Donations from members are the primary source of revenue for churches. Whether it’s in the form of cash, checks, or electronic transfers, churches rely on the money of their congregation to pay for day-to-day operations and special projects.
Of course, donations are not the only way churches get their money. They may also host fundraising events, sell religious items, and even host talent shows which means that churches work pretty much like businesses. If this is the case, then how do churches make money, and do they make profits?
Read on as we explore the business side of churches, who funds them, and how much they make a year.
How Are Churches Funded?
Churches are funded by a combination of donations from individuals and, in some cases, organizations. These donations may come in various forms, such as cash, checks, or even electronic transfers, and are essential to helping churches meet their budget needs and expand on their missions.
Additionally, churches get funding through outside organizations. Charitable foundations often give grants to churches for specific causes or projects. Businesses may also partner with local churches to provide funding for various initiatives, which can make a huge difference in a church’s income.
As you can see, all these sources are a long way from the traditional collection plates, which people usually associate with churches. But in order to understand how exactly churches make money, it’s important to look through the main sources of funding for churches.
Donations
All churches rely on donations from their members and supporters. They may ask for regular or online donations, or hold special fundraisers to raise money for specific projects or needs.
Data says nearly 50% of the population gives their money to religious organizations. Moreover, churchgoers make an average weekly donation in the amount of $17, which means that donations not only help churches raise money but are the foundation of their existence.
Tithing
It’s a form of donation that works a bit differently from traditional ones. Tithing is the practice of giving 10% of one’s income to the church. And believe it or not, 1.5 million US citizens who identify as Christians tithe.
Moreover, people between the ages of 55 and 65 are the most generous givers. According to reports, 32% of this age group have no issue donating the traditional 10% of their income to the church.
When it comes to tithing, it’s important to note that some churches require it from their members, while others encourage it as a way of supporting the church’s mission.
Offerings
Beyond the regular donations, members make additional gifts to churches which are called offerings. These can be designated for specific purposes or given as general support for the church’s work.
Grants
Some churches may apply for grants from government or private organizations to support specific programs or projects. The purpose of these grants may be as simple as paying for church repairs, supporting youth group activities, or implementing a community outreach program.
Churches are also eligible to receive tax relief from the government. This is because, just like nonprofits, churches are federally described as 501(c)(3) organizations. And while this doesn’t mean that churches raise money as nonprofits, they too are exempt from paying certain taxes, which helps them save a considerable amount of money.
Endowments
Just like nonprofits can set up endowments, churches can create special funds for their supporters to direct gifts. An endowment is essentially a large sum of money that is set aside to generate income for the church’s ongoing expenses or special projects.
And even though they are not primary church funding sources, they represent a universal way for members to demonstrate their commitment and devotion to their faith. Endowments are typically invested and managed by the church’s finance committee and are often distributed for specific programs like outreach, education, pastoral sabbaticals, etc.
Text-to-Give Campaigns
This method is a great way for churches to raise money, especially now that we are moving towards a cashless society. The idea is to give people the ability to donate money directly through their mobile phones.
Text-to-give and other eGive campaigns allow donors to quickly and easily give money with just a few clicks and help churches increase their donations by 26%. And the best part is, most of these campaigns are free or have minimal fees associated with them.
How Do Churches Make Money?
A church makes money by leveraging the resources it has, like its members, volunteers, and staff. Churches can also make money by renting property, selling products or services, organizing talent competition shows, silent or charity auctions, and more.
The money made by the church can then be used for various purposes such as mission trips, charitable activities, expansion of facilities, etc. All these ways combined are not only valuable sources of income for churches but provide the basis to help them get funding and support their mission.
Here’s a list of activities that can help churches make profit.
Investment Income
Believe it or not, it’s not unusual for churches to invest their money in stocks, bonds, and other financial instruments to generate income. True, trading stocks may be frowned upon, but since they are nonprofits, it’s perfectly normal for churches to use some of their profits to make investments and then use the returns to further the church’s mission.
Selling Merchandise or Services
Churches often make money by selling religious materials such as books or music or even custom-made products like mugs or bags. These products can be sold in the church’s lobby, a bookstore, or an online library.
Additionally, churches can earn money via various means, such as selling concert or play tickets for religious events. Some churches also offer paid counseling services or other programs related to their religious mission, which often provide significant revenue streams.
TV and Radio Stations
Many churches own some kind of media outlet that helps them spread their message wider and also generate extra income. This is particularly true for churches that own radio or TV stations and air religious programming. These types of media provide a great opportunity to make money from sponsorships, advertising, donations, and other revenue streams.
Additionally, churches raise money by charging for access to special events or services that are broadcasted through the TV or radio stations they own. Some sell advertising space on their websites or newsletters. What this means is that just like nonprofits, churches can earn money without relying on members’ donations as heavily.
Rental Income
Some of the best spots in the world belong to churches, so why not profit from them? Many churches raise money by renting out their space for special events like weddings or concerts. They also rent space to individuals and organizations that need a place to hold meetings or other functions. Some even have coworking spaces.
According to some reports, churches in the US that have a lot of space earn a minimum of $8,000 a month for rent. This is more than enough for a church to pay any expenses it may incur, mortgage included. Also, a church may decide to lease its property to other businesses, which can use it to establish a working space.
Auctions
Organizing auctions is not just a great way for churches to make money, but it’s also a great way to bring people together. Churches can organize charity auctions where they collect items from their members and then auction them off for a good cause.
Silent auctions, on the other hand, are conducted without the involvement of an auctioneer and may include items that are donated by generous individuals or businesses. Both types of auctions offer churches an incredible opportunity to raise more money and spread the word about the good they’re doing.
Hosting a Talent Show
Organizing talent contests, sing-a-thons, or similar performances is an excellent opportunity to boost church income. These events can be especially enjoyable for children and the general community and encourage more involvement in church activities.
One way to make a talent show profitable is to charge an entry fee. Another way is to sell merchandise related to the event or set up a general donation box in the event area
Church Movie Night
Who doesn’t love a great movie, right? Churches can benefit from this by organizing movie nights and showing uplifting, inspirational, or religious movies. They can charge a fee for admission to the showings or ask for donations, which is a great way to make money while also providing members with an enjoyable evening out.
How Much Money Do Churches Make?
Churches make an average yearly income of $242,910. Data also reveals that US faith-based institutions make a combined yearly revenue of over $378 billion. What’s more, a little over 81% of this revenue comes from individual donations.
Now, even though donations are the key to how churches make money, they are not the only source of income they rely on. By using some of the methods and strategies we’ve listed, churches ensure that they have options to compensate for the remaining 19%, which are not raised with donations, so they can continue their mission for years to come.
Finally, as long as these activities are done in accordance with their religious mission and local laws and regulations, churches should have no problem finding additional sources for generating revenue.
FAQs
Who funds churches?
Churches are funded by a variety of sources that include individuals, organizations, and government entities. Individuals often donate tithes or offerings to the church, while organizations such as foundations or trusts may provide grants for specific projects or activities.
Additionally, government entities fund churches through tax deductions and other incentives to promote religious activities in the community. But generally, money comes through donations.
Do churches get money from the government?
Churches and other faith-based organizations in the US do not receive direct financial support from the government. However, in most countries, including the US, churches are recognized as nonprofit organizations and are therefore eligible for certain tax exemptions and benefits.
In the United States, for example, churches are exempt from paying property taxes, and contributions made to churches are tax-deductible for donors. Additionally, churches may be eligible for grants or other forms of financial assistance from government programs that are available to all nonprofit organizations.
How do churches spend their money?
Churches spend their money to support a variety of programs and expenses, including salaries and benefits. And even though these costs vary depending on the denomination, size of the church, and other factors, in general, they include worship services, outreach, education and youth programs, property buying, community support, missions, etc.
Churches are typically run by a board of directors or trustees who are responsible for making financial decisions. They are tasked with ensuring that funds are being used responsibly and in accordance with the church’s mission and values.