The Cost of Church Building: Figuring an Accurate Budget

Are you overwhelmed at the thought of preparing a church construction budget? If so, you’re not alone. The amount of thought, time, and planning necessary to execute an accurate budget can be daunting for many pastors and church boards.

At Churches by Daniels, we don’t want an inaccurate budget to keep you from accelerating your church ministry. Here are the most crucial factors to consider when figuring an accurate budget for your church construction project:

Understand Church Construction Financing

Multiple aspects contribute to the cost of your church construction project. Three significant factors that will impact your budget include the cost of materials, labor costs, and the building site.

Cost of Materials

Church construction costs are determined by the price per square foot of similar construction projects in your area. Churches should prepare to budget $120 to $150 per square foot for the church building itself.

After the building’s cost, factor in the indoor material costs—flooring, paint, sound and lighting equipment, furniture, and outdoor material costs—sidewalks, pavement, landscaping, and playground equipment.

Cost of Labor

The success of your church construction project relies heavily on hiring skilled labor. The cost of labor can be impacted by the demand for labor in your area, so research is essential to prevent any surprise expenses.

Building Site

Where you choose to build your church can impact the overall church construction cost. Site construction can vary based on terrain, landscaping, grading, curbs, storm drainage, and paving requirements.

Contingency Funds

All church construction projects should have contingency funds for changes made during construction. For long-term projects, like a new church building, it can be helpful to have extra funds set aside for material or labor costs impacted by inflation.

Develop a Project Timeline

Church construction planning takes time. It is important to understand that there are many steps between developing a church vision and having the first service in your new church building. Developing an accurate timeline for your church construction project is critical to creating an accurate budget.

The church construction timeline usually lasts two to three years. Steps to account for during the construction timeline include developing a vision for your church, fundraising, creating an accurate design, gathering approval from the church, fundraising, securing loans, gathering permits, and finally, construction.

Factor in the Cost of Inflation

Inflation is an often overlooked cost that can drastically impact the accuracy of your church construction budget.

According to the Turner Building Cost Index, building costs have increased by at least 5% each year since 2017. This inflation rate is determined by national labor rates, material prices, and the marketplace’s competitive condition.

According to this information, it is wise to expect that your church construction budget will increase by 10% from the time you begin developing a vision for your church to the time when your construction project begins.

Instead of letting the cost of inflation take you by surprise, include the cost of inflation in your church construction budget.

Have a Clear Plan to Secure Funds

Developing a realistic plan to secure funds is critical to create an accurate church construction budget. Instead of allowing your project to define the budget, let the budget drive your project—even if that means building in phases.

There are a few variables to consider when creating a plan to secure funds. Ask yourself these four questions:

1. How much do you have?

How much cash do you already have on hand for your church construction project? Evaluate your checking, savings, and money market accounts to determine how much you can afford to contribute to your construction budget.

2. What can you sell?

Do you have any assets, especially real estate, that you can sell to contribute to your church construction project? If so, add this to your church construction budget.

3. How much can you borrow?

Churches can typically borrow four times to six times the church’s gross tithes and offerings for construction projects. The amount a church is loaned is usually dictated by how comfortable the lender is with the church’s debt to income ratio.

4. How much can you fundraise?

Once you’ve decided how much money you have and can acquire, it’s time to set a fundraising goal. Fundraising is a powerful way for your congregation to serve the ministry that serves them. Consider developing a special fundraising campaign that helps you to create powerful connections within your community.

Learn More About Successful Church Construction Planning

We understand how important it is to have a church building that fulfills your vision for ministry. That’s why we’ve specialized in building church facilities and serving pastors all over the country since 1980.

Churches by Daniels offers financial consulting and assistance for your construction project. This service includes establishing an initial budget, developing capital campaigns, assistance with the loan process, and more.

Learn more about our budgeting and financing process.