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Church An Umbrella For Member Ministries

Corporate Law Discussions

Church An Umbrella For Member Ministries

Postby Anant » Wed Dec 24, 2014 9:49 am

I am a pastor of a 501c3, non-profit church in PA. Can the church's 501c3 status serve as an umbrella for myself when I go other places and minister under my own(not the church's) ministry name?  Can the church "cover" other members who also have their own ministries?

ANSWER: What you are referring to is called by the IRS "group exemption" .

Group Exemption is discussed starting on the bottom of the first

column on page  7 of IRS Publication 557 at

www.irs.gov/pub/irs-pdf/p557.pdf

We see there that the only subordinates are organizations which are themselve established under state law as an exempt organization.  A individual can not be such an organization unless that individual(you) incorporate under a state's corporation sole provisions.  In the alternative you could organize, with a minimum of 3 unrelated directors, a nonprofit organization for your preaching. In any case, the IRS exemption organization fee page for 2011 has, for the third item, that the fee is $3000 for the present church to apply for the group exemption determination.

www.irs.gov/charities/article/0,,id=232771,00.html

Harvey Mechanic, Attorney at Law - [email protected]

---------- FOLLOW-UP ----------

Can I, the pastor of a church in PA, function under a fictitious name when I go other places to preach and, without incorporating my own ministry, use the 501c3 status of the church?

ANSWER: A fictitious name does not mean that a entity is formed.  You are still an individual as to the IRS.  Therefore, as I wrote above, you could not use the status of the church unless it was the church that obtained the fictitious name and all of the funds went into a church bank account with the church's EIN(Employer Identification Number, also known as the taxpayer identification number). Harvey Mechanic, Attorney at Law - [email protected]

---------- FOLLOW-UP ----------

Thanks for answering my first two questions.  At some point the church I am a pastor of will probably apply for a group exemption, as there are a few individuals in the church with their own growing ministries - I understand that each person would have to incorporate their ministries to be able to come under any future IRS-acknowledged "group" status of the church's 501c3.

In the meanwhile our church is considering on doing the following, and I am asking if what we are considering is legal and appropriate.  The church would obtain the fictitious name that I would use when I go to other places to minister.  As it is now, I am already sent out and supported by(not financially, but through prayer and encouragement)the church when I do that - it is the will of the board and the consensus of the members that I take the things that we have successfully working for us and help others to do the same.  The church would open a bank account for "my ministry", using its EIN and the factitious name it obtains, and the board would oversee, review and be in control of all funds deposited there.  The income would come from honorariums and the sale of my own teaching literature, cd's and dvd's.  I would receive some sort of agreed upon compensation from this account, and the accounting record of all income and expenses would be made available as reports to the board and the membership of the church.  Some amount, probably 10% of the "profit" would always be automatically put into the general church fund.  (By profit I mean the amount of honorarium that exceeds the expenses that were incurred and necessary in performing the ministry at the other location.)  None of the general church funds would ever go into the factitious name account, but funds from it would be transferred to the church account.  All allowable professional expenses incurred by me in "traveling ministry" would be reimbursed from the fictitious name account, in accordance with the church board's written and already agreed upon professional reimbursement arrangements.

My question is - would this be appropriate and allowable for our church to use a factitious name in this manner?  If not, what would we have to do to comply with an appropriate use of a factitious name for "my" ministry?  Or is this an avenue that we shouldn't even consider?  I want to make sure we are doing what's right.

Thank you so much for reading this long email and for helping.
Anant
 
Posts: 40
Joined: Thu Jan 16, 2014 11:15 pm

Church An Umbrella For Member Ministries

Postby Christmas » Thu Dec 25, 2014 3:02 pm

You are welcome.  I have in my profile that this free forum is only for general questions relating to IRS federal exemption issues of 501(c)(3) organizations. The church may set up as many accounts as it wants including an account using a fictitious(note the spelling) name, if that is allowed under Pennsylvania law, but it would then need to account for payments to you as an employee or an independent contractor.  

Harvey Mechanic, Attorney at Law - [email protected]
Christmas
 
Posts: 43
Joined: Sat Feb 01, 2014 5:59 am


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