American Church Group - Colorado

Incorporation Can Protect Church Members

When an organization becomes incorporated, it gains the same legal rights and responsibilities as an individual. That’s true for churches and ministries, just as it is for businesses. Incorporation takes the weight of responsibility off the shoulders of individuals and instead, places it on the organization. In contrast, a court may find all members of an unincorporated church legally responsible for negligent or criminal actions committed by one church member.

Incorporated churches and ministries have several advantages

Churches and other ministries should consider incorporation for a variety of reasons. The most important is to protect individual members from personal liability associated with the negligent actions of fellow members.

Incorporated ministries also enjoy other benefits:

• Incorporation can help an organization clarify its purpose, procedures, and vision.
• Only incorporated ministries may apply for and receive grants through federal or faith-based organizations and foundations.
• Incorporated groups may be eligible to receive special mailing rates and other discounts from vendors.

Complete incorporation at the state level

Incorporation takes place at the state level, often through the Secretary of State’s office. When incorporating, first contact an attorney who is familiar with not-for-profit laws in your state. The attorney will prepare a document known as Articles of Incorporation and help you establish your corporation’s unique name, a statement of organizational purpose, and operational bylaws.

According to Michael Allison, vice president and chief counsel at Brotherhood Mutual Insurance Company, church bylaws should include the following elements:

• Statement of purpose.
• Structural organization (the relationship between members, pastors, and leaders).
• Election process for church leaders.
• Guidelines for church membership meetings.
• Definitions distinguishing leadership and membership decisions.
• Committee roles and responsibilities.
• Process required for amending the bylaws.

Once you establish your church’s bylaws, use the bylaws as a guide by which your ministry operates. Doing otherwise can create legal problems, especially if church leaders reach major decisions in a manner inconsistent with your bylaws.

Review bylaws regularly

Your ministry should appoint a task force to evaluate its bylaws at least every two years. This group should operate strictly within the established rules for changing bylaws and should consult an attorney before finalizing official changes. Many states also require incorporated ministries to submit annual paperwork, such as an annual report to the Secretary of State’s office.