I've received dozens of e-mails about budgeting for media. In the last article, I talked about the three main components that drive church budgets:

1) Vision from church leadership

2) Content and frequency

3) Personnel — the ability and quantity of media personnel

If you can't identify and define those three critical components, the rest of what I'm about to teach you will end up being an exercise in frustration.

In this issue, we're going to talk about leasing versus owning equipment as it pertains to setting your church media budget.

Which is better? Either could be right for you. Consider these key decision-making factors and ask these questions about each piece of equipment:

1) Will the technology change dramatically in three years?

2) Will the venue change dramatically in three years?

3) Will our application (how you use the equipment) change significantly in three years?

4) Will the technology cost substantially less in three years?

5) Can the equipment be upgraded easily for three years?

I pick three years as a benchmark because if you're making enough changes or if your church is experiencing significant growth within that time frame, chances are a lease will make more sense than purchasing for what I call "high-technology items."

High-technology items

Any technology that has a rapid growth curve and/or rapid depreciation value is part of this group.

It's safe to say that computer-based technologies will be less expensive and significantly more powerful within three years. It's also a good argument that non-linear editors (video and audio) will be more powerful, easier to use and cost less in as little as three years. The case could also be made for automated lighting fixtures or large-format audio mixing consoles.

It might be easier to qualifiy it with this statement: "I'll be stuck with this equipment and I'm not confident that it is technology that will suit us for five years or longer." Sure, that's a little flippant, but the point is that if the device you're thinking about purchasing has a good chance of not meeting your needs for at least five years, you ought to consider leasing.

Conversely, if you're going to be in a facility for a number of years and you don't see the application (how you do what you do) changing significantly, then purchasing (owning) certain technologies will make more sense.

Common examples include speakers, amplifiers, microphones, video monitors, video tape/DDR decks, switchers, routers, distribution amps, screens, communications headsets/matrixes, lighting dimmer packs, many lighting consoles and most conventional lighting fixtures.

The majority of these devices do change somewhat, but for the most part are mature technologies that don't see quantum leaps every few years. It can make a lot of sense to go ahead and include these items in a building campaign or capital funds program. You can also add them to annual budget items for upgrades, repair and replacement.

One lease doesn't fit all. There are three basic lease types:

1) Lease percentage buy-out

2) Lease dollar buy-out

3) Lease only

The first two lease types can be compared to getting a loan from a bank, except the monthly payment can be lower. With the first type, you'd have a "balloon payment" (large cash outlay) at the end of the lease. The second type is closest to a loan, with a $1 purchase option at the end of the lease.

Personally, I'm not a big advocate of those two lease types for churches. I prefer the third type of lease for several reasons.

First, the idea of changing out "high-technology items" is to keep your church on or near the front edge of the technology curve. Second, when working with a leasing company that specializes in audio, video and lighting, they're going to be able to get you a better rate on the equipment, because they can sell it easier than a standard leasing company.

Finally, the whole point isn't to lease-to-own. This isn't Rent-A-Center! The point is to keep your church technologically relevant so that you have the tools to support the vision of your church leadership.

It's also important to know you can have leases structured where certain equipment (computers) renews faster than other equipment (automated lighting fixtures) types. These multi-tiered leases generally make the most sense while keeping the church more cash-fluid during its growth curve.

When I consult with churches, I often create a technology roadmap that helps the church understand which areas of equipment upgrades they'll need to consider over one-, two-, three- and five-year increments. This roadmap shows the value/cost ratio for leasing versus buying and is very helpful to churches that are experiencing serious growth in their church and media ministries.

There's a lot more to this, but I wanted to give you some solid information as you continue to learn about budgeting for media.

We'll talk about replacement life cycles for audio, video and lighting with some of my friends in the next part of this series!

Copyright 2004. Reprinted with permission from Church Media Hotlist (anthonycoppedge.com).