1 of 3

Q. Our church was established in 1930. It has never been incorporated. A child was sexually molested by a church member during a church activity. The victim's family sued the church. The church's insurance company declined any coverage because of an exclusion in the policy for sexual misconduct. Some of the members are concerned that they may face personal liability for the victim's injuries. Should they be concerned?

A. As a church leader, you know if your church is incorporated. If it is not, you should be familiar with the advantages and disadvantages of incorporation. I've summarized the key points below.

Incorporation is a simple process by which an organization is recognized by the state as a legal entity. Two forms of church corporation are in widespread use in the United States. By far the more common form is the membership corporation, which is composed of and controlled by church members. Several states also recognize trustee corporations. The trustees of a trustee corporation constitute and control the corporation. A few states also permit certain officers of hierarchical churches to form a corporation sole, which is a corporation consisting of a single individual.

In a few states, churches historically were not permitted to incorporate. For example, the constitution of Virginia prohibited the issuance of a charter of incorporation to "any church or religious denomination." However, a federal court in 2002 ruled that the Virginia constitution's ban on church incorporation violated the first amendment guaranty of religious freedom.

The Model Nonprofit Corporation Act, which has been adopted in whole or in part by several states, provides a uniform method of incorporation for several kinds of nonprofit organizations, including religious organizations. The procedure consists of the following steps: (1) preparation of duplicate articles of incorporation setting forth the corporation's name, period of duration, address of registered office within the state, name and address of a registered agent, purposes, and names and addresses of the initial board of directors and incorporators; (2) notarized signature of the duplicate articles of incorporation by the incorporators; and (3) submission of the prescribed filing fee and duplicate articles of incorporation to the secretary of state. The secretary of state reviews the articles of incorporation to ensure compliance with the Act. If the articles of incorporation are satisfactory, the secretary of state endorses both duplicate copies, files one in his or her office, and returns the other along with a certificate of incorporation to the church. The church's corporate existence begins at the moment the certificate of incorporation is issued.

Many states have a special procedure for church incorporation that churches can elect in lieu of the general nonprofit corporation law.

Unfortunately, many church leaders do not know if their church is incorporated. You can quickly and easily check to see if your church is incorporated by contacting the office of the secretary of state in your state capital. Representatives of the office of secretary of state ordinarily will tell you over the telephone whether or not your church is incorporated. If you are informed that your church is incorporated, then you may wish to ask for a certificate of good standing (the name of this document varies somewhat from state to state) that confirms the corporate status of your church. You also should request a certified copy of your charter (article of incorporation), to be sure that you have a copy of the document on file with the state.

next page... |  1 of 3

share this page