Hot Legal Topics – ECFA Webinar

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Build Your Ministry On Solid Ground

So many church and nonprofit leaders are passionate and have a clear direction for their ministry, but they’re not sure what legal documents need to be in place to protect their organization. In this webinar hosted by the Evangelical Council for Financial Accountability (ECFA), Steven D. Goodspeed and Mark F. Juba at MG Law – The Church Lawyers – share over 30 years of experience on topics all churches need to know including:

  • governing documents – which ones are legally binding and which ones act as guidelines
  • employment – contracts, volunteer agreements, and separation agreements
  • child protection policies – guidelines for employees, volunteers, and the congregation
  • alternative dispute resolution – how to avoid landing in secular courts
  • benevolence and disaster funds – churches can give relief and donations without IRS penalties
  • domestication law – allows nonprofits or churches to move to another state without filing a new tax-exempt determination letter
Take a Closer Look at Church Governance

When it comes to the foundation of a church it is important to adopt documents that govern operations and frequently review them. The articles of incorporation or certificate of formation are the legally superior formation documents for the organization. Bylaws are also an important supporting document and should be in sync with other governing documents.

Religious liberty protections need to be addressed in the governing documents as well. Having a policy or statement of your beliefs regarding marriage and sexuality in your bylaws helps to solidify the religious liberty protections of your church.

Lead Your Flock With Employment and Volunteer Agreements

Knowing how to create employment agreements for all staff, including ministers and pastors, protects the church and self-governance. The first amendment, in conjunction with the judicial abstention doctrine, prevents judges from inserting themselves into a church’s employment decision, like selecting a minister or pastor. Churches should also outline a clear employment relationship with an executive employment agreement.

When it comes to volunteers, there is no legal right to volunteer at a church, and the church has no legal obligation to allow a person to volunteer. This issue is crucial when screening and selecting volunteers, especially in your children’s ministry. Your church has the legal right to lead forward with your beliefs and draft a volunteer agreement that clearly states these guidelines.

In the employment policies or handbook, a church should protect its right to discriminate on the basis of religious beliefs. To do so, a church should include a clear statement of faith in the employee handbook which employees and volunteers should be expected to follow. Having written policies that are consistently implemented is key for nonprofits and ministries to operate according to its beliefs.

Protect the Most Vulnerable

Keeping churches and ministries safe for children is crucial. With the proper training, policies, and experienced legal counsel, churches are aware of how to prevent their children’s ministry from being compromised. Besides the legal ramifications, churches need to know that insurance coverage may be affected if churches employ registered sex offenders or even allow them to attend services. Applying the child protection policy to social media, online, or text messaging also ensures that the church is providing a safe place for the most vulnerable among us.

Settle Disputes Outside the Judicial System

In case a church faces a dispute, the Christian Alternative Dispute Resolution helps to settle disputes while protecting your ministry’s beliefs. This process is recognized by the courts as a valid means to settle disputes outside of the judicial system and allows churches to reach a faith-informed resolution. Including the resolution on all documents helps to protect the church’s belief system so it is not subject to secular law unless it is absolutely required.

Provide Relief During Tragedies Without Taxable Income

Unfortunately, tragedies like natural disasters or accidents affect ministries. During these trying times, churches often want to provide relief through benevolence or disaster funds. The IRS generally prohibits churches and nonprofits from giving money or assets to individuals. However, funds can be directed through a benevolence or disaster fund that is governed by IRS’ rules for tax deductibility status. Like any policy, the church must clearly define these policies and maintain well-documented records distributed funds in the event of an IRS inquiry.

Free to Move About the Country

Not many churches decide to uproot and move to another state. But many churches may want to expand their ministry to serve a need in another state. With the domestication law, nonprofits are no longer required to re-apply for the IRS tax exemption determination letter if it changes its incorporation from one state to another. This is a huge benefit to ministries who began in one area but now feel their mission and ministry is better reached someplace new.

The valuable information covered in this webinar only scratches the surface of the legal issues churches face. If you would like more guidance related to your specific ministry, contact The Church Lawyers to receive legal counsel today.