Emerging From The Meltdown

Volume 43, Issue 1 :: by Robert I. Evans and Avrum D. Lapin

What congregations and architects should keep in mind in a recovering economy

At almost no other time in recent history have houses of worship faced so many monumental challenges in balancing budgets and envisioning transformation: in the way they operate, how they interact with their constituents, and how and what they might consider when approaching the possibilities of renovations or new construction. This angst is similar to that facing other nonprofit organizations across the U.S., but houses of worship have often not been truly prepared to wage effective large capital and endowment campaigns–until today. Now approaches and “tools” not previously utilized are available, and architects are an integral part of the solution.

Coping with a recession and other unprecedented challenges in both 2008 and 2009 placed religious groups of all sizes and denominations in unenviable positions. Religious leaders at all levels have mounted never-before-dreamed-of outreach efforts that require changes in long-standing thinking and methodologies. Facing staffing and other rising costs, many have been forced to trim essential spiritual, educational, and social programming when people of faith are pressing for more and relevant services. With giving somewhat down and calls for services up, where should clergy and others turn?

Profile of Giving

Donations to religious causes have increased steadily every year for the past decade, according to the Giving Institute and its seminal Giving USA publications. Even during downturns in the economy, donors have always supported houses of worship at significant levels. In fact, in 2008, giving to religion represented 35 percent of charitable dollars donated to all causes, and projections for 2009 and 2010 suggest that this rate of giving will continue unabated. Considering that donors turn to their houses of worship more frequently during bad economic times; the results reflect more generosity, especially if those congregations are actively asking for voluntary financial support.

According to a study by the Lake Institute on Faith & Giving at the Center on Philanthropy at Indiana University, as of October 2009 the majority of U.S. congregations did not see declines in giving, and only a little over a third of these congregations reported making budget cuts in 2009. In addition, the recession has proved to be a learning experience for congregations, with close to 40 percent reporting more open communication about money and giving, and 28 percent offering personal finance courses and seminars (since 2008).

From our decades of experience in working with a spectrum of faith-based and other nonprofit projects, the houses of worship that were the most successful and that best met the expanding needs of their members were the ones that pursued their fundraising efforts assertively. The push for annual appeals remained generally strong as long as congregations’ short-term goals were clear and understandable.

One critical result of the bad economy was that leadership of many congregations finally began to recognize the need to build their endowment funds and to achieve financial security for future downturns or other unexpected challenges. Probably one of the most important benefits we have seen is the realization that these types of campaigns must be a priority. While annual campaigns have continued, capital campaigns have been nearly nonexistent. Congregational leaders and members often set aside the priorities of much-needed renovations and refurbishments. With expected economic expansion in 2010 and 2011, we hope that capital campaigns for long-delayed maintenance and growth will resume, becoming a necessity for many congregations. While still cautious, we are seeing more confidence in donors who are regaining financial strength, while their congregations are readdressing many of the facility-related issues that were tabled over the last two years.

Environmentally Sensitive Building

Once economic recovery moves ahead, delayed or stalled capital projects will, by necessity, move forward but will probably take on new meanings and embrace some new approaches. Nonprofit facility design, construction, and renovation projects, especially for houses of worship, will begin to mirror those of the for-profit world in a number of ways. Most important, the emphasis on being “green” will become more prevalent, and this philosophy will characterize significant capital campaigns for religious facilities at a pace that we have never before witnessed.

Typically, houses of worship have not chosen to build environmentally friendly facilities. Facing “front-end” price tags for construction that are often 5 to 10 percent higher, leaders have found difficulties in justifying higher costs. Tax incentives that exist for organizations in the for-profit arena have no relevance for any nonprofit project. But there is hope: while the tax issues have not changed, costs have decreased momentarily, and, most important, the interest among donors in supporting green projects has grown exponentially.

“Going green” is rapidly–and finally–becoming the new “buzz,” and environmental consciousness is catching on like never before in the nonprofit world. Until now, scant attention has been paid to making houses of worship environmentally conscious or friendly, other than with small-scale innovations like recycling and the use of compact-fluorescent bulbs. Now leaders and donors are demanding plans that emphasize energy efficiency and a variety of other actions that will have long-term impact. Many leaders and donors recognize this now, while others are slowly learning how an investment in their congregation today will lead to a more cost-efficient and eco-friendly tomorrow.

In conjunction with building more environmentally friendly facilities, congregational leaders and the architects they retain will need to build maintenance endowment funds into project budgets. The capability to address deferred maintenance must become a top funding priority in capital campaigns, in terms of both “green” and routine upkeep. It makes fundraising, environmental, and common sense to build houses of worship that are beautiful and efficient, yet also reflect the vision and possess the resources to manage for small and large future repairs instead of waiting until problems become catastrophic. Being good stewards of our planet and of our houses of worship should theoretically be basics of all construction and renovation projects today.

Expanding Role of Architects and Planners

So where can architects and planners of houses of worship make their greatest impact? We suggest three key areas:

Architects as part of the fundraising team

In order to get the most out of any capital project, architects must reassert their presence and be welcomed as an integral part of a congregation’s fundraising team. Architects and campaigners must recognize and develop this synergy and openly embrace the value each other brings. Especially through the ebbs and flows of the capital campaign process, the visionary team of clergy, congregational leaders, and architects joined around the “higher purpose” can keep the energy and campaign momentum strong.

Some architects have been reluctant to get involved in fundraising, unfortunately seeing it as “beneath” them. And capital project leaders have failed to make architect involvement in campaign efforts part of the formal package. An architect’s abilities to convey the vision of the project to potential donors is truly invaluable and is a testimonial that donors will appreciate and understand. A project’s architectural team can reflect technical knowledge of the project and show how their design plans represent the nature and personality of the congregation, key elements in the “selling proposition” of the campaign. Similarly, the leadership team must be inclusive in their efforts and encourage participation by their architect in meetings and “asks.”

One major Midwestern congregation we worked with did not heed this advice. Leaders rebuffed the efforts of their architect when he offered to attend leadership meetings and play a proactive role in the campaign process. This was a huge mistake. It severely diminished opportunities for cohesion among the campaign team and the congregation-wide understanding of the project, and cost the project significant charitable support. It is imperative that clergy, professional staff, volunteer leadership, fundraising counsel, and architects join as one campaign “sales force,” whether for emerging and innovative “green” projects, which require even more strategy and cultivation, or for more time-proven efforts.

Architects as advocates for environmental priorities

The next few years will continue to be a reorientation for both campaign teams and architects, as houses of worship look to explore innovative capital projects with an emphasis on “greening” their buildings. We recommend that all participants enter the process with an open mind and commitment to innovation throughout all steps of the fundraising journey. Campaign leaders and architects will need to educate their congregants on the vast benefits of creating environmentally friendly facilities, counteracting the perception among some who may see them as excessive or as cost centers to be avoided as institutions try to be more conservative in these difficult economic times. It is important to stress the money-saving aspect, as well as the vision for a more sustainable congregational future. Each fundraising endeavor, in this way, could and should be a community-building experience in which every member plays a role. This will determine the project’s level of success and the efficiency with which it is completed.

One architectural firm with whom we have established a close relationship spearheaded the efforts in creating a LEED-certified building for a midsized congregation unsure of what fundraising path to take. The congregation was clearly dedicated to respecting the environment yet had not considered taking the steps to become a green facility. The architect’s ability to convey the importance of such a project and its ability to ensure a brighter, more efficient future ultimately convinced the leadership that their house of worship should strive for this certification. The neighbors adjacent to the house of worship were so moved by the thoughtful efforts to sustain the surroundings that they were vocal supporters of the plans and enabled the construction to move forward without a hitch.

Architects as advocates for fiscal management

Previously, we indicated that some forward-thinking houses of worship have become proponents of endowment development. Going forward, architects for religious facilities must emphasize that at least 20 percent of the construction costs should become a budgeted endowment opportunity whereby dollars are set aside immediately to fund major future expenses that cannot be paid out of annual budgets. These costs range from HVAC and other equipment changes to such basic expenses as new carpeting, wall coverings, lighting fixtures, and the updated nuts-and-bolts aspects of any modern facility.

The principals of one architecture firm reached out to us in 2009 because they were starting to position themselves as a quasi-unique resource to churches and synagogues. We suggested the three points that frame this article, yet we have still seen reluctance on their part to become proactive in fundraising. Is this an expression of their own nervousness about seeking voluntary giving, or is it a conversation that requires even more explanations? These architects may be hesitant to break traditional barriers, but this proves to be a significant disadvantage for both parties.

We feel confident that capital campaigns will once again become part of the daily considerations for houses of worship, yet new elements and dimensions will emerge. There are a few key points to remember as capital renovation projects or new construction projects begin. Our advice to clergy and volunteer leaders: create a strong, diverse fundraising team and make sure that this team includes your architect and design team. Internally, align the purposes of the building committees and the campaign leadership, and synergize their efforts. These groups must work in tandem to promote campaign success.

Robert I. Evans, Managing Director, and Avrum D. Lapin, Director, are principals of the EHL Consulting Group of suburban Philadelphia. A member firm of The Giving Institute, the organization that oversees the preparation and distribution of Giving USA, EHL Consulting works with dozens of nonprofits on fundraising, strategic planning, and nonprofit business practices.

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