Inflation Giving

Inflation & Church Giving – Is There a Correlation?

It’s been said that inflation is taxation without representation. For the first time in decades, our country is experiencing a massive increase in both wholesale and retail inflation. The tail-end of the pandemic shows just how far we’ve come since COVID first erupted around the world. However, it also brings a new challenge for church leaders that requires a fresh or renewed perspective. High inflation presents challenges, not only for operating the church but also for ministering to those that are highly impacted – both in the short term and long term.

Financial market panic began in early 2020, causing governments across the globe to enact far-reaching measures. The closing of businesses and places of worship instituted a government spending spree on a scale that the world had never seen.

The US dollar is nothing more than a commodity, like food or fuel. As we learned in economics 101, supply and demand ultimately causes price increases or decreases. These fluctuations are known as either inflationary or deflationary.

This begets the question; who does inflation affect? How will this ultimately impact church giving, and what should we be doing to manage through this season?

Inflation tends to hit two groups of people the hardest—young (e.g., 34 yrs old and younger) and older people living (and dependent) on a fixed income. A deeper review should also seek to understand the socioeconomic strata of your church demographics—for instance, those that ‘borrow’ vs. ‘own’ and their age. A person or family renting a house, leasing a car, and carrying credit card balances will be more heavily impacted than people who own their home or car and have savings and investments.

Low-income individuals and families of all generations spend more on housing, gas, and other essentials than wealthier families. This reduces discretionary spending and ultimately can affect giving to the church. Why? Because this segment is usually giving ‘what is leftover.’ Even if they are budgeted or percentage givers, their incomes will lag, thus causing a shifting of priorities.

The good news for younger workers is that it isn’t just rising prices; pay is also rising, especially for less-skilled workers. However, even with growing compensation, the more recent wholesale and retail inflation increases are beginning to impact all Americans, especially when compounded with rising credit costs. So let’s take a deeper look.

Owners vs. Renters  

Homeownership has primarily been seen as a ‘hedge’ against inflation. Statistically, 80% of those in their 60’s own homes. Comparatively, only 30% for those that are in their 30’s. Those pastors leading younger churches might be more impacted than a church serving an older demographic. The same can be said for those that ‘rent’ cars by leasing versus purchasing. When you ‘rent’ or lease a depreciating asset, the effects are compounded. The same can be said for those that carry a credit card balance month after month.

Fixed Income Retirees

As a rule, those living on fixed incomes with social security or pensions will be more protected in the long term as annual benefits tend to be adjusted or indexed to Consumer Price Index (CPI). But make no mistake, these people are feeling the effects of what our leaders have called ‘transitory inflation’ now for many months. The lead/lag aspects of adjusting fixed income typically will fall short of actual increases; therefore, you should expect a decline from segments of this group dependent on a fixed income.  

Wages and Inflation

Younger or hourly workers will need to negotiate wage increases that match inflation. This can be done in a tight labor market either through employers being sensitive to their employee needs or workers moving to new employment opportunities that provide a current compensation-adjusted environment. Keep in mind employers and even the church, like the government, are either slower to move or are limited with what they can do given budgetary cycles.       

Many churches are starting to settle into a ‘new norm’ related to weekend attendance and giving. However, the ‘other’ new norm is now inflation, and make no mistake, this will impact church giving.  

So, what can you do about it? The following strategies can help you assess and create a plan to understand what is coming and how to prepare. 

  • Assess giving through age demographics. If you’re using MortarStone, demographic giving reports are quick and easy to evaluate. Look at your young and aging givers; are giving patterns increasing, decreasing, or staying the same? 
  • Stratify demographic data using giving bands. Identify different groups of givers based on their giving patterns. In Mortarstone, band five givers are those that give $10K+ per year. Help band five givers save on taxes with non-cash gift options–these types of gifts benefit the giver and the church long-term. 
  • Know your giving composition and filter through the economic framework listed above (e.g., how many younger givers, do we serve renters vs. owners, etc.). Once evaluated, begin holding classes that help these younger givers save, budget, and plan. MortarStone offers several church-wide financial courses; get more information by contacting us
  • Last, survey your church. A few simple questions will help you understand how inflation impacts your givers. Perceived financial stress can be tested by deciphering whether a person has more than enough, just enough, or not enough resources to get by at the end of each month. After completing the survey, access which ministries and programs will best benefit and help your congregation thrive during hard financial seasons. 

Assessment of your environment and preparation are two keys to ensuring your people know that you care about them and are aware of their needs. 

Don’t go at this alone – MortarStone is here to help! Schedule a time to discuss financial strategies with our team of generosity advisors – our goal is to see your church fully funded to continue the great commission.