered before agreeing to a bond issue program on behalf of the church.³

The leadership needs to be wary of bond issues that seem closely tied to a particular religious belief. It’s extremely unlikely that a golden investment opportunity would be available only to members of a specific church or faith. They should always check out any claim of influence within the church that is made by a promoter and ignore claims that religiously based bond issues are unregulated. Virtually all investment instruments, including church bonds, come under the scope of federal and state securities or commodities laws. Therefore, the church leadership should check out the promoter of the bond issue before any money changes hands. Contact the state securities agency to find out if the promoter and investment are properly registered in your state.⁴

Church borrowing money

Rather than agreeing to a bond program, should a church just borrow the funds needed for expansion? Although it is not a sin for a church to borrow, it does circumvent the need to trust God. If God is convicting the people to expand and renovate, I believe that there is enough money in each church to fund the project. If emotion is driving a program, then it will probably fail. But if the desire to reach more people and show them God’s love is the motivation, then God will honor that attitude. Buildings should not be built “to the glory of God” because God does not need buildings. So, I encourage the church leadership of any church that is contemplating expansion, to set aside some time to seek what God wants for the church, and ask Him how the money will be provided. If God is in the expansion plans for your church, He already will have prepared the hearts of the people to give; there will be no need for pressure.

Biblical guidelines regarding church borrowing

The Word of God has the only acceptable guidelines regarding borrowing.

1. Borrowing is always presented in the negative (Proverbs 17:18).
   
2. God never once made a promise to anyone and fulfilled it through a loan (Luke 6:38).
   
3. God promised His people that if they would obey His commandment they would not have to borrow (Deuteronomy 28:12).
   
4. God had worship structures built at least three times and, according to His Word, no credit was used in any of the three (1 Chronicles 29:16; 1 Kings 6; 2 Kings 12).

It might be argued that these are not valid examples because borrowing was not an everyday practice during those times, and today it is a common acceptable method of funding church projects. So, what is the harm in the church borrowing to fund an expansion project?

1. Borrowing denies God’s people the opportunity to experience His overwhelming blessings in response to their giving (2 Corinthians 9:10).
   
2. Debt restricts a church’s ability to serve God to its full potential. Quite often, controlling decisions are based on the need to meet debt payments rather than on God’s redirection of funds to current needs.
   
3. Often, the ability to repay the debt is dependent on the ability of the pastor to preach. If at any time the church’s pulpit was empty for any number of reasons—meaning that the primary motivator for repayment, a pastor, was absent—the church very well could find itself in a financial crisis.
   
4. Huge sums of God’s people’s money go to meet interest payments. That money could otherwise be used to further God’s kingdom rather than Satan’s or the world’s. Unfortunately many churches, as well as entire denominations, spend more money on interest payments than on foreign missions.

Conclusion

There is nothing inherently wrong with a church bond program. There are a great many risks, however. I do believe if God’s people lend money to a church, they should not charge interest for it. There’s an Old Testament admonition for God’s people not to charge each other interest. I’ve known an awful lot of church bonds that didn’t get paid on time, or didn’t get paid at all—in which case a lender needs to be able to forgive that debt. I’d say if a person has free money that he or she doesn’t need for a substantial period of time, say five years or longer, go ahead and loan the church the money—as long as they don’t pay interest to the lender. The principle is clear. If we loan money to each other we are to do it without interest, as a witness to the unsaved around us. In this way we show that we are more interested in each other than in the profit we might gain through loaning money. There are four principles that need to be remembered when considering loaning money to your church: (1) don’t charge interest; (2) expect nothing in return; (3) only loan money you can afford to lose; and (4) meet all family needs first. ⁶

¹ Jeff Berg & Jim Burgess, The Debt-Free Church, Moody, 1996, p. 169.

² Jeff Berg & Jim Burgess, The Debt-Free Church, Moody, 1996, pp. 170-173

³ www.uccan.org/PlannedGiving/StrippedBonds.htm (Link no longer valid)

⁴ www.bbb.org/library/faithful.asp

⁵ Larry Burkett, Using Your Money Wisely, Moody, 1985, pp. 79-80