Faith groups grapple with economic fallout of COVID-19

Pastor Paul Baudhuin leads a St. Louis Park church much like many congregations with financial struggles. For several years, the church reserve fund has been its lifesaver, tapped to pay for both staff and operations. But COVID-19 has upended everything.

The church doors have been locked for five months, but expenses stay much the same. Member donations are relatively stable so far, but they don't cover the bills.

"We need to rethink everything now," said Baudhuin, of Aldersgate United Methodist Church. "We may have to cut staff, including my own hours. Should we sell our building? ... COVID is forcing us to make decisions we hadn't planned to for another three, four years."

Across Minnesota and the nation, houses of worship are wrestling with — and sometimes reeling from — the economic fallout of the COVID-19 pandemic. One in three U.S. congregations has no savings, according to the 2018-2019 National Congregations Study, an ongoing survey conducted at Duke University Divinity School. Just 18% have a year's cushion.

In Minnesota, most synagogues and mainline Protestant churches remain closed. Mosques opened in June. And Catholic churches have opened with space for roughly a fourth of the people typically in the pews.

The result: In-person donations have shrunk or evaporated. While online donations have jumped for many houses of worship, faith leaders worry that could dwindle. Earnings from religious programs, summer camps, fundraisers and building rentals have diminished or disappeared.

Many churches serving middle-class communities report that individual donations have so far been relatively stable. But less affluent congregations report donations plunging by up to 70%.

"To some degree, every church is struggling," said Bishop Bruce Ough, of the United Methodist Church in Minnesota and the Dakotas. "Overall we're doing OK. But it's really hard work."

Adding to the equation are the growing needs of congregation members struggling with unemployment, empty cupboards and housing uncertainties. Iman Asad Zaman, executive director of the Muslim-American Society of Minnesota, said demand at the food distribution program run by the society's three mosques is up 500% since COVID-19 hit.

But donations to the society fell 20 to 25%, he said. Other mosques' revenue is down "more like 50 percent," he said.

"Most of our donations come in during the month of Ramadan, about 80 percent," said Zaman, referring to spring holy days. "We have effectively missed the boat."

The peak fundraising season for the Jewish community, Rosh Hashana and Yom Kippur, is approaching in September. Religious leaders are keeping their fingers crossed.

Synagogues such as Temple Israel in Minneapolis are predicting a 30% decline in pledges. And those pledges typically account for about 30% of the temple's budget, said Rabbi Marcia Zimmerman.

Temple Israel already had to furlough close to half of its roughly 60-person staff this summer, she said, but temple members have been incredibly generous during these hard times.

"Families are stepping forward like never before," Zimmerman said.

Uneven impact

On a recent Wednesday night, about 40 people pulled into the parking lot of Transfiguration Church in Oakdale for an outdoor mass that was launched after COVID-19. Many older church members don't want to go inside the church, explained the Rev. John Paul Erickson.

The cars lined up near the makeshift altar illustrate the strengths and challenges confronting large suburban churches during the pandemic. They reveal a spiritual devotion to their religious home, and that translates into continued giving.

They also reveal the accommodations faith groups are making to stay connected with the many members reluctant to attend in-person services. Attendance at weekend masses, typically about 1,300, has dropped to 550. There are fewer envelopes in the church offering baskets, but credit card giving online is up 85%.

Transfiguration is among about 250 faith-based groups in Minnesota that received federal Paycheck Protection Program (PPP) loans for church and school salaries. The roughly $320,000 loan helped stabilize finances and staffing, Erickson said.

But Transfiguration, like many houses of worship, has a multimillion-dollar debt from building construction. It planned to launch a capital campaign for debt reduction this year. But "now is not the time to do it," said Erickson, noting the focus needs to be on helping the congregation.

Other larger houses of worship are holding their own, in no small part because of the PPP grants that paid for staffing, including the Basilica of St. Mary in Minneapolis and the Cathedral of St. Paul, their clergy said. But both are losing revenue that would have come from building rentals and visitors. The Rev. John Ubel, rector of the cathedral, estimates it has lost about $100,000 since the pandemic started from not hosting confirmations, graduations and concerts.

Smaller churches in urban areas have been squeezed hard. Pastor Joel Ramirez of Iglesia Centro Cristiano de Minneapolis, said contributions plunged by 70% during the early months of the pandemic. They've slowly risen, now down by 30%.

The 100-member church is surviving, he said, because it's received some small grants and has few expenses. A national group called Churches Helping Churches gave it $3,000. Two individual donors gave about $1,000 each. Most of the money went to help members in need, he said.

"We are living day to day," said Ramirez, the church's sole employee. "But we're not closing the door."

The status of Ramirez and Erickson's churches reveal the wide variations in the pandemic's impact. Mark Chaves, a professor at Duke University Divinity School who leads the National Congregations Study, said the impact nationally has been "uneven.''

"There's so much inequality," said Chaves. "Some churches will be fine. Some will somehow weather it out. A lot are in tenuous positions."

In the farmland of southwestern Minnesota, the often century-old churches, with no mortgages and limited staff, seem to be holding their own.

Many members are retired, so job loss isn't an issue. And unemployment rates are considerably lower than in the metro area, said Bishop Jon Anderson, who oversees 237 churches that are part of the Southwestern Minnesota Synod of the Evangelical Lutheran Church in America.

"Financially our congregations are doing better than I imagined, better than they imagined," said Anderson. "But fall is around the corner. I don't know how badly farmers will be paid for corn and soybeans."

The belt tightening and other demands of COVID-19 are taking a toll, he said.

"At an emotional level, they [pastors] are tired," he added. "It feels like every week you have to do a quick pivot to adjust to the new landscape."

Financial aid

Faith leaders said the Paycheck Protection Program was a godsend, with most receiving forgivable loans in the $150,000 to $350,000 range. With that ended, staff reductions and furloughs become a growing possibility.

But faith groups hope to avert that and limit other financial woes.

The Minneapolis Jewish Federation, which already has raised $3.3 million for Jewish organizations affected by COVID-19, now has launched a project called Kadima with a goal of raising $25 million.

Transform Minnesota, the umbrella group for evangelical Christians, hopes to raise $1 million to support churches, in particular African American churches, through its One Fund initiative.

Denominations are stepping up in different ways. The regional United Methodist Church board of pensions committed $915,000 of its reserves to fund a three-month health and pension holiday for all churches.

The United Church of Christ in Minnesota rolled out a no-interest loan program and a grant program offering $2,000 for any church to use. So far $30,000 has been distributed.

Such efforts are appreciated, but won't fully shore up religious communities' losses in the months ahead, faith leaders said.

"It's an open question what the long-term impact of COVID will be,'' said Chaves. "It's clear that a lot of churches are vulnerable."

Jean Hopfensperger • 612-673-4511