Well, they’d done it. Ken and his friends had announced their decision to start a new church. “Announce,” though, was probably a little dramatic. They’d decided to start a church and agreed to let their friends and acquaintances know of their decision. Whether anyone actually learned or cared was another matter. But as soon as they’d made the decision to start a church, Ken and his friends faced another question: what was next? Ken realized that they really didn’t know how to start a church.
Deciding
Deciding to start a church is one thing, while actually starting a church is another thing. A first step to starting a new church is indeed gaining a consensus decision to do so. Better if everyone agrees with the decision. Unanimity among your key contributors would be best. Even one holdout can reduce the commitment level, when starting a new church requires plenty of commitment. Follow a deliberative process. Hold meetings. Share in advance the purpose of the meeting to consider whether to start a new church. Let your candidate leaders and supporters prepare, pray, study, and research. Meet, discuss, and then adjourn for more prayer, study, and research before meeting again. Several meetings over a relatively extended time are generally wise, until clarity and consensus emerge. Then formalize the decision. Call a vote or make an equivalent call for final affirmation or dissent. Be sure of who’s on board and who’s not on board, and proceed only when you have a strong and clear consensus. Prayer, and God’s answer to prayer as the participants discern and share it, is the key ingredient to a sound decision.
Organization
As soon as you decide to start a church, the form of your organization as a church becomes an important question. Who, really, has decided to start the church? A few individuals? A group of friends and acquaintances? If so, then what is their status or membership as a group? Your organization form answers those questions. A solid first step after deciding, either yourself, within your leadership group, or as a body of believers, to start a church is to form the organization in a manner that federal and state authorities will recognize. For millennia, church bodies have formed simply by believers gathering regularly. Yet modern society and the state have ways that they recognize groups or associations of individuals who have agreed together to carry out a common corporate purpose. And the state expressly extends those corporate forms to churches, along with certain advantages.
Incorporation
In short, a good first step to start your church, after clearly and firmly deciding to do so, is to incorporate it under the laws of your state. Incorporation involves completing a state articles of incorporation form, likely available online from your state’s corporations bureau. See the example form in the appendix at the back of this guide. You, as the incorporator, sign the completed form and file it with the state along with the modest filing fee. After reviewing the form for sufficiency, the state then recognizes your church as incorporated by assigning it a corporate identification number, file-stamping the articles of incorporation, and returning the articles to you while also making them available online for public inspection. If you have other founders of your new church, they may join you as incorporators, although they need not do so. The office of incorporator is largely a formality, effectively relieved and completed once the church has its first board.
Representation
You can begin to see that incorporating your church can have a degree of complexity to it. Skilled administrators who can follow instructions and are familiar with corporate matters may be generally capable of incorporating their own church. But you will speed the process and ensure its orderly steps if you retain qualified attorney representation. Your attorney may also help you draft articles of incorporation with greater detail than the state’s form calls upon you to provide. See the example articles of incorporation in the appendix at the back of this guide. If you don’t know of a qualified attorney, ask friends and acquaintances, and use the local or state bar’s lawyer referral service. You may also find help from your sponsoring church, denomination, or other acquaintances familiar with church administration. Follow this guide and the similar guide Help with Your 501(c)(3).
Nonprofit
Your state may have several corporate forms including a for-profit corporation, limited liability company, professional corporation or professional limited liability company, and nonprofit corporation. A nonprofit corporation is the form that your church should take. Your state likely has a separate nonprofit corporation act, apart from its business corporation act. The state will grant your church the privileges and impose on your church the duties of a nonprofit corporation under the state act. Nonprofit corporation acts may run to tens of thousands of words, covering many details of corporate formation, organization, and operation. Review your state’s act online, and you’ll see provisions governing officers, meetings, property, contracts, liabilities, and so on. Your church’s recognition as a state nonprofit corporation gives it a clear legal standing, with the authority to open accounts, own properties, buy and sell goods and services, hire and fire employees, and do everything else needed to operate a church. See the example articles of nonprofit incorporation form among the forms in the appendix to this guide.
Ecclesiastical
Some states have statutes authorizing an ecclesiastical corporation as a specific religious form of nonprofit corporation. If your state is among those recognizing ecclesiastical corporations, then you should use that form to incorporate your church. The articles of incorporation forms in the appendix at the back of this guide include an ecclesiastical corporation form. The states generally treat an ecclesiastical corporation under their nonprofit corporation act in similar fashion to a non-religious nonprofit. The ecclesiastical form, though, may invite the church to formally associate with a denomination, recognizing that many churches do wish to exist under the leadership of a central organization. Be sure to file the right form of articles of incorporation with your state. Use nonprofit articles if your state does not recognize ecclesiastical corporations but ecclesiastical articles if your state recognizes them and offers an appropriate form.
Societies
A body of believers does not have to incorporate to function as a church, at least a spare church. Unincorporated religious groups and societies are common. Unincorporated religious societies teach, evangelize, worship, pray, baptize, offer communion, host weddings, and do other things that churches regularly do. However, states do not generally authorize unincorporated societies to form contracts or buy, sell, and hold property. Unincorporated religious societies thus don’t generally own facilities, hire and employ staff, or otherwise act on their own behalf, apart from the individual responsibility, accountability, and liability of their members. Unincorporated religious societies also don’t offer the limited liability protection of an incorporated body, don’t offer a governance structure, and have no corporate existence beyond the continued meetings and actions of their members. Although religious societies may accomplish much good work, they generally don’t do so after the manner of a traditional church. For that work, you’ll do better incorporating as a nonprofit entity under your state’s laws.
Sole
If for some reason you’re convinced you want a church but don’t want to incorporate it, you may have another option. A few states recognize an ancient peculiarity of the law known as a corporation sole in which a religious officer acts as a corporate representative of the unincorporated church. In those states, the officer may hold property for an unincorporated church to pass on to the next officer when the first officer resigns or retires, and so on. A corporation sole, though, offers no corporate governance structure, no limited liability protection, or no ability to contract. The IRS and your state, county, or city may also not recognize the ancient form as exempting your church from income, property, sales, or other taxes. Don’t get too fancy. If you want to start a church with the usual advantages and structure of a church, incorporate it as a state nonprofit corporation.
Name
Incorporating your church requires you to choose a name. Names can be hugely significant toward carrying out the church’s mission. Identifying or not identifying your church as a church, identifying or not identifying your church as affiliated with a denomination, and giving your church a priority such as first or second and a geographic identifier are all considerations. Nonprofit corporations must generally not use in their name for-profit identifiers like company or corporation or abbreviations like corp., co., or inc. If your church desires to use more than one identifier in different settings or for different purposes, your church may later file a certificate of assumed name for the second or subsequent identifier, after choosing the incorporated name. The name you choose must also be available. Search your state’s corporations bureau online for name availability before filing your articles of incorporation, or the state may reject them for the name you chose already being in use by another church. Give careful thought to your church’s name.
Membership
Your articles of nonprofit corporation will likely also have to identify whether your church is a membership organization or directorship organization. Membership organizations identify members clearly enough to count the roll to elect the board members who will govern the organization. Directorship organizations have no voting members. Board members instead elect board members. The advantage to a membership church is that the members democratically elect and control the board. The advantage to a directorship church is that the members do not democratically elect and control the board. Directorship boards can move their church in the direction they see fit, with only loss of members holding them accountable. Directorships are also generally simpler to run without having the formality of annual membership votes. Give substantial consideration to your choice of membership or directorship.
Exemption
For your church to qualify for tax exemption under Internal Revenue Code Section 501(c)(3), it will help or may even be necessary for your church’s articles of nonprofit incorporation to include language expressly limiting your church to tax-exempt charitable and religious purposes. See the example articles of incorporation in the appendix at the back of this guide. A later chapter addresses tax exemption and refers to the necessary language and example forms in the appendix to this guide. Again, follow this guide and the similar guide Help with Your 501(c)(3).
Reflection
How satisfied are you with the process you followed to gain agreement from your leaders or members to start a new church? Do you have unanimity or a strong consensus? Are you an appropriate incorporator of your new church, or should someone else be the incorporator or join you as incorporator? Do you have a qualified attorney representative to help you through the process or a skilled official at your sponsoring church or denomination to assist? Is a membership or directorship the better form of governance for your church?
Key Points
Before starting your church, deliberate and memorialize your decision.
Your church benefits from a form of organization the state recognizes.
Incorporation is a church’s preferred form of organization.
You incorporate your church by completing and filing a state form.
Attorney representation can speed and ensure a sound process.
Your church should incorporate as a nonprofit, not a for-profit.
Your state may have an ecclesiastical corporation form to use.
Unincorporated societies can function but not hold property.
A few states have a corporation sole for religious officers, not of use.
Choose your church’s name carefully to identify the mission.
Choose the better of either a membership or directorship form.
Include the necessary tax-exempt language in your corporate articles.