Ask the Experts

House of God

My grandmother has gotten very involved in a large church back home. My family has no problem with that–most of us are at least somewhat religious. But we’re worried about my grandmother’s finances, because she has started to give a ton of money to this church. She gives constantly, and my parents recently discovered that she took out a reverse mortgage on her house to cover the costs. My family and I don’t want to interfere with my grandmother’s religious life, but we’re concerned. What can we do?

It is not unusual for your Grandmother to be giving money to her church, of course. Churches have asked for donations for as long as they’ve existed, and churchgoing Americans of all stripes contribute. The trend is more notable with so-called “megachurches,” where donations can range between an average of $1,368 and $1,865 per person depending, some studies suggest, on the age of the church.

But such churches are supposed to be centers of inspiration and support, not money-making enterprises, church pastors we spoke to said, and even at the very largest institutions–which can attract congregations of 43,500 people–ought to value each individual member. Your grandmother should never feel pressured to give more than she can afford.

And it certainly does sound like she is currently giving more than she can afford. A reverse mortgage is a powerful financial tool, but it is not free money, the experts at Reverse Northwest told us. Reverse mortgages draw equity from your home, working, as the name suggests, in a way that is sort of the reverse of a regular mortgage. With a regular mortgage, an institution lends you money to buy a property and you slowly pay them back over time until you own the house free and clear. In a reverse mortgage, an institution pays you on a regular schedule, with the stipulation that when a certain time is up, they will be repaid with either cash or the leveraged property. A reverse mortgage is a good tool for folks who own their homes but are short on retirement savings, but putting her house up for the sake of a church rather than her own well-being suggests that your grandmother is not making the most careful decision she could.

It’s probably a good idea for your family to speak to your grandmother about her spending habits and her finances. It’s probably a conversation best held between your parents and your grandmother, but if your family decides you should have a role in it, you should make sure you express your support and concern in a loving way. Experts suggest legal means only as a last resort when it comes to reigning in an elderly relative’s spending. That’s because legal action can do serious harm to personal relationships.

“The basic question is not how much of our money we should give to God, but how much of God’s money we should keep for ourselves.” — Jim George

John Regan is a former Director of Sales for equity research.