For years, the faith community has been a driving force in building affordable housing such as the unit where the Seldens live. And despite the recession and the accompanying risk of attempting a project now, Jericho and some other Washington area churches have recently taken their involvement a step further, purchasing properties and partnering with developers or builders to construct communities that can include subsidized units, full-price residences and even commercial space.
Churches have a steady income from weekly donations to spend in a depressed real estate market and to qualify for financing. The churches say their goal is to diversify revenue streams so that, among other things, they can expand their community service projects to support growing congregations. And the developers can get tax benefits. . . .
Terry Lynch, executive director of the Downtown Cluster of Congregations, a consortium of 43 churches and synagogues in the District, said the move is part of “a new economic reality” for churches that need money to “maintain a large vibrant congregation.” Churches have to meet their social missions, and as memberships expand, the demand for services grows — even beyond what they might be able to support with member donations, Lynch said. “You have to be savvy in how to pay for extended ministries,” he said. “How do you offer substance abuse programs, food banks and other programs without reliable funding? On top of that, they are paying for utilities, youth ministries, educational facilities. . . . It’s very daunting.” . . .
“From a church standpoint, it’s smart” to diversify, Ricker said. “It’s just like any other investment, like buying a CD or buying stock.” The Moore property is not Evangel’s first real estate investment. Several years ago, the church sold land next to its sanctuary on Route 214 to a builder to construct an active-adult complex. Cameron Grove has 735 homes, including single-family houses, duplexes and condominiums.
For the developers, one advantage is that they can get tax credits for agreeing to work with nonprofit groups. Tax credits vary based on the project’s location.
I assume those subsidies are those that come from the federal government that pay the difference between what a low-income renter can afford and what the landlord charges. (A church landlord could just charge low rent to poor families it wants to help, but this way it gets a check from the government.) I also assume that when churches own real estate it takes it off the tax rolls, making it a sweet deal for investors and developers. (Is that fair to competing private operations?)
I’m not saying this kind of investment is necessarily wrong, but I’m uneasy about it and would like your opinion. (I’ve just been reading about the huge property holdings that the medieval church acquired and the problems that caused.) What do you think about churches “diversifying their revenue streams”? Shouldn’t churches depend on the offerings of the faithful, or is it legitimate for churches to make money from business operations?
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