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It is Better to Give

From the January 2013 newsletter edition.
Category: Contracts

Does Your Church Have a Planned Giving Policy? One of the factors that influence the governance of a church is its sources of income. For some churches, tithes and offerings is the primary source for revenue. Other churches rely on programs and fundraising to generate funding. Where gifts are a source of income, a Church should decide for itself what is acceptable and not. Churches should consider establishing a Planned Giving Program. Planned giving is…

Churches Could Be Target of Scams

From the October 2012 newsletter edition.
Category: Risk Management

One might think that churches would not be the mark of con-artists, swindlers and tricksters. The fact is churches are vulnerable to the same scams that plague secular organizations and individuals. Here is a common scheme that often catches victims off guard. In this scenario, a potential donor offers to make a substantial contribution to your ministry. The donor only has a cashier’s check. The donor offers to deposit the check in your offering basket…

Churches Have Duty to Inspect Bank Statements

From the October 2012 newsletter edition.
Category: Compliance

If your church has a bank account, you likely receive a monthly statement. These statements provide a list of transactions, your closing balance and other activities that have occurred during the month. Bank statements are not infallible. Sometimes mistakes occur. In some instances, the mistake is caused by the bank’s negligence. For other occasions, errors happen due to a church official’s fault. In a few cases, funds may be misappropriated by an insider. For these…

Private Benefit Rule Applies to Churches

From the July 2012 newsletter edition.
Category: Compliance

Churches must operate in such a way as to not violate their tax exempt status. Churches that operate as 501(c)(3) organizations must follow specific rules to keep their tax exempt designation. One of the rules that apply to these churches is the Private Inurement (Benefit) Rule. The purpose of the Private Inurement Rule is to make sure that tax-exempt organizations are not misused for private interests. As a result, churches should be prepared to prove…

Multi-Level Marketing As A Church Fundraiser

From the July 2012 newsletter edition.
Category: Risk Management

During difficult economic times, many organizations look for new sources of revenue. For churches, the consideration of additional lines of income carries special significance. Notwithstanding the doctrinal concerns, churches should scrutinize new businesses just as any organization would. Business opportunities may be brought to church leadership by its membership. Members often mean well. However, such pro- posals should be viewed with an objective, arms-length approach. One type of business venture that may be presented to…

501(c)(3): To Be or Not To Be

From the January 2012 newsletter edition.
Category: Governance

The start of a new year begins the practices of filing income tax returns, gathering receipts and finalizing the recordkeeping from last year. Donors may ask if your church is a tax exempt organization under the IRS rules. You may have wondered if your church should apply for a 501(c)(3) status. Now is a good time to have that conversation. There are two main advantages of having your church classified as a 501(c)(3) organization. First,…

Tax Deductibility for Church Contributions

From the January 2012 newsletter edition.
Category: Compliance

It’s tax season. Your church members may have questions about the tax deductibility of monies paid to the ministry during the year. As a general rule, charitable contributions made to qualified orga- nization are tax deductible. Churches are qualified organizations. Nonetheless, there are some important rules to keep in mind. Quid Pro Quo Contributions Rule A Quid Pro Quo contribution is a payment made to a church partly for charitable reasons and partly for goods…

Protecting Private Data Can Limit Church Liability

From the October 2011 newsletter edition.
Category: Risk Management

Churches, like many organizations, keep private information on their members. As leaders, you should consider the impact to your church should the sensitive information you have on your members be made public due to your negligence. Mistakes with member data could be a significant legal liability to a church, its leaders and congregation. Church leaders have a responsibility to safeguard the private information entrusted to them by their members. Private information is that which would…

When Is Church Work Not Church Work?

From the October 2011 newsletter edition.
Category: Compliance

One of the advantages churches enjoy is a favorable tax treat- ment under Federal, state, and local laws. The reason churches are given favored treatment is public policy recognition of the special missions these organizations undertake. In exchange for the favorable tax treatment, churches must adhere to limitations on their activities. Churches that step over the line could face sanctions that may threaten their tax status. Understanding how courts draw this line is important for…

Duties of a Church Board Member

From the July 2011 newsletter edition.
Category: Governance

Some churches have adopted a Board of Directors format for management. Where a Board has been elected or appointed, it is important that board members have a thor- ough understanding of their legal duties. Church boards have the ultimate respon- sibility for the management of the church. One of the most important responsibili- ties of the board may be hiring the pastor. Therefore, as a practical matter, boards usually delegate the day to day manage-…

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