Church Giving Begins to Rebound?

Since the recession in 2008, many U.S. churches have seen a decline in giving. But the tide may be changing. The third annual State of the Plate constituency survey of 1,507 churches revealed that 43% of these churches experienced an uptick in giving this past year (up from 36% the previous year). Overall, 6 in 10 churches reported giving that was flat or up in 2010—encouraging results given the nation’s stalled economy.

Smaller churches (under 249 people in worship attendance) saw giving declines (40% in churches under 100 people and 43% in churches with 100-249 people). Giving dipped most in Southeast states, rather than among Pacific Coast states as it did in previous years.

Whether giving increases or decreases in 2011 will depend on a variety of factors, said Matt Branaugh, Director of Editorial for Christianity Today International’s Church Management Team, a survey co-sponsor. “It’s critical for church leaders to nurture relationships with people and show them how their giving directly helps the church’s mission and their surrounding community,” Branaugh added.

Though churches appear to be coming out of a downward cycle, a new government proposal to limit tax deductions on charitable giving is creating concern among church leaders. In the State of the Plate survey, 91% of respondents expressed concern that such a change could create yet another obstacle to generous giving among churchgoers.

“Charities and churches have been hit hard by the economy the past three years. If the government’s plan to change the rules on charitable tax deductions goes through, giving to charities and churches, and the people they in turn assist, will likely be negatively affected,” said Brian Kluth, founder of MAXIMUM Generosity and the State of the Plate research.

An Executive Summary highlighting results with charts, graphs, and trends is available at YourChurchResources.com. CTI’s other legal and financial resources for churches include The Essential Guide to Church Finances, ChurchLawAndTax.com, and ChurchSafety.com.

Handling Leases for Car Allowances

Question: Our church provides an auto allowance budget line item for vehicle expenses for our pastor. The pastor leases a vehicle that he uses for church-related business. He has asked to use the budget line for reimbursement of the expenses associated with the leased vehicle's use.

The pastor submits receipts for expenses associated with the leased vehicle for reimbursement (i.e. lease payments and maintenance). What are the IRS guidelines in such an instance?

Answer: “If you lease a car that you use in your ministry, you can use the standard mileage rate or actual expenses to figure your deductible car expenses. You can deduct the part of each lease payment that is for the use of the car in your business. You cannot deduct any part of a lease payment that is for personal use, such as commuting. You must spread any advance payments over the entire lease period. You cannot deduct any payments you make to buy a car, even if the payments are called lease payments. If you lease a car that you use in your business for a lease term of 30 days or more, you may have to include an inclusion amount in your income for each tax year you lease the car. To do this, you do not add an amount to income. Instead, you reduce your deduction for your lease payment.

“This reduction has an effect similar to the limit on the depreciation deduction you would have on the car if you owned it. The inclusion amount is a percentage of part of the fair market value of the leased car multiplied by the percentage of business and investment use of the car for the tax year. It is prorated for the number of days of the lease term in the tax year. The inclusion amount applies to each tax year that you lease the car if the fair market value of the car when the lease began was more than the amounts shown in Table 7-4 (For 2010, the fair market value is $16,700).

“Fair market value is the price at which the property would change hands between a buyer and seller, neither having to buy or sell, and both having reasonable knowledge of all the necessary facts. Sales of similar property around the same date may be helpful in figuring the fair market value of the property. Figure the fair market value on the first day of the lease term. If the capitalized cost of a car is specified in the lease agreement, use that amount as the fair market value.

“Inclusion amounts are listed in tables reproduced in IRS Publication 463. For each tax year during which you lease the car for business, determine your inclusion amount by locating the applicable appendix in Publication 463. To find the inclusion amount, do the following: (1) Find the line that includes the fair market value of the car on the first day of the lease term. (2) Go across the line to the column for the tax year in which the car is used under the lease to find the dollar amount. For the last tax year of the lease, use the dollar amount for the preceding year. (3) Prorate the dollar amount for the number of days of the lease term included in the tax year. (4) Multiply the prorated amount by the percentage of business use for the tax year. This is your inclusion amount.”

--Pages 274-275, the 2011 Church & Clergy Tax Guide.

Should Churches Avoid Discipline for Legal Fears?

The March/April issue of Catalyst Leadership focuses on the topic of "Crisis," and features an interview with Ken Sande, president of Peacemaker Ministries. Ken is also an editorial advisor for Christianity Today International's Church Management Team. The interviewer asks Ken whether churches should be concerned with any legal dangers when it comes to matters of church membership and church discipline:

"We hear from pastors all the time who are considering disciplining a member for egregious behavior, but before anything can be done they get a phone call from an attorney threatening a lawsuit if the church says anything publicly about the member's behavior. The average pastor tends to back off, and that is the end of that.

The church may have avoided a lawsuit, but they will have done nothing to restore the brother or sister in sin or to protect the church from further problems."

The interviewer then asks:

"What are some things church leaders can do to overcome the dangers of using discipline?"

Sande responds:

"Take God at his word. The Bible consistently presents discipline as an act of love and redemption. We have to lose the cultural idea that accountability and discipline are bad things.

Next, realize that preparation is 99 percent of the battle. Most churches do not prepare their congregations for discipline until a crisis hits. You can't just teach these things in one sermon. We need to be teaching about the blessings and meaning of discipline long in advance of a crisis.

It is also crucial to obtain informed consent. This is a legal term, and it is the only reliable defense against being sued. Informed consent means that the people in the church know what the Bible says about discipline, they know exactly what the process involves, and they have agreed to submit to the process, sometimes in the form of a membership covenant."

You can read the full interview in Catalyst Leadership.

Has your church used discipline? Avoided it? What has it learned?

For more guidance on resolving conflict within a church, check out "Managing Church Conflict," ($14.95), "Handling Conflict," ($14.95), "Mastering Conflict," (free), all from our sister site BuildingChurchLeaders.com.

Confronting Violence at Church

The current issue of Leadership Journal revisits the fatal shooting of Pastor Fred Winters as he preached one Sunday morning at First Baptist Church in Maryville, Illinois. The piece recounts—in chilling detail—his final moments on March 8, 2009, as the suspect approached the pulpit while hiding a .45 caliber Glock pistol underneath a church bulletin:

Pastor Fred Winters was in the early moments of his sermon. He looked at the man standing in the aisle and asked, "May I help you?"

At that moment the stranger removed a church bulletin covering the gun and began shooting. The first shot hit Pastor Winters's Bible, shredding it into what people perceived as confetti. The reality of what was happening didn't register with anyone yet, in fact some later commented they thought it was a drama sketch.

Pastor Winters yelled, "It's real, this is real!" and moved toward the side of the stage.

The second and third shots each missed Pastor Winters. He jumped off the stage toward the gunman and grabbed the gun. It was there the fourth and final shot hit the pastor in the chest, piercing his heart and killing him."

The article goes on to share how the church has worked to heal from the trauma in the two years since, including interviews with the church's ministers of worship and pastoral care, as well as Winters' wife. While the suspect remains in custody awaiting trial, one disturbing fact remains:

To this day, there is no understanding of why the shooter picked this church on this day. He had no prior connection with First Baptist. No motive has been discovered. It was a random act of violence.

Considering the number of Christian churches in the country (most estimates usually put the figure at about 300,000) and the number of services that take place every week at those churches, random acts of violence like this one are a rarity. These incidents serve as reminders that, though rare, church leaders still must work to prevent them—or know what to do if a potential situation begins to unfold.

Sadly, another such reminder arose earlier this month.

On March 3, police say two men entered the offices of NorthPointe Baptist Church in Arlington, Texas, where Pastor Clint Dobson and his office assistant worked.

They began to rob Dobson and his assistant—and then did the unthinkable.

According to a police report, the suspects murdered Dobson, 29, by suffocating him with a plastic bag. They also attacked his assistant, seriously injuring her.

The suspects were arrested a few days later, thanks to a tip from two women who said they heard the men "laughing and making inappropriate comments" while watching news reports of the pastor's death, according to a report by KTVT, the local CBS television affiliate in Dallas-Fort Worth.

In both the Maryville and Arlington stories, we see the ongoing challenges churches face when it comes to safety and security. Openness and accessibility, essential qualities for any church that wants to reach out, can be used by individuals who wish to do harm. The thought of pre-screening people before they attend a worship service seems absurd; many churches offer benevolence—frequently involving food and money—throughout the week as people in need show up at their offices looking for help.

What can be done? A pastor and office assistant I recently spoke with say they may consider installing security camera systems at their respective church offices as a way to keep their building secure throughout the week (and create a possible deterrent by showing a would-be attacker that their face will be recorded before they enter).

What other steps are worth taking? For help on this question, our sister site, ChurchSafety.com, offers the following electronic training resources for local churches:

• Confronting Gun Violence at Church

• Protecting Your Church From Crime and Violence

• Dealing with Dangerous People

How is your church addressing this question?

When the Bank Says No

Rejection is no fun under any circumstance. It can be especially disheartening for a church when a lender rejects its initial loan application for a capital construction project. But the first "no" does not necessarily doom your chances to finish the project. Your church can pursue another lender, adjust the project, improve its financial situation, or a combination of the three.

Lenders will refuse a church's loan proposal in more subtle ways than an outright "no." Instead, a lender might reduce the amount it is willing to offer. In other scenarios, the lender has more clear reasons for the rejection, and the unsuccessful church should ask for reasons why.

"Listen. As that lender is telling you no, they are really saying 'not that way' or 'not now' or 'not that much.' If you can hear them out, they will usually give you some clues about what to do next so that your future request might be approved," says David Van Winkle, vice president of sales for the Evangelical Christian Credit Union.

After a refusal, shop other banks to compare interest rates, loan programs, and financial requirements. The refusal could also be a cue to explore other sources, such as your denomination, grants, and bonding programs. If the first effort involved a lender that isn't familiar with churches, look for one that specializes in that market.

"Match up the loan you're seeking with the type of loan that particular institution makes. That can't be stressed enough," says Frank Sommerville, an attorney and CPA who specializes in helping nonprofit organizations.

Adjusting the project after a rejection is another practical option, says Brian McAuliffe, executive pastor for Willow Creek Community Church.

"Rethink the plan, rescale the plan, get creative about timing. Hold off until you can raise the cash or the economic factors change," he says.

The lender's refusal can be a motivator to do the hard work needed to strengthen the weak spots in your church's finances, too. Get a prescription for improvement from the prospective lender, follow it, and come back in a year to try again.

"The single most common prescription is slightly lower borrowing capacity and building size," says Dan Mikes, executive vice president of Bank of the West's church loan division. "Another common one, at least in the current environment, is to say, 'You're a little thin on cash.' You should have one to three months of expenses held in operating reserve."

The initial rejection can force your church to look harder at its ministry priorities. It can serve as a way to rally the congregation.

"You can tell the congregation that you believe in the project and feel God is on their side," McAuliffe says. "Of course it still has to fit a reasonable financial model. You just cannot do a project and say God will provide. That would be fiscally irresponsible."

This article originally appeared in Your Church Today magazine. To learn more about healthy ratios for borrowing, check out Essential Guide to Church Finances (Christianity Today International).

Illegal Immigrants in the Church

Late last year, we released "Illegal Immigrants in the Church," from Church Law & Tax Report. In it, Richard Hammar and Ann Buwalda, an immigration attorney, review the details on what churches need to know about immigration law as it relates to welcoming undocumented immigrants into church and recruiting them to work or volunteer. They explore commonly asked questions by churches, and provide information to help churches understand their legal responsibility towards undocumented immigrants in church.

In February, this question surfaced again when Christianity Today asked three distinguished voices about how churches should respond to illegal immigrants who are in their midst.

Below are excerpts of the responses from Mark DeYmaz (directional leader at Mosaic Church of Central Arkansas and coauthor of Ethnic Blends: Mixing Diversity into Your Local Church), M. Daniel Carroll Rodas (distinguished professor of Old Testament at Denver Seminary and author of Christians at the Border: Immigration, the Church, and the Bible), and Matthew Soerens (U.S. church training specialist for World Relief and co-author of Welcoming the Stranger), as well as links to their full responses.

Read their takes, then tell us how your church is addressing this question.

Mark DeYmaz:

"When it comes to meeting the spiritual, material, and physical needs of immigrants, there is strong biblical precedent for getting involved (Ex. 22:21; 23:9; Lev. 19:33-34; Deut. 27:19). But New Testament teaching also makes it clear that as followers of Christ, we are to honor the law and respect the rulers of our land (Luke 20:23-25; 1 Pet. 2:13-14). How should we resolve this apparent tension? Out of concern for this member and what his decision might mean for the church, I met with local immigration officials to discuss the situation. I learned that a church is in no way restricted from ministering to people based on their legal status or expected to know who within the congregation is and is not properly documented."

Read DeYmaz's full response.

M. Daniel Carroll Rodas:

"The original question can make issues of legality the overriding focus. These issues obviously are important and must be dealt with. But they should not be the starting point of the discussion or the defining dilemma.

An appreciation of the full biblical witness concerning immigration redirects our attention to the complex needs and wonderful potential of these newcomers, made in the image of God and coheirs in the body of Christ. A very different conversation is generated with another set of questions:

* Is the present immigration system compassionate and just?
* How can churches serve as a constructive moral voice in the national debate and express the love of God to immigrant families?
* What steps can be taken so that both majority-culture churches and immigrant congregations learn from one another?"

Read Rodas' full response.

Matthew Soerens:

"The church's Great Commission is to "make disciples of all nations" (Matt. 28:19), and immigrants—regardless of their legal status—present a mission field at our doorstep. Churches should welcome immigrants, recognizing a divinely appointed mission opportunity.

Welcoming immigrants who are here unlawfully, of course, raises new questions for many churches. First and foremost for many is, Are we breaking the law by helping? In general, the legal answer is no. In most states, it is entirely lawful to preach the gospel to undocumented immigrants as well as compassionately meet their tangible needs. We can minister effectively and still be fully in submission to God-ordained governing authorities.

As laws change, though, Christians in some states may need to wrestle with whether their mandate to love immigrant neighbors requires civil disobedience."

Read Soerens' full response.

Why the National Church Compensation Survey Matters

John Clemens with IRN USA Radio recently interviewed Matt Branaugh about Christianity Today International's National Church Compensation Survey. In this six-minute clip (which aired on more than 1,100 stations nationally), you'll hear more details about the importance of this survey, and why every church leader should care, including:

• How boards can effectively use the data gleaned from this survey to set pay packages;
• How pastors and others can use the data to understand their own pay situations;
• How churches possess a unique opportunity to set examples in their communities regarding fair pay.

Can Social Media Get a Church Sued?

Recent incidents involving alleged misuses of social media in both the public and private sectors have government officials and business executives scrambling to implement social media policies for employees.

Church leaders should take the opportunity to do the same before a situation arises, casting negative light on their congregations, or worse, landing them in court.

Indiana's deputy attorney general was fired after making controversial remarks through his personal Twitter account and blog, according to a USA Today article (The Nonprofit Quarterly also blogged about it last week). Jeff Cox "tweeted 'use live ammunition' in response to a Mother Jones tweet that riot police had been ordered to remove union supporters from the Wisconsin state Capitol in Madison," the USA Today article explains.

The article continues:

"Corbin, the attorney general's spokesman, said the agency has no formal rules on social media but is developing them. He said the employee handbook, however, is clear that employees should conduct themselves in a professional manner during and after working hours."

A few days later, Inc. magazine's website published "How to Avoid a Social Media Lawsuit," which includes links to resources and books that can help organizations craft effective social media-use policies. Some of the more notable liabilities, according to Inc., include:

• Copyright/Trademark
• FTC Advertising and Full Disclosure
• Privacy
• Illegal Development

What's the takeaway for church leaders?

"If your staff is going to talk about anything work-related on any webpage, that posting may create problems for your church, and, in some cases, a liability for your church," writes Frank Sommerville in "Can Social Networking Get Us Sued?" "The best way to avoid liability for staff members' postings to social media is to require them to agree that all postings will comply with the church's terms and conditions for social networking by its staff members."

Sommerville's article is included in "Using Social Media Safely," a downloadable training resource on ChurchSafety.com that includes help with forming a use policy for church staff.

The Fall-Out from 'Natural Decrease'

Editor's Update (4/26/2011):The Nonprofit Quarterly pointed this morning to a Boston Globe article reporting 40 of the city's largest nonprofits, with property valued at $15 million or more each, have received letters from the city "requesting them to make regular and voluntary tax payments based on the value of their holdings.

"Boston is not alone is seeking to raise revenues from nonprofits ... In Boston, nonprofits are especially tempting targets, because as the Globe notes, they own about 52 percent of the city’s land area," the Nonprofit Quarterly continues. "Under the new plan payments would rise from $15 million, which they paid this year, to $48 million over the next five years."
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Editor's Update (4/4/2011): The Nonprofit Quarterly pointed this morning to a Times-Picayune article covering the recommendations of a mayor-appointed "Tax Fairness Commission" in New Orleans. One of the three recommendations:

"...changes to the state’s constitution that would allow cities statewide to collect taxes from nonprofits as part of a larger effort to bring in more revenue from untaxed property ...

... If adopted by lawmakers and voters statewide, the most sweeping of those changes, according to The Times-Picayune, “would allow local governments to collect taxes on as much as half the assessed value of properties that long have paid nothing because their educational, religious, cultural, fraternal or other missions qualify them for exemptions.”

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Up until last week, there's a good chance most people hadn't heard of "natural decrease." But newly released U.S. Census data reveal a near-record number of counties in the country are dying, and the term describing the phenomenon has quickly gone mainstream.

The Associated Press reports:

"In all, roughly 760 of the nation's 3,142 counties are fading away, stretching from industrial areas near Pittsburgh and Cleveland to the vineyards outside San Francisco to the rural areas of east Texas and the Great Plains. Once-booming housing areas, such as retirement communities in Florida, have not been immune.

West Virginia was the first to experience natural decrease statewide over the last decade, with Maine, Pennsylvania and Vermont close to following suit, according to the latest census figures. As a nation, the U.S. population grew by just 9.7 percent since 2000, the lowest decennial rate since the Great Depression."

What's the significance for church leaders? Well, beyond the obvious ministerial needs and challenges that churches located in dying counties can help meet, there's another separate-but-significant connection. The AP says two primary reasons for "natural decrease" are an aging population and a poor economy.

It's the second reason that church leaders should especially note. As municipalities--dying or not--continue to struggle with shrinking tax revenues, and aggressively look for ways to survive, churches and nonprofits will only find it tougher to avoid taxes and tougher zoning restrictions.

A year ago, we saw the question of taxing churches unfold publicly in places like Utah, Ohio, and Indiana.

On the zoning front, challenges with ordinances appears, as one attorney puts it, to be "heating up" for churches because of the economy (and that's saying something--zoning issues are already one of the top five reasons churches go to court each year).

In the March issue of Christianity Today, the magazine cites multiple examples of churches battling zoning ordinances. Even though the Religious Land Use and Institutionalized Persons Act (RLUIPA) was passed more than a decade ago, protecting houses of worship from discrimination, some churches still face hostile governing bodies. And those challenges come with a cost: Pricey legal battles to fight ordinances that are usually put into place by cities that want property used for business (and tax-generating) purposes.

Christianity Today cites one recent example:

The city council of Burbank, Illinois, passed a new zoning law late last year banning churches from building in commercial areas. The action came after Rios de Agua Viva, a Hispanic congregation, signed a $900,000 contract to transform an old restaurant into its new sanctuary.

Sadly, churches with building or expansion plans, regardless of what part of the country, may face similar sentiments. The article continues:

More than a decade after RLUIPA's passage, however, many religious institutions face lengthy, costly battles to exercise their freedom to worship, said Richard Baker, an attorney who is representing the Burbank church.

"Churches do not realize the fight they're in," Baker said. "If you go into a commercial district, they say you're wrecking their tax base. If you go into residential, they say you're disturbing their peace."

What tax and zoning challenges have you observed in your area? Are declining city and county coffers the primary reason? How have churches successfully navigated those choppy waters? Or not?

Concealed Weapons in Church

In 2010, the state of Georgia enacted a law prohibiting a person with a concealed weapons permit to carry a concealed weapon into a place of worship. A lawsuit was filed challenging the constitutionality of the law. Hear what the state's court decided, and Rich Hammar's analysis of that decision and its implications for churches and church leaders: