Hundreds of congregations have filed for bankruptcy or defaulted on loans. University of Illinois law professor Pamela Foohey, who tracks church bankruptcies, says more than 500 congregations filed Chapter 11 between 2006 and 2011””and the pace hasn’t slowed since. About 90 congregations filed for bankruptcy in 2012, even as the overall rate of bankruptcy filings declined 13.4 percent.
Meanwhile, the church bond market, once a refuge for cautious investors, is now a black hole, says Rusty Leonard, CEO of Stewardship Partners, a Christian investment management firm.
Before the 2008 economic crash, church bonds had strong investment appeal due to a decades-long safety record. Now, “the market has disappeared,” said Leonard. “The options for a new church trying to build a building are significantly reduced. We’ll see fewer buildings.”