How to Build an Ecclesiastical Corporation from Nothing
Most people when they think of a church or ministry they do not think of the reality the organizations go through when they are dreamed about and developed. Local, state, and federal governments see religious organizations as, corporations, even though the public sees them as something else entirely. Every church or what the government calls, "Ecclesiastical Corporation," has to be planned, developed, and goes through the same rigorous process as any profit corporation. Like any entrepreneur, a pastor has a dream, organizes a team of professionals with the proper experience, and then moves forward to make the vision happen. The whole process to achieve success is not easy, and in my professional opinion churches and ministries should not be only seen as merely churches and ministries but corporations as well - that is, not to sound like I am trying make religious organizations as profit network but out of respect for what they have to go through.
Moreover, the process of building a church or ministry from nothing is actually more difficult than building a profit corporation. Where a for profit corporation can seek out angel investors, and even convince people to take a risk and buy shares in their company, an ecclesiastical corporation has to go through the blood sweat and tears of seeking out the community for donations, evangelism to find members, and convincing people their doctrines coincide with the teachings of the Holy Bible. Most of the time the people who start a church are not even getting paid to do it and do it because they are vision driven by doing things out of love for their community. The dream may be to not only perform sacerdotal services for the community but to feed and house the poor; counsel the heart broken; strengthen families; be a source of conscience for their community; and care for orphans and widows. A Christian church does a tremendous amount of good for any community and they are usually started by people who love their communities.
So moving forward, you love your community. You want to bring the love of the gospel of Jesus Christ to your community and develop a church to become a pillar to strengthen it. First of all, most pastors do not think of building a church as a business. If you begin with the mindset of understanding how a business works then you will succeed. Just like any business three parts to it (Operations, Finance, and Sales), so to does a church. You could say a church is made up of, Services, Donations, and Evangelism. Let's go through the steps together on building and developing a successful ecclesiastical corporation.
- Write Your Vision Down
Got a dream? Write the vision down on a piece of paper, and then answer these questions: What do I want to do? What denomination will this organization be? What services will we provide? Who will be the pastor? Where do we see ourselves in 5, 10, 15, 20 years? It's important to ask yourself questions and think ahead. Look at your own strengths and weakness because what you are about to undertake will stretch you our thin. Once you have your vision down on paper find other like-minded people who will share in your vision. You can put an ad out in the newspaper, online forums, and even network with other churches and ministries. It's important to find these people now because they will be your core group. Once you have found your core group you basically have the makings for a board of directors.
2. Planning
The next step is to meet with your core group and plan, plan, plan, and then plan some more. At this stage you want to develop what are called, "organizational minutes." These minutes are used to construct the beginnings of the ecclesiastical corporation, and shows the government how you and your board have agreed upon the structure of the church or ministry; who takes what positions on the board as chairman and co-chairman, and then who will take which officer responsibilities such as president, vice-president, secretary, and treasurer (This positions will be more refined when you apply for your charter). The great thing about the internet is if a person in your core group does not know how to perform a specific task there are tools for learning how to write minutes, how to set up a treasury and do accounting, and so on...
3. DO NOT DO A DBA!
Most pastors make the mistake of going to their county clerk office and filing a DBA, however, your entity is not a sole proprietor it will be an organisation of members. I see this mistake happen so many times when people asked me what they did wrong in creating their churches. They file a DBA because some Joe without business law experience assumed they needed to file a DBA and suggested it to them, and then they got solely hit with taxes and rental fees. The thing about filing a Doing Business As is you are the business are one in the same; your church or ministry needs to be separated from you to create what is called a, corporate veil, and more on this later. I will also show you how to bullet proof your constitution and bylaws to protect you and your members from law suits.
4. Finding a Name
When I first began building a church back in 2005 I found the idea of talking to government agencies intimidating, yet as I talked with each and every person I found them to be very kind and helpful. So do not be afraid when talking to the government nor see them as red tape but rather see them as the people holding the red tape and suggesting to you on which is the best scissor to cut through it. The government is here to help you because you are a taxpayer. So with that being said, you and your board should get together and right down a list of names for your church. Try to write out 10 to 20 names each of you like. What you will do with this list and call your state's corporation division; the place who you will have to ultimately file your articles of ecclesiastical incorporation with. You will be on the phone with them as you give them each name to see if they are available to reserve. You can also do your own search by going on your states entity search and type in each name to see if they are taken. Once you discover a name is not take then download a reservation of name document provided by your state and reserve the name. Filing the document a low cost to you depending on the state, and could only cost $5, $10, or $15. States have this document to give you and your group of entrepreneurs enough time to file your articles of incorporation.
5. Filing for a Charter
Now we are at the meat of your church or ministry. This document is what gives your religious organization the right to perform marriages, funerals, baptisms, dedication services, counseling, and much more. This document, as mentioned above,is your articles of incorporation. Again, ask questions if you have never done this before and usually the government is there to help you. Keep in mind after you file this document you will be required by your state to file annual reports once a year and is usually every October but again each state is different so ask questions. If you are not sure how to fill out this document then here is a hack: go to your state's entity search, look up churches, and see how they did it. While there you can see how they filed their annual reports as well. Look around and search for churches on these entity searches to get a feel at how it is done. Every corporation; for profit or not in your state is on this entity search. Once you have that down file your articles and pay the entry fee which can be from $10 to $25 depending on the state.
6. Constitution & Bylaws
While you are waiting to hear back from your state for approval on your articles of incorporation have a board meeting and discuss the creation of your constitution & bylaws. Again, if you do not know how to create your constitution & bylaws there are samples all over the internet. Even if you were a member of a church you should be able to ask for a copy of their C&B to get an idea of what one looks like. Usually the constitution structures the corporation while the bylaws act as the rules it follows. Once a C&B is written out this is a great opportunity to do two things. 1. Whoever will be the pastor can be written into the C&B as automatically ordained due to being a founder or co-founder. The IRS will ask at the point of your filing for a determination letter on what makes the pastor qualified to be the pastor. 2. Bullet proof your constitution & bylaws with verses from the Holy Bible. Why? In the governments eyes there is a separation between church and state. Should the event come up where your church is sued and your organizations C&B is in question, your organization's attorney can seek to have the case dismissed due to the separation of church and state. The Bible and the question of religion will need to be brought up in court where the government feels it has no place. If you are curious about this I would encourage you to do a Google search for, Court cases thrown out due to Bible verse in constitution & bylaws. Once written out your board will need to approve and adopt them in your meeting minutes.
7. Your Corporate Veil
Basically, your corporate veil is your Secretary's ability to take good minutes. Minutes taking is not a hard process. The mistake I have seen so many times was the minutes taker writing everything down with page after page of minutes. A little tip for your secretary here is to go off the agenda, only write down the important points, and keep minutes to a few sentences. If you're taking down everything in the board meeting and your ministry gets audited by the IRS you will be exposing everything to them to them point they will ask questions about the little things. To protect your board and your members only take small minutes for each section. Example: "Chairman Jon Doe brought up the idea of building a playground by the church for the children and submitted a report to each board member for review. After review, Joe Smith gave a motion to pass the proposal. Jan Doe second Smith's motion and the playground was passed. 5 yays, and 0 nays." That easy! The object of the IRS is to see if your organization is in compliance with the law, that's it! The first thing a government organization will do in an audit is audit the minutes to see if they are acting in compliance with what ever law they are being audited on. If you give the IRS an excuse to audit your finances then you could face an even bigger headache. Keep your minutes simple, compliant, direct to the point, and organized in a binder. Do this and you'll be thankful when you apply for 501(c)(3) status.
8. Evangelism
In business it is the job of the sales department to bring in the work and profits. As I mentioned above there really is no difference between sales and evangelism. There are several kinds of evangelism from television, online Bible studies, online teachings, to street evangelism. The kind of evangelism I was involved in when my wife and I built our church was street evangelism. Get in the mindset you are trying to sell your church to people. The best way to do this is to build a sales (evangelism) department with their only focus is to drive sales, drive people into your church. There are awesome sites with material on how to evangelize. One great source if Ray Comfort and Kirk Cameron's The Way of the Master series which teaches you how to evangelize.
9. Where to have Church Services
Some pastors believe when you create a church you have to build a building. That's not always the case. The first church I went to met in the school cafeteria on Sunday mornings. Thrive Church of Mount Pleasant, Michigan met in a theater for worship at Celebration Cinema. Keep in mind your church or ministry is a nonprofit, and as long as you are not making a profit many businesses with venues will not have a problem with a church meeting to conduct worship. When my wife and I started out church we had people meet in our home for Bible study, then worship, and then grew to the point where we had to move and rented out and old doctor's office. The important thing is to ask locations for help and to expect rejection. Do not get discouraged that you only need a building to meet for worship also, God has provided the whole earth for space for mankind to worship Him. I've known churches who started out meeting in parks, online webinars, in homes, in other churches, farm fields, and school football fields. If you need inspiration for a location just think of author of the best selling book, Crazy Love; Francis Chan started his church on the front lawn of his house and today has grown so fast his organization has had to branch off into other house churches.
10. Filing for 501(c)(3) Status
Dealing with the IRS was an intimidating process but this was the only area where I needed assistance. I had someone with experience dealing with the Internal Revenue Service to write up application for 501(c)(3) status; you will too. Many people without business experience will say when you want to create a business that you need to get an attorney to help you. They charge you thousands of dollars for items that only can cost you $10 to do. If you do your research right this will be the only step when you'll need to get an experience financial agency to help you. The only thing I needed to do was fax, and fax, and fax some more. The IRS will ask to see your board meeting minutes, yep, they are going to audit you, so be prepared for it. You'll send in your board meeting minutes, they'll send you letters with questions, and then you'll have to fax back by a certain deadline your answers to those questions. It rough, nerving, and you're going to sweat blood; well, not literally. LOL But be cool, always run to the government and never, ever, run away from them. Don't be afraid to get on the phone with them and ask specifically what they are asking for in their questions. Here is the good news, they don't ever ask anymore questions than what they've already asked from the beginning; meaning if they send you a letter with 10 questions, you're not going to get anymore than 10 questions. You'll answer those 10 questions, then you're next letter may be 7 questions, then 5, then 2, and when you hit 1 question you know once you've answered that your next letter from them will be your determination letter for 501(c)(3). Once you have received this letter your members will not be able to deduct their donations to your organization off on their taxes. Not only that but you will nor be able to receive grants to build and ask for money from your community to buy property and build.
In conclusion, the steps to building a church or ministry can drain a pastor but in the end they are worth it. At first you may feel you have a lot on your plate but with the right tool of leadership you can lead your flock to the promised land. Don't make the mistake of thinking of your church or ministry as just a religious organization, get into the business mindset by using the principles executives use in corporations... because you've built a corporation! My final bit of advise when building a church or ministry is to always learn, never stop learning, and finally, always ask questions.