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The word incorporation suggests big business rather than Christian fellowship. Nonetheless, though a church doesn't have to incorporate, many church leaders opt for the legal protection it offers.

Centuries ago as civil law and commercial enterprises developed, the legal entity known as "corporation" came into being. Holding the same rights and responsibilities as an individual, corporations rather than each employee, shareholder, or member are liable in case of trouble.

American law embraced that traditional understanding. While the purposes of profit and nonprofit corporations are different, their standing before the law is the same. American courts have always upheld the ruling that the individuals who make up a corporation are protected from personal liability. This is the main reason why churches incorporate.

An unorganized group of people may covenant to pray and worship together, even to hold property in common. Traditionally this group could not hold title to property or take on debt. Trustees would have to act for the group.

The liability threat to such a group, however, is more daunting. If someone in an unincorporated church is injured, the person could not recover damages because suing the church would be like suing oneself.

Alternately, what if someone in the church molested a child, and a court awarded $1 million in damages? A judge could force every member of the unorganized church to pay up.

That kind of ruling is beginning to change as states pass new statutes, says Richard Hammar, editor of Church Law and Tax Report. In many states, unincorporated churches can now hold title to property, enter into contracts, and be insured to protect against damages that might be recovered by a member. Virginia and West Virginia do not permit church bodies to legally incorporate.

The problem of personal liability of members is under review, too. "That principle has not been forcefully recognized by the courts in recent years and has even been rejected by a few courts," Hammar says. "This is a legal principle in decline."

Unincorporated churches must exercise due caution. A Uniform Unincorporated Nonprofit Association Act has been drafted by a national conference of commissioners seeking uniform state laws, but this has yet to be adopted around the country.

There are still valid reasons for incorporation:

1. 1. It provides a sure liability shield, provided the church board is not "grossly negligent." Gross negligence means that board members were aware that something was dangerous or wrong but allowed people to be harmed by it.
2. 2. Churches must be incorporated to receive grants through federal or faith-based social-service provider programs or private foundations.
3. 3. Incorporated groups often can obtain special mailing rates and purchasing discounts from vendors.
4. 4. The work involved in incorporating can help clarify an organization's purposes, procedures, and other issues.

Some church leaders argue against incorporation, believing the act of incorporating makes the church liable to the government when it should be ac countable only to God. Hammar disagrees. "That argument fails to distinguish between the church as a corporate entity and the church as the body of Christ," he says. "Any church that incorporates is not subservient to the state but provides advantages to its members." An incorporated church can dissolve the corporation and revert to being an unincorporated association if problems arise, he adds.

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