The Growing Financial Strain on Churches and Nonprofits
Financial uncertainty has become the defining challenge for many churches and nonprofit organizations across the United States. With declining attendance, shrinking donations, and rising costs, thousands of religious institutions are questioning their long-term viability. On a recent episode of the Nonprofit MBA Podcast, host Stephen Halasnik, co-founder of Financing Solutions, sat down with Loren Richmond Jr., a pastor, chaplain, and consultant with more than 15 years of experience advising ministries and nonprofits through crisis. Their conversation sheds light on why so many faith-based organizations are struggling, and what practical steps can keep them afloat.
Summary
Why Thousands of Churches Are Closing Their Doors
Richmond points to a staggering forecast: an estimated 20,000 to 30,000 churches could close over the next decade. While Christianity in America is not disappearing, the landscape is shifting dramatically. Long-established denominations such as Catholicism and mainline Protestantism are experiencing steep decline, while non-denominational and newer “megachurches” are attracting the majority of attendees. These large congregations benefit from economies of scale, professionalized staffing, and modern outreach strategies—advantages that smaller, traditional congregations often lack.
Shifting Attendance Patterns: Big Churches Win, Small Churches Struggle
The contrast between vibrant, packed contemporary Christian services and half-empty Catholic or mainline churches is striking. Richmond explains that the majority of churchgoers now attend large-scale congregations with professional resources, while smaller churches are left with dwindling membership and limited financial support. This imbalance leaves many pastors questioning whether they can survive another decade.
The First Call for Help: “We’re at the End of Our Rope”
When churches and nonprofits contact Richmond for help, the conversations are often urgent and desperate. Leaders say, “We’re in trouble. What can we do?” Unfortunately, many organizations wait until it is too late—when their financial resources are nearly depleted. Richmond emphasizes the importance of proactive planning, urging leaders to ask difficult questions early about their revenue streams, giving demographics, and financial sustainability.
Four Critical Steps to Stabilize Church Finances
Richmond shared an example of a struggling Christian nonprofit that needed to choose a path forward. His recommendations included:
- Retain existing donors – Losing a few givers can create devastating shortfalls over time. Nonprofits must actively engage lapsed donors and ask long-time supporters for modest increases to offset inflation.
- Right-size staffing – Overstaffing is common, and difficult staffing adjustments are sometimes necessary to align with current resources.
- Clarify mission alignment – Organizations that drift from their core mission often lose financial traction. Leaders must ensure every program supports the mission and budget priorities.
- Diversify funding streams – Whether through rentals, partnerships, or new programming, nonprofits must create additional sources of revenue to remain viable.
Renting Space: An Overlooked Financial Lifeline for Churches
One practical strategy many churches are adopting is renting out their facilities. Large, historic churches often have underused sanctuaries, chapels, or classrooms. Renting space to immigrant congregations, minority churches, or even nonprofits can provide steady income. However, Richmond warns that fairness must guide these arrangements. Too often, vibrant new congregations are relegated to inconvenient hours while a handful of legacy members occupy prime Sunday morning slots. A more balanced approach can both strengthen finances and honor the vitality of the broader faith community.
Breaking the Stigma Around Money Conversations
One of the biggest obstacles Richmond sees is the hesitation to discuss money openly. Many pastors shy away from financial conversations, either because they feel unqualified or fear being perceived as “money hungry.” Yet avoiding the subject often accelerates decline. Richmond stresses the need for transparency: “God invented math,” he quips. Churches must balance faith with realistic financial planning, including sensitive but necessary conversations about legacy giving and bequests from older members.
The Decline of the Voluntary Association Model
Historically, American churches relied on the “voluntary association” model: attract members, and their regular donations will sustain operations. But younger generations are less inclined to make lifelong institutional commitments. Instead, they engage with organizations seasonally or sporadically. This cultural shift has made it much harder to sustain churches that carry year-round costs like salaries, mortgages, and maintenance. Nonprofits must therefore adopt creative funding strategies and business-like approaches to adapt.
Lessons from the Business World: Benchmarking and Strategy
Halasnik, a serial entrepreneur who has built seven companies, advises church leaders to adopt business analysis practices. Benchmark successful organizations, study what attracts attendance, and analyze demographic trends. If pastors lack these skills, they should delegate to business-minded congregants. Richmond agrees, but notes that resistance to change is often a major barrier. Leaders must be willing to surrender control and embrace fresh ideas.
When It’s Too Late: Liquidation and Micro-Church Models
In some cases, Richmond admits, survival is no longer possible. Churches that have shrunk to a dozen elderly members may need to sell their building and reinvent themselves as “micro churches”—small, low-overhead gatherings sustained by volunteer leaders. While painful, this approach can preserve community and mission without the financial burden of a traditional church structure.
Why Banks Rarely Lend to Churches
Halasnik explains why many churches struggle to secure traditional bank financing. Commercial banks focus on cash flow and collateral, and most churches operate at break-even or worse. While Financing Solutions offers unsecured lines of credit, approval still depends on demonstrating reliable revenue. For churches without cash flow, survival requires alternate strategies like monetizing real estate, cutting costs, or creating new revenue streams.
Maximizing Real Estate Before Selling
Both Richmond and Halasnik caution churches against rushing to sell their buildings. Real estate is often their most valuable asset. Renting out space can provide income while buying time to strategize. “Deferred maintenance is no joke,” Richmond acknowledges, but maximizing real estate use can extend a church’s mission and financial runway.
Urgency and Unified Leadership Are Essential
Perhaps the most important factor in navigating financial uncertainty is creating urgency and unity. Boards, pastors, and major donors must understand the seriousness of the situation and commit to finding solutions together. A fractured leadership team or passive board can doom an organization even faster.
Beyond Desperation: Expanding the Imagination
Richmond encourages leaders to expand their imagination beyond quick fixes. Instead of focusing solely on immediate cash, churches should explore partnerships, re-engage past supporters, and consider creative uses of their buildings. Breaking out of a narrow, panic-driven mindset allows nonprofits to discover new opportunities for sustainability.
Case Study: A Small Church Reinvents Itself
Richmond shared the story of a small Minnesota church that faced crisis when a key renter left. Without reserves, they were forced to sell their building. Instead of disbanding, the pastor rallied a committed core group and transitioned into a micro-church renting space from another congregation. With Richmond’s guidance, they are now building systems to ensure sustainability beyond a single leader. This model demonstrates that even in decline, adaptive reinvention can keep ministry alive.
Collaboration Over Competition: Learning from Rivals
Too often, struggling churches blame thriving congregations for “stealing” members. Richmond suggests adopting business thinker Simon Sinek’s concept of the “worthy rival.” Instead of seeing neighboring churches as enemies, struggling congregations can learn from their strategies—whether it’s youth engagement, innovative programming, or community outreach. Collaboration, not competition, may hold the key to revival.
A Message of Hope Amidst Uncertainty
While Richmond admits that about one-third of struggling churches he encounters are beyond saving, he remains hopeful. Another third simply need a strategic push and renewed clarity, while the final third could go either way depending on leadership choices. For him, the work is about helping faith communities rediscover vision, embrace new strategies, and sustain their missions in rapidly changing times.
About the Experts
Loren Richmond Jr. is a pastor, chaplain, strategist, and media consultant who has spent over 15 years helping churches, nonprofits, and faith leaders navigate seasons of uncertainty. He has helped plant a church in a skeptical neighborhood, directed a food pantry in one of Denver’s most underserved communities, and now serves in public housing. Loren has walked alongside pastors facing burnout, churches wrestling with identity, and ministries asking, “Does any of this still matter?”
Stephen Halasnik is co-founder of Financing Solutions, a leading provider of lines of credit for nonprofits, and host of the Nonprofit MBA Podcast.
