Kevin Folsom is director of special projects at Building Solutions, a company that provides technical guidance for real estate and facility development programs, building assessments, and facility problem-solving. He previously served for seven years as director of campus operations at Trinity Christian Academy in Addison, Texas. Prior to that, he served in a similar role with Dallas Theological Seminary for 25 years. Folsom is a longtime member of APPA, an association of higher education facility officers.
Folsom spoke with Church Law & Tax about the importance of audits/evaluations of a church’s physical assets and why it’s essential to set aside needed cash reserves for replacing physical items and maintenance funding.
What are common mistakes churches make in managing and maintaining physical assets?
They don’t want to think down the road about things that will need to be renewed because they’ll need to start setting aside money for it now. They say, “I’ll wait until that problem happens.” We do the same thing with our houses. We don’t save $500 a year toward replacing our roofs. We usually wait until it needs to be replaced, or we hope and pray that we’ll have a hail claim and that the insurance will replace it.
How should church treasurers speak to skeptical pastors, boards, finance committees and/or congregations about the need for an assessment and reserves for physical assets?
Treasurers can help people know that the value of the facilities is typically much greater than their annual operating budget. Even some of the components can be more than their annual operations budget. So it is possible for facility deferred maintenance to go far enough that it becomes so significant that they have to go into debt or even close the doors because the facilities just became too problematic or costly to repair.
It’s very important for the institution to consider replacement planning and maintenance funding for their facilities whenever they invest to build something. They have an obligation to God and the donors to be good stewards for ongoing reinvestment in that to make sure they stay ahead.
Why is replacement planning and maintenance funding an ongoing issue or area of attention?
Because as soon as you build a building, it begins to decay. Some components of a facility may only last two to three years, while others may last 10 years.
What physical asset expenses most often catch churches off guard?
The thing that catches them off guard the most is roofing and vertical waterproofing. They can endure the pain of that much longer, whereas air conditioning, when it stops working, they pretty much get the money and will fix it, because they’re not going to be hot. As for roofing and waterproofing, they may put a bucket under it to catch the leak, or they may let some of the unsightliness of wall stains and cracking sealant go long and prolong, not realizing all the time that it’s decaying from the inside out.
What advice do you have for prioritizing maintenance, updates, and repairs?
There are standards that you can find through installation contractors, engineers, warranties, and so on, on expected life cycles of most components of a facility. Your major components to check are flooring, vertical waterproofing, roofing, air conditioning, and heating. They all have different life cycles depending on the level you’ve installed in the facility, and you just monitor those things.
Set aside enough money each year so that when the life cycle reaches a point of renewal you have the money there to do it, instead of waiting until you see the decay and repair what’s needed.
For further insights on setting aside cash reserves for major repairs and ongoing maintenance, see “Where’s the Money to Fix This?”