Nonprofit Resources


Debt Measure for Churches: Debt per Average Adult Attendee

In recent posts, we’ve looked at a key income ratio and a cash flow and reserve ratio for churches. In this post, I am going to discuss a controversial subject for many churches: debt.

Whether or not you believe a church should go into debt, if your church has debt it is important to monitor debt ratios and measurements. Your lender will be monitoring them even if your church isn’t.

Many loan covenants are based on the results of these ratios and measurements. To violate a loan covenant, your church would need to get a debt waiver from your lender for the audited financial statements. Otherwise, you risk having all debt (including the long-term portion) classified as current, or having the loan called. This adds the potential of further disclosures in the audited financial statements, including going concern issues and a qualified opinion. More importantly, violated covenants can cause a strained relationship between the church and its lender.

One key debt measure for churches is debt per average adult attendee. This is calculated by dividing total debt by average adult attendees:

Total Debt
Average Adult Attendees

The result will vary significantly based on the philosophy, denomination, location, age, size, and demographics of your church. Each church will need to determine the level of debt it is comfortable maintaining or servicing. You will probably encounter varying opinions within your congregation. Some individuals believe that a church should not incur debt while others are very comfortable with a high debt load.

Lenders believe that debt will be funded by unrestricted contributions because typically these are the resources from which the church will be able to pay mandatory debt service payments.


In developing this benchmark, we looked at the RMA standards and had conversations with both lenders and churches. We determined that it was not possible to come up with a firm number because of the many factors that impact the levels of debt per adult attendee and giving unit a particular church is able to carry successfully.

Instead, we decided that the benchmark should be set by the revenue stream lenders consider for repayment, or by unrestricted contributions. Because giving varies so much from church to church, we decided it is not possible to set a fixed amount for this benchmark. Rather, the benchmark should be determined by the level of unrestricted giving per adult attendee.

Based on our experience with church clients across the country, we realize the lower this ratio is, the less strain debt will be on the church’s budget. This recently revised benchmark tells us that we must multiply no more than 2.0 times the unrestricted contributions per adult attendee to be within the benchmark.

An amount between 2.0 and 3.0 times unrestricted contributions per adult attendee is in the warning range. Any amount in excess of 3.0 could be interpreted as a red flag. A ratio result that high indicates that the church’s debt levels are more than three times the unrestricted support, which places an excessive burden on the budget. It also means that debt is at a level lenders consider too great for the church to support.

Debt per Giving Unit

Another valuable measure is debt per giving unit, which is not shown on the Index login page but is available in the database. I previously introduced the concept of a giving unit, which is usually a group of family members who contribute jointly to the church. A giving unit is also defined as any recurring supporter of the ministry. This excludes the individual who may make a smaller one-time gift supporting an event, such as a short-term mission trip.

To identify the regular recurring giving units, the measure only includes giving units that contribute more than $250 annually to the church.

The benchmark for this measure is also specific to the church and is based on unrestricted contributions per giving unit at the same levels as the benchmark for debt per average adult attendee.

See how your church can benefit from the full range of ratios and measures available in the Index at

Sarah Thompson

Sarah joined CapinCrouse in August 1997. She has acquired a broad range of experience through serving a wide range of clients within the nonprofit industry, including colleges, seminaries, churches, Christian schools, church extension funds, foundations, and other nonprofit organizations. She is a member of the Uniform Guidance team.


  • Mike Flavin says:

    Great article!

    I am of the opinion that churches should strive to be debt free.

    real estate professionals prefer 25 year or longer amortIzation . However, they have a fairly consistent income stream.

    Churches generally live on contributions, so I would like to see real estate debt paid back much more quickly through a giving campaign.

    Is my view old fashioned? Or do you agree?

    • Sarah Thompson Sarah Thompson says:


      No, I wouldn’t consider your view old-fashioned. It’s true that the less debt a church has, the more funds it has available for ministry. It’s also true that if a church has too much debt, less money is available for ministry. If a church’s debt is too high, it becomes financially “stressed” because the principal and interest take up a disproportionate share of the budget.

      However, the use of debt does allow churches to expand their ministry beyond what their immediately available cash would allow. Any borrowing has to be done wisely, with great caution, prayer, and counsel. That is why we give debt benchmarks and measures so churches can responsibly use debt to maximize their ministry impact and keep expanding.

      Also, in light of COVID-19, churches are beginning to rethink their need for physical space and money invested in buildings. That will also have an impact on the amount of debt they choose to carry.

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