Church bonds are a type of investment that allow investors to make a return and invest in a cause that they believe in at the same time. Church bonds are a type of debt instrument that is offered by churches. Even though church bonds are similar to other types of bonds, there are a few key differences. Here are a few things to consider about church bonds and what they can do for you as an investor.

Church Bonds

Churches often need to raise money for some type of project to grow the church. In order to raise this money, one of the options that they have is to issue church bonds. Churches will look for individual investors to lend them money. An individual can offer the church money and receive regular interest payments on the amount. At the end of the bond term, the investor will be able to get back their initial investment.

Interest

With this type of investment, investors can create a regular stream of interest income for themselves. While some bonds pay interest quarterly or monthly, church bonds pay interest every six months. When investors receive this interest, they have to count it as regular income. It is taxed at the investor's marginal tax rate.

Advantages

Investing in church funds can be very attractive. As an investor, you can take advantage of several benefits. One of the biggest benefits is that an investor can create a regular source of income for themselves. By investing in multiple church bonds and staggering the investment dates, an individual could theoretically bring in interest every single month of the year.

Another advantage of this type of investment is that you can put money into a cause that you believe in. If you are involved with a particular church, you can loan it money in order to help with important projects. If you believe in the work that the church is doing, you can make a difference with your money. Most investments only give you an opportunity to invest in a successful business. However, instead of putting money into profit-making endeavors, you can change people's lives.

Criteria

Not every church can be approved to issued church bonds. Churches have to go through a comprehensive approval process by the bank that helps them issue the bonds. The bank will look over the financial situation of the Church and make sure that they can repay the debt. They use ratios to determine how much they can expect from each church member on a regular basis. If a church is accepted into consideration for a church bond, they will have to make regular payments into a sinking fund. This money is used to ensure the repayment of the bonds once they mature.

Bond Broker

If you do not have a particular church in mind to invest in, you could find church bonds through a bond broker. Opening an account with a bond broker will generally take an initial investment of at least $5000 to get started. 

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