3 Financial Tips for Churches With (or Considering) Faith-Based Schools
May 23, 2023
Over the past 10 years, most churches have had the conversation whether their church should/shouldn't have a school. After all, it's a way that churches can:
- Reach more families
- Use their facility throughout the week
- Generate some additional income
Based on our experience working with churches that have schools, we want to provide some guidance to those of you who have them and those of you considering establishing one.
Financial Tips for Churches that Currently Have Schools:
- Always ensure your school is self-sustaining. You can ensure that's the case by running regular financials just for the school to make sure your revenue from tuition is covering all of your costs. Once you've checked that off the list, take the extra step to ensure you're covering the cost of things churches often cover on your behalf such as overhead (administrative staff, rent for the facility, percentage of utilities, etc.). Even if you don't have to pay for those items currently, you need to calculate to ensure that you can cover those through the school to ensure it is a self-sustaining ministry in the event sharing physical space with the church is no longer a viable option.
Teachers are your ticket to success and have to be paid accordingly. There comes a point where your staff believing in your mission won't be enough to hire and keep the best teachers. Asking them to choose between providing additional resources for their family at another job or making less money but believing in your mission will leave you empty-handed every time. If you want to have teachers who are comparable to the best schools in your area, you need to be compensating comparably as well.
Know your numbers. Ensure you know the following. When it comes to building and keeping a school self-sustainable, knowledge is power.
Where your tuition falls within the range of neighboring community schools.
What your break-even costs are for your school each month.
How many students you need to be enrolled at your tuition price of $x to break even.
How many students you have enrolled and how many you need to fill the break-even gap, if need be.
Bonus: Financial Tips if You're Considering Opening a School
Being around faith-based schools for a while now, here are a few tips we suggest you consider if you are considering launching a school via your church in the near future:
- You must have your church finances in order, healthy, and systematic. Adding a school will only complicate matters financially and likely impact the cash flow in the beginning. Get your church's finances in order before you ever go down the path of considering a school.
- Start building cash for launching and for reserves. You will need cash to get a school started. I'm not here to advise you on your specific needs on whether a loan is a good move or not but suffice it to say, the startup costs will add up even if you already have the facility, tables, chairs, etc. checked off the list. How much do you need? That depends on a host of different factors and one I can't answer for you. What I can tell you is the more affluent the community is you will be engaging for enrollment, the less you usually need as they are less impacted by tuition changes. The adverse is true with less affluent communities - the less affluent the community you will enroll, the more cash and cash reserves you'll need because they will be greatly impacted by any tuition changes requiring you to do it less often and more gradually.
- Don't start a faith-based school with the objective to bring financial resources to the table for the church. Out of all the churches we've worked with, exactly zero of them bring in a significant portion of net income to the table for the church once all expenses have been covered. I'm not saying there aren't schools out there that are financially healthy. What I am saying is that a school is not a solution for increasing income for a church. If your church is called and equipped to start a school of its own, go for it! Just don't go down the path of a school thinking it's a big money maker.