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Preparing for Church Expansion at Every Growth Stage

Church Finance Basics

A church with an attendance of 100 has different needs than a church of 1,000. As you move through different growth stages, make sure you are aware of and plan for the following:

Risks associated with church size

Smaller churches

One difficulty small churches may face is a lack of professional expertise within the congregation who can offer guidance in matters of risk management. For example, small churches may not have an attorney or Certified Public Accountant (CPA) who would normally assist with financial internal controls and tax issues. Lacking these kinds of internal resources can expose your church to greater risk. If your church is on the small side, consider seeking outside assistance, especially regarding legal and financial matters.

Larger churches

According to church law expert and attorney Richard Hammar, churches of 500 to 750 tend to have the greatest risk of litigation. This could be because many churches in this demographic may have recently experienced significant growth. When you grow quickly, risk management procedures and protocols often don’t keep pace with that growth. If this describes your church, it’s important to focus on risk management. For help in this area, check out our many risk management resources.

The number one risk for every church

The number one risk for a church of any size is sexual abuse of a minor. The best way to protect children and teens is to properly screen volunteers. Unfortunately, smaller churches are traditionally weak in this area, with only 21% of those under 100 reporting they practice proper screening, which includes both criminal background and reference checks. This may be because at a small church, everyone knows everyone, and it feels wrong to suggest someone should be screened. However, by failing to screen, small churches face the same staggering risk of liability as large churches in terms of the potential financial outcome of a single child molestation claim.

Although larger churches are more likely to screen, those over 1,000 are about five times more likely to have a sexual misconduct claim than churches of 100 or less, according to Hammar. In addition to simply needing more stringent protections for children, larger churches must be aware of their tendency toward an unhealthy culture, in which questionable behaviors may be tolerated due to fear when they should be challenged.

Insurance considerations


Most liability insurance policies exclude intentional or criminal misconduct from coverage. In considering insurance companies, find out how they interpret this exclusion. Specifically, are negligence claims against the church in cases of child molestation excluded from coverage? If a company indicates that such claims would be excluded, keep shopping.


You may have heard it said that the more activities you have involving minors, the higher your liability limits should be. But how high exactly? In general, you should have liability limits at least equaling the net assets of the church.

The one exception to this guideline is sexual misconduct coverage. It’s recommended to obtain at least $1 million in this type of coverage, regardless of the net asset value of the church. Usually, in order to be approved for this amount, you must show the insurance company that you have implemented recommended screening procedures.

As your church grows, be prepared to reassess all insurance limits, increasing them as needed.

Facility expansion considerations

Financial statements

At a certain growth point, space becomes an issue, and a church must consider expanding its facilities. It’s usually necessary to finance at least a portion of the project, but you’ll want to obtain the best possible terms. To do so, make sure your church is in the best possible financial position before talking to a lender.

Once you’re ready to pursue financing, having accurate and properly prepared financial statements, usually provided by a CPA, is key. Presenting improperly prepared or incomplete financials can hinder your ability to borrow at a favorable rate.

Uninsured contractors

Small churches may be tempted to complete some or all of an expansion project using their own volunteers from the congregation. Although using volunteers can cut costs, it is still recommended to hire a licensed bonded general contractor for liability reasons. This way, you may still be able to use your own people for certain tasks, but the contractor’s insurance, not the church’s, would provide protection if something were to happen.

In addition, sometimes builders start a job but are unable to finish it. Avoid being left with a half-finished project by asking for a completion bond from the builder before construction begins.

To learn about additional issues growing churches face, watch the full Risk Mgmt LIVE discussion here.

If you’ll soon need to expand your facilities or renovate, call 866.621.1787 to speak with a church loan consultant or email

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