January 4, 2017
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:
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:
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.
There are a lot of hats worn in any growing ministry – and we want to serve every one of them.
With the holiday season right around the corner, it’s wise for ministries to evaluate their fire safety plan. Whether your ministry is hosting a holiday party, prepping treats for charity, or running a community kitchen, make sure you’re well-prepared with these tips.
The holidays present unique opportunities and challenges for churches that aren’t typical during other times of the year. A lot of the ministries that I work with are seeing steady increases in attendance and are praying for a significant jump in Christmas service participation this year.
In this article, Brad Brown from Plan A Wealth Management gives a wonderful insight into why ministries might consider choosing a 403(B)(9) retirement plan.