As the inflation rate continues to rise, robbing every consumer of their buying power, it forces many uncomfortable decisions. For example, families must make tough choices when buying groceries and find creative ways to keep food costs down by eliminating certain costly items. For some, higher costs mean less money for extras like vacations or upgrades to computers or other electronic devices. For others, higher interest rates can delay purchasing a home or car. And for others, it’s cutting back on basics like clothing and other necessities. Churches feel the impact of inflation too. Not only do churches see higher utility bills and increased costs to essentials like ministry curriculum, but it often impacts donations – a primary source of income for a church. And just like a personal budget, churches must keep their spending under control or risk a financial crisis by letting reserve funds dwindle to nothing due to overspending. As income decreases and expenses increase, it creates tension in how best to allocate the limited dollars to fund the church’s mission. Savvy churches look for ways to reduce spending that will not impact the church’s mission.
The Real Cost of Deferred Maintenance
For some churches, deferred maintenance is the short-term solution for cutting spending. But, as some church budgeting experts have found, the quick fix can quickly become an expensive solution. According to many facilities and budgeting professionals, for every dollar “saved” with deferred maintenance, the organization or church typically spends another four dollars in future costs. These higher costs often reveal themselves in areas like emergency repairs and a reduction in equipment efficiency. Deferred maintenance can result in reduced life of assets like HVAC units, lighting, fire alarms, and can even lead to safety and health risks.
Deferred or Neglected
Churches or other organizations faced with the dilemma of deciding how and what to cut to make ends meet need to look at the calendar. In other words, at what point does deferred maintenance become purposeful neglect and ultimately more expensive? That depends on the asset for the deferred maintenance. For example, in most cases, asphalt lasts approximately five to eight years before needing a fresh coat of slurry. If the last time the church slurried the parking lot was two or three years ago, as long as it’s not developing “alligator skin,” which can quickly turn into a sinkhole, you might have at least three to five years to avoid this project. A church or organization can delay things like touch paint for a while, but eventually, the facility looks uncared for.
Prioritization
Church and other organizations looking for short-term budget reductions and deferred maintenance are at the top of the list; it is vital to prioritize safety over budget. Always care for compliance assets like the fire alarm and sprinkler systems to ensure proper functionality. Public gathering spaces must remain safe. Include general operations next on the prioritization list to ensure essential building functions like lighting and plumbing work.
Safeguards
In an ideal world, the revenue trend line will always point up and to the right, and finding areas where to decrease spending to avoid a financial crisis doesn’t exist. Two essential funds can help safeguard against deferred maintenance when lean times come:
- An Emergency Fund: An emergency fund is exactly what its name implies: a fund for emergencies. For churches, most experts recommend 40-80 days’ worth of expenses to cover emergencies.
- Sinking Funds: Sinking funds are a way to prepare for upcoming costs in advance. For example, if a membrane roof has a 20-year life expectancy and costs $150,000, create a sinking fund that sets aside enough money each month to replace the roof at the appropriate time.
When budget cuts become necessary due to a reduction in revenue, there are times when deferred maintenance is the short-term solution to solve a financial situation. Avoid deferring compliance and general operating assets keeping the facility safe at all times. And plan by creating emergency and sinking funds to safeguard against times when financial resources are scarce.
