Six Debt Ratios and Measurements Your Church Should Monitor
Six Debt Ratios and Measurements Your Church Should Monitor
These calculations offer key clues about the health of the church's finances.

Why is it important for churches to monitor debt ratios and measurements?

First of all, your lender will monitor them even if you aren’t. Keep in mind that many loan covenants are based on the results of key debt ratios. If you violate one, there may be penalties and, in extreme circumstances, the lender may even call your loan—requiring you to refinance or pay off the remaining balance. Most importantly, you will strain the relationship with your lender.

There are six debt ratios and measurements you can use to monitor your church’s dependence on debt levels and identify any needed adjustments. These represent important indicators every church should understand and monitor.

1. Debt to Unrestricted Contributions

total debt
____________________________
unrestricted contributions

This ratio measures how many times your debt is greater than annual unrestricted gifts. Lenders expect debt to be funded through unrestricted contributions. They determine what debt load a church will be able to handle on top of other required expenditures (salaries, benefits, facility expenses, mission expenses, and so on).

Log In For Full Access

Interested in becoming a member? Learn more.

Related Topics:
Posted: February 25, 2015
View All
from our store
Talking to Your Congregation About Money

Talking to Your Congregation About Money

Helpful insights on talking about money and encouraging people to become generous givers.
Church Finance

Church Finance

Learn about budgeting, financial reporting, tax compliance, insurance coverage, and more.
Charitable Contributions Bulletin Inserts

Charitable Contributions Bulletin Inserts

Help your members give more by answering their charitable giving and tax law questions.
Church Fundraising Campaigns

Church Fundraising Campaigns

Discover tips on raising and borrowing money.

ChurchSalary

ChurchSalary

Let ChurchSalary do the work. Get personalized compensation reports for staff and pastors.