Problems with Pioneers – Revex v Capex Funding

Where does the money for organisational growth come from?\r\n\r\nIn business, the first place to look for new project funding is usually from revenue; can growth be funded out of revenue expenditure – or revex?\r\n\r\nBut increasing revex without increasing income reduces profit, and depending on the speed of return from the new investment this lower bottom line can cause problems in cash flow, confidence and shareholder patience.\r\n\r\nSo can new project funding be justified out of capital expenditure – or capex?\r\n\r\nIt depends. While capex is limited usually to acquiring or improving physical assets, it may be sometimes possible to use capex to start a new business to grow the company.\r\n\r\nBut again the bottom line is – the bottom line: in broad terms any capex investment reduces reserves and unless it can be proven that the investment is either acquiring a genuine asset or creating an opportunity for a certain return, why risk it?\r\n\r\nSo if growth can’t be funded from revenues, asset management or cash reserves, that leaves outside investment from increasing shareholder cash, or increasing debt by borrowing. Again, the simple question has to be asked: why would anyone want to do it? Is it realistic? A good rule is: if it’s such a good idea – borrow from the bank. If that’s a problem, then there’s a bigger problem with the idea.\r\n\r\nNow think about a local church wanting to start a pioneer ministry. How can they pay for it?\r\n\r\nWhat about revex? The reality is that most churches are on the breadline, and don’t have surplus money from income to invest.\r\n\r\nWhat about capex? Again, not realistic as most local churches have no strong cash reserves, and even churches with assets find it difficult to reorganise long term assets to release extra funds in the amounts needed to support a pioneer ministry.\r\n\r\nWhat about Head Office investment – in the Church of England this would be the diocese. Would they invest? Well, how would they? Why would they? With voluntary income generally reducing, value of investments declining, and increases in costs only being mitigated by reducing clergy numbers, what compelling argument can be made to fund some new venture with (usually) untried pioneers?\r\n\r\nWhich leaves ‘shareholder’ investment – raising funds from organisations or individuals either inside or outside the church. And that raises rather complicated questions of ownership – who’s buying what and who eventually owns what?\r\n\r\nSo. Want to be a pioneer? Then more likely than not you’ll have to find your own support.\r\n\r\nThe Apostle Paul understood 2,000 years ago that it’s better this way.