News

Should Churches Incorporate?

Leaders weigh in on whether churches should form separate corporations to receive federal social-assistance funds.

The President's Advisory Council on Faith-based and Neighborhood Partnerships voted in February on whether the government should require houses of worship to form separate corporations to receive direct federal social-service funds. Thirteen members voted yes; twelve, including most evangelicals on the council, voted no.

"The government regulates what it funds. If it funds church activities, it will regulate them. But if churches form separate corporations to receive federal funds, this will help ensure that congregations will be free from government subsidies and corresponding government oversight. The formation of a separate corporation helps to shield a church from liability. It also avoids intrusion into core bodies, maintains a clear distinction between the institutions of church and state, and avoids some of the most difficult church-state conflicts."

Melissa Rogers, chair, President's Advisory Council on Faith-based and Neighborhood Partnerships

"The state may wish for collateral, and it may want the church's other affairs to be investigated. This is a practice I would work to avoid, as the risks may outweigh the benefits. Furthermore, there may be a few members opposing the program. As a church program, their opposition can be detrimental and cause a rift; [whereas] a program carried out by an nonprofit organization that is aligned with the church does not need such unanimous approval and may prevent internal conflicts and avoid staff hiring conflicts."

Ram Cnaan, professor of social welfare, University of Pennsylvania

"Establishing nonprofits is a 21st century expression of the Wesleyan legacy. Wesley believed the world was his parish and operated accordingly in starting social ministries. In today's society, one of the most effective ways to minister to the world is to establish a 501(c)3. If today's church were the Acts church, there would be no need for the department of health and human services because the church would be meeting the needs of the people."

Kirbyjon Caldwell, pastor, Windsor Village United Methodist Church

"I think it's advisable for a church to establish a separate organization, particularly if they're dealing with a significant amount of money and not something like the transfer of a used computer or a few thousand dollars to defray some expenses. That's largely for the protection of the church itself, which otherwise would be subject to a number of requirements which probably aren't appropriate for a church to be subject to."

Stanley Carlson-Thies, president, Institutional Religious Freedom Alliance

"Separate incorporation can be prudent because it forces the ministry to keep government funds separate and limits the scope of a government audit. But unless the red tape adjusts for size and beginner charities, neighborhood storefront ministries will be priced out of the competition for government grants."

Carl Esbeck, professor of law, University of Missouri

"The church must be a proper steward and know what it is getting into. I've seen churches do it very well—keep their mission and freedom and also utilize government resources effectively—and I've seen groups get caught in the morass. It really comes down to the individuals who are leading the church. It's important for churches to look inward and look at internal capacity, and to not simply execute programs but to understand the environment in which the program will occur."

Rodolpho Carrasco, associate director, Partners Worldwide

"Should they? Yes. Should they have to? No. It would be safer and easier if people did have to form 501(c)3s. But for many ministries valuable in reaching the poor, the complications of forming a 501(c)3 would be formidable and prohibitive; 90 percent of them wouldn't even try. The places where you might need the money most, because it would do the most good for the most marginalized, would not get the money. The least that churches have to do is form a clear, separate accounting system. But to demand that churches form a separate 501(c)3 is too complicated and will defeat the purpose."

Joel Hunter, senior pastor, Northland Church

"Churches are not primarily social service agencies. But one thing they can do better than other kinds of organizations is mobilize volunteers to do certain kinds of tasks—particularly mobilizing small groups of volunteers to do well-defined tasks on a periodic basis, like the 10 adults who cook dinner in the homeless shelter, or 20 people who work eight Saturdays in a row for a Habitat project, or the youth group that will paint for two weeks in the summer. That kind of contribution is congregations' special niche in this larger system."

Mark Chaves, sociologist, Duke University

Copyright © 2010 Christianity Today. Click for reprint information.

Related Elsewhere:

Previous topics for discussion included whether evangelicals are doing a good job at racial integration, whether Christians should leave the American Medical Association, the most significant change in Christianity over the past decade, whether the Supreme Court should rule that memorial crosses are secular, multisite campuses vs. church plants, and whether Christians should fast during Ramadan with Muslims.

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