What do you need to know to apply?

Mechanics of the ACG

The funding model

The power of model is based on the blend of:

  1. How relatively little initial capital (e.g. R 5 mil) can plant 41 churches, by virtue of the foreign donor committing almost half the build cost.
  2. How the retention of interest (on non-interest bearing funding) builds the capital base.
  3. How the success will probably draw significant monthly cash flow (e.g. R 500 000), and
  4. How the short loan period means more of the loan repayments is made available for new plants. 65% of the first month’s instalment represents capital repayment. See table 1 - Capital repayment as percentage of instalment.
Table 1- Capital repayment as % of total instalment

Planting 1 000 churches in 5 years

While it may sound very ambitious to plant 1 000 churches in 5 years, we believe that this is doable if we:

  1. Follow the SNAP church approach.
  2. Deliver the SNAP churches for R 320 000 per plant, and keep the costs down.
  3. Secure R 5 mil upfront capital/ funding.
  4. Achieve a monthly inflow (new funding) into ACF of R 500 000 for 3 years.
  5. Pay interest on only 40% of the funding (60% will be donated capital or non-interest bearing).
  6. Offer loans over a 5 year period at 8.5% interest, and
  7. Have minimal bad debts. We expect minimal bad debts, as the planted churches are known to JH and are being carefully screened.

 

The table below illustrates the projected church plants per month. You will notice how the number of plants accelerates in later years, as the loan repayments accelerate and new churches are increasingly funded from ‘within’.

Table 2- Number of SNAP Church plants in month

The graph below (Figure 2 – Projected SNAP church plants) shows the projected SNAP church rollout. As can be seen, the model really kicks into gear after 3 years and rapidly accelerates thereafter.

Figure 2- Projected church SNAP plantings

At the heart of the ACF is a Capital Fund (effectively a revolving credit fund).

This capital fund will represent a combination of permanent capital (funds donated and accumulated surpluses) and temporary (term) capital.

The fund will allow donors/ lenders a wide range of donation or funding options, including:

  1. Outright donations to the fund.
  2. Interest bearing term loans, with maturities between 2 years and 5 years. Fixed interest rates will be payable (illustrated at 6.5%).
  3. Interest free term loans, with maturities between 2 years and 5 years, and
  4. Callable loans, where the lender can recall the loan with a reasonable notice period (e.g. 6 months), after an initial loan period (e.g. 2 years).

The notional interest on interest free loans (at 6.5%) will be credited to the permanent capital of the fund.

Donations and loans will be channelled through JH to the CDTF (for regulatory and control purposes), who, will in turn transfer all funding/ capital received directly into the separately accounted for.

While JH and CDTF will work together on finding suitable church planting opportunities, the management (both daily administration, loan evaluations and asset and liability matching) of the fund will be done by CDTF, thereby ensuring strict lending practices and good administration of the fund.

Figure 1 - Basic operation of ACF Captial Fund

The wide range of funding options is designed to mobilise as much potential capital/ funding as possible, for example by allowing families to provide funding for a period (when the funds aren’t required by them), but that those funds can be recalled when required for family needs.

SNAP Churches as an alternative to bricks and mortar

Building a traditional bricks and mortar building typically costs in the region of R 6 000 to R 8 000 per square metre (on decent build quality and complying with building regulations), depending on size etc. Add to this professional fees, such as architectural fees and engineering fees could easily see a modest 15 m x 8 metre church cost R 1 mil.

A SNAP church in contrast costs less than R 350 000 (fully installed). The structure consists of steel columns that stand on concrete plinths.

Steel trusses bolted to columns with purlins, carry the corrugated iron roof. The patented steel wall, with a polystyrene core and aluminium coating, is fire resistant, rust free, and provides excellent insulation.

We have modelled costs of R 320 000 per SNAP church, believing that the volumes will result in a lower cost per unit

The other benefit of the SNAP church solution is how the entire church can be constructed in roughly a week.

Affordability and foreign funding makes SNAP Churches a great option

The difference between R 350 000 and R 1 mil is frankly the difference between viability and non-viability.

Put differently, one could plant 3 SNAP churches for every bricks and mortar option.

This is especially relevant as JH has secured foreign funding for $ 10 000 per SNAP church (for 1 000 churches), effectively reducing the funding obligation to roughly R 200 000 (possibly less if the volumes result in a lower cost per unit).

It is actually quite amazing to think that a congregation with only a R 60 000 deposit can get a SNAP Church and only have a repayment obligation of R 2 445 p.m.

Many communities could generate a significant amount of the monthly instalment by making the sanctuary available for functions.

What is also powerful is the dignity that we give the community by providing them with a solution that allows them to acquire a church for themselves.

The SNAP church application and credit granting process

The application process for a SNAP Church will typically start at JH.

The congregation will apply to JH for a SNAP church. JH will assess the merits, based on a variety of considerations, including land ownership, the size of the congregation, the number of years it has been operating, the degree to which the pastor/s embraces the JH theology, the effectiveness of the ECD, to name but a few.

The application process will carefully consider the financial position of the congregation and may include congregational tithing commitments.

The application will be forwarded to CDTF for credit vetting. CDTF’s formal assessment will include:

  1. A review of the financial position of the congregation (including the budget).
  2. Assessing the ability of the congregation to repay the loan.
  3. Checking land ownership.
  4. Checking founding documents (e.g. constitution or trust deed).
  5. Performing a property valuation.
  6. Checking that the municipal rates are up to date.

An approved loan will then result in:

  • The registration of a 1st mortgage bond/ instrument of debt.
  • Ensuring adequate short term insurance.
  • A stop order being established (for the monthly instalment).
  • The approved loan amount being transferred to JH, who in turn will settle the suppliers.

CDTF will monitor the loan, ensure that insurance is updated and rates etc. are up to date.