Tuesday Re-mix –
How would you describe your church to your next-door neighbor? How would you describe your church to that neighbor’s 6-year old daughter? How would you describe your church to another pastor in your community? How would you describe your church to the homeless person on the street? HOPEFULLY, you answered each of these questions differently, because you cannot know how to describe your church appropriately unless you first know something about the person(s) to whom you are describing it. Right?
The audience matters. While the pastor down the street may want to know something about your church’s theology, your neighbor’s 6-year old daughter could not care less about that. While your neighbor may want to know about your church’s location or your worship style or your ministries, the homeless person on the street just wants to know if there is a place there to get some food or to sleep for the night. The point is, it is important to understand what the person wants to know before you start describing your church.
So what does the government want to know about your church? What about the legal community? Believe me, it is an entirely different set of questions from any of these, and probably different from anything you might imagine. The government wants to know what kind of taxable entity you are, and if your are not taxable, the government wants to know why not. The days when the IRS just “assumes” you are a church because of your name or just gives you the benefit of the doubt are long gone (if those days ever really existed in the first place). The lawyers, on the other hand, want to know what kind of legal entity you are (that is a different question from what type of taxable entity you are) and, specifically, who to name in their lawsuit when they want to file one against your church. Again, the days when the church enjoyed some type of moral protection against getting sued are long gone. Churches and their big budgets are now prominent targets for the legal community. In both instances, whether from the government or the lawyers, you can bury your head in the sand and pretend to be invisible if you want, but you will look silly (and dishonest) in the long run. This is why your church needs both an attorney and an accountant…you need professionals who speak government and/or legal jargon in order to correctly describe your church in those very specialized languages.
This is also why your church should incorporate. There are only a limited number of legal possibilities when it comes to choosing the correct “legal entity” to call your church. And of all the possibilities, a corporation most accurately describes most church cultures. You can run with partnership, or joint venture, or unincorporated association if you want, but you are not going to like the consequences when the first lawsuit gets filed. Unless you incorporate your church (or fall under the corporate umbrella of your church’s denominational entity), you open the door to pastors, staff, elders, deacons, lay leaders and even ordinary church members having liability for any and everything that goes wrong. Incorporation creates a “legal entity” which limits the liability of otherwise innocent bystanders. Without that limitation, your wealthier members become sitting ducks to the very creative members of your legal community.
But be careful. It is one thing to incorporate and call yourself a corporation and it is another thing altogether to actually act like one. And if you call yourself one but do not act like one (i.e., do not have trustees or do not have meetings of those trustees or corporate minutes or a constitution or by-laws, etc.), then you open the door yet again to the creative meanderings of the legal community to find a way to get to the assets of your wealthier members when that next lawsuit gets filed.
If you want to describe your church to your neighbor’s child, you better know how to speak to a child. But when it comes time to describe your church to the shark-infested waters of government or law, do yourself a favor…get a lawyer to help you. You would be foolish not to.