Beyond the Bank: Two New Funding Tools for Christian Schools

Christian schools often rely on capital campaigns and bank loans to fund major projects. But two lesser-known tools—Real Estate Pooled Income Funds (REPIFs) and Tax-Exempt Bonds—offer new ways to raise capital, engage supporters, and align financial strategy with mission. 

These tools: 

• Access new pools of capital.
• Reduce the need for large upfront fundraising.
• Offer tax benefits to supporters.
• Encourage long-term investment and engagement.

The tradeoff? Complexity. But for the right Christian school and project, these tools can make a “too big” vision achievable—and they can be used alongside traditional fundraising.

Understanding the Tools

1. What is a REPIF

A Real Estate Pooled Income Fund (REPIF) is a type of charitable trust that:

• Aggregates contributions from donors
• Invests in real estate (e.g., school buildings)
• Provides donors with a tax deduction and income stream over time
• Eventually transfers the property to a charity (the school or church)

How it works

• The trust is managed by a public charity.
• Donors are also trust beneficiaries.
• The trust purchases and rents real estate to the school or church.
• The school/church pays for the project from operational funds.
• Rental income is distributed to donors for a set period.
• After that period, the property is donated to the school or church. This model allows donors to invest and receive income, rather than simply donate.

2. What are Christian School Bonds

Christian school bonds are tax-exempt municipal-style bonds issued to benefit Christian schools or groups of schools. 

They are:

• Issued through a conduit (e.g., a state authority).
• Sold to public or institutional investors, as well as school supporters.
• Often offer lower interest rates than bank loans.
• Avoid loan-to-value (LTV) limits (no large down payments needed)—in other words, up to 100% financing.
• Are more liquid than a private loan or bank loan, and investors can sell them if needed.

Why Christian schools prefer bonds:

• Access to capital markets without restrictive bank terms.
• Broader participation from supporters.
• More flexible than private loans.
• Tax-exempt interest for investors.
• Greater flexibility and scalability.

Why Are These Alternatives Needed?

Four key trends are driving interest in REPIFs and bonds: 

1. Construction Costs – New builds and renovations are increasingly expensive.
2. Interest Rates – Traditional mortgage rates remain high.
3. LTV Requirements – Banks often cap loans at ~65% of project value, requiring large upfront fundraising.
4. Commitment & Church Shopping – Schools want to foster long-term commitment from families and congregations. 

These tools offer a way to fund projects without overburdening donors or leadership, while encouraging deeper engagement. 

Legal Background: Can Christian Schools Issue Bonds? 

Yes—and recent U.S. Supreme Court decisions have made that clearer than ever

The Constitutional Framework

The First Amendment of the U.S. Constitution contains two religion clauses:

• The Establishment Clause – Prevents the government from establishing a religion.
• The Free Exercise Clause – Prevents the government from interfering with religious practice. 

Additionally, many states have “Blaine Amendments” in their state constitutions, which go further than the federal establishment clause by prohibiting public funds from benefiting religious institutions. These have historically been used to exclude religious schools from some public benefit programs.

Three Important Cases

1. Trinity Lutheran Church v. Comer (2017) Missouri denied a church-run preschool access to a public playground resurfacing grant solely because it was religious. The Court ruled this violated the Free Exercise Clause.
2. Espinoza v. Montana Department of Revenue (2020) Montana created a tax credit scholarship program but excluded religious schools. The Court ruled that once a state offers a generally available benefit, it cannot exclude religious schools simply because of their religious status.
3. Carson v. Makin (2022) Maine offered tuition assistance for students in rural areas without public schools—but excluded religious schools based on the proposed religious use of funds. The Court again ruled this exclusion unconstitutional.

What this means for Bonds

These cases collectively affirm that religious organizations cannot be excluded from generally available public benefit programs, such as tax-exempt municipal bond programs. 

As a result:

• Bond counsel, underwriters, and conduit issuers are now comfortable including religious schools.
• Christian schools can access the same capital markets as secular nonprofits.
• Legal precedent supports equal treatment under the Free Exercise Clause.

Advantages of REPIFs and Bonds

Financial Flexibility

• No LTV Limits – Avoids the need for a 35%+ upfront fundraise.
• Aligns Cost with Asset Life – Spreads cost over time, paid through operating budget. Very important for schools. High attention and engagement come from families of current students. Major drop-off after graduation. Building projects are long term. REPIFs and Bonds help address that timing misalignment.

Supporter Engagement

• Timely Participation – Families benefit during their child’s enrollment, not after.
• Investment vs. Donation – Supporters can contribute to capital projects from their “invest” budget and to operations from their “donation” budget. 

Example: Timelines are important. Key supporters are families of current students and families currently attending a church. The PTA president’s star football player son will graduate in ~2 years. That new football complex won’t be completed for three years. The REPIF changes that conversation. Now, that new football complex will grow the program and the increased revenue will benefit that family for years to come. Also, you avoid asking for a big donation when college tuition is on the horizon for many families.

Reduced Risk of Excess Influence

• Layer of Separation – REPIFs are managed by a charity, bonds by a trustee.
• Liquidity – Bonds can be sold; REPIFs offer income over time. 

In contrast, a private loan from one or two key families gives them outsized influence on school or church decision-making.

Congregational Investment

• Encourages families to invest time, talent, and treasure.
• Builds long-term commitment and reduces volatility from minor disagreements.
• Fosters generational loyalty to the school and church.

Capital Campaigns: A New Perspective

Traditional campaigns ask families to stretch their “giving” budget. Realistically, that giving budget can only stretch so far, especially since a building campaign will be for assets enjoyed long after current student's graduate.

REPIFs and Bonds Offer a New Option

Supporters can contribute from their “invest” budget, receiving a return while supporting the mission. 

This model:

• Broadens the base of contributors.
• Encourages sustained engagement.
• Reflects a more mission-aligned approach to stewardship and shared investment.

Is This Right for Your School?

These tools invite families and church members to invest in the mission, not just donate. They offer a sustainable, mission-aligned model of support.

Key Questions

• Do we have a strong base of mission-aligned supporters?
• Can we manage the legal and financial complexity to get these benefits?
• Would a pooled investment model reflect our community’s values?
• Are we in a state where legal precedents apply clearly? 

Christian schools are entering a new era of financial strategy. Thanks to legal clarity and innovative models like REPIFs and bonds, schools can pursue bold visions without relying solely on traditional fundraising. 

These tools align mission, stewardship, and financial prudence—and they may be the key to unlocking your next big project earlier than you might expect.