You need to know what you can and can't print or post online.
Richard R. Hammar
Editor's note: A church newsletter recently featured an invitation to a luncheon for a political candidate, who is also a deacon at the church, and this raised concerns that the church isn't following the IRS restriction for tax exempt organizations, according to an NBC news affiliate in Wilmington, North Carolina. If your church is considering printing or posting information on political topics, Richard Hammar offers some help.
The tax code notes that section 501( c)(3) organizations are permitted to conduct certain voter education activities—including the presentation of public forums and the publication of voter education guides—if they are carried out in a non-partisan manner. In addition, they may encourage people to participate in the electoral process through voter registration and get-out-the-vote drives. On the other hand, voter education or registration activities conducted in a biased manner are prohibited.
What churches and ministers must know about copyright law
Christianity Today explores the topic of who owns a pastor's sermon in its January/February issue. Churches and pastors may find this subject difficult to discuss, especially when sales of published sermons start to significantly add up.
Frank Sommerville, ManagingYourChurch.com's Editorial Advisor and regular contributor, shared his expertise in the Christianity Today article:
Disputes over the copyrights of pastors' sermons aren't likely to go away, said Frank Sommerville, a Dallas-based attorney who specializes in nonprofit law. That's partly because of the money at stake, and partly because current copyright law is stacked against pastors.
Sommerville says that under the Copyright Act of 1976, a pastor's sermons qualify as "work for hire." That means the copyrights and intellectual property rights actually belong to their employer.
Process with Seventh Circuit may take up to a year to resolve.
Richard Hammar, senior editor of Church Law & Tax Report and ChurchLawAndTax.com, reports the Justice Department filed a notice of appeal this afternoon in the Wisconsin clergy housing allowance case.
In late November, a federal district judge ruled the housing allowance provided to clergy was unconstitutional. The judge stayed the decision, pending the appeals process. The deadline for an appeal was this coming Monday, January 27. For the time being, housing allowances are allowed in the Wisconsin district and should be designated by churches there, Hammar said.
The Seventh Circuit Court of Appeals in Chicago will hear the appeal. The same appellate court overturned a prior ruling by the same judge a few years ago, in which the judge ruled the National Day of Prayer was unconstitutional.
Hammar provided an in-depth analysis of the housing allowance ruling, and its potential implications, in the January/February 2014 issue of Church Law & Tax Report. He said an appeal, if filed, could take up to a year to get resolved.
If the Seventh Circuit affirms the ruling, then it would affect churches and clergy in Wisconsin, Illinois, and Indiana--the three states covered by the Seventh Circuit. More significantly, though, it also would likely force the Internal Revenue Service to consider applying the ruling nationally to ensure the consistent treatment of clergy for tax purposes, regardless of their geographic location.
Should the Seventh Circuit overturn the ruling, the plaintiff--the Freedom From Religion Foundation--would have the option to appeal to the Supreme Court. Hammar considers the likelihood of the Supreme Court hearing such an appeal to be small.
Watch for updates on ManagingYourChurch.com and ChurchLawAndTax.com.
Our new step-by-step infographic does the legwork for you.
By our count, starting a new church requires at least seven significant steps to ensure it has proper legal and tax standing. And within those seven steps, numerous smaller steps abound.
For instance, did you know that incorporating with a state corporation commission alone involves five critical pieces that need to be in place first? That includes the identification of board responsibilities and the incorporation of provisions required by the IRS. Did you know that you can't move forward with a church plant, at all, until you've found an available church name to incorporate with? Or that you can't file for a 501(c )(3) until you have a Federal Employer Identification Number? Do you have any idea what kinds of church bylaws are required of you before you can set up a church bank account?
Will our church get in trouble for allowing undocumented immigrants to volunteer in our children's ministry?
Q: There is a wonderful Christian family that attends our church, contributes to tithes, volunteers in children's ministry and other ministries. Will our church get in trouble for allowing them to volunteer even though the family is undocumented?
A: Churches are under no legal obligation to restrict worship services to only those lawfully present in the United States. However, churches should exercise the same level of screening for all volunteers, regardless of their citizen status, to exclude those who may have criminal histories and otherwise pose a risk to children or other congregants.
Richard Hammar offers key points regarding Wisconsin judge's ruling.
Richard R. Hammar
UPDATE (12/2/13): Below are five immediate takeaways from Richard Hammar on the November 22, 2013, ruling on clergy housing allowances by a federal judge in Wisconsin. Rich goes deeper on these five, plus five more, in the January/February issue of Church Law & Tax Report.
On November 22, 2013, federal judge Barbara Crabb from the Western District Court of Wisconsin (a President Carter appointee) struck down the ministerial housing allowance as an unconstitutional preference for religion. The ruling was in response to a lawsuit brought by the Freedom From Religion Foundation (FFRF) challenging the constitutionality of the housing allowance and the parsonage exclusion.
Court data from 2012 show congregations still plagued by abuse allegations.
Richard R. Hammar
Each year I review 12,000 published and unpublished rulings by state appellate and federal courts pertaining to religious organizations. Based on my case analysis from 2012, churches wound up in court for the following five reasons:
Zoning (5.4 percent of cases)
Property disputes (6.8 percent of cases)
Insurance coverage disputes (7.3 percent of cases)
Nonsexual personal injuries (7.6 percent of cases)
Panel says the approach should also apply to secular nonprofits.
Michael E. Batts
Editor's Note: Michael Batts is an Editorial Advisor for the Church Law & Tax Group, which publishes ManagingYourChurch.com. Michael also served as the chairman of the Commission on Accountability and Policy for Religious Organizations. Richard Hammar, senior editor of the Church Law & Tax Group, served on the commission.
On this Election Day, Mike recaps the commission's recent recommendations related to political speech and religious organizations:
A national commission, with input of leaders from every major faith group in America and other prominent nonprofit groups, issued a 60-page report in August offering Congress and the Treasury Department new proposals for bringing clarity to current IRS restrictions on political expression by nonprofit organizations.
After issuing a report to Sen. Charles Grassley (R-Iowa) on national tax policy for religious and other nonprofit organizations in December, the Commission on Accountability and Policy for Religious Organizations ("Commission") turned its attention to a Grassley request to address the prohibition against political campaign participation for nonprofits exempt under Section 501( c)(3) of the Internal Revenue Code.
October offer gives unique insight into ChurchLawAndTax.com.
Church leaders will have an unprecedented opportunity throughout October when ChurchLawAndTax.com, a sister site of ours, unlocks a new article each day on a significant law, tax, finance, or risk management matter leaders face.
The "31 in 31" campaign will give leaders access into valuable content that can aid critical decisions and directions for their churches, including pieces written by Richard Hammar and the site's Editorial Advisors for Church Law & Tax Report, Church Finance Today, and ChurchLawAndTax.com.
Each month, laws and judicial decisions are made that affect the way church leaders manage ministry. For leaders feeling the pressure of the increasingly complex legal landscape their churches face, this may be a great time to consider what training and information they and their staffs may need through a resource like ChurchLawAndTax.com.
Would such an arrangement help cover legal costs and settlements?
Richard R. Hammar
Q: Should our church have a reserve set up to help fund a defense effort if we're ever sued? This money would help pay legal expenses, church administrative costs to assist with discovery and other needs, and possibly even a settlement or awarded damages, if any arise.
A: There is no compelling reason in most cases for a church to have a reserve for legal expenses. This is why you have liability insurance. A reserve may be advisable if legal expenses are anticipated that are not covered by insurance (such as employment disputes). But the better response to these risks is to obtain insurance coverage.
There still may be some legal expenses that are outside of any insurance policy, but they will be rare. A small reserve fund that carries over from year to year would be an option. I have never seen a church do this, however.
Some common practices may lead to surprising fines.
Church leaders may not realize it, but common practices conducted in worship services and through website updates may put their churches at risk for copyright violations. Fines are assessed by the violation, including attorneys' fees, meaning a church that violates the copyrights of others could easily face some hefty bills.
Many times these violations aren't intentional. But fines are levied regardless of whether a violation was intentional or not.
Some common practices of churches that can lead to copyright problems include the following:
These questions may seem odd for church leaders to ask. Sadly, they're necessary. Acts of deadly violence at churches continue to make headlines.
With more than 135 deadly-force incidents occurring on ministry premises in 2012, church leaders must address how best to protect the people who come through their doors each week.
To help ministry leaders handle these challenges, Brotherhood Mutual Insurance Company and Christianity Today are co-sponsoring “Guns at Church: What Ministry Leaders Should Know,” a free webinar with noted church legal expert Richard Hammar at 11 a.m. (CDT)/12 p.m. (EDT) on Wednesday, August 14.
During this one-hour event, church leaders will learn:
It takes more than a ramp to minister to those with disabilities.
July marked the 23rd anniversary of the Americans with Disabilities Act. Although many spaces have made great leaps to become more accessible, a recent article in Nonprofit Quarterly pointed out that we still have an incredibly long way to go when it comes to making this world an accessible place for individuals with disabilities.
One man in the Bronx recently sued his church. He says he was left unattended by the usher who was put in charge of assisting him, resulting in him being trampled and injured by people entering the church who tripped over his wheelchair. Another woman sued a church in Texas because she says when she complained about the lack of accessibility in the restroom at her church, leaders allegedly banned her from worshiping at their church. The U.S. Department of Justice recently sued the state of Florida for segregating and isolating disabled children into nursing homes, when they could have been eligible for homecare.
An athiest says yes. How churches should reflect on this disturbing question.
A writer for the "Friendly Athiest" channel on Patheos recently asked whether religions produce "more than their fair share" of child sex abusers. The basis of his question, and his answer, which was yes, is the ongoing abuse scandals within the Catholic church, as well as the disturbing regularity of media reports covering abuses within other faith communities.
I penned a response over on our sister site, Out of Ur, that examines the writer's analysis and also raises an equally, if not more, important question: Why don't faith communities produce fewer abusers?
Why an accountable reimbursement plan is critical for every church.
Richard R. Hammar
Q: I need help with a question regarding money requested for our Deaf Church Pastor for car repairs. The Deaf Church Committee voted to reimburse him for the car repairs but since this is not an actual church expense, it seems it should be considered a gift, and therefore taxable income. Their position is that it is a reimbursement and therefore not taxable. Help?
A: The answer largely depends on whether your church already has adopted an accountable reimbursement plan. This explanation on Page 332 of the 2013 Church & Clergy Tax Guide explains how an accountable reimbursement plan works:
Noncompliance penalty delayed to January 2015 for large employers.
Michael E. Batts
The Obama Administration announced on July 2 a one-year delay in the effective date of a major component of the Patient Protection and Affordable Care Act requiring employers with at least 50 workers to offer health coverage or be exposed to a penalty.
The provision, commonly known as the "play or pay" penalty or employer mandate, will now become effective on January 1, 2015. The delay removes the pressure to redesign plan coverage in the next few months to maximize the cost benefit of avoiding (or paying) the penalties. Employers now have an extra year to vet the pros and cons of their plan designs and to implement the Act's requirements on coverage.
As of now, the Act's other two major provisions, expanding Medicaid and requiring individuals to obtain coverage or pay a penalty, are still scheduled to become effective on January 1, 2014.
This guest post first appeared in The Nonprofit Watchman, a free e-newsletter published by Batts Morrison Wales & Lee, P.A., that covers significant state and federal developments for churches, nonprofits, and their leaders. Reprinted with permission.
What church leaders should note from the Supreme Court's decisions.
Richard Hammar, editor of Church Law & Tax Report, penned a quick analysis today on ChurchLawAndTax.com regarding the Supreme Court's rulings on same-sex marriage. Rich offers seven key points for church leaders to note, including the following:
The seven state statutes and 30 state constitutions defining marriage as a union between a male and female are not affected;
It is likely if not inevitable that the Supreme Court will one day address the constitutionality of state laws declining to recognize same-sex marriages;
Churches need to carefully evaluate the application of federal laws and regulations to church employees who are lawfully married under state law to a person of the same sex.
Tight lending conditions may renew interest on a wider scale.
Editor's Note:This is the final post in a guest series from Dave Travis' book, What's Next?:2012 Edition. The first posts addressed church finances, financial accountability, the use of interns and residents, and outsourcing work. Travis is CEO of Leadership Network.
Church bonds have been around for many decades. Most of the time, they proved to be a reliable system of financing construction-type projects. Occasionally, a prominent scandal or failure would decrease enthusiasm for them.
Bond financing also tends to rise when banks set tight conditions and higher interest rates. For the first part of the last decade, credit availability was widespread. But things have changed.
These pitfalls can be avoided with the right preparation.
Last month, Frank Sommerville, CPA, JD, visited Christianity Today and spent time with our team. Frank is one of our Editorial Advisors and he spent time with us discussing some of the top risks churches face each day.
A couple of days later, he spoke nearby at a National Association of Church Business Administration (NACBA) local chapter meeting. Between our on-site visit with Frank and his NACBA presentation, it became abundantly clear that there are critical, ministry-killing pitfalls that threaten every church, and leaders need to be better educated on these risks:
Tennessee megachurch challenged decision affecting part of its property.
On the heels of last week's news regarding an Indiana study that showed one in four government leaders favored payments of some type by churches in exchange for their tax-exempt statuses comes this online column by Peter J. Reilly of Forbes.
Reilly recaps a recent Tennessee appellate court decision regarding property taxes assessed between 2004 and 2008 on a portion of property owned by Christ Church Pentecostal of Nashville. Tennessee's State Board of Equalization and its Assessment Appeals Commission contended the megachurch's bookstore and cafe did not qualify for property tax exemption, and its fitness center qualified for only a 50-percent exemption.
The reason: Assessors believed the bookstore and cafe went beyond religious purposes, while the fitness center, by offering memberships to the general public, went partially beyond those purposes. The church disagreed; in court documents, the church's senior pastor explained the crucial role the bookstore and cafe and fitness center played with creating what is known in architectural design circles as third place spaces for the surrounding community, particularly its immigrant and low-income populations.
Where will all the staff come from in the future? Most likely a combination of places, as always. But one of the key development arenas will be structured intern and residency programs, targeting younger generations who come forward to ask for practical training.
This trend mirrors what is going on in other corporations. Not-for-profits and other institutons are mobilizing interns for a variety of tasks. Additionally, a growing number of high schools are requiring low level experiences that are often called internships.
The internship has somewhat replaced the part-time job as a combination resume builder and experience base to pad school entrance and corporate job applications.
Churches have had internships for some years. What's new is seeing them as strategic for development of new staff and Kingdom workers for other contexts. We've seen the same development with "pastoral residents programs," that act as finishing schools with longer time commitments and stipends.
Churches must handle finances in "the light of day."
Editor's Note:This is the second in a series of guest posts from Dave Travis' book, What's Next?:2012 Edition. The first post addressed how much--or little--the economy is to blame for church failures. Travis is CEO of Leadership Network.
Here is the issue: Do church leaders make decisions and handle money "in the light of day," or do things happen behind closed doors?
The degree to which this is an issue can vary, but it will increase in importance as an authenticator--not only for prospective members, but for the community at large and its local government.
Once upon a time, church members simply trusted their leaders. Some still do. But in the world we now inhabit, trust depends to some extent upon reasonable transparency. In the future, it could become a critical issue.
U.S. churches exist in a legal gray area. They are required to follow not-for-profit regulations in many areas, without being required to file reports and returns in the way other not-for-profit organizations do. They must follow rules on political activity, compensation, insider dealings and the like, but they are still given considerable leeway in the matter of financial reporting.
Even when denominations require their churches to file reports, the results may not be shared outside denominational offices.
Going forward, we feel that voluntary transparency will bolster churches in the eyes of the public--members and outsiders alike. Younger adults will insist upon it, being accustomed to detailed reports from other charitable organizations.
Only 16 percent received an estate gift in 2011, too.
According to a new study by LifeWay Research, the majority of Southern Baptist churches believe that Christians should provide for their church in their will, but 86 percent of churches provide no help or assistance for estate planning.
In fact, 84 percent of all Southern Baptist churches receive no estate gifts in 2011, and just one percent received three or more of these type gifts.
According to Warren Peek, the president of the Southern Baptist Foundation, “Two practical steps pastors can take to cultivate this type of thinking are to put a process in place to accept and dispose of gifts of non-liquid assets and to make available information on estate planning.”
Excerpted from the March 2013 edition of Ministry Briefing, a monthly, downloadable digest of headlines for church pastors and leaders edited by Matt Steen and Todd Rhoades. Used with permission.
New survey shows attitudes on how pastors, churches respond.
The results of a new LifeWay Research poll released this morning reveal some interesting attitudes among American adults when it comes to how pastors and church leaders handle the topic of same-sex marriage.
In November, LifeWay received 1,191 completed online surveys. Responses were weighted by region, age, ethnicity, gender, and education to represent the adult population of the United States, LifeWay said. Some specific highlights (you also can read the full recap from LifeWay and additional coverage from our sister site ChristianityToday.com):
What churches should note as Colorado case, California bill challenge access.
A news story involving a Colorado family's battle with a school district has garnered national attention after a school in the district said the family's six-year-old boy, who believes he is a girl, can use a clinic bathroom or a gender-neutral staff bathroom—but no longer can use girls-only bathrooms.
The public discussion of "transgender" people is one church leaders should follow, since it's possible questions will eventually arise about what accommodations churches do—or don't—provide to individuals who identify themselves as the opposite gender.
In Denver, the child was born with male genitalia. The parents also say the child is a girl, and say consultations with professional counselors have confirmed their child's "gender identity" is female. In February, after the school's decision, the family filed a complaint with the Colorado Civil Rights Agency; the agency, citing the state's anti-discrimination laws, sent a formal charge requiring a response from the school district within 30 days.
Last week, the family took the situation public, appearing on local television news broadcasts, Katie Couric's television show, and CNN, according to the Denver Post.
Rights for transgender individuals "will be America's next great civil rights struggle," the executive director of a legal defense fund said in a news conference last week with the family, according to the Post.
Act mandates changes to FSAs, potentially affecting church cafeteria plans.
Richard R. Hammar
In March 2010, Congress enacted the 2,500-page Patient Protection and Affordable Care Act (the “Act” or “Affordable Care Act”) in order to increase the number of Americans covered by health insurance and decrease the cost of health care. Since being signed into law, it has been difficult for churches to navigate this new legislation, especially since new portions of the Act are being implemented each year.
In 2013, the main provision that will affect churches is the new limitation on health flexible spending arrangements under cafeteria plans. A flexible spending arrangement for medical expenses under a cafeteria plan (“Health FSA”) is health coverage in the form of an unfunded arrangement under which employees are given the option to reduce their current cash compensation and instead have the amount of the salary reduction contributions made available for use in reimbursing the employee for his or her medical expenses. The health reform legislation made the following change in Health FSAs effective for tax years beginning after 2012.
A brief Q&A recently featured in The Wall Street Journal offers tips for what to look for in a tax preparer. Many people hire someone to help them file their returns these days, the author notes, mostly because of the increasingly complex nature of the country’s tax code.
Those involved with ministry likely turn to some form of outside help for their returns. Clergy face numerous questions and decisions related to their tax status, and churches and clergy also deal with a number of complex matters, including the handling of housing allowances and the tax treatment of business expenses. Among the Journal’s tips for hiring a tax preparer, the following seemed especially insightful:
What the IRS has said about these types of contributions.
Richard R. Hammar
It's a common scenario at local churches across the country: A member faces a significant medical condition, racking up major debt in the process. Others at the church learn of this challenge and wish to help. Can they donate to the church, designate their gifts for that member, and still receive tax deductions for the contributions?
The Internal Revenue Service has ruled on such situations many times. Such gifts likely can be treated as deductible if (and it's a significant if) donors and churches handle them a certain way. The IRS has stated:
Trading indecent messages with minors can draw severe punishments.
Richard R. Hammar
This video, the first in a series by Richard Hammar on six legal risks for church youth pastors, describes a new concern for churches: Recent cases of youth ministers "sexting" with youth group members.
Security expert Carl Chinn discusses how congregations should respond to the latest stats.
Last month, church security expert Carl Chinn updated his statistics on violent incidents at churches and faith-based organizations. He began tracking this information in 1999 by learning of incidents reported by news agencies, which he then independently researches and verifies before categorizing and tabulating them. The result of this work is 14 years of data churches can use to analyze the risk of violence for their congregation.
Chinn works for a security solutions firm serving the private sector, but his ministry background is extensive. Previously, he was building engineer for Focus on the Family, and he also served on the security team at New Life Church in Colorado Springs that responded to a 2007 shooting there. He frequently speaks to law enforcement groups, churches, and ministries nationwide.
His analysis of 2012 revealed 135 "deadly force incidents" and 75 deaths at churches and faith-based organizations—"a bad year for violence," he observed recently in a blog post on his site. Chinn recently spoke via phone with ManagingYourChurch.com to talk more about church security, shootings, and how churches can respond.
Q: Since 2009, the number of "deadly force" incidents surpassed 100 and stayed there. Is that a function of better reporting and information, or was something else going on during the past four years?
More than one in four pastors say a faction has forced them out.
Research conducted in recent years by two different organizations paints a disturbing picture about certain conflicts between pastors and small factions within their churches. The in-fighting often festers long enough that many pastors wind up pushed out.
Researchers at Texas Tech University, surveying nearly 600 pastors, say 28 percent of pastors indicated they have been forced out of their congregations at one time or another due to personal attacks or criticism from a small group of members. Separate work from Duke University’s National Congregations Study in 2006-2007 shows 9 percent of congregations had experienced a conflict between a pastor or leader and a group of church members within the previous two years that led to that pastor or leader’s departure.
A full graphic from ChristianityToday.com further illustrates all of the data, including details about which denominations saw more or less of these situations, what types of leadership roles were involved, and how many times a pastor or leader said they’ve experienced such a situation (of those forced out, three-fourths said it has happened only once so far in their careers).
David Briggs from the Association of Religion Data Archives says these factions within congregations are called “clergy killers”—“a small group of members [who] are so disruptive that no pastor is able to maintain spiritual leadership for long.” As the Texas Tech researchers point out, the toll is a heavy one in terms of the stress and dysfunction that carries on for weeks, months, or perhaps even years. A separate study of 55 ministers by Texas Tech and Virginia Tech University showed these dismissed pastors faced higher levels of depression, stress, and health problems, and lower self-esteem, Briggs says.
Beyond the short- and long-term effects on the pastors, which are significant and not to be casually dismissed, is the health and well-being of the congregation left behind. A small faction, for better or worse, has exerted enough influence to force a leadership change. If it was for the worse, the situation isn’t healthy, and the lingering toxicity likely will make it difficult to call a replacement.
How can churches avoid such situations? Or, better yet, how can church leaders respond when one or more individuals bring forward concerns about the pastor? We asked Ken Sande, founder of Peacemaker Ministries and an Editorial Advisor for ManagingYourChurch.com, for guidance.
Panel offers 43 recommendations, sets 2013 release for political report.
An independent commission formed by the Evangelical Council for Financial Accountability at the request of Sen. Charles Grassley, R-Iowa, in January 2011 issued its first public findings today through a 91-page report that is available for free download.
The report touches on key areas Grassley asked the commission to examine, including pastoral housing allowances, compensation and excess benefit transactions, examinations of church leaders, donor accountability, and the possible formation of an IRS advisory committee for religious organizations. The commission said it will release separate findings on political activity by churches and religious organizations next year.
"The vast majority of religious and other nonprofit organizations in America operate with a genuine commitment to financial integrity and appropriate accountability," wrote Michael E. Batts, the commission's chair, in the report's opening letter. "Occasionally, we see a few exceptions."
Through public input, as well as the assistance of 80 legal and financial leaders representing a variety of faith traditions, including Richard Hammar, senior editor of Church Law & Tax Report, Batts says the commission formed 43 recommendations for Grassley and his staff to review.
"While self-regulation is a key element of addressing concerns about misconduct, critics
of self-regulation rightfully point out that non-compliant outliers have little interest in self-regulation," wrote Batts, managing partner of Batts Morrison Wales & Lee, P.A., and an Editorial Advisor for Church Law & Tax Report and ManagingYourChurch.com. "That’s where effective administration of existing law must come in, together with education about the law."
Watch for more articles regarding the commission's findings and recommendations in coming weeks on ManagingYourChurch.com.
The most important tax benefit available to ministers who own or rent their home is the housing allowance exclusion.
To the extent the allowance represents compensation for ministerial services, is used to pay housing expenses, and doesn’t exceed the fair rental value of the home, including utilities, ministers who own their home do not pay federal income taxes on the amount of their compensation that their church designates in advance as a housing allowance. Housing-related expenses include mortgage payments, utilities, repairs, furnishings, insurance, property taxes, remodeling expenses, and maintenance.
For ministers who rent a home or apartment, all of the above is true, with the only difference being the allowance is used to pay rental expenses, such as rent, furnishings, utilities, and insurance.
Q: I recently read an article about when churches give Christmas gifts and have a question. If a church takes up a love offering at Christmas for its pastor and staff, is that reportable as income? This would not come from budgeted funds, and there is no predetermined amount. It would be miscellaneous, free-will donations made by members of the congregation. The church would simply tabulate the funds and write the checks. Is this reported as taxable income?
Key reminders you can deliver through the church bulletin.
Richard R. Hammar
As the calendar flips to November, it's a good reminder of the many tax details that churches must track, especially on behalf of those who faithfully give to the church throughout the year. Churches must properly document donor contributions, which includes a statement on receipts regarding whether any goods or services were provided in consideration for the contributions.
To avoid jeopardizing the tax deductibility of charitable contributions, churches also should advise donors at the end of 2012 not to file their 2012 income tax returns until they have received a written acknowledgement of their contributions from the church. This communication should be in writing. To illustrate, the following statement could be placed in the church bulletin or newsletter during the last few weeks of 2012, or included in a letter to all donors:
I. Thou shalt not allow the church’s intellectual property to be used for personal purposes.
Rule: Under the work for hire doctrine, any property developed within the scope of the job duties of an employee is the property of the employer.
Practice Tip: An intellectual property policy should be carefully crafted and adopted. It should address all areas of concern, such as curriculum, sermons, and music.
II. Thou shalt not have a substantial amount of revenue derived from unrelated business income.
Rule: An organization may have some unrelated business income, but too much can endanger the exempt status of the church.
Unrelated business income is generated from activities that are:
1. Regularly carried on.
2. Not substantially related to exempt purposes.
3. Trade or business.
Practice Tip: The rules are complicated and there is an exception to every exception. Each activity must be separately analyzed. The commercial manner in which an activity is conducted can create unrelated business income even if the activity seems to be related.
How would your congregation react if they knew a convicted sex offender was worshipping among them each Sunday morning? This controversial question is something congregations across the country are currently asking themselves.
Unfortunately, there is no one-size-fits-all answer. Experts recommend that staff members proactively address this question by developing a sex offender policy.
Kristen Blanford, partner at Hermes Sargent Bates law firm in Dallas, Texas, understands that liabilities are attached when religious organizations are dealing with sex offenders.
“How it’s handled really comes down to each congregation’s individual faith beliefs and ministries,” Blanford said.
She recommends that leadership teams consider a few critical questions when developing a sex offender policy for their congregation:
We've covered the politics of religion, the debate on churches and political activity (including a movement of churches in Maine to raise money for the political action committee opposing a same-sex referendum in that state on this November's ballot), and the 13 benefits of tax exemption that churches should weigh while deciding how political to get.
The topic remains visible. And ripe for debate.
Now it's your turn. As heated races at the local, state, and federal level come down to the wire, what is your church doing this political season? Should churches actively lobby on legislative matters? Officially endorse or oppose candidates at the pulpit or through church communications, such as bulletins, newsletters, websites, and social media?
Or should churches take neutral positions on legislation? Remain silent regarding candidates?
The U.S. Supreme Court denied a petition on Monday to take up an appeal by a minister who claimed an income tax exclusion for two homes.
In late 2010, the U.S. Tax Court ruled that federal tax law does not limit the number of homes for which a minister can receive special, tax-free benefits. The federal government appealed the Tax Court decision, and the 11th Circuit Court of Appeals reversed the Tax Court earlier this year. The appeals court said the clergy housing exclusion is limited to a single home.
The minister, Philip Driscoll, then filed a petition to have the case considered by the U.S. Supreme Court. The denial issued on Monday by the Supreme Court leaves the issue where the IRS and the vast majority of clergy have understood it to be for decades–that the clergy housing exclusion is limited to a single home.
This guest post first appeared in The Nonprofit Watchman, a free e-newsletter published by Batts Morrison Wales & Lee, P.A., that covers significant state and federal developments for nonprofits and their executives. Reprinted with permission.
New regulations force changes for church nurseries.
Richard R. Hammar
Q: I am a children’s pastor. We have replaced all of our cribs, in light of the new regulations banning certain ones from being used, sold, or donated in this country. We have a missionary we support in South America who runs an orphanage. They have children sleeping on the floor, and they are very interested in our old cribs. They visited several months ago and they have a plan for making the cribs safe with a simple conversion that will not allow the sides to drop. My question is, since they are in another country, is it legal for us to ship these cribs to them?
A: In June 2011, the first of a two-stage process to implement the Consumer Product Safety Improvement Act's new regulations for the sale, distribution, and use of nursery cribs in the United States went into effect. On December 28, 2012, the second stage begins.
Church boards, staffs must collaborate for the good of the ministry.
Michael E. Batts
Now more than ever before, church leaders must recognize the importance of risk management as an inherent part of organizational oversight and leadership. But what does proper risk management look like, and whose responsibility is it? Many boards assume that the pastor and staff have the “bases covered” and board involvement is often limited to reacting to flare-ups. Such an approach to risk management is problematic and dangerous for multiple reasons.
Church leaders are typically consumed with day-to-day operating activities and decisions— the “tyranny of the urgent.” As a result, they frequently do not have, or take, the time to step back and proactively assess organizational risks and address them proactively. If that is the case, and the board is operating under the assumption that staff “has it covered,” the church may be a ticking time-bomb for obvious reasons.
Board and staff: a collaborative approach
A key area of responsibility for the board is to ensure that the church maintains an adequate approach to risk management in carrying out its programs. While the actual conduct of risk management activities is the responsibility of staff under the authority of the pastor, the board should evaluate the church’s risk management strategy since the board has ultimate responsibility for oversight.
An effective risk management plan is a holistic one—one that addresses risk in all aspects of the church’s activities. The risk management plan should also be proactive rather than reactive, identifying risks before they become liabilities and taking appropriate steps to mitigate them.
In order to effectively carry out its responsibilities, the board may wish to establish a standing “risk management committee” to oversee the church’s risk management strategy and to provide reports and recommendations to the full board.
The board or risk management committee should work with the pastor and staff to ensure that:
Peacemaker founder discusses starting a new ministry.
Editor’s Note:On July 31, Ken Sande officially stepped down as president and chief executive officer of Peacemaker Ministries, the ministry he started in 1982 as a way to resolve conflict and bring reconciliation and healing, particularly in church and ministry environments. Sande, an attorney, serves as an Editorial Advisor for Church Law & Tax Report. He recently spoke with me via phone about the changes underway for Peacemaker and for himself.
You recent stepped down as president and CEO of Peacemaker Ministries, the ministry you founded 30 years ago. Why?
We’ve talked about doing this for a while. It was on the books; we had a consultant involved because we desired a smooth transition. We thought it might not happen for a couple of more years. But a couple of things happened.
One, we continued to sense Peacemaker’s expansion as a global ministry and there are implications with such an expansion. I don’t have a lot of global experience—I was born and raised in Montana. I felt maybe we should get someone in here who has that experience and can speak to a global stage. I told the board there has to be someone more gifted than me to do this. It’s a dynamic similar to when a pastor starts a church and then brings someone in a few years later to grow it.
The other thing that proved to be decisive was that, in the last few years, I have had a growing interest in creating educational materials that are proactive, rather than reactive, with conflict. With Peacemaker Ministries, we have world-class people trained to respond to conflict. They’re really good at that. But over the years, as I walked away from mediations we were called in to help, I began realizing that more could have been put in place years before that might have avoided those crises. It’s about getting upstream of conflict.
In 2009, Richard Hammar—senior editor of Church Law & Tax Report and Church Finance Today—became one of 270 “registered parliamentarians” in the United States by passing a qualifying examination administered by the National Association of Parliamentarians. Recently, he passed a “professional qualifying course” and became a Professional Registered Parliamentarian (PRP), the highest status that a parliamentarian can achieve. The National Association of Parliamentarians describes this status as follows:
A member who reaches Professional Registered Parliamentarian® (PRP) status has demonstrated to fellow professionals that he or she not only has the in-depth knowledge of parliamentary procedure required of a Registered Parliamentarian, but also the skills to provide effective, practical help to an individual or organization in need of parliamentary assistance. These skills include the ability to preside over a meeting; to perform the duties of a parliamentarian for another presiding officer and help them preside effectively; to consult organizations on the rules that govern their meetings and operations; and to share parliamentary knowledge with others. A Professional Registered Parliamentarian must maintain this certification through practical experience and recurrent training, ensuring that each PRP maintains the same high professional standards throughout his or her career.
Event now will take place Wednesday, September 19.
Due to illness, Richard Hammar’s “Prevent Payroll Mistakes—What Churches Need to Know” webinar, which was originally scheduled for tomorrow (Wednesday, September 12, 2012), has been rescheduled.
In an effort to best serve you, we have rescheduled this free webinar to 11 a.m. (Central Time)/12 p.m. (Eastern Time) on Wednesday, September 19, 2012. Our hope is that this will accommodate as many registrants as possible. For those who can’t make the event because of this change, you will still receive free access to the recorded version of the webinar and the webinar handout. We will send out information regarding how to access the recorded webinar within 72 hours of the webinar’s conclusion next week.
You do not need to do anything in order to remain registered for this free event and its new date. Watch for an automatic notification from GoTo Meeting that confirms the new date for the webinar. This will be all that you need to log in and join us next week or to receive notification when the recorded version becomes available.
While this solution offered the least disruptive approach possible, we recognize the change still may create an inconvenience for some, and may cause a few of you to miss the presentation due to other scheduled commitments. We are very sorry for this.
Again, please watch for the GoTo Meeting e-mail regarding the new date of 11 a.m. (Central Time)/12 p.m. (Eastern Time) on Wednesday, September 19, 2012, for the “Prevent Payroll Mistakes—What Churches Need to Know” webinar with Richard Hammar.
Does your church use Robert’s Rules of Order Newly Revised as its parliamentary authority, either by a specific reference in the church bylaws or by common usage? If so, it is important for you to be familiar with the key provisions in the new and revised 11th edition of Robert’s Rules of Order, which released in late 2011, to ensure that your board and membership meetings are being conducted consistently with your parliamentary authority. The 11th edition replaces all earlier editions of Robert’s Rules, including the most recent 10th edition that was published in 2000.
This new edition contains more than 100 substantive changes in parliamentary procedure. It is important for church leaders to be aware of this development since most church bylaws identify Robert’s Rules of Order Newly Revised as the official parliamentary authority in the conduct of membership meetings.
Any church that has identified Robert’s Rules of Order or Robert’s Rules of Order Newly Revised in its governing document will be bound by the rules contained in the 11th edition. Following are three key changes in Robert’s Rules 11th edition that churches need to know about.
A change is allowed, but note one important limitation.
Q: Our church designates, in writing, a housing allowance for our pastor on an annual basis (usually late November for the upcoming fiscal year—for example in November 2011 we submitted our proposed budget for 2012).
We now have a member who wants to modify the pastor's housing allowance and give the pastor an additional amount and designate it as the 2012 housing allowance. He referenced an auditor from a tax service about this issue and was told there would be no problem (tax wise) if our church decided to "adjust" the pastor's housing allowance in October for fiscal year 2012.
If we record this action in our business meeting minutes for October 2012 and increase the housing allowance for 2012 (about double the designated amount), are we within the tax laws?
What to do when someone must be removed from office.
Richard R. Hammar
Imagine a member of your church’s board has engaged in behavior that violates the church’s understanding of Scripture. In doing so, they’ve probably also violated the qualifications for serving on the board. In cases like this, the congregation or board may determine that the individual must be removed from office. What do you do next?
Start by reviewing your church’s bylaws to see if there is any provision dealing with the removal of a board member. If there is such a provision, it must be followed.
If the church bylaws do not address this issue, then check state nonprofit corporation law if the church is incorporated. It may contain a procedure that will guide you in the removal of the board member.
David Middlebrook explains the benefits of a properly conducted report.
Q: At the end of every year, our board discusses the salary for our ministers for the upcoming year. We would like to compensate our ministers for all they do for our church, and some have suggested we get a compensation study done on our senior pastor and others at the executive level. What is a compensation study?
A: A compensation study, when properly undertaken, is an independent report on an organization’s total compensation of certain individuals, usually those at the executive level. It is performed by a compensation committee or a group of the board of directors, neither of which would include the subject of the study or members of the subject's family. This group or committee also should consist of only non-disqualified persons.
Total compensation includes both cash compensation (which is salary, bonus, and housing allowance) and non-cash compensation (which is everything else). Properly done, the compensation study should serve the organization for at least a few years, barring significant changes in the size or finances of the organization or its compensation structure. The process for determining the reasonableness of compensation is much like that of valuing an item of property.
Over the years we have seen the best and worst responses to conflict from our brothers and sisters in Christ. But the story of one conflicted church, a church we will call Lakeview Community Church (LCC), stands out from the rest because of its shocking ending.
God-fearing immigrants founded LCC almost 100 years ago on lakefront property near Cleveland, Ohio. These hardy people shared not only a common faith but common values. They did business with each other, and the children of many of the families married and continued to grow the church and the family businesses.
Over the years, the neighborhood around the church's property changed significantly. The new ethnic demographic of the community contributed to the church's growing sense of being disconnected from their immediate neighborhood. In addition, many of the children and grandchildren of the founders lived in more upscale suburbs, but continued to remain members, traveling to the church each Sunday to attend service and visit grandparents. As the grandchildren grew into teens, intergenerational conflicts began to erode the former unity of the church.
Investigation also says leaders disregarded safety—here’s what churches should note.
Joe Paterno and other key Penn State officials knew about sex abuse allegations as early as 1998, but actively hushed concerns in fear of repercussions, according to a special investigative team’s report released today. The sweeping independent report notes that the investigation’s “. . . most saddening finding . . . is the total and consistent disregard by the most senior leaders at Penn State for the safety and wellbeing of Sandusky’s child victims.”
The report agrees with a recent grand jury’s findings that Penn State officials made no attempt to investigate abuse allegations, identify victims, or protect other children from the continuing crimes.
According to head investigator (former FBI Director Louis Freeh), "The most powerful men at Penn State failed to take any steps for 14 years to protect the children who Sandusky victimized." Freeh noted a trickle-down effect of organizational fear that arguably resulted in even a school janitor failing to report an incident of abuse he witnessed in 2000 because of concern for his job. In an ironic twist, the lack of action by staff and officials, all to protect jobs and reputations, most likely will carry severe consequences for the university and its staff in the months and years to come.
Church leaders and staff must remember that reported abuse must be investigated seriously and quickly. Liability can be traced not only according to what is (or isn’t) done, but how quickly an organization responds.
An Oregon church says its insurer's restrictions go too far.
Marian V. Liautaud
Set Free Christian Fellowship in Medford, Oregon, recently received a letter from its insurance provider that outlines requirements for allowing known sex offenders to attend the church. Stipulations include fully disclosing the identity of sex offenders to the 100-member congregation, allowing offenders to attend only one predetermined service, and requiring offenders to be escorted while on site.
The Medford church, which specifically reaches out to people struggling with addictive behaviors, fears that these proposed requirements may lead to its closure.
One survey shows many say no; what the law says about political activity.
Matt Branaugh and Michelle Dowell
On Father’s Day, numerous churches in Maine used their offering time to take up collections for a political action committee (PAC) campaigning against a same-sex marriage referendum on that state’s ballot.
An article on ChristianityToday.com points out such an activity is permissible, and won’t jeopardize a church’s tax-exempt status if conducted within reason. But many church leaders are often confused about what’s allowed when it comes to politics. The Internal Revenue Service explicitly prohibits church support or opposition for political candidates in races; however, churches may lobby for or against legislation, including referendums on ballots, although the IRS is vague about how much or little it will permit.
Our nation celebrates its independence this week, and November seems far away, yet we already find ourselves in a heated political season. A contested race for the White House is underway, as are competitive races for congressional seats. Many states will have referendums covering a variety of social and moral issues, including abortion, religious liberty, and marriage. In some form or fashion, churches will see spirited, and perhaps contentious, political debate in their communities.
What role, if any, should they play in that dialogue?
Eligible churches could receive thousands of dollars for their coverage.
This morning's Supreme Court decision to largely uphold President Obama's health care reform legislation appears to preserve a health insurance credit for small employers, including churches, to help cover the costs of providing coverage to employees.
This means churches that meet certain criteria remain able over the next few years to apply for the credit.
To fully understand the credit and how it works, Richard Hammar recorded a brief video explanation last year and also wrote a Feature Report covering the numerous details of the provision. Eligible churches that use a fiscal calendar year ending December 31 will use May 15 deadlines, while those using a different fiscal year will use a deadline of the 15th day of the 5th month after their fiscal year closes.
Some churches who have applied for the credit have received thousands of dollars. Others have said they have encountered lengthy delays from the IRS with the processing of their applications.
Christianity Today receives 43 honors for its print and online publications.
Today's post is a little different than the norm because we have some good news to share.
ManagingYourChurch.com received a top honor Friday from the Evangelical Press Association during the organization's 2012 conference.
The site received the Award of Excellence--the highest possible--in the Christian Ministry/Digital category. Judges said: "Top notch writing and editing; touches on SO many relevant, practical topics for church leaders—news, advice, legal, etc.; well-laid-out blog. Pleasing color palette. Easy to navigate; Follows many blog best practices, thus easy for new visitors to intuit; exceptional presentation all the way around."
ManagingYourChurch.com is owned by Christianity Today, a not-for-profit global publishing ministry. Its goal is to help church leaders keep their ministries safe, legal, and financially sound.
Her piece is a beneficial 10-minute read for any church pastor or leader who wonders whether internal controls and other financial best practices are worthy of congregational time, energy, and resources. In short, they are. If standing unblemished before the Lord wasn’t enough reason to justify their efforts—and if the integrity of their witness wasn’t reason enough, either—then let Dagher’s piece provide this additional validation: influential outsiders are watching.
What they say matters, not just in the court of public opinion, but also in the minds of those coming through their doors now or in the future. It’s up to churches to answer the call.
Dagher interviewed a variety of fundraising consultants, financial counselors, investment managers, even a forensic accountant, to learn what ordinary people can do to make sure their tithes go where they should. Five lessons immediately jump out. They should sound familiar, and if they don’t, now is the time to make them familiar:
Were the firings legal? A recent Supreme Court ruling sheds light.
Two female teachers at Christian schools in different parts of the country were recently fired for becoming pregnant out of wedlock, according to Cincinnati.com News and WFAA-TV. Both women are working with lawyers on separate lawsuits against the schools in Ohio and Texas.
A January decision from the Supreme Court on ministerial exception plays a large role in whether or not a court will allow such lawsuits. In that ruling, the Court affirmed the ministerial exception, which bars courts from reviewing employment disputes between churches and ministers. The case involved a Christian school in Michigan that fired a teacher. The Court decided that the First Amendment prevents courts from “interfering with the freedom of religious groups to select” their clergy, and, based on various criteria, the teacher could be classified as a minister.
Taxes, vacation time, and other things to clarify.
Bible college and seminary are great for a lot of things. In my experience, important skills you need to survive in an office, such as yearly budgets, business plans, and understanding a housing allowance, are not some of those things.
I love the education I received, but I am embarrassingly lost every spring when I try to do my taxes.
For rookie pastors, or for those who start a pastoral position at a new church, someone on staff will approach you within your first 30 days and start talking about things that affect your paycheck and how many days you get off for the year.
It will be tempting to not ask questions because you are intimidated or because of some silly pride that prevents leaders from asking questions. You can go that route and miss out on some deserved benefits. Or you can ask some honest questions and get clarity.
May 2 event covers what churches must know about reporting laws and prevention.
Allegations of child molestation at Penn State University stunned the nation last fall. Even as the investigation continues, church leaders can learn from the tough lessons of this case, including recognizing abuse, the duties to report suspected cases of abuse, the mandatory reporting laws enforced by each state, and the civil and criminal liabilities associated with a failure to report.
Hammar's background with risk management matters, including his creation of a comprehensive training program designed to help prevent child abuse in churches, makes him uniquely qualified to address the laws that churches nationwide must know, the prevention plans they must make, and the responses they should give if allegations ever arise.
April is National Child Abuse Prevention Month. With state legislatures, such as Georgia's, closely scrutinizing their abuse reporting laws, it's a prime opportunity for churches to assess their current practices and identify potential vulnerabilities. To go deeper on the ways churches can protect the children in their care, check out the following resources:
Q. Redeeming Church Conflicts doesn’t apply to us because our church is being sued by non-Christians. So we have to listen to our lawyers, right?
A. If you are being sued by anybody, it is always wise to listen to your lawyers. Besides being licensed experts in the secular law, however, lawyers are not merely “attorneys-at-law;” they are also to be “counselors-at-law.” That means they are to be aware of what is important to you as Christians and how your faith will be expressed even as you respond to a lawsuit. And that means that Redeeming Church Conflicts does apply because you don’t stop becoming people of faith just because you are being sued by non-Christians. Christians, of course, should retain Christian lawyers who will be sensitive to the priorities and values of their fellow believers.
Michigan child-rape case spotlights clergy-penitent privilege.
A child sexual assault case in Michigan has garnered national interest in recent weeks because the evidence used to bring criminal charges against the alleged perpetrator included testimony from his pastor.
A county judge deemed the inclusion of the pastor's statements to be a violation of the state's clergy-penitent privilege laws, and tossed it out from the county prosecution's case against the man. The suspect, who is accused of raping a girl when she was 9, faces a mandatory 25-year prison sentence if convicted.
The prosecution appealed the county judge's decision based on two factors: One, the suspect's alleged confession was given to his pastor in the presence of the suspect's mother, thus reducing expectations for confidentiality. And two, the pastor requested the meeting, not the suspect, suggesting the suspect wasn't seeking spiritual counseling when the meeting occurred.
This case once again illustrates the challenges with understanding how clergy-penitent privilege works. Richard Hammar has written a few times about the clergy-penitent privilege on ChurchLawAndTax.com, including a case in Florida in which the privilege didn't apply, another case in Rhode Island in which it didn't apply, and a Q&A about the difference between privileged and confidential communications. These articles are critical first steps for pastors to understand how clergy-penitent privileges work, as is a thorough reading of applicable state laws.
For more help, the first volume of Pastor, Church & Law by Hammar includes an extensive checklist that pastors and church leaders can use before any potential communications that may involve a confession.
Quick action helped prevent a shooting this past weekend.
A man armed with a shotgun entered worship services Sunday at a church in South Carolina. Quick—and courageous—action by attenders helped prevent a shooting.
The Huffington Postreports churchgoers watched through the church's windows as the 38-year-old assailant approached the building; half a dozen attenders responded when he burst through the doors, the website said.
As the man was led away by police he told reporters his children were recently taken away from him and he was "trying to get someone to listen to him," the site said.
Because of their accessibility, especially on weekends, churches sometimes receive visits from people who are troubled or upset. In a few instances, those people intend to do harm. Leadership teams can prepare ahead, though, to try and defuse a potentially dangerous situation. ChurchSafety.com offers the following preparation tips from its Confronting Gun Violence at Church training resource:
A ruling against one Florida ministry underscores the complexities.
Churches and ministries that interact with sex offenders face numerous challenges, as our national research in 2010 revealed. A recent case in Florida involving Matthew 25 Ministries, an organization devoted to working with sex offenders, underscores the complex nature of these challenges.
Four years ago, the group leased residences in a development to house recovering offenders, only to quickly learn the state doesn’t allow convicted offenders to live within 1,000 feet of a nearby public school bus stop. The organization attempted to get the bus stop relocated. Then it tried to convince neighboring families to move. Eventually, the management company overseeing leases in the development notified 25 families of possible eviction if they weren't out by a certain date.
Lawsuits followed, leading to a recent decision from a federal judge that “both the ministry and [the leasing management company] were guilty of discrimination on the basis of familial status,” our sister website ChristianityToday.com reports.
What can churches and ministries take away from this story?
A little more than a year ago, Sen. Chuck Grassley (R-Iowa) asked the Evangelical Council for Financial Accountability to oversee an independent commission tasked with evaluating several financial and tax matters related to churches and nonprofit ministries. The goal: Determine whether more oversight—possibly administered through new legislation and regulation—is needed to curb any abuses and to foster clearer communication and relations between the Internal Revenue Service and religious organizations.
The formation of the Commission on Accountability and Policy for Religious Organizations came just as Sen. Grassley's office completed a three-year inquiry into the financial practices of six media ministries.
One year later, the commission is taking input from churches and ministries as it works to develop recommendations for Grassley. One method is through an online form available through March 31; the other was through a live, 90-minute town hall meeting broadcast online last week. Church leaders are invited to participate.
A federal appeals court ruled Wednesday that the ministerial housing exclusion in the Internal Revenue Code is indeed limited to a single home.
The ruling overturns a split Tax Court decision (Driscoll v. Commissioner, 135 T.C. No. 27 (2010)) in which the lower court had ruled that the minister could exclude allowances paid to him for both his primary home and a lake home.
The lower court had based its ruling on its determination that the phrase "a home" can mean more than one home. Not so, said the 11th Circuit Court of Appeals on Wednesday. In an opinion that reads more like a grammar lesson than a court ruling, the appeals court ruled that "a" is, in fact, singular.
The appeals court decision restores the state of the law to what it was widely understood to be before the Driscoll case—one home.
It is possible that Driscoll could further appeal the matter, although we consider it unlikely. We will continue to closely monitor the case for that possibility.
When should churches seek legal protections for names and logos?
Editor’s note: Two stories that garnered recent, widespread media attention have put the spotlight on churches and trademarks. Mars Hill Church in Seattle recently sent a cease-and-desist letter to another church over the use of a name and logo similar to its own; in Chicago, a church’s trademark for a ministry has been challenged by Adidas, the athletic apparel company. We asked attorney Brock Shinen, who represents Copyright Solver and other faith-based organizations across the country, to address how churches should handle such situations.
Churches should feel confident that it’s right and beneficial to register for trademark protection for their names and logos. A primary objective of trademark law is to eliminate confusion as to the source of goods or services.
A church applying for trademark protection won’t necessarily take away another church’s right to have its name and logo: If a church’s name and logo are unique, trademark protection will be granted. If the name and logo are generic or descriptive, it won’t.
When a church considers registering a name, it should come up with a unique name that truly distinguishes the church from all other churches. The problem is that most churches want to choose from the same few names. Either they want to use generic or descriptive terms (such as Anaheim Hills Community Church), and/or they want names already in use by thousands of other churches.
Public events involving copyrighted material raise challenges.
A few years ago the National Football League challenged a church in Indianapolis for showing the Super Bowl, a practice hundreds of churches around the country engage in. After public outcry, the NFL re-issued a statement with a less severe tone. This high-profile battle brought awareness to the ongoing problem of copyright violations within churches.
Employment disputes between churches and clergy can’t be reviewed by civil courts.
Richard R. Hammar
In a ringing endorsement of religious liberty, the United States Supreme Court today unanimously affirmed the so-called “ministerial exception” barring civil court review of employment disputes between churches and ministers. The ministerial exception has been applied to a wide range of employment disputes by state and federal courts over the past half century, but has never before been addressed by the Supreme Court.
Several months ago the Court accepted an appeal of a federal appeals court’s decision rejecting the application of the ministerial exception to a claim of disability discrimination by a “called” teacher in a Lutheran secondary school in Michigan who was regarded as a commissioned minis-ter by her church. The appeals court concluded that the exception did not apply because the teacher’s duties as a “called” teacher were identical to the duties she previously performed as a lay teacher, and her “religious” duties comprised only 45 minutes of each workday.
On January 11, 2012, the Supreme Court issued a decision explicitly recognizing the ministerial exception and concluding that it barred the civil courts from resolving the Lutheran teacher’s disability claim. The Court concluded that the First Amendment prevents the civil courts from “interfering with the freedom of religious groups to select” their clergy.
Church leaders followed these stories most this year on ManagingYourChurch.com.
I’ve said it before, and I’ll say it again: I’m a sucker for lists. And the end of a calendar year always brings opportunities to reflect on the top stories and headlines from the year that was.
So it’s only natural to share the top ten articles for ManagingYourChurch.com in 2011 based on unique page views. Each post is highlighted below, starting with the tenth-most uniquely viewed post and building up to the first-most. Each highlight also includes the post’s title, author, and date, as well as a brief description and, if available, a notable reader comment.
See what caught the interest of church leaders nationwide, and feel free to weigh in with your thoughts on these legal, financial, and management topics:
Social media tools continued to proliferate in 2011, and no new addition created a larger stir than the summer unveiling of Google+. Many early adopters viewed Google+ as the first legitimate threat to Facebook’s status as the social networking site of choice for the masses. Christian author Margaret Feinberg dove in to Google+ immediately and shared her initial thoughts about how it works, and the way its features may be useful for churches.
Notable reader comment: “I definitely see the strengths of G+'s Circles. Love the idea of Hangout, etc all being built in. My concern is that FB would only need to make a few changes to do the same thing. And so far, my Incoming on G+ is DEAD. Very little updating going on.” —Richie Allen
Simple reminders can help members with end-of-year giving.
Richard R. Hammar
To avoid jeopardizing the tax deductibility of charitable contributions, churches should advise donors at the end of 2011 not to file their 2011 income tax returns until they have received a written acknowledgement of their contributions from the church. This communication should be in writing. To illustrate, the following statement could be placed in the church bulletin or newsletter during the last few weeks of 2011, or included in a letter to all donors:
IMPORTANT NOTICE: To ensure the deductibility of your church contributions, do not file your 2011 income tax return until you have received a written acknowledgment of your contributions from the church. Some of your contributions may not be tax-deductible if you file your tax return before receiving a written acknowledgement of your contributions from the church.
Keep your congregation informed about the rules for substantiating charitable contributions by ordering the2012 Charitable Contributions Bulletin Insertsby Richard Hammar. The insert is designed as a one-page summary explaining the rules of most importance to church members and can fit easily in church bulletins, newsletters, or contribution statements. The inserts are available in quantities of 100 or can be purchased for electronic download. Call 1-800-222-1840 or visit YourChurchResources.comto order.
When members struggle financially, financial institutions may come knocking.
A national bank recently subpoenaed an Iowa church’s financial records, seeking information about donations made by a man whose business defaulted on a $650,000 loan.
The financial institution wants to know about cash and property given to the church by the man and his wife since 2005, according to The Des Moines Register newspaper. The man’s lawyer says the bank intends to try to collect money he gave by investigating to see if those gifts qualify as fraudulent transfers.
The amount the bank can receive from the church may depend on whether or not the man files for bankruptcy.
What ministries should note about changing federal rules.
New federal regulations for cribs could lead to substantial penalties and civil lawsuits that may implicate not only your church, but also your church board. It's important your church understands these new regulations and follows them closely to avoid creating a liability for the church. Here are three resources to help you do that:
No review of World Vision case; 'ministerial exception' consideration next.
Editor's Note:The Christianity Today Liveblog, a sister site to ManagingYourChurch.com, covered Monday's important religious employment case development at the U.S. Supreme Court, and briefly previewed Wednesday's Supreme Court review of the ministerial exception. Both will be of significant interest to churches regarding employment matters:
Among Monday's many Supreme Court actions, the justices opted not to hear Sylvia Spencer et al v. World Vision, a case that had potentially significant implications for religious organizations' hiring practices.
The Supreme Court's denial of certiorari lets stand an August 2010 decision by the Ninth Circuit Court of Appeals in favor of World Vision ...
"Pulpit Freedom Sunday" raises questions as Election Day draws near.
This past Sunday, the Alliance Defense Fund expected nearly 500 church pastors nationwide to participate in "Pulpit Freedom Sunday." The event, organized for four consecutive years by ADF, is designed to challenge a 1954 amendment to the
501( c) 3 tax code that doesn't allow nonprofits to participate in political campaigns. The law is often referred to as the "Johnson Amendment" because Lyndon Johnson, a U.S. Senator at the time, introduced and advocated its passage.
This limitation has an unusual and unfortunate history. It was proposed in 1954 by then Senator Lyndon B. Johnson of Texas as a floor amendment to the tax code, and it was passed without explanation. Apparently, Senator Johnson was attempting to limit the political activities of a private foundation that had supported one of his opponents in a Texas election. It is clear that few, if any, Senators contemplated in 1954 that the newly enacted limitation could be used to threaten the tax-exempt status of churches. However, the limitation is worded in absolute terms—prohibiting any attempts by churches or any other tax-exempt organizations to participate or intervene in a political campaign—and therefore does pose a significant threat to churches.
The goal of "Pulpit Freedom Sunday" is to get "the Johnson Amendment declared unconstitutional—and once and for all remove the ability of the IRS to censor what a pastor says from the pulpit," according to an ADF website created for the event. In 2008, 33 pastors preached on political matters for "Pulpit Freedom Sunday," then sent copies of their sermons to the IRS. In 2009, 84 did the same, while last year, about 100 did so. Each year, including this year, ADF has agreed to defend—for free—any IRS attempts to prosecute participating pastors.
So far, no such challenges have occurred.
Articles and editorials about this year's event showed up nationally in notable newspapers and websites.
Most clergy are shocked when they learn the answer.
Richard R. Hammar
Most clergy would be shocked to learn that their sermons are works made for hire that are owned by their employing church, and that their sermons cannot be used in any other churches with which they are later employed without the permission of the church with which they were employed when the sermons were created. This can become a contentious issue in the case of clergy whose sermons are recorded and sold publicly by the church.
Are Sermons Works Made for Hire?
Are a minister's sermons works made for hire that are owned by the employing church? To the extent that sermons are written in a church office, during regular working hours, using church secretaries and equipment, it is possible if not likely that they are works made for hire since they are created by an employee within the scope of employment.
The argument could be made that sermons are works for hire even if composed by ministers at home, during "non-office" hours, since they comprise one of the most important functions that they perform on behalf of their employing church and congregation.
Helping keep churches safe, legal, and financially sound.
Welcome to the Managing Your Church blog—we're glad you stopped by.
If you came looking for TheYourChurchBlog.com, you're still at the right place. We've made a few changes, though, as you probably already can tell. We've slightly adjusted our name to better reflect the nature of what we cover. We've also unveiled a new look. Don't worry, though—you can still count on the same quality content and conversation on church management and leadership topics that matter to you. Whether it's law, tax, finance, safety, staff, or office issues, we're here to help.
As you can see from the site's new tagline, we hope our information, resources, and insights help church leaders keep their churches safe, legal, and financially sound. Join the conversation today!
Editor's note: Mike McCarty is an "Ask the Expert" on our sister site ChurchSafety.com and the founder and CEO of Safe Hiring Solutions, a professional provider of background checks for churches, nonprofits, and other organizations and individuals. Recently Mike posted an article on his blog site discussing the pros and cons of using social media sites for background checks. Because of his expertise in this area and the timely nature of the topic, we are making his article available as a guest post here for our readers.
How many of us have narrowed our hiring decision to a single candidate and then done a Google search of the applicant's name and bounced from Facebook to YouTube to Twitter and the blogosphere to see what else we can learn?
The internet is the Wild West 2.0, a wide open, unregulated, and unfiltered expanse of 160+ million blogs, 80,000 new blogs daily, 550 million Facebook users, 67 million MySpace users, 41 million LinkedIn users, 490 million YouTube users logging 92 billion (that's a 'b'—billion!) YouTube views per month.
An organization would be crazy not to peek into the social media window.
I saw him at a church conference. He lit up the stage. He was one of the most electric worship leaders I had ever seen. Young, handsome, talented. I went after him. I had to be a bit discreet—it felt a bit like stealing. He was, after all, serving at another church. But that just added value to his stock, particularly considering the church he was at. So the covert seduction began.
In the end, I got him. I was elated. Buckle your seat belts, church growth world—it’s time for warp speed! I had just nabbed the up-and-coming worship leader at one of the nation’s most prestigious megachurches.
In less than twenty-four months, he had been removed from ministry and placed under church discipline. He eventually left the ministry, and to the best of my knowledge, he has never served in a church since.
Not long afterward, I interacted with the senior pastor of the church from which I had procured my wunderkind. He graciously asked how my new hire had worked out, and I had to sheepishly tell him that, well, he didn’t.
I told him the whole story. After I was done, he said, “I’m not surprised. We had been having issues with him for months. Just before he left, I had entered into some pretty serious conversations with him attempting to confront the very kinds of things you have had to deal with. I was deeply concerned that he went to another church before we could work through anything.”
And then he said words that have haunted me and instructed me ever since:
Feds cracking down on employers' immigration records
If an immigration agent came to your church, would you have the paperwork on hand to verify that all of your employees are eligible to work?
More and more employers are discovering the answer to this question the hard way. According to a July issue of The Kiplingler Letter, "The feds are cracking down on employers with paperwork audits. With just three days' notice, immigration officials swoop in to check the I-9 forms that firms must file attesting to the eligibility of new employees to work in the U.S. Both the number of audits conducted and the amount of fines collected are way up…even technical errors, such as lack of a ZIP code on an address, are prompting fines."
The 'ministerial exception' rule faces its day with Supreme Court.
A news article from the July edition ofChristianity Today covers the U.S. Supreme Court's April decision to accept a teacher's appeal regarding an unfair firing claim against a Michigan elementary school run by a church.
At stake: How far a rule known as "ministerial exception" will go in matters of employment within churches and religious groups. Lower courts have stayed out of employment disputes between clergy and churches based upon this exception. What's unclear is how widely the rule can apply to nonordained staff members. The Supreme Court's decision to intervene likely will answer that question.
Richard Hammar again highlighted this case last week during his annual law and tax presentation to the National Association of Church Business Administration (he also explained the importance of this development in this short video update).
Hammar told Christianity Today he doesn't expect the Supreme Court to limit the exception to "ordained pastors performing pastoral duties." Other observers are wary. Rick Garnett, associate dean of the University of Notre Dame Law School, says the case is the country's most significant one to religious freedom in 20 years, giving church leaders nationwide good reason to monitor its progress throughout the next year.
A constitutional challenge to the tax-free housing allowances and parsonages provided to thousands of American pastors is over after the plaintiffs who filed the original lawsuit voluntarily requested its dismissal Friday in a California district court.
But the battle is far from over. More legal challenges from opponents of the provision are promised, while a federal commission reviewing the benefit has been asked to determine whether it needs additional protections.
A leader from the Freedom From Religion Foundation, the group that led the latest charge against the decades-old tax benefit for clergy, said her organization will continue its fight to bring an end to these allowances, which it believes violate the First Amendment's Establishment Clause and endorse religion.
Friday's request for dismissal was FFRF's "only option at this time" after a U.S. Supreme Court ruling in April on a separate Arizona taxpayer case undermined the grounds for its case in California, said Annie Laurie Gaylor, co-president of the Madison, Wisconsin-based organization.
The group is evaluating its next options to challenge the benefit. "We plan to pursue it in a slightly different manner," Gaylor said. "We're sorry about (the California case)—we think the Ninth Circuit already indicated that it believed the law was unconstitutional. We believe it's an unconstitutional law."
Do you intentionally try to understand your church’s risk profile? Which of the following is most like your church?
A risk-friendly church engages in risky conduct to preach the gospel. Intercity ministry, working with homeless and hungry people, is a good example of this.
A risk-neutral church stays away from many risky activities but has not done any planning to understand its risk profile. This church would need to understand each of its activities to start risk management planning.
A merely risk-conscious church knows that it is engaging in risky activities yet has no policies or procedures to deal with these risks.
At least five churches in a business park in Georgia are being prevented from holding services there after a fire marshal’s routine inspection found that each church did not have a certificate of occupancy, according to a local newspaper and channel. Further troubling for the congregations, the complex where the churches are located is not zoned for churches; therefore, the county will not issue the needed certificates.
The churches hope to convince the county to allow them back in, which may include asking the county to rezone the area. Until then, they will not be able to meet in these buildings.
Zoning cases like this are among the top five reasons churches go to court, according to Richard Hammar, who is an attorney and the senior editor of Church Law & Tax Report.
Hammar writes in detail about a similar case and the court’s ruling, as well as what churches should know about the Religious Land Use and Institutionalized Persons Act (RLUIPA), which may help churches who face similar zoning issues.
It's time churches share their stories to local communities.
A little more than a year ago, Bill Maher hosted actor Ashton Kutcher, author and editor Jon Meacham, and Florida Congresswoman Ileana Ros-Lehtinen on his HBO program, Real Time. A YouTube clip from the program circulated recently throughout social media circles.
Church leaders might find the clip particularly interesting—and not just because of Maher's well-documented skepticism of religious beliefs (for instance, in 2008, he released Religulous, a feature film with a title combining the words "religious" and "ridiculous.")
Rather, it's a question he raises to his guests.
At one point, Maher asks Meacham, Kutcher, and Ros-Lehtinen whether churches should be taxed. Without hesitation Meacham says yes, offering his own church—one located on valuable New York City property—as an example to support his position. After Maher quips about the "invisible" product churches "sell," Meacham adds they're only open one hour per week anyway.
Kutcher suggests churches should be judged based on their philanthropic worth before determining their tax status, a "luxury tax" of sorts. The congresswoman remains silent on the subject throughout the clip.
Conversations like this only underscore the growing chorus of opposition to the tax-exempt status of churches. One need only read the YouTube comments below Maher's clip to see how hostile that chorus has become.
It's time churches responded, joining the conversation in an active, productive way. Lest Maher or any of his guests think otherwise, churches already pay many types of taxes, despite their exempt status, whether it's payroll taxes for employees, fees for local services, or taxes on substantial amounts of unrelated business income.
A reminder of what leaders can do to help prevent headlines like these.
A church bus driver in southern Illinois was arrested and charged last week with sexually abusing a child.
According to the local newspaper, "the arrest came after a Wayne County Grand Jury returned an indictment against him." The driver, 33, was charged with aggravated criminal sexual abuse of a person under the age of 13, a Class 2 felony, the paper reported. He faces three to seven years in prison, and up to $25,000 in fines if convicted.
The article doesn't indicate the circumstances of the alleged abuse—whether it occurred as the man served in his role with the church, during church activities, or on church property. It also doesn't indicate whether the man has any prior convictions.
Without those details, it's less clear as to how his involvement with the ministry could have been handled differently.
However, church leaders still can take away this immediate lesson: Regardless of the role or position within the church, be it paid staff member or volunteer, children's ministry director or bus driver, anyone who will have access to children must go through a careful screening process, including thorough background checks.
These resources can help any church set up policies and procedures, including helpful ways to establish them in a positive way:
Courts have generally recognized a rule known as the "ministerial exception" when it comes to employment lawsuits in churches. Because of the First Amendment, many judges have considered it inappropriate to rule in these disputes, especially when their rulings may influence who preaches from the pulpit.
However, a case in Michigan involving the teacher of a Christian school--in which a federal court ruled the teacher's disability discrimination lawsuit couldn't proceed because of the ministerial exception--was appealed to the United States Supreme Court. Earlier this month, the Court accepted it. In this short video update below, Richard Hammar explains the significance of this development, and why church leaders will watch closely to see how the Court interprets the scope of ministerial exception:
Ken Sande explains how to confront a member's sin.
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?"
Walking a 'fine line between compassion and conformity'
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.
Recent Twitter mishap in Indiana underscores the need for clear policy
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:
How the economy, and dying counties, may hamper church-building plans.
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."
_______________________________ 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.”
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.
"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).
Rich Hammar discusses an important Georgia ruling for churches.
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:
As February fast draws to a close, you may be encouraged to know that you get an extra three days to work on 2010 filings. From this morning's Richard Hammar's Essential Reminders:
"Taxpayers will have until Monday, April 18 to file their 2010 tax returns and pay any tax due because Emancipation Day, a holiday observed in the District of Columbia, falls this year on Friday, April 15," reports the IRS.
We’ve given the site a fresh, new look to serve church leaders like you even better. You’ll find an updated Archives of the Church Law & Tax Report newsletter through 2010 (that's nearly 25 years' worth of past editions) and extensive updates to the Legal Library, a comprehensive, fully searchable reference written by Richard Hammar for pastors, board members, and church leaders. We’ve also revolutionized the Weekly Lessons quiz feature to improve your learning experience.
A new, free Updates section of ChurchLawAndTax.com highlights information pertinent to church leaders and includes:
Upcoming resources to help wade through tax laws that affect clergy.
The "The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010," passed by Congress and signed by President Obama in mid-December, triggered a domino-like effect of changes for tax-filers--so much so that even the Internal Revenue Service delayed its efforts to process returns (it finally began doing so on Monday).
For pastors, the tax-filing process already is a cumbersome one. As Richard Hammar notes in the upcoming edition of Church Law & Tax Report, there are at least 20 common tax-filing mistakes that clergy make each year, either because they filed their own returns and didn't understand how various laws applied or because they used a tax professional who didn't understand the unique complexities that apply to clergy. Among the mistakes frequently made:
A new, free PDF offers helpful payroll tax reminders for churches.
Looking for a helpful—and easy—way to remember federal payroll tax reporting requirements as a church? Check out this handy, printer-friendly PDF we've prepared titled "Ten Steps to Tax Reporting."
Here's a sneak peek:
10) Complete Forms 1099-MISC and 1096. Must be issued to any nonemployee who is paid compensation of at least $600 during any year.
9) Determine the amount of income tax to withhold from each employee’s wages. The amount of federal income tax the employer should withhold from an employee’s wages may be computed in a number of ways—the most common are the wage bracket method and the percentage method.
"An issue has come up in our church about peoples' legal obligations regarding confidential matters discussed in small group meetings. We strive to maintain strict confidentiality on things discussed in our small group settings. We want them to be a 'safe place' where people can share their troubles and not have to worry about group members spreading gossip or the information somehow ending up in a courtroom.
One woman we heard from was in a small group in another church and group members were called in to testify against her in court. Before joining one of our small groups she wanted to be assured that sort of thing would not happen.
So my question is, how private are small groups really? We typically get information second-hand and are not usually witnesses to things that happen in people's homes or in their personal relationships."
To continue reading this post on the SmallGroups.com blog, click here.
Sen. Charles Grassley, R-Iowa, has asked the Evangelical Council for Financial Accountability to head an independent commission that will obtain feedback about the financial practices and oversight of churches and religious groups nationwide.
The goal is to help determine best practices and changes that encourage compliance with federal tax laws and maintain financial integrity within the religious community while avoiding new laws mandating such behavior. But those involved say it’s too early to tell how the commission’s work will affect any changes—or whether it can prevent any new laws—and how long it will take.
In a press conference called this morning in Washington, D.C., ECFA leaders outlined requests made by Grassley, who yesterday released his final report of a three-year inquiry into the financial activities of six high-profile media ministries. The issues to be explored “could potentially affect every house of worship and every member of the clergy in America,” said Michael Batts, an ECFA board member who will chair the special commission.
Grassley’s office contacted the ECFA three weeks ago to indicate its report of the six ministries—in which only two fully cooperated with investigators and no ministry received a penalty—was imminent.
The key law, tax, finance, and safety issues readers cared about this year.
Last week, we took a moment to highlight the Top 10 most-read articles from Your Church magazine's website, YourChurch.net. As we continue to count down the days to 2011, we now offer the Top 5 most-read posts from TheYourChurchBlog.com during 2010:
These Your Church Today articles drew the most traffic.
As 2010 comes to a close, it’s time to get all nostalgic and look back at the year that was. That includes reviewing the articles that interested readers throughout the year. Based on Internet traffic patterns, these 10 articles from YourChurch.net (Your Church Today magazine’s website) led the way:
10. Is My Church Covered? We noticed many church leaders seemed to be taking a hard look at their church insurance policies, their premiums, and any possible savings they could make in light of tightened budgets. Our Summer 2010 cover story reviewed the changing landscape of church insurance, including key coverage changes to note, terms to know, and a brief look at the biggest church insurance providers.
9. State of the Plate Results A detailed look at the results from the 2010 State of the Plate survey, which Christianity Today International conducted with Maximum Generosity to see how 2009 ended for American churches. Among the findings: More churches missed their budgets in 2009 compared to 2008.
8. Debunking the Clergification Myth Respected author and researcher Ed Stetzer examines the prevailing models of church staffing structures and argues for changes that place less emphasis on paid staff and more emphasis on an empowered lay leadership base.
Act now so that pastors can receive this tax benefit in 2011.
Churches must designate a portion of each minister's compensation as a housing allowance by December 31 in order for ministers who own or rent their homes to receive the full benefit of a housing allowance exclusion for calendar year 2011. The designation should be adopted during a regular or special meeting of the church board, and should be contained in the written minutes of the meeting.
Churches should designate a parsonage allowance for any minister who lives in a parsonage and who is expected to pay some of the expenses of maintaining the parsonage (e.g., utilities, furnishings, repairs, improvements, yard care). For sample housing and parsonage allowance resolutions, see chapter 6 in the 2011 Church and Clergy Tax Guide, available for January shipment.
Last month, we highlighted Sex Offenders in the Pews, Marian Liautaud's article in Christianity Today that is based largely on research we conducted earlier this year. This week, Leadership Journal, another one of our sister publications, published "Sex Offenders: Coming to a Church Near You," Marian's article about this topic from the view of church pastors and staff members.
Of particular note: A small church in the Northeast worked hard to integrate a convicted sex offender after his release from prison. After numerous meetings with families, the pastor decided integration could work--and could reinforce the church's redemptive mission. It's a theme that emerged from our research (nearly 8 in 10 church leaders say they're open to a sex offender's attendance, with proper supervision and appropriate limitations in place).
But in the case of this church in the Northeast, such an approach still comes with its costs:
A new LifeWay survey shows pastors strongly oppose endorsements.
A majority of pastors believe churches should not publicly endorse political candidates, a new LifeWay Research survey shows.
Phone interviews conducted randomly in early October with 1,000 church pastors, ministers, and priests revealed 70 percent strongly disagreed and 14 percent disagreed with the statement, "I believe pastors should endorse candidates for public office from the pulpit."
The results reinforce LifeWay's finding in October 2008 that less than 3 percent of Protestant pastors had publicly endorsed candidates for public office that year.
Even with pivotal races for seats in the U.S. House of Representatives and Senate coming to a head in two weeks across the country, it appears most pastors aren't willing to publicly weigh in.
"We know that pastors have strong feelings when it comes to political candidates and their job performance," said Ed Stetzer, president of LifeWay, in a prepared statement. "But each week when they step into public pulpits in front of sometimes thousands of congregants, the vast majority of those pulpits remain silent on advising others how to vote. They may not approve, but they do not plan to tell."
The reasons for this silence aren't exactly clear. One possible explanation may be a fear of jeopardizing tax-exempt privileges. While churches and religious organizations have heavily involved themselves in political campaigns in the past, the IRS has heightened its scrutiny of such activity during the past decade.
Sale in honor of church administration day on October 21.
Our friends at the National Association for Church Business Administration have designated Thursday, October 21, as "National Church Administration Day." As NACBA explains it on its website:
"The idea behind National Church Administration Day is for seasoned church leaders to share their expertise with anyone – whether clergy or laity – performing administrative duties in any congregation, with the goal that all churches become more effective and responsible."
In appreciation of church administrators, Christianity Today International’s YourChurchResources.com store is offering a 30% discount from now through October 21, 2010, in honor of National Church Administration Day. Customers can apply the 30% off promotion code “cad30off” when they place their orders for any products at YourChurchResources.com.
Can churches legally designate medical allowances for pastor health plans?
Question: We are entertaining the idea of changing our health care coverage to a HSA (Health Saving Account)-compatible policy. Presently our three pastors receive a designated amount of medical allowances each year to help them cover the costs of out-of-pocket moneies that go toward their deductible. Is it legal to still set aside a designated medical allowance within our budget if we go to a HSA-compatible policy?
Answer: Health Saving Accounts (HSA's) are medical reimbursement accounts that are regulated through the IRS. An HSA is generally only permitted in conjunction with a high deductible health plan. So, depending on how you use the medical allowance, it may impact whether it is legally permitted.
I'm assuming with your current plan, the pastoral staff submits receipts for medical expenses and then is reimbursed up to a designated amount. When you switch to a high deductible plan, it makes sense to take the designated money and deposit it into their HSA account. This is legal as long as all of the pastors are part of a high deductible health plan (i.e. they don't have a traditional health plan with co-pays somewhere else). One other item to be aware of is that the IRS sets limits on how much may be contributed into an HSA account. The IRS changes these limits each year.
How a California court may alter a long-standing ministry benefit.
Earlier this month, we covered eight federal issues that local churches should watch closely during the remainder of 2010 and into 2011, according to recent remarks from Dan Busby, president of the Evangelical Council for Financial Accountability. Busby, one of our editorial advisors, is based near Washington, D.C. His role at the ECFA includes advocating on behalf of ministry interests on Capitol Hill, so he’s uniquely positioned to see national tax and finance developments unfold that can influence church leaders.
We took notice when we heard the first item on Busby’s list: a California lawsuit, filed by the Freedom from Religion Foundation Inc., challenging the constitutionality of tax benefits associated with the housing allowances that churches provide to pastors.
The significance of housing allowances isn’t lost on church leaders. For decades, churches have used them to recruit and retain pastors. It’s an especially handy tool that churches with limited means, especially small congregations, can use to lure a gifted person. And at a time when the country slogs out of a multiyear recession, it’s perhaps as useful of a benefit as ever. The down economy has challenged weekly giving and strained budgets for many congregations, making pay raises remain small, even nonexistent in some places.
“The three most common housing arrangements for ministers are (1) living in a church-provided parsonage; (2) renting a home or apartment; or (3) owning a home. The tax code provides a significant benefit to each housing arrangement … The rules … represent the most significant tax benefits enjoyed by ministers.”
Given the importance of housing allowances, we asked Hammar to give us a deeper sense for where the California case will land.
At the moment, the signs aren’t favorable. Church leaders should begin thinking now about a future in which housing allowances for pastors do not receive federal tax exemptions.
8 in 10 church leaders say registered offenders can attend--with limitations.
Marian V. Liautaud
In April 2010, Christianity Today International (CTI) conducted a national survey of 2,864 people, including ordained church leaders (15 percent), church staff (20 percent), lay members (43 percent), and other active Christians (22 percent). Respondents were drawn from the readers of CTI publications and websites. The purpose of the "Sex Offenders in the Church" survey was to explore attitudes and beliefs on whether to allow sex offenders to participate in faith communities. The survey explored what practices churches use to keep their congregations safe when sex offenders are welcomed.
Pastors, lay leaders, and churchgoers overwhelmingly agree that sex offenders who have legally paid for their crime should be welcomed into churches. In fact, 8 in 10 respondents indicated that registered offenders should be allowed to attend church under continuous supervision and subject to appropriate limitations.
Ian Thomsen, church administrator for Arvada Covenant Church in Arvada, Colorado, says, "If we can reach out to sex offenders, and through our efforts change their lives for the better and take a significant risk away from society, we see this as a tremendous challenge—but what a wonderful challenge. We want to take it on."
"Jesus said there's no unforgiveable sin except blasphemy of the Holy Spirit," says Mark Tusken, rector of St. Mark's Church in Geneva, Illinois. "Now that doesn't mean we want to condone sexual crimes. We're not out to hang a shingle that says Sex Offenders Not Welcome any more than we want to hang a shingle that says Come, Y'All. But my prayer has always been that St. Mark's would be a safe place—a place where people can come because they sense the refuge of Christ here.
"That means parents can come without even giving a thought about something happening to their kids, but also that somebody with a sex offense in their past ought to be able to come and fit in and not be judged." In the 16 years that Tusken has overseen his congregation, he has known of only one convicted sex offender attending.
Click here to continue reading Marian Liautaud's article from the September 2010 issue of Christianity Today.
Where does you and your church land on this subject?
As hard as it may be to believe, churches are not immune from embezzlement. In fact, the widespread belief among church leaders that such a crime "could never happen in a church" makes churches an easy target. Economic downturns make the risk even greater. Here are seven reasons to prevent fraud from happening at your church:
Removing temptation. Churches that take steps to prevent embezzlement remove a source of possible temptation for church employees and volunteers who work with money.
Protecting reputations. By taking steps to prevent embezzlement, a church protects the reputation of innocent employees and volunteers who otherwise might be suspected of financial wrongdoing when financial irregularities occur.
What other church leaders are reading and using to keep their congregations safe.
ChurchSafety.com provides expert guidance and risk management information on a broad range of safety topics. We’ve compiled the Top 10 most-downloaded resources from ChurchSafety.com during the past year. Find out what other church leaders have read and used to train staff and volunteers and to develop a safe environment for ministry:
While the number of incidents involving guns at churches remains small, information and preparation are still vital. Begin by assessing the current security of your church. This download gives helpful advice on how to plan for the unexpected, whether or not your church should hire a security guard, and how to deal with the media in the aftermath of violence.
Children are often the most vulnerable members of our congregations, and their presence also presents some of the most serious liability risks. Most churches use minors to assist in various children's or youth programs. Screening these workers will help prevent youth-peer sexual harassment. Institutions can be found guilty of negligence in these cases for not providing security against such abuse. Learn practical steps to properly screen underage workers and access helpful templates for references and interviews.
When crisis arises, are you prepared? Don’t be taken by surprise next time. Learn to respond appropriately to situations ranging from common medical emergencies to crisis involving gunfire. Every church can benefit from forming a safety team that is trained to respond appropriately to various emergencies. This download will discuss the importance of having a team that can handle situations requiring security intervention, medical response, or evacuation.
The topics that most interested readers like you during the past year.
I love milestones. And I'm a sucker for top 10 lists (thank you very much, David Letterman). Since today is August 26, it means the TheYourChurchBlog.com turns 1. Naturally, I went back and looked at our 10 most popular posts for the first year.
But before I do, a few observations about our past year:
1. Subject popularity appears diverse: 3 of the Top 10 posts fall under the Law Category, with 2 each under Finance and Safety, and 1 each under Staff and Office (the other post was a general one and didn't fall under one specific category);
2. Our highest traffic day came on February 23, on the heels of our post "Oregon Case Provides a Powerful Reminder to Churches," which reviews the implications of an appeals court's ruling that allowed a pastor's victory in a defamation lawsuit against his former church to stand.
3. The post garnering the most comments was "Where You Work Best," which discusses the pros and cons of worshipping at the church where you also work.
Without further delay, here are TheYourChurchBlog.com's Top 10 posts during its first year:
10. Legally Host a Super Bowl Party: If your church is hosting a Super Bowl party this year, you will need to abide by three simple guidelines to avoid violating copyright law ... read more
9. The Top 7 Resources to Combat Church Embezzlement: Earlier this month, we looked at two recent cases of church embezzlement, and the "zero tolerance" stance judges are starting to take against these crimes. Unfortunately, yet another big headline has since emerged ... read more
8. 10 Questions to Ask About Your Church's Communication: As you approach 2010, consider these 10 questions to discuss your church’s communication efforts ... read more
7. What Will the New Health Care Bill Mean for Churches?: Now that President Obama has signed the health care reform bill into law, many churches are wondering what the impact will be on staffing costs. ... read more
How pedophiles exploit churches--and what to do about it.
Like a triple espresso on an empty stomach, some news stories make my hands shake.
In our paper yesterday, I read about a Boy Scout camp director recently arrested for possession of child pornography. The FBI raided the camp to confiscate his computers. This man also worked at a YMCA.
Get ready to tremble with me.
Leadership from both organizations described how he passed extensive criminal background checks. One group performs them periodically and requires annual youth protection training. The suspect worked there for seven years. A senior leader remarked that, unfortunately, no manual exists for them to see exactly what a pedophile looks like.
By now, you likely see the connection between this news story and your ministry. You perform criminal background checks (right?), you conduct child protection training (right?), and the potential still exists for the wrong people to make it into your ministry.
Every church needs a strong board, united in purpose.
Many churches are afflicted by "dragons," well-meaning saints who, one way or another, undermine the ministry and sap the vitality from a congregation. To make a church healthy, the place to start is by building a healthy board. Cohesiveness among the spiritual leaders of the congregation is a healthy core for healing the rest of the body and for fighting the infectious attitudes that spring up from time to time.
Some pastors go too far and "stack" the board with friends who can be trusted never to disagree.
"Every member of my board is someone I've personally led to Christ, and I've never had trouble with them," boasted one prominent Southern pastor to a group of seminarians. "I held one man in my arms as he went through delirium tremens. Now he's on my board, and I can count on his vote. He owes me."
Such crass political maneuvering is not only repugnant, but in the long run, runs against the pastor's best interest. The best board is not one where everyone plays follow-the-leader. A board that always votes unanimously the pastor's way will only be as strong as the pastor's personality. When the pastor is overwhelmed, run down, and needing guidance, a collection of clones won't be adequate.
At the same time, healthy boards are united in purpose and plan, respecting one another's differences. The strongest board is a team of coworkers willing to honor God not only with their decisions but the decision-making process. Their relationships are as important as their righteousness, and the relationship between pastor and board is cemented with trust; without that, the pastor's ministry will inevitably come unglued.
Changes may prove costly for churches, as will non-compliance
Earlier this year, the Federal Communications Commission set a deadline of June 12--this Saturday--for organizations to stop using any wireless systems, including microphones, currently operating in the 700 megahertz (MHz) frequency.
Churches need to determine if their wireless mic systems comply with the new rules. Several say the changes will result in thousands of dollars in costs. Church leaders who aren't sure whether their systems use the frequency can find out on a website created by the FCC.
The FCC says the deadline will help eliminate potentially harmful interference with public safety systems now using the frequency. The deadline also will allow companies that purchased slices of the spectrum in 2008 to now pursue next-generation 4G wireless devices, the FCC says.
A zoning attorney offers helpful information before you buy or build your next church facility.
Editor's note: Church law expert Richard Hammar says zoning is one of the Top 5 issues to land a church in court. To learn more about church property and zoning laws, check out Richard's Volume 2 of "Pastor, Church, & Law, 4th Edition."
Below are 10 things your church should know about zoning:
1. Zoning laws can prevent your congregation (whether by lease or purchase) from using land or buildings in many areas. They can also prevent you from expanding current facilities.
2. Include a "zoning contingency clause" in any real estate contract to protect your congregation from a financial loss if permission to rezone the property is not obtained by authorities.
3. Check zoning laws in advance. If you plan to purchase land or expand your present facilities, check with municipal officials before you shop.
Continue reading this article at LeadershipJournal.net, the website for our sister publication Leadership journal, where the article first appeared. Click here for a free trial issue.
A special webinar this week covers important financial controls.
Back in December, we ranked the Top 7 Resources to Combat Church Embezzlement. Six months later, I’m reminded of why, and with another unfortunate headline emerging last week, it’s an opportunity for me to highlight a special online event we’re hosting this week that you can attend.
At the time of our December posting, a couple of recent headlines had caught our eye, including the “zero tolerance" stance judges are beginning to take in cases involving embezzlement at churches, and a $1 million embezzlement allegation against an individual who oversaw a Connecticut church’s investments.
In Your Church magazine’s Spring 2010 issue, many of our Editorial Advisors cautioned leaders about the ever-present threat of fraud to church finances, a problem compounded by a reluctance by some to institute stronger financial controls, or by an ongoing presumption that safeguards aren’t necessary because those in their church office are trustworthy.
Last week, we were reminded again of this threat—this time in our own backyard. The pastor of a storefront church in Aurora, Illinois, just minutes from our offices, was arrested, accused of swindling $470,000 from three men, including a member of his congregation, through a church real estate investment scheme.
Why outreach ministries may be affected by a looming deadline.
(Editor's Note: Since posting this on May 14, the IRS has issued a statement urging small nonprofits to still file, even though the May 17 deadline has passed).
We recently fielded a question from a reader regarding the Internal Revenue Service's Form 990-N.
Tax-exempt organizations that average $25,000 or less in gross receipts during the previous three years are required--annually--to file a Form 990-N with the IRS through a free electronic form. When an organization misses a filing for one year, or even two, the IRS will send a reminder. But if the organization fails to make its filing for a third consecutive year, the IRS will revoke the organization's tax-exempt status.
It's a big deal this year because 2009 represents the third tax year since certain law changes went into effect. And the deadline for filing for the 2009 tax year looms near.
The reader wanted to know whether the Form 990-N affects churches. The short answer is no.
But there are situations that church leaders should note because they could trigger a need for ministries and organizations related to their churches to comply. And in those situations, a filing must be made, either by Monday, May 17 (the deadline for organizations that use a January 1 fiscal year is normally May 15, but because that date falls on a Saturday this year, it pushes back to May 17), or by November 15 (the deadline for those that use a July 1 fiscal year) at http://epostcard.form990.org.
The definitive collection to guide leaders before, during, and after turbulent times.
In our ongoing conversations with church leaders, as well as our collaboration with colleagues at Leadership Journal, OutofUr.com, and BuildingChurchLeaders.com, we know conflict remains one of the biggest detractors from a healthy church office environment. So we're keenly aware of this issue, and why it matters a great deal to church leaders like you and me.
I was reminded—again—of the significance of this issue last summer, when I attended the National Association of Church Business Administration's annual conference. Ken Sande, president of Peacemaker Ministries, offered a keynote address on the urgency with which church leaders should address conflict and resolve it peacefully. Otherwise, congregations face unnecessary heartache, and the testimony given to the communities surrounding them becomes stained.
One point that Ken offered during his speech remains firmly planted in my mind: "Reflect much on Jesus and his gospel, and you will reflect much of Jesus and his gospel."
Since then, we've offered two pieces on the subject of healthy conflict resolution, and in a recent phone interview I did with Ken, he offered additional resources to help church leaders. Here's a helpful look at all of them:
The SEC's embarrassing news provides a sobering reminder.
An eye-opening national headline emerged last week, providing a timely sneak peek into our upcoming issue of Your Church magazine.
The inspector general for the Securities and Exchange Commission--the organization tasked with enforcing the laws and regulations that govern the country's stock and options exchanges--conducted 31 probes of employee internet use during the past 2 1/2 years. The overarching finding? Senior staff members of the SEC spent hours surfing pornographic websites on government-issued computers, according to a memo obtained first by ABC News.
Among the findings, according to an Associated Press story published Friday:
One senior attorney spent up to 8 hours a day looking at porn. Upon running out of hard drive space, he burned files to CDs or DVDs;
One accountant was blocked more than 16,000 times in a month by the SEC's internal filter, yet he still found ways around that filter using search engines;
In all, the SEC discovered 2 cases in 2007, and 16 in 2008 (as many will recall, the country's financial woes began to emerge midway through 2007).
Unfortunately, this isn't the first government agency to share disturbing news like this. Last fall, the National Science Foundation's agency inspector revealed he had to shift time scheduled to combat grant fraud to instead crack down on porn use by staffers.
So, what's the connection to church leaders and staff members?
Ministry leaders must do more to peacefully resolve conflicts.
By all accounts, America has become the most litigious society on the face of the earth. In the last decade, civil caseloads have increased by 33 percent, which is five times faster than the increase in our population. As a result, new case filings in state courts now exceed 16 million per year. This amounts to one court case for every 12 adults in the United States!
This surge in litigation is being driven by several factors. To begin with, a lawsuit is often seen as an easy path to instant wealth. In a recent survey, hundreds of Americans were asked how they might become independently wealthy. A generation ago, typical answers would have included, "build a successful business," "patent a valuable invention," or "inherit my uncle's estate." These answers hardly appeared on the recent survey. Instead, the two most common answers were, "win the lottery," or "win a big lawsuit." In other words, many people view an injury as a blessing, because it gives them a shot at a million-dollar lawsuit.
Another thing that drives litigation is the American preoccupation with individual rights. If we want something badly enough we begin to think that we have a legal right to it, whether it's a government entitlement or a particular job. And above all else, we think we have the right never to be inconvenienced or offended by others.
These attitudes are reflected in many of the ridiculous lawsuits being filed in our courts. For example, a poodle traveling in a pet cage was accidentally removed from an airplane in Tampa instead of its real destination, Miami. The error was soon discovered and the poodle was safely delivered to its owners only a few hours late. But the owners felt justified in suing the airline for $50,000 to relieve their "emotional suffering."
These kinds of lawsuits bring to light another factor in our litigation problem: the attorneys who are willing to advocate such absurd complaints. There are more than 1,1 million lawyers in America today. Although most of them are dedicated and conscientious professionals, there is far too many who will take almost any case in order to stay in business. Their low standards, combined with the greed and self-indulgence of certain clients, creates just the right mixture for a thoroughly clogged court system.
The Church's Failure
But there is a fourth significant factor that is often overlooked, which contributes to our country's problem with litigation: the failure of the church to carry out its God-given mission to teach people how to respond to conflict in a godly manner. In March 1982, former Chief Justice Warren Burger observed the following in an American Bar Association Journal article:
“One reason our courts have become overburdened is that Americans are increasingly turning to the courts for relief from a range of personal distresses and anxieties. Remedies for personal wrongs that once were considered the responsibilities of institutions other than the courts are now boldly asserted as legal "entitlements." The courts have been expected to fill the void created by the decline of church, family, and neighborhood unity.”
After serving as a full-time Christian conciliator for 28 years, I must agree with Justice Burger's indictment of the church. I have found very few churches that are providing systematic, biblical teaching on conflict resolution. Therefore, when disputes arise, Christians are often just as willing to file a lawsuit as are their unsaved neighbors. Worse yet, church leaders are all too willing to violate 1 Corinthians 6:1-8, as they also go to court to solve problems within the church.
Now that President Obama has signed the health care reform bill into law, many churches are wondering what the impact will be on staffing costs.
“Does the church have to pay 100 percent of the employee’s premiums?” “Will we be required to cover our entire church daycare staff, which currently does not receive medical insurance as a benefit?” “Will we have to pay large fees and/or provide heathcare for our employees? Health insurance is very expensive and being forced to pay could mean we no longer can afford our small staff.”
These are the kinds of questions and concerns that are surfacing on discussion boards and through readers’ questions to us.
I can appreciate the trepidation many churches are feeling. We are in a very dynamic period, with several state attorneys general having filed legal challenges to the new law in recent days, and Senate Republicans engaging in parliamentary maneuvering. No one can say what the results of these efforts will be.
And, note two additional considerations: First, if the Republican Party regains control of the House of Representatives in the mid-term elections later this year, it will have the authority to defund implementation of many, if not most, of the provisions in the new law. Second, even if none of these roadblocks stop this legislation, many of the provisions in the law do not take effect immediately. Some do not take effect for several years.
The bottom line is that it is premature to say what all of the ramifications of this bill will be.
I am currently reviewing the impact of each provision in this 2,500-page bill on churches, while at the same time monitoring the potential obstacles to full implementation. I will be sharing the results of my analysis in upcoming articles for Church Law & Tax Report and Church Finance Today.
In the meantime, if you have questions on this new legislation, please feel free to submit them to: CLTReditor(at)christianitytoday.com.
A pastor's worst nightmare leads to a new beginning.
Ralph Neighbour III, with Jim Wilson
My lawyer said, "Just follow my lead and answer the questions he asks, and everything will be okay." I clung to his advice as I entered the smartly decorated boardroom lined with towering bookshelves. The first thing I noticed was the videographer and stenographer setting up their equipment. Then the opposing counsel, who to me represented evil incarnate, walked into the room.
"Please state your full name for the record." His tone and mannerisms suggested this was strictly routine. For the others in the room, this was just another work day. They pushed buttons on the camera, they typed on the stenograph machine, they served coffee, they represented their clients—this was a 9-5 job for everyone in the room. Everyone, that is, except me.
I cleared my throat and said, "Ralph Webster Neighbour III."
"I am sure your lawyer has explained to you the deposition process, but let me explain it again for the record …"
There was that phrase again—"for the record." I thought: This is high stakes. The church's reputation and my future are on the line here! I also knew this deposition was just the beginning; we would walk at least another year through this legal maze.
I couldn't believe this was happening to me—a seventh generation pastor. But here I was, giving a deposition in a sexual misconduct lawsuit. This was not what I signed up for!
This article first appeared in Leadership journal. The full version is available atLeadershipJournal.net. For additional resources on embezzlement and sexual misconduct issues for churches, please visit:
Charitable contributions made after January 11, 2010 and before March 1, 2010 are deductible on 2009 income tax returns.
Michael E. Batts, CPA
In an effort to encourage further charitable giving to help those affected by the earthquake in Haiti, Congress passed a bill on January 21 that permits donors to deduct (on their 2009 income tax returns) charitable contributions of cash made after January 11, 2010, and before March 1, 2010, for the relief of victims in areas affected by the earthquake. The President signed the bill immediately after it passed in both houses of Congress, giving effect to the new law. The new law does not apply to noncash contributions.
501c(3) organizations, including churches, that are accepting charitable contributions for the relief of earthquake victims must consider the implications of the new law in assisting their donors with proper documentation.
Appeals court says First Amendment can’t stop defamation lawsuit.
Richard R. Hammar
Editor's Note: On March 5, 2010, this post was corrected to show the trial court originally ruled in favor of the pastor, and this ruling was recently affirmed on appeal. The correct version appears in full below:
Last week, an Oregon appeals court issued an important ruling involving a pastor’s efforts to sue his denomination and two denominational officials for defamation. Church leaders should take note because appellate decisions become reference points for future cases heard around the country.
The court found that the First Amendment guaranty of religious freedom did not prevent a dismissed pastor from suing church officials for defamation as a result of statements they shared with the congregation (read more about the ruling in The Oregonian).
First, some background. The pastor was asked by denominational officials to accept a call at a small church. After expressing concern that the church would not be able to adequately compensate him, the officials agreed to supplement his salary and sent the church a check in the amount of $3,000 for this purpose. The officials made clear that the supplemental payment was a gift, and did not have to be repaid by the pastor.
CTI invited well-known and well-respected members from church legal and financial circles to an Editorial Advisory Board to bring authoritative and qualified eyes to its work.
The 14 advisors will regularly contribute to the church management division’s publications, websites, and resources, and also will regularly provide ideas, thoughts, and feedback, shaping the articles, videos, books, blog posts, and other resources that guide church leaders on important legal, financial, safety, and administrative decisions.
Noted church and business leaders who will lend their expertise include:
Microphone systems must comply with June 12 deadline.
Editor's note: Since this posting appeared on January 22, Your Church has published a more in-depth article on the FCC's ruling: "Racing the FCC Mic Deadline."
The Federal Communications Commission has set a deadline of June 12 for organizations to stop using any wireless systems, including microphones, currently operating in the 700 megahertz (MHz) frequency.
The restriction includes churches.
In its prepared statement, the FCC didn't indicate what penalties, if any, organizations might face for not complying. The FCC says the deadline will help eliminate potentially harmful interference with public safety systems now using the frequency. The deadline also will allow companies that purchased slices of the spectrum in 2008 to now pursue next-generation 4G wireless devices, the FCC says.
The FCC's announcement shouldn't come as a surprise, but that may not ease the sting for church leaders who now face the prospect of replacing or modifying their current microphone systems to comply. Your Church covered this looming possibility in May, and included some possible solutions that may not require buying a new system.
In a Pittsburgh Tribune-Review article, two church leaders indicated they'll likely need to replace equipment. One estimates it will cost the church $2,400 to replace four mics affected by the changes.
Most telecommunications providers currently use 3G standards, which allow simultaneous voice and data transmissions at faster rates of speed. The upgrade to 4G will accelerate the speeds of those transmissions and widen the types of services those providers can offer. Companies, including AT&T and Verizon, paid the FCC billions of dollars through a 2008 auction for the rights to portions of the spectrum.
If your church is hosting a Super Bowl party this year, you will need to abide by three simple guidelines to avoid violating copyright law. Attorney David Middlebrook, who specializes in representing tax-exempt organizations and is a member of our Editorial Advisory Board, lays out the guidelines set by the NFL in this quick video clip:
A look at the hottest topics facing pastors and administrators.
As 2009 draws to a close, here's a fun look back at the year's 10 most-read posts on TheYourChurchBlog.com. Doing this kind of review often helps us understand the most pressing issues facing church administrators, executive pastors, pastors, and leaders.
And, it's a nice way to showcase topics that you may have missed the first time around.
A sad story emerged last week out of Indiana, where a 37-year-old woman accused of stealing more than $350,000 from a church while working there as an employee received the maximum sentence allowed by the state.
According to an article in the Greencastle Banner-Graphic, the local paper, the woman was convicted on six counts of Class C felony charges and six counts of Class D felony theft, resulting in 10 years in the state jail, followed by 5 years of probation.
The woman began stealing from the church shortly after getting hired in late 2004 as the church's financial and administrative secretary, according to the article. She forged signatures on 192 checks, doctored bank receipts to cover it up, and also made unauthorized charges on church credit cards, the paper said.
This case is similar to one covered by Richard Hammar in November's Church Finance Today in which a woman employed as a church office manager for seven years stole $450,000. She received a 15-year sentence, which included an upward adjustment "for misrepresenting that she was acting on behalf of her church," according to the article.
What's the takeaway for church leaders from these cases? Aside from the need to implement strong financial controls, if such controls aren't already in place, Richard explains three reasons why church leaders should learn from cases like these:
The scenario that got both Sally and Jim both terminated from their company could have run like this:
Jim: All I said was that I needed the documents, completed and signed, by tomorrow night. Sally: Don’t tell me that’s all you said. You demanded it! Jim: I asked nicely. Sally: Yes, but when my boss was here you kissed up to him really well and then asked me nicely. But your e-mail screamed at me. Jim: Well, you made me do it because you didn’t write back to me. Sally: I’m your boss and don’t have to get back to you. I tell you what to do.
And so it went, until the screaming attracted the attention of the entire office. Most office conflict doesn’t spiral out of control. But everyone has a conflict in the office from time to time. Even if you don’t have frequent conflict with others, you will be around people who do disagree with one another.
In office conflicts, there are “only” three major causes of conflict. If your office has any of the following, then you will have conflict:
Humor aside, everybody is going to have conflict. The book of James gives another example of the source of conflict:
What causes fights and quarrels among you? Don't they come from your desires that battle within you? You want something but don't get it. You kill and covet, but you cannot have what you want. You quarrel and fight. —James 4:1–2 (NIV)
Conflict begins when someone shares their salary with a co-worker, who then becomes envious of the other. Or, one person gets a promotion, while the one who doesn’t takes out their angst on the new boss. It also can start when a subordinate continually makes insulting jokes and jabs, undermining morale.
What should we do when conflict happens? Here are some typical steps to consider when conflict happens in your office:
Current legal trends that can help your church assess its vulnerabilities.
Richard R. Hammar
For many years, I've closely reviewed litigation involving churches to identify patterns that pastors and leaders can use to assess their own risks and potential vulnerabilities. In 2008, the following five types of cases brought churches to court more than any others:
1. Sexual Abuse of a Minor (15 percent of cases). Sadly, this type of case is typically the No. 1 or No. 2 reason churches wind up in court every year.
2. Property Disputes (13 percent of cases).
3. Zoning (10 percent of cases).
4. Personal Injury (9 percent of cases). This is a Top 4 issue every year.
5. Tax (7 percent of cases).
Based on this ongoing analysis, churches should note the following major risk categories they face and work to evaluate (and to minimize) their own risks:
How to handle all types of charitable contributions.
Marian V. Liautaud
Join us on Tuesday, November 10, 2009, for a live webinar event with nonprofit CPA, Elaine Sommerville titled, "You Want to Donate What? How to Handle All Types of Charitable Contributions" (Click on "You Want to Donate What? on the left side of the page to sign up). Elaine will present a sensible plan to help your church receive and document these contributions with confidence. She also will provide tips on educating members to give donations that comply with tax laws and benefit the giver as well as the receiver.
The Post’s piece recounts several recent, high-profile shooting incidents, including one that took place in February, when a man arrived at a Maryland church’s Sunday services toting a Bible and .38 caliber revolver, confronted his estranged wife in the parking lot, and shot her five times. She died on the scene. He recently received a life prison sentence.
A small Kentucky church recently did. What are the implications?
A church in Louisville, Kentucky, generated local and national media attention earlier this month, not because it allowed a convicted sex offender to attend its services, but because the church pastor decided to hire and ordain one.
WHAS-TV, a local television station, as well as CNN and newspaper wire services, covered the story when it first emerged. On Wednesday, the story picked up new steam when the Associated Press wrote its second piece about the situation (it was picked up here by MSNBC.com). During the past week, I’ve left three voice mails for Pastor Randy Meadows on the church’s main phone line, hoping to learn more about his decision, and the circumstances surrounding it. My calls haven’t been returned.
We know the following facts:
• The City of Refuge Worship Center, a small, independent congregation based in downtown Louisville, ordained Mark Hourigan on September 13. The church’s website shows he is the music minister and leader of the church’s “Pride Committee.”
• Hourigan, 41, is listed on the Kentucky State Police’s Sex Offender Registry. The site lists Hourigan’s offense as “Sexual Abuse 1st Degree,” and also notes he faced two counts. His victim was an 11-year-old boy, according to the site.
• Media reports indicate the abuse took place in 1993 and 1994. The AP’s first story, quoting an interview between Hourigan and CNN, said Hourigan told the cable network he completed a sex offender treatment program and was upfront with Meadows regarding his criminal past.
• According to the AP, “ ‘I don’t take anything lightly when it comes to someone’s past,’ Meadows told CNN. But he added, ‘God gives everyone a second and a third and fourth chance.’ ” Meadows also told the network that Hourigan will sign an agreement not to minister to children.
• The ordination drew protests from at least one abuse victims group, and the departure of at least one church deacon, who disagreed with the decision, according to media reports.
Undoubtedly, a church faces numerous challenges when a sex offender begins to attend. In ChurchSafety.com’s “Dealing with Dangerous People,” an electronic training resource, the tension that arises with a sex offender’s attendance at a church is best summed up in this way:
Tips and tactics to remember when it comes to contracts.
John R. Throop
The deal sounded good.
About 50 churches in the Washington, D.C., area leased interactive electronic kiosks for their entrance areas so that members and visitors could check on activities and news and register for classes and meetings. The selling point? Church leaders say the kiosks were presented to them as “cost-free,” with the chance for their churches to potentially earn revenue from advertisers interested in reaching church audiences.
But in April, a lawsuit filed against three commercial leasing firms, an online services firm, and an interfaith digital network services firm by the District of Columbia churches suggested the deal wasn’t a good one. The churches say they received lengthy—and costly—leases and faulty equipment, as well as fees and termination expenses. All told, the lawsuit estimates hundreds of thousands of dollars in combined losses for the churches.
Officials from at least two of the firms deny the allegations. News reports indicate that the companies must prove the charges and expenses were disclosed—in the “fine print”—even as the equipment was advertised as cost-free.
The situation underscores why it’s important for church leaders to review any contract before signing it. Legal experts concede that contracts and agreements can be tough to navigate, but necessary to do nonetheless.
“One insurance coverage contract I reviewed was over a thousand pages long,” says Frank Sommerville, a Christian attorney based in Houston. “There was a lot of complex language surrounding liability coverage and exclusions, and that could create a lot of potential issues for the church.”
Church leaders don’t want to find themselves on the wrong end of a deal. Details really do matter. For that reason, it may be especially important to secure an attorney’s help with reviewing larger contracts. In addition, these seven items are important to remember when it comes to reviewing purchasing and leasing deals: