Financing Principles for Investors
There are principles that exist, that if violated, will produce unpleasant consequences. Few people intentionally step off a five-story building due to their knowledge of the law of gravity. However, many churches and faith-based organizations are unaware of the fundamental financing principles relating to non-profit organizations. Non-profits operate differently from business organizations. Unknowingly, but in good faith, they sometimes make financing decisions that result in consequences similar to stepping off a five-story building. An example of this would be if a non-profit organization incurred too much indebtedness, it might not be able to continuing offering the services, ministries, or functions it previously did.
Any reputable church financing company should begin its due diligence with a detailed and explainable analysis to determine whether a project is viable, sensible and wise. If not done, the very basic principle of "counting the cost" has been violated!
Employing certain financing principles is different than simply saying you do! Every business day at Great Nation, we apply what we preach. Here’s how:
For every church we underwrite and offer to our clients, we prepare a full and extensive financial analysis and evaluation that calculates and measures no less than 29 different ratios and percentages.
We conduct a complete cash flow analysis to determine a church’s ability to service existing and any proposed debt payments. We also take certain actions to verify truthfulness, accuracy and reliability of the data collected, including verification that the CPA who prepared the financial statements is properly licensed!
With few exceptions, if any, our President and/or a senior member of Great Nation’s management team personally conduct an on-site visit to interview each church’s leadership and inspect each facility. This usually includes attending Sunday morning church services to verify attendance.
After our Underwriting Department has evaluated, verified and compiled a full and complete review of the project, it is submitted to our Program Acceptance Committee (the “PAC”) who determines whether the financing project goes forward.
After sales of bonds have begun, no money is disbursed to the church unless and until our attorneys opine that the property given as collateral has been properly secured.
If a church plans major construction, for their safety and investors, we regularly require churches to employ an independent construction supervisory firm. In the effort to control cost overruns, this firm monitors material/workmanship quality and change orders during construction, then reviews and approves all construction payments before being paid!
During the life of your Church Bond investment, we and the Church Bond Trustee conference regularly to monitor each church’s performance. We do this because we care about your investment now and for the future!
Our sincere prayer is for churches and investors to share and embrace these fundamental financing principles. Employing these practices are for everyone’s benefit, confidence and success!