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Why Every Church Needs a Gift Acceptance Policy

Not every charitable gift is right for every church. A well-designed gift acceptance policy helps leaders evaluate complex donations, protect the ministry from unnecessary risk, and make consistent decisions that honor both donors and the church’s mission.

Matthew Branaugh, Attorney and Editor

Bio

Churches are called to receive generosity with gratitude and steward it faithfully. Generous giving fuels ministry.

Every week, churches receive charitable donations–whether cash, real estate, or personal property–that support worship, outreach, discipleship, missions, benevolence, education, and countless other ministries.

Many of these gifts are straightforward. Others are not.

Get the tools and trusted guidance your church needs to make wise decisions about complex gifts and reduce unnecessary risk. Become an Advantage Member today to access our Gift Acceptance Policy and other attorney- and CPA-developed resources.

Stewardship extends beyond how contributions are spent. It also includes discerning whether certain gifts should be accepted in the first place.

More than just cash

While most gifts involve cash or routine online giving, church leaders increasingly encounter more complex gifts, including:

appreciated securities;
closely held business interests;
cryptocurrency;
intellectual property;
vehicles;
real estate;
donor-advised fund grants;
planned gifts through estates and trusts.

While these gifts can provide tremendous opportunities, they can also expose a church to unexpected legal, financial, tax, environmental, operational, and reputational risks if not carefully evaluated.

Unexpected questions

These gifts often involve issues unfamiliar to many church leaders, triggering questions like:

Does accepting this gift create ongoing financial obligations?
Will this property require expensive maintenance?
Could environmental contamination become the church’s responsibility?
Are there tax consequences?
Can the donor legally require the church to use the gift in a particular way?
Should the church accept ownership of a struggling business?
Does accepting this gift advance—or distract from—the church’s mission?

A thoughtful gift acceptance policy helps answer these questions before problems arise. It also communicates to donors that the church is committed to honoring generosity while faithfully stewarding the resources entrusted to its care.

Equally important, a written policy allows church leaders to make difficult decisions consistently. Rather than responding differently depending upon the donor or the amount involved, leaders can point to an established process that treats every proposed gift fairly and objectively.

Declining an unsuitable gift should never be viewed as rejecting generosity. Sometimes the most faithful act of stewardship is recognizing that accepting a particular gift would ultimately burden the church rather than strengthen its ministry.

Church Gift Acceptance Policy and Procedures Template

Church Law & Tax’s policy template (download your copy) guides church leaders through these questions and considerations. It’s designed to help churches:

establish consistent gift acceptance procedures;
reduce unnecessary legal and financial risk;
protect donor intent whenever practical and lawful;
clarify decision-making responsibilities;
promote good governance;
encourage thoughtful stewardship.

Strengthening the mission

Every charitable gift represents an act of generosity and trust.

Receiving that generosity faithfully requires more than gratitude—it requires wisdom, discernment, accountability, and stewardship.

A thoughtfully developed gift acceptance policy helps church leaders evaluate opportunities consistently, communicate clearly with donors, reduce unnecessary risk, and ensure that every accepted gift strengthens the church’s mission for years to come.

Whether a church receives a weekly offering, a gift of appreciated stock, a parcel of real estate, or a transformational estate gift, the principles remain the same: honor the donor, protect the ministry, and steward every resource for God’s glory.

Editor’s Note: This article was created using a combination of artificial intelligence and a human editor and attorney.

Gift Review Checklist

Before accepting a complex gift, consider the following questions:

Mission

☐ Does this gift advance the Church’s mission and tax-exempt purposes?

☐ Is acceptance consistent with our theological convictions?

Ownership

☐ Has ownership been verified?

☐ Are transfer documents complete?

☐ Are there liens or encumbrances?

Financial

☐ Estimated value reviewed

☐ Carrying costs evaluated

☐ Insurance reviewed

☐ Marketability considered

Legal

☐ Legal counsel consulted (if appropriate)

☐ Contracts reviewed

☐ Environmental issues evaluated (if applicable)

☐ Tax implications considered

Operational

☐ Storage

☐ Maintenance

☐ Staffing

☐ Transportation

☐ Security

Governance

☐ Appropriate approvals obtained

☐ Restrictions documented

☐ Board minutes completed

Gift Acceptance Matrix

Gift Type	Designated Authority	Board Approval	Professional Review
Cash	✓	No	No
Checks	✓	No	No
Online Giving	✓	No	No
Publicly Traded Securities	✓	Usually No	Sometimes
Closely Held Business Interests	Recommendation	Yes	Yes
LLC Interests	Recommendation	Yes	Yes
Partnership Interests	Recommendation	Yes	Yes
Cryptocurrency	Recommendation	Usually Yes	Yes
NFTs/Digital Collectibles	Recommendation	Yes	Yes
Vehicles	Usually	Sometimes	Sometimes
Artwork	Usually	Sometimes	Appraisal Recommended
Intellectual Property	Recommendation	Yes	Yes
Real Estate	Recommendation	Yes	Yes
Planned Gifts	Usually	Sometimes	Sometimes

IRS Quick Reference for Church Leaders

Remember:

✓ Donors who itemize charitable contributions must follow IRS rules for substantiating them. As a courtesy, the Church provides donors with contemporaneous written acknowledgements for individual cash contributions of $250 or more. The church also substantiates noncash gifts, but provides only description of noncash gifts (not their dollar values).

✓ Acknowledgements must include a statement that no goods or services, other than intangible religious benefits, were provided by the Church, if that was the case. If the Church provides any goods or services in return for the gift, it must include a description and good-faith estimate of their values.

✓ Donors—not the Church—are responsible for obtaining qualified appraisals when required.

✓ When a donor values a noncash gift at $5,000 or more, the Church will provide a designated person to sign Part V of Section B of the donor’s required Form 8283.

✓ The Church shall complete and/or file applicable IRS forms when required by law, including Form 8282 for property valued by the donor at $5,000 or more and disposed of by the Church within three years of the contribution date.

✓ The Church should keep complete documentation supporting every significant gift.

Practice Tip

Establish a standard receipting process for every contribution, regardless of size. Consistency strengthens both donor confidence and financial accountability.

Matthew Branaugh is an attorney and editor for Church Law & Tax.

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Advantage Member Template: Gift Acceptance Policy and Sample Board Resolution

This template is provided by Church Law & Tax and Gloo for informational and general

This template is provided by Church Law & Tax and Gloo for informational and general guidance purposes only. It does not constitute legal, tax, accounting or investment advice, and Church Law & Tax and Gloo are not law firms. No attorney-client relationship is created by your use of this template.

This template is not tailored to the specific circumstances, legal obligations, or operational needs of any particular church or religious organization.

Church leaders should consult qualified legal counsel, tax advisors, and other appropriate professionals before modifying, adopting, and/or implementing this policy.

Church Law & Tax and Gloo make no representations or warranties, express or implied, regarding the accuracy, completeness, suitability, or legal sufficiency of this template.

Use of this template is at your own risk. Church Law & Tax and Gloo shall not be liable for any damages, losses, or liabilities arising from your use of, or reliance on, this template.

This template reflects general guidance as of the date of publication and may not account for developments occurring after that date.

Church_Gift_Acceptance_Policy Download

Sample Board Resolution Download

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Can Church Employees Volunteer at Their Own Church?

A new Department of Labor opinion letter clarifies when nonprofit employees may volunteer for their employers—and offers churches a practical framework for determining when an employee’s volunteer service could become compensable work.

Matthew Branaugh, Attorney and Editor

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Frank Sommerville, Attorney, CPA

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Elaine L. Sommerville, CPA

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The U.S. Department of Labor’s Wage and Hour Division (WHD) has addressed an important question that often arises in church workplaces: When may a church employee volunteer additional time for the church without that time becoming compensable work under the Fair Labor Standards Act (FLSA)?

In Opinion Letter FLSA2026-12, WHD reviewed a specific case involving exempt employees of a nonprofit that breeds and trains service dogs who want to volunteer outside normal work hours as puppy caretakers in their homes.

Church employment rules can get complicated quickly—and getting them wrong can expose your church to back wages, overtime, and other costly liabilities. Become a Church Law & Tax member for trusted guidance on employment, tax, legal, and financial issues, or subscribe to our free weekly newsletter to stay informed about developments affecting your church.

The department explains that nonprofit employees—whether exempt or nonexempt—may volunteer for their employer if the services are:

Offered freely,
without direct or implied coercion,
without an expectation of compensation, and
are not the same or similar to the work they are employed to perform.

An employee cannot simply “volunteer” to perform essentially the same duties they normally perform for pay. Whether duties are sufficiently different depends on the facts and circumstances, including how closely the volunteer activities relate to the employee’s regular responsibilities.

“Put another way, a nonprofit employee cannot be both a paid employee and a non-paid volunteer while performing the same type of work for the same employer,” the department said.

The analysis

Applying this standard, WHD concluded that veterinarians and directors could potentially volunteer as puppy caretakers because their regular duties were assumed to differ substantially from routine canine care and socialization.

Trainers, however, generally could not volunteer for such work because training and caring for dogs substantially overlap with their paid duties.

WHD referenced five past cases put before the department to help further illustrate the way the analysis works:

A hospital office employee could volunteer to sit with patients during off-duty hours;
A school district bus driver could volunteer as a school basketball coach;
A secretary for a nonprofit serving at-risk youth could chaperone a trip because the secretary’s primary employment duties did not involve supervising children.
A school district bus driver could not volunteer to drive a school’s basketball team to away games because it overlapped with his primary employed duties.
Detention officers could not volunteer as reserve peace officers for the same public employer because duties between the roles overlapped.

For properly exempt employees, WHD clarified that improperly characterized “volunteer” work may not require additional compensation if their primary duties remain exempt work and they continue to satisfy all exemption requirements.

Caution: The department nevertheless cautions nonprofits that misclassifying “volunteer” time can affect the analysis of an employee’s status as an exempt employee and can create liability for back wages, overtime, liquidated damages, and attorneys’ fees for employees that are classified as nonexempt.

What this means for churches

Churches often face situations in which exempt and nonexempt employees want to volunteer for church events, ministries, and activities.

The WHD guidance suggests room for such volunteering.

However, churches should use the WHD’s analysis before approving any volunteering.

When an employee desires to volunteer, the churches should:

Review all employee job descriptions to ensure they are detailed and accurate and such duties do not overlap with the requested volunteer areas;
Review wage classifications for ministerial exception, exempt, and nonexempt employees to ensure they are correct;
Outline specific duties a volunteer role entails and then review how those may overlap with an employee’s primary paid duties;
Verify the employee freely wishes to volunteer, without appearance of coercion; and
Verify the employee does not expect compensation for the volunteer work.

Tip: Special consideration should be given when an employee will be volunteering in roles supervised by the same person as the employee’s regular supervisor as this may indicate the duties are more “work” duties than “volunteer” duties.

We used AI to help generate this content, which Frank Sommerville, Attorney and CPA, and Elaine Sommerville, CPA, peer-reviewed.

Matthew Branaugh is an attorney and editor for Church Law & Tax.

Frank Sommerville is both a CPA and attorney, and a longtime Editorial Advisor for Church Law & Tax.

Elaine L. Sommerville is licensed as a certified public accountant by the State of Texas. She has worked in public accounting since 1985.

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Can Churches Get Political? What Church Leaders Need to Know

Churches and pastors have constitutional rights to political speech—but tax-exempt status comes with restrictions. Here’s what leaders should consider before candidates, causes, and elections enter the conversation.

Matthew Branaugh, Attorney and Editor

Bio

Can churches get political?

The question feels especially loaded for pastors as the heat of our political landscape seemingly burns hotter than ever.

Some want to see their churches take a stand for or against specific candidates or causes. Others wonder whether any stands taken by their churches should occur at all.

Stay informed on the legal, tax, finance, and risk issues affecting churches. Sign up for a free Church Law & Tax newsletter or become a member today for trusted guidance and practical resources from leading experts.

Many pastors feel caught in the middle.

To help, Church Law & Tax put together a free guide to help churches and pastors navigate political activities.

Video: Can Our Church Get Political?

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The goal is to help leaders understand where lines exist, and how they should thoughtfully consider them before deciding how to act.

Thankfully, while the political landscape offers a lot of heat to our cultural moment, pastors and church leaders have an opportunity to bring light.

A fuller picture

Technically speaking, churches can get political. The Constitution’s Free Exercise and Free Speech clauses offer robust protections for churches and pastors to speak and act as they feel called based on their theological convictions.

Whether it’s endorsing a candidate for Congress or lobbying against a ballot measure involving, say, the legalization of marijuana, they can respond as they feel led.

But there’s more to consider.

Specifically, the Internal Revenue Service (IRS) lays out two requirements for nonprofits and churches in order to maintain their tax-exempt statuses.

One requirement, based on the controversial 1954 adoption of the “Johnson Amendment,” says tax-exempt entities cannot support or oppose political candidates, even to an insubstantial degree.

The other, based on an act of Congress from 1934, says churches can support or oppose ballot measures, or lobby for or against legislative matters—but only if these activities represent “no substantial part” of their overall operations. Defining “substantial” has proven elusive over the years.

Status quo

Adding to the ambiguity: Limited enforcement by the IRS. Only a handful of violations have ever been openly pursued by the agency.

An executive order issued by President Donald Trump in 2018 attempted to undo the Johnson Amendment but lacked any substantive legal effect.

A 2024 lawsuit brought by two Texas churches and the National Religious Broadcasters appeared destined to bring change when the IRS agreed to a settlement statement offering churches and religious organizations more leeway. But a federal judge dismissed the case on jurisdictional grounds.

The IRS listed updated guidance on the Johnson Amendment as a 2025-2026 priority, but until anything is issued, the status quo remains.

That leaves pastors and churches facing continued uncertainty. Should they support or opposed candidates? What stands should they take? Is risking their tax-exempt statuses worth it? Should tax exemption even influence a decision to begin with?

Room to advocate

Pastors and church leaders should first examine how God is calling their church to act, whether it involves a candidate or an issue.

For some, they are resolute about issues affecting their communities—or the country as a whole—and they believe they need to engage, as is their right.

The Constitution protects churches and pastors who wish to speak into these issues, and whether it comes from the pastor’s preaching, a pastor testifying on behalf of the church before a legislative committee, or other forms of advocacy, there is room to act.

Those actions won’t likely trigger IRS scrutiny, either, unless the time, money, and resources expended become a substantial part of the church’s operations.

While the constitutional protections remain when it comes to political candidates, the assurances of tax-exempt protection do not.

Even with relatively nonexistent IRS enforcement, pastors and church leaders must contemplate what a loss of exemption could mean for their congregations. Among the potential impacts:

property tax exemptions;
sales tax exemptions;
charitable contributions deductions for donors;
eligibility for certain types of retirement plans;
availability of unemployment taxes.

More importantly, though, a church’s stand for or against a candidate or issue may invite division within the congregation itself. A 2024 survey by the National Association of Evangelicals reinforced these concerns, with 98 percent of pastors saying candidate endorsements should be avoided—largely because of the divisions they can cause.

A force for civic good

While there is an opportunity to bring light on key political issues during this election season, churches and pastors also have an opportunity to shine in another important way: they can support our country’s democratic processes.

For instance:

Hosting nonpartisan forums inviting all candidates;
Serving as a precinct location for elections;
Compiling and distributing voting records (without commentary) of candidates on major issues;
Conducting nonpartisan voter registration drives; and,
Providing educational materials and hosting educational meetings about community issues, such as drug legalization, education reform, health care access, and economic development.

Can churches get political? Constitutionally speaking, yes.

Should churches get political? That’s a more nuanced question for every pastor and church, but one worth answering. There’s an opportunity to bring light, even in the heat of an election season.

Matthew Branaugh is attorney and editor of Church Law & Tax. Don’t miss Church Law & Tax’s free guide on churches and political activities and its “Politics and the Church: Activism, Speech, and the Tax Code” Recommended Reading page.

Matthew Branaugh is an attorney and editor for Church Law & Tax.

Download: AI Policy Template for Churches

Use this policy template to provide guidance regarding any uses of artificial intelligence within church

Use this policy template to provide guidance regarding any uses of artificial intelligence within church work

Disclaimer

This template is provided by Church Law & Tax and Gloo for informational and general guidance purposes only. It does not constitute legal advice, and Church Law & Tax and Gloo are not law firms. No attorney-client relationship is created by your use of this template.

Laws and regulations governing artificial intelligence, data privacy, employment, and related matters vary by jurisdiction and change frequently. This template is not tailored to the specific circumstances, legal obligations, or operational needs of any particular church or religious organization.

Church Law & Tax and Gloo make no representations or warranties, express or implied, regarding the accuracy, completeness, suitability, or legal sufficiency of this template. Use of this template is at your own risk. Church Law & Tax and Gloo shall not be liable for any damages, losses, or liabilities arising from your use of, or reliance on, this template.

This template reflects general guidance as of the date of publication and may not account for developments in law or technology occurring after that date.

When to Use This Template

To create a workplace culture demonstrating commitments to biblical integrity, and legal, ethical, and responsible uses of artificial intelligence (AI)
To provide acceptable and unacceptable uses of AI for church work, including examples
To establish an ongoing process for church leaders to examine current and potential AI uses and potential policy changes as AI and the legal landscape surrounding it continue to evolve

How to Use This Template

Review this template with qualified legal counsel familiar with applicable federal, state, and local laws, as well as the specific laws governing nonprofit and religious organizations in your jurisdiction
Consult with relevant advisors (including HR, finance, and technology professionals) as appropriate
Customize bracketed sections of this template to reflect your church’s actual practices, structure, and values
Approve through a process consistent with your church’s governing bylaws, such as a board-approved action
Communicate to all personnel
Apply consistently
Review at least once a year and amend as needed

Best For

Church Board
Technology Committee
Church IT Leader/Department
Executive Pastor

Editor’s Note

Churches often handle sensitive or confidential information. Examples of sensitive or confidential information include, but are not limited to, pastoral care records, prayer requests, information about children and youth, employment-related matters, donor information, membership records, volunteer screening data, disciplinary matters, family crisis details, and financial assistance request details.

Some churches locally store the information. Others store it in cloud-based arrangements, typically through enterprise agreements with third-party providers that include provisions regarding related protections. This policy template should be customized to align with a church’s existing practices, including related safeguards and protections associated with sensitive or confidential information.

Download a .pdf copy:

AI_Policy_For_Churches Download

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How Churches Can Prevent AI-Powered Fraud

Artificial intelligence is making church scams more convincing than ever. From fake pastor emails to AI-generated invoices and voice messages, ministry leaders need stronger safeguards to protect church finances, sensitive data, and their congregations. Here are practical steps every church should take to reduce fraud risk before an attack occurs.

Matthew Branaugh, Attorney and Editor

Bio

Rick Spruill, Digital Content Manager

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Artificial intelligence (AI) is changing ministry operations, but it is also creating new risks for churches. Today’s scams are no longer easy to spot. AI-generated emails, voice messages, invoices, and fake receipts can look and sound legitimate enough to fool even experienced church staff members.

As a result, churches should strengthen financial controls, improve verification practices, and require stronger online security measures before fraud occurs.

Bottom line: Churches that rely on trust, fast approvals, and informal communication processes are increasingly vulnerable to AI-driven scams targeting finances, payroll, and sensitive ministry data.

Why AI Fraud Risks Are Growing for Churches

Criminals now use AI tools to create:

Convincing phishing emails
Fake pastor voice messages
Fraudulent invoices and receipts
Vendor payment scams
Impersonation texts and emails

For example, a church staff member may receive a message that appears to come directly from a pastor requesting an urgent payment or reimbursement. Meanwhile, AI-generated financial documents can look polished enough to move through busy church workflows unnoticed.

Access trusted guidance on cybersecurity, fraud prevention, legal compliance, finance, and risk management designed specifically for churches and ministry leaders.

Become a member today.

Churches are especially vulnerable because ministry environments depend heavily on trust, responsiveness, and distributed communication among staff and volunteers.

Simple Safeguards Churches Should Implement Now

Fortunately, churches can reduce fraud risks significantly with practical safeguards and stronger oversight.

Require two-factor authentication (2FA) multi-factor authentication (MFA) on all church accounts
Verify payment requests through a second communication method
Separate reimbursement, approval, and payment responsibilities
Review invoices and receipts beyond visual appearance alone
Limit access to financial and administrative systems
Train staff and volunteers to pause when requests feel unusual

Most importantly, churches should normalize verification rather than treattreating it as distrust. A quick phone call or secondary confirmation process can prevent significant financial loss.

Likewise, written response plans help churches act quickly if fraud occurs.

As AI technology advances, ministry leaders must view cybersecurity and fraud prevention as part of faithful stewardship.

Subscribe to Free Church Law & Tax Newsletters

Stay informed on the latest legal, financial, tax, and risk-management developments affecting churches nationwide.

Subscribe to our free weekly newsletters.

Matthew Branaugh is an attorney and editor for Church Law & Tax.

Rick Spruill is digital content manager for Church Law & Tax/Gloo.

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Who Should Handle Church Payroll During a Sabbatical?

When the only person who knows how to process payroll goes on sabbatical, churches face more than a scheduling challenge—they expose a critical internal control weakness. Here are practical ways to ensure payroll and IRS filings continue without interruption while improving financial oversight for the future.

Tim Samuel, CPA and Church Chief Financial Officer

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Q: I’m taking a monthlong sabbatical soon. The church has two payroll cycles to process and a quarterly withholding to file with the IRS. I am not supposed to come into work, but no one else knows how to do these tasks. In terms of compensation information, the only individuals who know who gets paid what (besides me) are church board members. And no one on staff seems willing to cover these tasks. How can these tasks get done?

A: CPA Tim Samuel, a longtime Church Law & Tax editorial advisor, offers this advice:

I would encourage the board to revisit the assumption that payroll can only be handled by one person based on the idea of keeping compensation information confidential.

But, this is a significant internal control concern. When only one person has access to payroll, the organization becomes vulnerable to errors, fraud, and operational disruption. Every church should have at least one trained backup person or an outside professional who can step in when needed.

Confidentiality is important, but it should not prevent proper oversight and cross-training. Payroll companies, bookkeepers, accountants, finance staff, and other designated leaders routinely handle compensation information as part of their responsibilities.

For this sabbatical, I would recommend one of several practical options:

• Train a trusted staff member before the sabbatical begins.

• Delegate the responsibility to the treasurer, finance committee chair, or another authorized board member.

• Engage an outside CPA, bookkeeper, or payroll specialist for the month.

• Work with your payroll provider to identify a temporary administrator who can process payroll and submit the required filings.

• Create written procedures and a payroll calendar so another individual can follow the process while you are away.

A sabbatical often reveals where an organization has become too dependent on one individual. In this case, the church has identified an opportunity to strengthen its internal controls, reduce fraud risk, and ensure critical financial functions can continue even when a key employee is unavailable.

Tim Samuel is a CPA and the chief financial officer of Bridgeway Community Church, a nondenominational, multicultural church in Columbia, Maryland, that draws more than 4,000 people each week.

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Legal Risks of AI for Churches: What Church Leaders Need to Know

Church leaders must understand the legal, privacy, and governance risks tied to artificial intelligence before adopting AI tools in ministry operations.

Matthew Branaugh, Attorney and Editor

Bio

Rick Spruill, Digital Content Manager

Bio

Church leaders increasingly use artificial intelligence (AI) tools for communication, administration, and ministry support. However, understanding the legal risks of AI for churches is essential before adopting these technologies.

AI tools can create privacy and data security risks
Copyright ownership issues may affect AI-generated content
Churches should establish written AI usage policies
Federal and state laws may apply to AI-related decisions
Proper oversight helps reduce liability and reputational harm

Churches can use AI legally and responsibly, but only when leaders understand the risks, establish policies, and maintain human oversight. Most importantly, church leaders should never assume AI-generated content is legally safe simply because it is easy to produce.

Bottom line: AI can improve church operations. However, churches that fail to establish safeguards may expose themselves to legal, financial, reputational, and cybersecurity risks.

Your staff is probably already using AI. Download our free “AI in the Church Workplace” policy template today!

Churches should prohibit staff and volunteers from using personal AI accounts for church-related business. Instead, churches should carefully select the AI tools that their employees and volunteers can use for church business to help minimize risks and maximize their effectiveness.

Why Churches Are Rapidly Adopting AI Tools

Many churches now use AI for:

Sermon research assistance
Email drafting
Social media content
Volunteer communication
Budget summaries
Church administration
Website chat support

For example, AI platforms can quickly generate outlines, summarize large amounts of text, and create ministry graphics. However, speed does not eliminate legal and ethical responsibilities.

Above all, church leaders must remain accountable for every decision, communication, and content piece produced using AI systems.

Privacy and Data Security Risks

Bottom line: Churches should never allow staff and volunteers to upload sensitive or confidential information into AI tools without first understanding how that information may be stored, used, or shared.

One of the largest legal risks of AI for churches involves privacy and data protection.

Many AI tools collect and retain user-submitted information. Consequently, sensitive church data entered into these systems may become vulnerable, subjecting the church to legal risk.

Sensitive or confidential information may include:

Prayer requests
Counseling notes
Financial records
Employee information
Children’s ministry data
Donor information

Churches should pay close attention to state privacy laws and cybersecurity obligations. In addition, leaders should review vendor terms of service carefully to ensure no church-submitted data is used to train the vendor’s system or can be otherwise accessed by the vendor’s personnel.

The Federal Trade Commission has issued guidance regarding deceptive data practices and AI-related risks. Review FTC privacy and security guidance here.

Practical Steps Churches Should Take

Create a written AI usage policy
Prohibit uses that violate laws or the church’s mission and values
Require vendor terms protecting privacy and security
Restrict sensitive data uploads
Train employees and volunteers at least annually
Review cybersecurity insurance coverage
Limit AI access permissions

Risk Area	Potential Concern	Recommended Action
Member Data	Unauthorized disclosure	Restrict uploads into AI systems unless vendor terms outline data security and confidentiality protections (seek legal counsel before final decision)
Financial Records	Cybersecurity exposure	Use secure internal systems unless vendor terms outline data security and confidentiality protections (seek legal counsel before final decision)
Pastoral Counseling	Confidentiality concerns	Avoid AI processing entirely unless vendor terms outline data security and confidentiality protections (seek legal counsel before final decision)
Children’s Data	Legal compliance risks	Avoid AI processing entirely unless vendor terms outline data security and confidentiality protections (seek legal counsel before final decision)

Copyright and Intellectual Property Concerns

Bottom line: AI-generated content may create ownership disputes and copyright infringement concerns if churches do not verify sources carefully.

Churches using AI-generated graphics, music, videos, or written content should understand potential copyright risks.

For example, some AI systems generate content based on existing copyrighted materials. As a result, churches may unknowingly publish infringing material.

The US Copyright Office has also clarified that purely AI-generated works may not qualify for copyright protection under current law. Read the U.S. Copyright Office guidance on AI here.

In other words, churches may not fully own certain AI-generated ministry content.

Common Intellectual Property Issues

Using copyrighted images unknowingly
Publishing AI-generated devotionals without review
Creating sermon graphics that resemble protected works
Uploading copyrighted church materials into AI tools

Most importantly:

Church leaders should maintain human review processes before publishing AI-created materials to avoid potential copyright violations.
Churches that prioritize copyright ownership of works created by employees and independent contractors should clarify when AI uses are or aren’t appropriate.
Church leaders should disclose when AI is used to create content shared publicly.

Employment and HR Risks

Bottom line: Churches should never rely solely on AI systems to make employment decisions involving hiring, discipline, or termination.

Employment laws apply when AI tools influence workplace decisions. Some states even require disclosures about AI uses for employment practices as well as regularized bias testing.

Laws implicated by AI uses include:

Title VII of the Civil Rights Act
Americans with Disabilities Act (ADA)
Age Discrimination in Employment Act (ADEA)

AI systems can unintentionally create discriminatory outcomes if leaders fail to monitor results carefully.

Accordingly, churches should require human oversight for all employment-related decisions.

AI Usage	Potential Risk	Safer Practice
Resume screening	Discrimination claims	Human review required
Performance scoring	Bias concerns	Human review required
Scheduling automation	Wage-hour violations	Review labor law compliance

Governance and Policy Considerations

Bottom line: Every church using AI should adopt a written governance policy before staff members and volunteers begin widespread use.

Church boards should proactively address AI governance now rather than waiting for a problem to occur.

A written AI policy should define:

Approved AI tools
Review and approval procedures for tools
Acceptable and unacceptable uses
Employee and volunteer responsibilities
Content approval standards
Cybersecurity expectations

Likewise, churches should evaluate whether their insurance policies cover AI-related claims.

Board members should also document oversight discussions in meeting minutes. This demonstrates responsible governance practices.

Advantage Members: Click here to access our downloadable AI Policy Template for your church.

Questions Every Church Board Should Ask

Do church-approved vendors provide adequate privacy and legal protections?
Who approves AI tools for the church and monitors vendor terms of service at least once a year?
What data should be shared with AI platforms?
Who approves AI-generated content?
How does the church disclose AI uses for content created and shared publicly?
How should employees and volunteers use AI for content that the church expects to own the copyright for?
Does the church’s insurance policy cover cyber incidents?
Do employees receive ongoing AI training?

Ethical and Ministry Reputation Risks

Bottom line: Even legally permissible AI usage can damage trust if churches use these tools carelessly or deceptively.

Church leaders should recognize that AI risks extend beyond lawsuits.

For example, members may react negatively if they discover sermons, devotionals, or counseling materials relied heavily on undisclosed AI assistance.

In addition, deepfake technology and AI-generated misinformation can harm ministry credibility quickly.

Accordingly, transparency and human review remain essential.

Frequently Asked Questions

Can churches legally use AI tools?

Yes. Churches can legally use AI tools for many administrative and communication purposes. However, leaders must still comply with privacy, employment, copyright, and cybersecurity laws.

Should churches create an AI-use policy?

Absolutely. A written AI policy helps reduce confusion, improve oversight, and limit legal exposure.

Can AI-generated content be copyrighted?

The US Copyright Office has stated that purely AI-generated content may not qualify for copyright protection without sufficient human authorship. Questions also remain with respect to human-created works that involve AI-generated components.

What is the biggest AI risk for churches?

Privacy and data security risks currently represent one of the largest concerns, especially when sensitive ministry information is entered into AI systems.

AI can help churches operate more efficiently, but ministry leaders should approach these tools carefully. Churches that establish clear policies, maintain strong oversight, and prioritize legal compliance will place themselves in a far stronger position as AI technology continues evolving.

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Matthew Branaugh is an attorney and editor for Church Law & Tax.

Rick Spruill is digital content manager for Church Law & Tax/Gloo.

Image: iStock/Lustre Art Group

Can Exempt Church Employees Be Paid for a Second Role?

Church employees often serve in multiple capacities, such as administrative staff who also participate in worship ministry. Understanding how exempt and nonexempt classifications interact is critical for avoiding wage-and-hour compliance issues.

Frank Sommerville, Attorney, CPA

Bio

Q: We have full-time exempt employees whose working days are Sundays through Thursdays because the church is closed on Fridays and Saturdays. These employees frequently play in the praise and worship band, meaning they attend rehearsals middays on Tuesdays during working hours and they get paid from the worship budget for playing on Sundays.

Is it a problem when an exempt employee gets paid from two different line items like this?

A: This is a good question. Questions about dual roles come up frequently in church settings. Exempt church employees can get paid for a separate nonexempt role, but the church needs to closely evaluate the duties for the roles and any implications for overtime. Here is a good decision matrix:

Nonexempt and Nonexempt. Minimum wage and overtime apply using a blended hourly rate.

Exempt and Exempt. No issues with overtime or minimum wage.

Exempt and Nonexempt. The situation is delicate because the government does not want employers to avoid overtime by simply combining an exempt position with a nonexempt position. We look at how much time is spent in each position. While 2004 regulations removed any bright-line test, the older test is still used as a guideline:

The older test is that the employee must be performing “exempt” duties at least 80 percent of their total work time. Exempt duties are those duties that allow the position to be classified as exempt. If the nonexempt duties require more than 20 percent of their work time, they are nonexempt for all hours worked.
Under the 2004 regulations, the test is a “primary duty test.” The key question to evaluate: What is the employee’s principal, main, major, or most important duty, considering the position is treated as one? If the employee’s primary duty qualifies for exempt classification, then the employee is exempt. Primary is defined as the main, major, or most important duty. To determine the primary duty, the US Department of Labor (DOL) will also examine the time spent in each job, the degree of supervision, the relative compensation allocated to each position, and the relative importance of the two positions to the employer.

Under the older test, if the exempt employee performed exempt duties for 40 hours per week and worked for the praise and worship band 10 hours per week, the employee is likely nonexempt. But if the employee performed exempt duties for 50 hours per week and worked for the band 8 hours per week, the employee is likely exempt. Since these hours likely fluctuate, the DOL uses an annual average.

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Under the newer test based on the 2004 regulations, the main, major, or most important duty will be the focus. Let’s say the employee is classified as exempt under the administrative classification because the employee is the church’s chief financial officer (CFO). The employee also plays an instrument in the worship band, which has six instrumental players. Since the CFO’s administrative duties are the main, most important duty, the CFO is likely classified as exempt.

If the exempt employee does not turn in time sheets, the employee and the DOL get to estimate the time worked if the employee is reclassified as nonexempt.

I assumed two jobs here based on the question, but the principles work regardless of the number of jobs held.

Related: Wondering how to handle compensation when a pastor leaves unexpectedly? Read our guidance on paying a pastor after resignation to understand key legal and payroll considerations.

Frank Sommerville is both a CPA and attorney, and a longtime Editorial Advisor for Church Law & Tax.

Image: iStock/GetFocusArt

Does a Church Have to Keep Paying a Pastor After an Immediate Resignation?

A pastor resigns without notice and requests pay through the end of the month. Here’s what churches need to know about compensation obligations, employment contracts, accrued PTO, and potential separation agreements.

Lane Paulsen, Attorney

Bio

Q: Our church was in the process of reviewing its pastor’s compensation to determine if it is reasonable when the pastor abruptly quit, effective immediately.

However, the pastor requested he still receive compensation for the remainder of this month. What is the church obligated to do?

A: Unexpected resignations are difficult situations for churches to navigate. On top of the relational and logistical challenges of a pastoral vacancy, the church must carefully fulfill its legal obligations to a departing employee.

What does ‘at-will’ mean?

Most states in the US are “at-will employment” states. While employment is not guaranteed by the employer for any length of time, employees are also not required to provide notice before resigning.

This means employees can quit or be terminated at any time.

In these states, the church is only obligated to pay compensation up to and including the last day of work for any employee. In addition to earned compensation, the church may also need to pay the pastor any accrued vacation or paid time off (PTO) that the pastor has not used. This depends on state law and the church’s own policies.

When a Pastor Resigns Unexpectedly, Every Decision Matters.

Questions about final pay, severance, employment contracts, and legal obligations can expose your church to unnecessary risk if handled incorrectly. With an Advantage Membership, you’ll gain access to expert guidance, in-depth legal insights, and practical resources that help you respond confidently when employment issues arise.

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The church’s obligations may be different if they have entered into a contract with the departing pastor. Employment contracts are the most common exception to at-will employment. If this church has entered into a contract with the pastor–for example, one specifying that the pastor is paid on a month-to-month basis, or is otherwise entitled to full monthly payment–then the terms of that contract would control.

If there is no contractual obligation to continue payment, the church may still choose to continue paying the pastor through the end of the month (or longer) as a gesture of goodwill. The compensation should be reasonable.

If the church does plans to pay any additional compensation, itthey should consider executing a separation agreement before making any payments.

Spell it out in the separation agreement

A separation agreement can specify a severance amount in exchange for a release of all claims the departing pastor may have against the church. This provides the church some legal protection even in an amicable departure. Many churches pay a reasonable amount of severance to departing employees, even those who have voluntarily resigned.

The church should consult local counsel before executing a separation agreement.

Related: Wondering how to handle compensation when an exempt employee has more than one role in the church? Read our guidance on this important tax-related topic.

Image: iStock/rouda100

How Churches Can Manage the Hidden Costs and Risks of AI

Many churches are already using AI through staff, volunteers, and software platforms—but often without oversight. An AI inventory, clear policies, and regular reviews can help church leaders manage legal, ethical, and financial risks while taking advantage of AI’s ministry benefits.

Tim Samuel, CPA and Church Chief Financial Officer

Bio

Many churches are using generative artificial intelligence (AI)–whether leaders realize it or not.

Consider these common scenarios:

A communications director uses a free version of ChatGPT to draft a newsletter.
A youth pastor accesses an AI image tool for event graphics.

A finance team member pays for a subscription to an AI tool summarizing reports and writing Microsoft Excel formulas.

A volunteer uploads volunteer data into a free AI tool while coordinating schedules and resources to serve the community.

These uses raise a variety of questions and concerns, including legal, ethical, and financial ones.

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Most churches do not handle these considerations well, though, because they do not address them in the first place. And most do not formally adopt AI through a board-approved strategy, missing an opportunity to effectively manage these important considerations.

Instead, their AI use arrives through employee- and volunteer-created free trials and personal subscriptions, plus church-paid software platforms that quietly add AI tools and features—often at additional expense.

Many churches do not approve of these uses, much less purchases, for AI tools or AI-related upgrades. These activities go on undetected; even ones with charges often run low enough to go unnoticed in monthly financial reviews.

So what should a church leader do?

Churches should begin with an AI inventory.

Doing so can go a long way toward reducing key legal, ethical, and financial risks.

A comprehensive inventory can be done through a combination of reviewing expense reimbursements, credit card charges, and software platform uses, and also by surveying staff and volunteers on the tools they’re using for church work.

The goal is to understand what is already happening before costs and risks spread.

This inventory should list each AI tool, who uses it, what it costs, and what information is entered into it.

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Evaluate the financial, legal, and ethical considerations. Have AI uses received reviews and approvals through some type of formal process? If not, a formal process should be created, starting with an AI policy for the church workplace. The church’s board should initiate this work, and appropriate departments, such as finance and IT, should administer it. Qualified legal counsel should be involved initially, since legal and ethical questions must be answered.

Establish clear rules for sensitive information. Churches should strictly prohibit the use of free AI tools or trial offers of premium tools for any church work involving sensitive or personal information. Even if a premium tool is approved, staff and volunteers should not enter donor names, giving history, payroll data, counseling notes, benevolence requests, HR and personnel matters, or confidential financial information into AI tools unless the tool’s premium version provides written assurances that submitted data is not used to train models or become publicly accessible in any way. Additionally, use of any premium tool for sensitive or personal information should require additional vetting and approval first by the church to ensure, among other things, that the AI provider meets state law requirements related to cybersecurity protocols and bias prevention.

Treat AI as its own budget category. AI should not disappear inside miscellaneous software expenses. Some tools charge per user, while others charge by usage, credits, images, documents, or processing volume. A tool that seems inexpensive during an introductory offer can become costly when usage expands across the staff.

Run short pilots. A 30- to 60-day pilot can help determine whether a tool saves time, improves quality, reduces cost, or strengthens ministry. Success should be defined before the pilot begins. Above all, avoid long-term agreements as much as possible.

Review AI tools at least quarterly. Leaders should ask what tools are being used, whether they are still needed, whether costs have changed, whether sensitive information is protected, and whether any tools should be canceled, consolidated, or expanded.

Recognize hidden rewards

Remember, too, that AI can be a helpful tool for churches when wisely used.

It can help busy ministry teams save time, communicate more clearly, organize information, improve first drafts, summarize meetings, and reduce administrative burden.

For churches with limited staff and growing demands, the right tools can create capacity for deeper ministry, better planning, and more thoughtful leadership.

Churches still must pay attention to the relational risks. AI can quietly reduce human conversations when staff rely too heavily on generated messages, automated follow-ups, or chatbot-style interactions.

Recent research and media reports have raised concerns about people forming unhealthy emotional attachments to chatbots, receiving affirmation of harmful thinking, or being discouraged from seeking help from real people in moments of crisis.

Broad acceptance of AI for personal and spiritual-related matters exists among those attending churches, too. A survey of practicing Christians by Barna Group and Gloo (Church Law & Tax’s parent company) show 61 percent would completely or somewhat trust AI on financial matters, and nearly half say the same when it comes to growing spiritually.

For churches, this matters because it shows AI has become commonplace even among their ranks.

Using it as a staff can create efficiencies. It also shouldn’t replace the way staff meet real ministry needs in ways that technology cannot.

Ministry is built on presence, prayer, wisdom, counsel, and trusted relationships. AI can help draft a message or organize notes, but churches should preserve pastoral care, parental involvement, small group community, counseling referrals, phone calls, visits, meals, and face-to-face conversations.

Leading with hope

AI emerged into the mainstream in 2022 and remains relatively new.

But the stewardship principle is ancient.

Churches are called to manage resources faithfully, protect the people they serve, and ensure every tool–including AI–supports the mission.

With proper planning, decision-making, and supervision, AI can strengthen ministry.

Tim Samuel is a CPA and the chief financial officer of Bridgeway Community Church, a nondenominational, multicultural church in Columbia, Maryland, that draws more than 4,000 people each week.

Image: iStock/tippapatt

Should Churches Accept Donations Through Venmo, Zelle, and Cash App?

Digital payment apps make giving fast and convenient, but they can also create fraud risks, reporting challenges, and administrative burdens. Here’s what church leaders should consider before relying on Venmo, Zelle, or Cash App for charitable donations.

Tim Samuel, CPA and Church Chief Financial Officer

Bio

Churches increasingly use digital payment applications such as Venmo, Zelle, and Cash App to simplify charitable giving.

These tools are familiar to donors, easy to access, and widely used in everyday life.

In recent years, some providers–including Venmo and Cash App–have expanded services for nonprofits by offering verified charity profiles, nonprofit processing options, and enhanced payment features.

Church leaders should carefully evaluate whether consumer payment platforms support the stewardship, accountability, and operational responsibilities that churches carry.

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Convenient but risky

Venmo and Cash App are designed to move money quickly and conveniently. Meanwhile, churches are responsible for documenting donor intent, maintaining financial controls, protecting donor trust, and producing reliable contribution records. Those differing objectives can prove problematic at times.

Regulators, prosecutors, and consumer protection agencies continue issuing warnings about increased fraudulent activities tied to digital payment applications.

In 2025, the New York Attorney General suedEarly Warning Services, the operator behind Zelle, alleging widespread fraud connected to the platform over multiple years. The lawsuit allegesthat scammers exploited weaknesses in verification and transaction controls while consumers and organizations absorbed substantial financial losses.

Churches can be particularly vulnerable because ministry environments are built on trust and personal relationships.

Criminals increasingly exploit this dynamic through “pastor impersonation” scams. In these situations, a scammer poses as a pastor or church leader through email, text message, or social media and requests immediate financial assistance through a digital payment application.

These requests often appear urgent and personal:

“Can you send this gift today?”
“Please keep this confidential.”
“I am helping someone in need.”

Donors and volunteers sometimes respond before independently verifying the request.

Federal prosecutors have also pursued criminal cases involving digital payment application fraud schemes where individuals impersonated trusted organizations or financial institutions to obtain funds through instant payment transfers.

Burden on church staff

Churches should also consider the operational complexity created by maintaining multiple giving systems.

When donors give through several platforms, finance teams may struggle to quickly research questions, trace transactions, resolve donor concerns, or identify unusual activity. Investigating missing gifts or responding to donor inquiries becomes difficult when information is spread across multiple applications and bank feeds.

As Parable, a virtual bookkeeping company who is serving numerouschurches nationwide, has noted, digital payment applications can create “mystery money” situations in which transactions lack sufficient donor identification or proper reporting detail.

This can complicate:

Contribution tracking
Fund designation reporting
Year-end donor statements
Audit preparation
Financial reconciliations
Internal control procedures

Finance personnel may spend significant time manually researching transactions to determine who submitted a gift and how it should be recorded.

The ACH option

Many churches now encourage donors to use the church’s primary integrated giving platform and complete a one-time setup process for recurring ACH giving. A centralized approach may improve reporting consistency, reduce administrative burden, simplify donor support, and strengthen financial oversight.

ACH-based giving strategies may also reduce transaction costs compared to card-based or wallet-driven payment methods. Over time, churches may preserve additional ministry resources while creating more predictable recurring giving patterns.

Finally, churches should also educate donors about why ACH transactions are more advantageous for the church when it comes to maintaining balances. Using a high-yield savings account or money market to receive ACH transactions, a church earns meaningful interest. But consumer payment apps do not pay interest because these platforms are designed primarily for transactions and convenience. Donors themselves may benefit from periodically reviewing whether funds stored in their payment apps are being managed intentionally and securely–and potentially missing out from the interest they can earn in savings accounts and money markets.

Tim Samuel is a CPA and the chief financial officer of Bridgeway Community Church, a nondenominational, multicultural church in Columbia, Maryland, that draws more than 4,000 people each week.

Image: iStock/TSViPhoto

Churches Can Spot AI-Generated Receipts and Invoice Fraud

AI tools can now create convincing receipts, invoices, and vendor documents in minutes. Churches that rely on trust and fast-moving workflows need stronger verification practices to prevent fraudulent payments and financial loss.

Tim Samuel, CPA and Church Chief Financial Officer

Bio

Not every receipt, invoice, or vendor document that reaches a church office is legitimate.

In today’s environment, AI-generated receipts, invoices, W-9s, and vendor forms can look polished enough to pass through a busy church process without drawing immediate attention.

For example, a ministry leader submits a reimbursement request with a clean-looking receipt attached. The amount appears reasonable, the vendor name looks familiar, and the description seems consistent with church activity. The document feels normal enough that no one pauses for a second review.

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A payment is approved, funds are released, and the church later discovers that the receipt was altered or entirely fabricated.

Exploiting volume, familiarity, and fast-moving workflows

These scams work because they dovetail into ordinary church operations.

Churches process reimbursements, invoices, event purchases, and vendor paperwork every week, often with limited administrative time and a strong desire to keep ministry moving without unnecessary delay.

Staff members are juggling multiple responsibilities, volunteers may help handle logistics, and requests often arrive in clusters during events, travel, or demanding ministry seasons.

Fraudsters take advantage of that environment. They create documents that look routine, keep the dollar amount within a believable range, and rely on the fact that someone reviewing the paperwork may only have a few moments to decide whether it should move forward.

Often the first attempt does not involve a large payment. It may be a modest reimbursement, a replacement receipt, a rush invoice, or updated vendor paperwork that seems simple enough to approve quickly. That smaller request can open the door to more significant losses later.

Churches make easy targets

Churches are built on trust and responsiveness. Those qualities strengthen ministry relationships, but they can also create vulnerabilities inside financial processes when verification is weak.

When finance staff members are stretched thin, especially during busy seasons of the year, a realistic-looking document can move through the system without the level of scrutiny it deserves.

The risk grows when reimbursements are approved informally, when vendor information is updated through email alone, or when exceptions are made because a request appears urgent or ministry-related.

The more a church relies on visual appearances, rather than documented verification, the more the opportunity exists for fake receipts and doctored vendor documents to slip through.

How your church can protect itself

To reduce the risk of fraud from receipts and vendor documents created or altered by AI, consider these safeguards:

Require documentation review that goes beyond appearance. A document that looks polished should never be treated as proof on its own. Every receipt, invoice, or reimbursement request should be reviewed for internal consistency, including vendor name, contact information, date, amount, tax, item details, and ministry purpose. A verification call or email to the vendor–or even just the possibility of one–can give a bad actor a reason to think twice before submitting.

Put vendor setup and bank changes behind a hard gate. Centralize who can add vendors or update payment instructions. Never rely only on attached forms or emailed documents when creating or changing vendor records. Require independent verification through a trusted phone number or contact already on file.

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Separate submission, approval, and payment. The person requesting reimbursement should not be the same person approving it, and the approver should not be the only person involved in releasing funds. Shared responsibility makes fraudulent payments harder to push through.

Treat unusual requests as exceptions that require added scrutiny. Off-cycle reimbursements, missing details, handwritten explanations, duplicate-looking receipts, round-dollar totals, or payments just under an approval threshold should receive a documented second review before money moves.

Watch for patterns over time, not just individual transactions. Fraud can enter through repeated small payments that seem harmless on their own. Churches should periodically review trends in reimbursements, vendor activity, and exception-based approvals to identify behavior that does not fit normal patterns.

Train staff and ministry leaders to slow down when something feels off. People handling requests should understand that AI can now generate convincing financial paperwork in minutes. Training should make it normal to pause, verify, and ask questions before approving a payment.

Write the response plan now. If a fraudulent payment is discovered, the church should already know who contacts the bank, who reviews recent transactions, who preserves documentation, and who informs leadership. A written plan allows the church to act quickly when timing matters most.

When churches make verification a normal part of stewardship, fraudsters lose one of their biggest advantages: a rushed decision inside a trusted environment.

Tim Samuel is a CPA and the owner of CFO: Creating Future Opportunities, LLC, which helps churches strengthen internal controls, improve financial clarity, and protect trust.

Tim Samuel is a CPA and the chief financial officer of Bridgeway Community Church, a nondenominational, multicultural church in Columbia, Maryland, that draws more than 4,000 people each week.

Image: iStock/Kaspars Grinvalds

Why 2FA Matters More than Ever in the Age of AI

AI-powered scams are becoming harder to recognize. Two-factor authentication remains one of the simplest and most effective ways churches can protect ministry accounts and sensitive data online.

Jonathan Smith, IT Director and Consultant

Bio

Online security seems to be a never-ending conversation.

I read recently where cybersecurity professionals are dropping out of what is increasingly a high-pressure, low-reward business. If everything stays safe, no one cares. But if a breach occurs, the pressure can be too much.

The age of artificial intelligence (AI) is not only powering some great advances in technology, but also some great advancements in evil. We should all desire to be good stewards of our data and that stewardship requires good security practices.

Church Law & Tax members get trusted guidance, practical tools, and expert insights to help protect their ministries from emerging cybersecurity threats, AI-driven scams, and other costly risks facing churches today.

Evolving Threats

AI has certainly added pressure because low-tech attacks now appear valid and credible.

The appeals made via email using broken English and poorly designed fake web pages are long gone thanks to AI tools that bad actors use. Fraudulent attempts now read and look legitimate.

However, there are steps you can take to protect yourself and your church, and thus avoid becoming a tech support burden.

Two-factor (2FA) or multifactor authentication (MFA) is one way to protect yourself and your ministry online.

Examples of 2FA and MFA include codes sent via text or email or an authenticator app on a phone.

Everything that can utilize 2FA or MFA should utilize it, and if a system in your church office can’t, you might want to do a risk assessment before you proceed..

Breaking down 2FA

While not perfect, 2FA is the simplest way to protect your online accounts. Even in the age of AI, 2FA slows down the damage if you get phished or tricked into giving your password away.

While a great safety net, 2FA still requires some discernment.

Many times, 2FA fails because people get the prompt via an authenticator app and then blindly approve it without thinking through if they logged in or not.

You’ve probably also noticed that most 2FA codes sent via text or email remind you to NEVER give these codes to anyone.

Why?

Because scammers know if they can get the code, they can obtain your data. Many times, scammers can trick you into giving the code to them. After all, they might have already tricked you into giving them your password through a phishing scheme.

Use 2FA or MFA on everything and make sure to use a password manager to ensure you never repeat a password.

When it comes to ways to get a two factor or multi factor authentication code, the most common method is via SMS or text message. This is because that was first.

As technology evolved, authenticator apps became increasingly popular. From a security standpoint, the Authenticator app is the most secure. Text messages can be hijacked and stolen, making this method less secure. Still better than nothing, but less secure, nonetheless.

The challenge with authenticator apps is every provider has their own.

You look at some people’s phones, and they have 30 different two-factor authentication apps for all the various products or services they use. While that’s better than not having two-factor at all, there are some ways to streamline the process.

Google Authenticator, Microsoft Authenticator, Authy, OneAuth, and others offer a centralized way to track all of your two-factor authentication codes without having to have an app for each one.

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Conclusion

This side of heaven, no technology is perfect, and nothing is completely secure. But we must do our best to protect our data and the data of the ministries entrusted to us.

While not always the most convenient tool, 2FA and MFA provides reasonable security in exchange for a little inconvenience.

We should not fear AI, but rather, plan for its wise use, which includes our security posture through tools like 2FA. Who knows, we might even have to 2FA to get into heaven. Ok, maybe not, but we should at least work 2FA into everything here on earth.

Jonathan Smith is the President of MBS and the Chief Technology Officer at Faith Ministries in Lafayette, IN. He is an author and frequent conference speaker. You can reach Jonathan at jonathans@mbsinc.com and follow him on X @JonathanESmith.

Jonathan Smith is director of technology for Faith Ministries in Lafayette, Indiana. He is also president of MBS, Inc., a provider of technology services that exclusively serves churches and ministries. He is a published author and a frequent speaker at conferences.

Image: iStock/PB Studio Photo

Employee or Independent Contractor? How Churches Should Classify Workers for Tax Purposes

Misclassifying workers can create tax problems for churches and workers. Here’s how to determine whether someone should be treated as an employee or an independent contractor for tax purposes.

The Editors

Bio

Churches often rely on a mix of paid staff and outside workers to carry out ministry.

Musicians, custodians, bookkeepers, and technology and other specialists may serve a church in different ways.

But an important question arises whenever someone is paid for their work: Is the person an employee or an independent contractor?

It’s a critically important question because it addresses how income taxes are handled under federal tax law.

CAUTION Determining whether a person is an employee or independent contractor depends on the nature of the inquiry. For income tax purposes, the Internal Revenue Service (IRS) provides certain criteria for determining classifications. For wage-and-hour law purposes, including overtime pay eligibility, the US Department of Labor provides differing criteria to make the determination. Churches must understand both. Church Law & Tax goes deeper in this article on the wage-and-hour law analysis.

Misclassifying workers can create costly tax and compliance problems for churches. Church Law & Tax members get trusted guidance on worker classification, payroll practices, and minister tax issues. Join today!

Why worker classification matters

Employees and independent contractors are treated differently under federal tax law.

When a church hires an employee, it generally must:

Issue a Form W-2
Withhold applicable payroll taxes
Follow wage-and-hour laws (based on whether they are exempt or nonexempt employees)
Maintain employment records

Independent contractors, on the other hand, typically receive a Form 1099-NEC, and the church does not withhold payroll taxes from their compensation.

Because of these differences, the IRS carefully evaluates whether workers are properly classified.

The key factors: control and independence

The IRS focuses on the business relationship between the church and the worker, evaluating the degrees of control and independence that exist between the two.

In general, a worker is more likely to be an employee if the church:

Gives instructions on when and where to do the work, the tools or equipment to use, where to purchase supplies and services, and the order and sequence to complete the work
Gives specific details with those instructions
Evaluates how the work is performed
Provides training to do the work
Guarantees a regular wage amount (hourly, weekly, or some other time period)
Provides benefits like insurance, pension plans, paid vacation, and sick days
Reimburses the worker’s expenses
Hires the worker with the expectation the relationship will continue indefinitely
Hires the worker for services that are a key aspect of the church’s mission

A worker is more likely to be an independent contractor (also known as self-employed) if the person:

Controls how the work is completed
Is hired to complete a specific project or task

Purchases and uses his or her own tools or equipment
Does not receive expense reimbursements

Works for multiple clients and makes his or her services available to the market
Faces the opportunity for profit or the risk for loss

No single factor determines the outcome. Instead, the IRS looks at the overall relationship between the church and the worker.

Common examples in churches

Certain roles in churches often raise classification questions.

For example:

Office staff and administrative assistants are typically employees.
Musicians may be employees or contractors depending on the level of direction and scheduling control.
Outside specialists, such as attorneys, CPAs, IT consultants, and website designers, are often independent contractors.

Churches should carefully review each working relationship, rather than assume a role automatically fits one category.

The “dual tax status” of ministers

Churches also must carefully handle the way they classify ministers.

Most ministers are employees for federal income tax purposes. However, ministers are considered self-employed for Social Security and Medicare taxes. This is often referenced as the “dual tax status” of ministers.

Ministers must prepay their income taxes and their self-employment taxes using quarterly estimated tax payments. Overlooking their dual tax status can result in payment errors and penalties.

Mishandling their dual tax status also can create other significant problems for ministers. They face jeopardizing their eligibility for tax-free benefits, such as a housing allowance. They also face taxes and penalties if the IRS discovers incorrect classifications.

When in doubt, seek guidance

Worker classification decisions can carry significant financial consequences if they are incorrect. Workers remain liable for their income taxes, even if misclassified, and churches may face penalties for misclassifications.

When uncertainty exists, church leaders should consult a qualified tax professional or legal advisor familiar with nonprofit employment issues.

If misclassifications are discovered, the qualified professional can help with reclassifications and also determine if Section 530 of the Revenue Act of 1978 provides the church any relief.

Taking time to classify workers correctly helps churches stay compliant with tax rules while maintaining responsible financial practices.

Church Law & Tax members can access in-depth guidance on payroll practices, worker classification, and other employment issues affecting churches.

The editorial team of Church Law & Tax is made up of Matthew Branaugh, attorney-at-law, and Rick Spruill, digital content manager.

Image: iStock/Jason

How Churches Can Prevent AI Impersonation and Payment Fraud

A convincing voice memo or urgent text that sounds like your pastor may not be real. Here’s how churches can strengthen verification, tighten financial controls, and reduce the risk of AI-driven payment fraud.

Tim Samuel, CPA and Church Chief Financial Officer

Bio

Not every message that sounds like your church’s pastor or leader is actually that person.

In today’s world, an AI-generated voice memo, video clip, or text thread can trick church staff into sending real money to criminals.

For example, a church staff member receives a short, urgent voicemail from a pastor: “I need you to handle this today. I’m about to give a eulogy.”

The message includes wiring instructions for a contractor. The voice sounds exactly like the pastor. The staff member hesitates, but the tone feels familiar, and the request sounds reasonable.

Minutes later, funds have left the church, never to be recovered..

Exploiting urgency, familiarity, and distributed communication

These scams work because they blend into normal ministry life.

Churches move fast and teams are spread across multiple campuses. Volunteers rotate, while leaders travel as requests hit phones and inboxes all day.

Fraudsters lean into that reality. They mimic a leader’s style, create urgency, and push the request outside normal tools and normal hours.

Often the initial approach does not involve a large wire transfer. It is a small test, a “quick reimbursement,” a “deposit to hold a slot,” or a vendor bank change that sets up a larger loss later.

Churches make easy targets

Churches are built on trust and responsiveness. That is a strength in ministry, but it can be a weakness in financial workflows.

When finance staff members are unavailable, such as evenings, weekends, holidays, or during services, scammers look for the person most likely to quickly help.

The more a church relies on informal approvals, text-based decisions, or “just this once” exceptions, the more the opportunity exists for a convincing fake to succeed.

How your church can protect itself

To reduce the risk of AI-driven impersonation and payment fraud, consider these safeguards:

Require two-channel verification before money moves. Any request involving a wire, ACH, gift cards, or payment instructions should be confirmed through a second method. Use a known phone number or an established internal channel, not a reply to the original message.
Lock down email and finance access. Turn on multi-factor authentication (MFA) for email, banking, accounting, and payroll. Limit administrative rights. Periodically review mailbox rules and forwarding settings since criminals often exploit them.
Put vendor setup and bank changes behind a hard gate. Centralize who can add vendors and change bank details. Never accept updated banking instructions by email alone. Require a documented call-back to a trusted contact already on file.
Strengthen approvals, especially for requests seeking exceptions to the usual process. Requests seeking exceptions should receive greater scrutiny. Automatically treat off-hours requests, urgent requests, and off-platform requests as exceptions that require a documented review and approval by two people.
Train staff and volunteers, and write the response plan now. Teach staff and key volunteers to stop when something feels off, even if the message sounds like it came from a leader. Document who to call at the bank, who resets accounts, and who informs leadership if a payment is sent in error.

When churches make verification normal, criminals lose their favorite advantage: a rushed, isolated decision.

Tim Samuel is a CPA and the owner of CFO: Creating Future Opportunities, LLC, which helps churches strengthen internal controls, improve financial clarity, and protect trust.

Tim Samuel is a CPA and the chief financial officer of Bridgeway Community Church, a nondenominational, multicultural church in Columbia, Maryland, that draws more than 4,000 people each week.

Image: iStock/MdZakirHossain

Can Ministers Claim a Double Deduction for Housing Expenses?

Federal tax law allows qualifying ministers to exclude housing allowances from taxable income while still deducting mortgage interest and real estate taxes. Here’s how the “double deduction” works—and where its limits apply.

Elaine L. Sommerville, CPA

Bio

Q: I am a minister who qualifies to receive an annual housing allowance from my church. Based on IRS guidance and your online tax guide, I also can take a “double deduction” with respect to certain housing-related expenses on my federal income tax returns. But my CPA says I can’t do this and cites a couple of Tax Court cases that she thinks supports her conclusion. Who is mistaken?

A: You are eligible to take a “double deduction” related to certain expenses.

First, you are a minister who qualifies for an annual housing allowance if designated by your church. This means a portion of your ministerial income is not taxable for federal income tax purposes (within limits). These funds can be spent on qualifying housing expenses, including monthly mortgage payments and real estate taxes.

Second, while nontaxable income (such as the housing allowance) may be used to pay the mortgage payments and real estate taxes, you are also still allowed to claim on Schedule A (Form 1040) itemized deductions for home mortgage interest and real estate taxes.

Your ability to claim a deduction for expenses paid with tax-free income is what’s known as a “double deduction.” This “double deduction” is specifically made possible under Internal Revenue Code (IRC) Section 265(a)(6), which Congress adopted in 1986.

IRC Section 265 generally prohibits expense deductions paid with tax-free income. But Section 265(a)(6) allows clergy to include in itemized deductions their mortgage interest and real estate taxes on their federal income tax returns, even when they used part of their tax-free housing allowances to pay those expenses.

The cases your CPA cites— Dalan v. Commissioner, decided in 1988, and McFarland v. Commissioner, decided in 1992—both involved ordained ministers with tax-free housing allowances designated by their employing churches.

However, the Tax Court in both instances concluded the ministers could not itemize deductions for expenses covered by their allowances other than the mortgage interest and real estate taxes.

Audit guidance from the Internal Revenue Service (IRS), as well as IRS publications, affirms this double deduction exception for ministers for mortgage interest and taxes. However, this guidance also affirms this special treatment does not extend to other types of deductions, such as unreimbursed employee business expenses. To learn more, Chapter 6 of Church Law & Tax’s online tax guide provides further details.

Elaine L. Sommerville is licensed as a certified public accountant by the State of Texas. She has worked in public accounting since 1985.

Image: AdobeStock/ mankjon

Johnson Amendment Lawsuit Dismissed—What Churches Need to Know Now

A federal court dismissed a high-profile challenge to the Johnson Amendment on procedural grounds, leaving existing IRS restrictions on political activity intact—for now. Here’s what churches and pastors need to understand about the ruling and what could come next.

Matthew Branaugh, Attorney and Editor

Bio

The Johnson Amendment—the controversial Internal Revenue Code (IRC) provision prohibiting most political activities by churches and other tax-exempt organizations—remains alive, despite a highly publicized lawsuit seeking to undo it.

A federal judge in Texas dismissed the case “without prejudice” on jurisdictional grounds, leaving the door open for a future challenge to the law against the Internal Revenue Service (IRS), the agency responsible for enforcing it.

Get clear, practical guidance on political activity, tax rules, and risk management—join Church Law & Tax today.

The four plaintiffs, which included the National Religious Broadcasters and two churches, plan to appeal.

For the time being, the outcome means churches and other tax-exempt organizations are bound to the limitations found under section 501(c)(3) of the IRC:

no public support for, or opposition to, political candidates
limited lobbying and advocacy efforts tied to legislation and ballot measures

What was at stake

The court considered a proposed settlement between the IRS and the four plaintiffs. The settlement included a statement from the IRS suggesting houses of worship should enjoy greater latitude when it comes to supporting or opposing political candidates for elected office.

The development triggered numerous filings from outside groups supporting and opposing the settlement, and an unsuccessful attempt to intervene in the case by Americans United for Separation of Church and State.

Had the court approved the settlement, the IRS statement would have become binding only in the US District Court for the Eastern District of Texas, Tyler Division.

However, it could have helped guide other courts handling similar cases nationwide—and the IRS was already prioritizing revisions to its guidance on the topic in anticipation of an approved settlement.

Deemed a “tax” case

The Johnson Amendment became part of IRC section 501(c)(3) in 1954.

The plaintiffs argued the amendment violated their free speech and Free Exercise rights under the First Amendment of the Constitution. They also argued it violates constitutionally granted rights of due process and equal protection, and rights protected under the federal Religious Freedom Restoration Act (RFRA).

However, the presiding judge determined “plaintiffs’ claims are ‘in respect to’ taxes and seek to restrain the threat of tax collection or assessment based on certain activity.”

Two federal tax laws—the Tax Anti-Injunction Act (AIA) and the Declaratory Judgment Act (DJA)—thus barred the court’s jurisdiction over the case, the judge said.

Future challenges

The pending appeal by the plaintiffs will require time.

Future challenges to the Johnson Amendment also can be brought if other facts and circumstances exist, the judge noted.

If a church engaged in political activities and was taxed by the IRS, a refund lawsuit could be filed, the judge said.

Additionally, an exception to the DJA allows declaratory lawsuits in one of three courts based in Washington, D.C. An IRS revocation of a church’s tax-exempt status, for instance, would create “a specific set of facts” for such a lawsuit.

What this means for churches and pastors

For now, the ruling means the same guidance for churches and ministers regarding political activities remains in place.

Churches and ministers enjoy First Amendment protections regarding publicly supporting or opposing political candidates for office and advocating on legislative matters and ballot measures.

However, those activities may draw IRS attention, thus jeopardizing a church’s tax-exempt status.

With respect to political candidates, the prohibition is absolute, although the IRS has not widely enforced it.

With respect to lobbying and advocacy, a limited amount of activity is permitted.

Separately, but relatedly, ministers still remain protected by the First Amendment to speak and preach on matters of social, biblical, and moral importance without fear of government intervention.

Chapter 12 of Church Law & Tax’s online Church & Clergy Tax Guide provides more details and specific guidance regarding churches and political activities.

Matthew Branaugh is an attorney and editor for Church Law & Tax.

Image: iStock/hobitnjak

Seven Things Many Pastors Don’t Know About Unrelated Business Income

Seven key facets of unrelated business income tax (UBIT) that every pastor and church leader should understand.

The Editors

Bio

Unrelated business income tax (UBIT) is an income tax on the unrelated business income (UBI) of churches and other tax-exempt charities.

UBI generally is income from the operation of a trade or business that is regularly carried on.

Seven things every pastor should understand about UBIT:

This isn’t about profit—it’s about activity.
A church can owe UBIT even if an activity supports ministry goals or raises money for good causes. If the activity is a regular trade or business and not substantially related to the church’s exempt purpose, the Internal Revenue Service (IRS) may treat the income as taxable.
“Occasional” can still be considered regular.
Repeated fundraisers, rentals, or sales—even if seasonal or part-time—may qualify as “regularly carried on.” Frequency and consistency matter more than intent.
Rent isn’t always tax-free.
Rental income is often exempt, but not always. Providing services (cleaning, staffing, event setup) or renting debt-financed property can turn otherwise exempt rental income into taxable UBI.
Volunteers don’t automatically eliminate UBIT risk.
Income may be exempt if substantially all the work is performed by volunteers—but that standard is higher than many churches assume. Involvement by a few paid staff can change the analysis.
Advertising is different from sponsorships.
Selling ads (logos, promotions, calls to action) in a church publication or online can generate UBI. True sponsorships that simply acknowledge donors are usually not taxable—but the line between the two is easy to cross.
UBI can affect more than taxes.
Too much unrelated business activity can raise red flags about whether the church is operating primarily for exempt purposes—especially if it becomes a major focus or revenue source. This can affect things like sales and property tax exemptions, for example.
IRS filings may be required.
Churches are not required to file an annual Form 990 or the related Form 990-T. However, UBI over certain revenue thresholds can trigger filing requirements, penalties, and interest if ignored. Additional state-related requirements and filings also may emerge.

Bottom line for churches: UBI is highly fact-specific. Before starting new income activities—or assuming old ones are safe—church leaders should slow down, ask questions, and consult trusted tax guidance tailored to churches.

Wondering how UBIT applies in real-life church decisions?
For example, many churches consider selling items like T-shirts, mugs, or water bottles with the church logo. Does that make the sales related to ministry—or could it create unrelated business income?

→ Read the Q&A: Does Our Church Owe Unrelated Business Income on Goods Sold?

The editorial team of Church Law & Tax is made up of Matthew Branaugh, attorney-at-law, and Rick Spruill, digital content manager.

Image: iStock/Vatcharachai

Annual Church Legal Checklist for Governance and Compliance

An annual legal review helps churches reduce risk, strengthen governance, and protect their tax-exempt statuses. Use this checklist to guide a proactive compliance strategy.

The Editors

Bio

Legal compliance for churches is continuous, not episodic. Federal tax law, state nonprofit corporation statutes, charitable solicitation regulations, employment law, and risk management standards intersect in ways that directly affect church governance and tax-exempt status.

An annual legal review allows a church board, senior pastor, and executive leadership to evaluate whether the organization remains legally compliant, structurally sound, and aligned with its religious mission.

Lead with Confidence. Stay Legally Compliant.

Church legal compliance doesn’t happen by accident. From tax-exempt rules and board governance to employment law and risk management, today’s churches face an increasingly complex legal landscape. One oversight can expose a ministry to audits, liability, or reputational harm.

Join Church Law & Tax today and give your leadership team the tools to protect your church and its mission.

This annual church legal checklist is designed to help church leaders identify governance weaknesses, compliance gaps, and emerging legal risks before they escalate.

Review Governing Documents, Corporate Status, and Organizational Authority

Confirm that articles of incorporation, bylaws, and any amendments comply with current state nonprofit corporation law.
Verify the church remains in good standing with the state’s secretary of state or equivalent agency. Review whether the church’s stated religious and charitable purposes align with actual ministry activities.
Evaluate whether governance practices follow written bylaws, including board elections, officer appointments, quorum requirements, voting thresholds, and member rights (if applicable).
Maintain organized corporate records, including board minutes, written consents, standing resolutions, and governance policies. Proper documentation reinforces corporate actions and reduces any personal liability exposure.

Confirm Federal Tax-Exempt Compliance and IRS Requirements

Churches qualify for federal tax exemption under Internal Revenue Code Section 501(c)(3), but exemption requires ongoing operational compliance.

Review compensation arrangements under the rebuttable presumption of reasonableness framework. Ensure no private inurement, excess benefit transaction, or impermissible private benefit exists.
Evaluate unrelated business income (UBI) exposure and determine whether Form 990-T filing obligations apply.
Confirm housing allowance designations are adopted prospectively and recorded in official minutes.
If affiliated ministries or church-controlled entities exist, confirm proper structural relationships and reporting compliance.

Strengthen Board Governance and Fiduciary Accountability

Board members owe fiduciary duties of care, loyalty, and obedience under state law.

Require annual conflict-of-interest disclosures from directors, officers, and key employees.
Review and enforce confidentiality standards regarding donor data, executive sessions, and sensitive personnel matters.
Confirm the board exercises appropriate oversight of financial reporting and internal controls, risk management, and legal compliance without assuming day-to-day operational control.
Well-documented oversight mitigates governance disputes and regulatory scrutiny.

Verify State Registrations and Charitable Solicitation Compliance

Confirm timely filing of annual corporate reports and renewal of state registrations.
If the church solicits donations across state lines — including online fundraising — evaluate charitable solicitation registration requirements in applicable jurisdictions.
Review sales tax exemption certificates and property tax exemption documentation, if applicable.
Failure to maintain state-level compliance can jeopardize legal standing and fundraising authority.

Audit Employment Law Compliance and Ministerial Classification

Review employee classification decisions, including ministerial status under the ministerial exception doctrine and employee-versus-independent-contractor analysis.
Confirm wage-and-hour compliance, overtime classification, and state leave law adherence.
Update employee handbooks and written job descriptions to reflect current federal and state labor law requirements.
Remote employees may create multi-state employment obligations.

Update Child Protection, Mandatory Reporting, and Safety Protocols

Sexual misconduct claims remain one of the most significant sources of church liability exposure:

Review child abuse prevention policies, and employee and volunteer screening and selection processes, including background checks and reference checks.
Confirm compliance with state mandatory reporting statutes and training requirements. Evaluate supervision ratios, facility access controls, and incident documentation protocols.

Assess Insurance Coverage and Enterprise Risk Management

Conduct an annual insurance review covering:
- general liability,
- sexual misconduct liability,
- directors and officers (D&O) liability,
- employment practices liability (EPLI),
- cyber liability, and
- property coverage.
- Evaluate policy limits, exclusions, deductibles, and defense cost structures.
- Consider whether ministry expansion — counseling services, childcare programs, mission travel, or digital ministry — alters risk exposure.

Insurance should align with operational reality.

Review Data Privacy, Cybersecurity, and Technology Governance

Churches routinely collect personally identifiable information (PII), donor financial data, and confidential pastoral counseling records.

Confirm cybersecurity safeguards, data breach response plans, and vendor agreements for online giving platforms and church management software.
Develop or update policies governing artificial intelligence tools, automated transcription services, and digital record retention to reduce confidentiality and privacy risks.

Evaluate Financial Controls and Internal Audit Practices

Review internal controls, such as segregation of duties, dual-signature requirements, expense reimbursement procedures, and restricted fund tracking.
Conduct an internal financial review or independent audit based on church size, complexity, and donor expectations.

Strong financial controls support transparency, accountability, and integrity in stewardship.

An annual church legal checklist is a governance safeguard.

Proactive review strengthens fiduciary accountability, protects tax-exempt status, reduces regulatory exposure, and reinforces congregational trust.

Church governance is not merely administrative. It is stewardship in action.

The editorial team of Church Law & Tax is made up of Matthew Branaugh, attorney-at-law, and Rick Spruill, digital content manager.

More than just cash

Unexpected questions

Church Gift Acceptance Policy and Procedures Template

Gift Review Checklist

Mission

Ownership

Financial

Legal

Operational

Governance

Gift Acceptance Matrix

IRS Quick Reference for Church Leaders

Remember:

The analysis

What this means for churches

Video: Can Our Church Get Political?

A fuller picture

Status quo

Room to advocate

A force for civic good

Use this policy template to provide guidance regarding any uses of artificial intelligence within church work

When to Use This Template

How to Use This Template

Best For

Editor’s Note

Why AI Fraud Risks Are Growing for Churches

Access trusted guidance on cybersecurity, fraud prevention, legal compliance, finance, and risk management designed specifically for churches and ministry leaders.

Simple Safeguards Churches Should Implement Now

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Why Churches Are Rapidly Adopting AI Tools

Privacy and Data Security Risks

Practical Steps Churches Should Take

Copyright and Intellectual Property Concerns

Common Intellectual Property Issues

Employment and HR Risks

Governance and Policy Considerations

Questions Every Church Board Should Ask

Ethical and Ministry Reputation Risks

Frequently Asked Questions

Can churches legally use AI tools?

Should churches create an AI-use policy?

Can AI-generated content be copyrighted?

What is the biggest AI risk for churches?

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What does ‘at-will’ mean?

Spell it out in the separation agreement

So what should a church leader do?

Recognize hidden rewards

Leading with hope

Protect Your Church from Financial Risk

Convenient but risky

Burden on church staff

The ACH option

Exploiting volume, familiarity, and fast-moving workflows

Churches make easy targets

How your church can protect itself

Evolving Threats

Breaking down 2FA

Conclusion

Why worker classification matters

The key factors: control and independence

Common examples in churches

The “dual tax status” of ministers

When in doubt, seek guidance

Exploiting urgency, familiarity, and distributed communication

Churches make easy targets

How your church can protect itself

What was at stake

Deemed a “tax” case

Future challenges

What this means for churches and pastors

Review Governing Documents, Corporate Status, and Organizational Authority

Confirm Federal Tax-Exempt Compliance and IRS Requirements

Strengthen Board Governance and Fiduciary Accountability

Verify State Registrations and Charitable Solicitation Compliance

Audit Employment Law Compliance and Ministerial Classification

Update Child Protection, Mandatory Reporting, and Safety Protocols

Assess Insurance Coverage and Enterprise Risk Management

Review Data Privacy, Cybersecurity, and Technology Governance