|Proper Planning Can Help Avoid Unfortunate Surprises…|
|… for parishes with New or Old Churches|
Orthodox Christians love their temple — no matter how elaborate or modest. Most parishes take great pride in keeping their church interior sparkling and immaculate. Most, not all, parish halls or basements are also tidy and in good condition.
Unfortunately many Orthodox parishes are unprepared for funding the true long term cost of ownership of their facilities. Whether the parish facilities are new or ancient it behooves the parish to take a serious look at undertaking a well thought out, comprehensive “Replacement Reserve Analysis”.
Understanding Replacement Costs — More Than a Guesstimate
Owners of apartment buildings, shopping centers and other real estate complexes have a reasonable understanding of the importance of planning for replacement and maintenance of their property. Churches less so. Orthodox Churches — probably below that.
While many parishes have some sort of ‘building reserve fund’ often these accounts are severely under funded and will encounter a short fall when a period of major expenditures hits. This is most likely because the fund was based on an eyeball guesstimate –rather than a thorough evaluation.
The point of doing a replacement reserve analysis is to identify an annual amount of money that needs to flow into a replacement reserve account to maintain appropriate reserves and handle peaks in building related expenses.
An example of a professionally created replacement analysis can be found here. Simply reading the document gives a basic outline for what needs to be considered.
Inventory cost areas. It is likely that many future costs have really not been considered by your building ministry team or parish council. Your analysis should include:
- parking lots
- painting interior/exterior
- gutters & downspouts
- seating (pews/chairs)
- church school area furnishings
- accordion walls
- meeting room furnishings
- tuck pointing
- stain glass
- out buildings
- storm water management
- handicap lifts
- office equipment and furnishings
- kitchen appliances
- electrical wiring
- bells, cupolas, outdoor lighting
- and probably much more.
Identify remaining the remaining economic life for each and probable replacement year for each item. (This is of course no small task.)
Estimate probable replacement cost for each item and include that on a schedule looking out 15, 20 or better 30 years. (Likewise no small task.)
Summarize and identify a minimum annual deposit to a common pool of replacement reserve funds that:
- will allow replacement to be funded as projected
- prevents your replacement reserves from dropping below a minimum recommended balance (suggested to be five percent of the one-time replacement cost of the projected replacements listed in the Inventory)
- allows a constant annual funding level between peaks.
For parishes with complex situations it may be useful to consult with professionals.
Hiding from Future Costs?
When undertaking such an analysis one objection will likely be:
“How can we possibly think about examining long term building costs, and making significant annual/monthly payments to a reserve fund in this economy? We can barely balance the budget as it is.”
Obviously no parish is looking for large additions to the cost side of its budget. But if the parish budget does not include a proper contribution to long term building costs the budget is not balanced. It has been balanced on paper only — on the back of a hidden inability to fund future costs.
If your parish believes that such future unpleasant outcomes don’t really occur please contact the Diocesan Parish Development Ministry for the realities being faced by many parishes.
Is it not the essence of good stewardship then to perform the due diligence to understand what it will take to keep the church’s real properties in good shape over the long haul? Even if the parish can’t afford the reserve contributions now –there is a need to inform parishioners of the future reality.