Author: rgorgol

Ebola: Here and Abroad

CDC experts weigh in on disease basics, how church leaders can locally respond, and travel advisories.

Ashley Emmert and Tim Gioia

The Centers for Disease Control (CDC) recently broadcast a call for church and community leaders who need to understand more about Ebola, the deadly virus that has claimed thousands in West Africa and now has made its way to the United States. The CDC covered several topics, including how to communicate about the virus and how best to provide aid to those affected. Below are important takeaways for church leaders:
How is Ebola spread?
  • A person can only spread the disease if they have symptoms, such as fever or signs of illness.
  • Ebola doesn’t spread through the air (it’s not “aerosol transmitted”).
  • If people are in contact with the bodily fluids of a person who is actively ill—blood, urine, or diarrhea, for instance—a person could touch those substances and touch their own mucus membrane (eyes, mouth, small cut, or laceration), leading to infection.
  • Past data about this disease indicate it is spread by direct contact, not through the air. Available data continues to support this.
What are the symptoms of Ebola?

The virus itself infects multiple organ systems in the body. Symptoms include: fever, severe headache, muscle pain, weakness, diarrhea, vomiting, abdominal pain, and hemorrhaging. It can cause stomach pain and nausea. People can’t support their blood pressure. It’s a body wide activity because the virus multiplies throughout the body. One thing clinicians have noted is that a person infected with Ebola has a lot of difficulty holding onto his or her bodily fluids. People can lose between 5 to 10 liters of fluids a day. There is a lot of potential for infectious waste being dispersed during this time.
How is it treated?

The treatment for Ebola is mostly supportive. People receiving treatment are in intensive care, on IV fluids, on oxygen to help them breathe, and medicine to support their blood pressure. The idea is to help the person’s own immune system so that it can support itself. There aren’t well-known or good treatments for this infection—there are no antibiotics. There are a small number of experimental treatments available and the doctors aren’t sure if they work or if they’re safe. Sometimes it’s worth the risk to try it, but the care is usually supportive.
Is Ebola coming soon to a city near me?
It’s important to remember that although the situation is much worse in Africa, there are very limited cases in the United States, and they resulted from coming in very close contact with someone who is infected. Remember, this is very different from flu season.
What’s being done by the CDC to stop Ebola?

The CDC is doing a lot of work in this area. A good bit of effort is focused in Africa—there are hundreds of staff working in West Africa, and the CDC plans to send more. Genuine compassion is part of the reason these people are over there—public health and compassion, teaching about the disease, and so on. But there’s also a practical reason—by controlling the epidemic at its source, it’s less likely to come over and spread.
How can churches help?

First, help decrease fear and educate people in the community on this infection. Second, decrease the stigma about the disease. In Dallas, the CDC needed to follow the contacts of people who the gentleman from Liberia came in contact with. Those individuals were afraid to leave their apartment because they were being followed and receiving threats. The CDC had to work with the community to reduce stigma and help people be compassionate. People are even being stigmatized because they appear to be from West Africa.

Also, build resilience in the community. Contribute to local networks and food banks. Get food from food banks for people who have been stigmatized. These charitable networks are helpful in any type of emergency.

Lastly, it’s important for church leaders to promote general good health. Promote basic public health efforts, like getting flu shots and washing hands. Tell people, “If you feel ill, stay at home—even if you have the flu or a stomach virus. It’s just better not to go out anywhere because you could possibly spread your disease to others.” This kind of encouragement can go a long way toward preventing the spread of any disease.

Travel Advice*

Many churches and organizations want to help by sending mission teams. However, this might not be wise. Liberia, Sierra Leone, and Guinea have all been labeled “Warning Level 3” by the CDC. The Congo has been labeled Level 2. Level 3 means churches and organizations should limit all nonessential travel to these areas. The current situation in Guinea, Sierra Leone, and Liberia is not only marked by the Ebola outbreak but also “instances of civil unrest and violence against aid workers [being] reported in West Africa as a result of the outbreak. The public health systems in the affected countries are being severely strained as the outbreak grows,” according to the CDC website. Travel at this time is not advised until the situation is better controlled.

Churches or organizations that still plan to travel to one of these locations should take precautions before, during, and after their trips to minimize risks:
  • Only travel with authorized health organizations. The professional staff in these groups are not only trained to handle these situations, but also can help with trip preparation. Due to the high threat level surrounding these countries, travel restrictions are in place for not only entering, but also exiting. The health organizations can assist with arrivals and departures.
  • See a travel medicine provider 4 to 6 weeks ahead of time. This visit will give trip participants the ability to make sure they are physically able to handle the stress as well as get all the required vaccines needed before they leave.
  • Pack a health kit with over-the-counter medicines and alcohol-based sanitizer.
  • Pack personal protection equipment (PPE). This includes masks, gloves, eye protection, and some kind of body covering. These things will help limit exposure to possible infection, since Ebola is spread through the direct contact of body fluids from an infected person showing symptoms.
  • Make certain the organization coordinating the travel has established a plan for getting back to the United States if a team member somehow gets exposed to Ebola.
  • Follow all infection prevention possible. Wash hands frequently with soap or an alcohol-based sanitizer. Properly dispose of all materials used to treat anyone carrying the symptoms of Ebola. Symptoms can appear up to three weeks after exposure to Ebola. Anyone who experiences these symptoms, or comes into unprotected contact with someone experiencing these systems, should immediately tell someone in the organization. Team members should monitor their health and those around them.

Upon returning to the United States, expect an extensive screening process to ensure no one is a contagious carrier of Ebola. Team members should see their doctors as soon as possible for a checkup and symptom monitoring once they return home.

*Note, we recommend that unless you are a professional medical expert with a notable aid organization, you stay out of the countries affected by Ebola.

More information on Ebola is available at cdc.gov. Learn more about liabilities churches face when sending people on trips in the September/October 2014 issue of Church Law & Tax Report. Go deeper on how churches can promote good health in their congregations, especially during cold and flu season, check out Preparing Your Church for a Pandemic.

5 Tips for a Safe One-on-One Mentoring Program

Guidelines and safeguards for an effective adult mentoring ministry.

Samuel Ogles

When I graduated college and moved to a new city, I was a young adult in need of a guide. While my friends and church community offered support, it wasn’t until I connected with a couple of adult mentors that I found what I was looking for. As they invested in my personal and spiritual growth, I benefited greatly from their years of experience of living as Christian professionals. And I’m not alone. As mentoring ministries spring up in churches across the country, more and more people are benefiting from this important ministry option.

In order to minister more effectively to the various demographics and needs in your own community, you might already have a mentoring program in place or are considering developing one. As you move forward with your own program or explore the possibilities of starting one, you’ll need to consider not only how to protect the integrity of your program but also the safety of participants. Here are some general guidelines and safeguards that should help—drawn from existing programs and interviews I conducted for this article*:

1. Meet only with the same gender. Pair women with women and men with men. This rule helps greatly reduce the risk to vulnerable participants and to your ministry. The last thing you want is for a mentoring relationship to become anything other than platonic.

2. Ensure quality mentors. Churches will differ on how many requirements they put in place for their mentors. Regardless, your mentors should be people who are spiritually and relationally mature. At the very least, your church should have a vetting process that involves a letter of recommendation and a proven history of faithful ministry in the church. For more structured programs, churches may wish to develop a formal agreement or training program to prepare mentors to be paired with mentees.

3. Monitor progress. Offering a mentoring program necessitates that your church check in from time to time on the relationships you’ve helped foster. It would be wise for churches to require participants to keep a record of their meetings. Be sure to contact mentors and mentees independently for periodic feedback. Develop your own protocol for collecting this information and have your staff follow it faithfully. It’s better to hear about a developing issue during a regular check-in rather than an ongoing issue through a formal complaint made to a pastor or a board of elders.

4. Evaluate your program. Before your program is in place, develop a system for evaluating the effectiveness of your adult mentoring ministry. This could be done using participant feedback or even measurable results, such as “job placement” if your program focuses on ending unemployment. Determine the best way to evaluate your own program based on its particular aims. Formalize your evaluation process and inform the appropriate staff.

5. Clearly communicate the focus and limits of your program. Your ministry and your participants should know what your program is and what it is not. It is absolutely vital to make clear that adult mentoring is distinct from other relationships such as peer friendship, spiritual direction, or lay counseling.

*For their help with this article, the author would like to thank Richard Hammar, attorney, CPA; Sr. Susan Pieper, Superior General of the Apostles of the Interior Life religious community, Catholic Spiritual Mentorship Program; Mike Scherschligt, founder and director of the Holy Family School of Faith; Troy Hinkle, Ph.D., program director, Holy Family School of Faith; and Archbishop Joseph Naumann, Roman Catholic Diocese of Kansas City, Kansas. Other sources for this article include and the download How to Build a Successful Mentoring Program Using the Elements of Effective Practice at mentoring.org, City Hope San Francisco’s adult mentoring program, and Woodward Park Church of Christ’s adult mentoring ministry.

15 All-too-Common Church Facility Problems

Set a high standard for maintenance, safety, and overall look of your building.

Chuck Lawless

I know the church is not a building. That is not to say, though, that the building is unimportant. A building says something about the congregation that gathers there; so, we need to pay attention to our facilities.

Listed here are 15 facility issues I and my consulting teams have seen recurrently in churches, including established churches and church plants.

1. No obvious main entrance. We have seen this problem in churches with large facilities as well as church plants that meet in rented space. The building has several doors, each that enters the facility in a different location. Only one leads to the main entrance, but guests must guess which door that is.

2. An unmarked (or unattended) welcome center. No signage indicates the welcome center, and no greeters direct people there. Brochures and sermon CDs might be available there, but sometimes no one is present to distribute them. Such a location is an information kiosk—not a welcome center.

3. Paper signage. Think about what this communicates: handwritten (or poorly done computer-generated) room signs on a piece of paper taped to a wall. I realize emergency situations necessitate a “quick fix,” but this kind of signage implies a lack of attention to excellence.

4. Old information on screens or bulletin boards. I’ve seen bulletin board announcements for events that took place six months ago. Even in churches with computerized announcements, I’ve seen outdated information flashed on the screen.

5. Unsecured children’s area. Our “secret shoppers” often report having complete access to children’s areas. In some cases, no security system is in place to protect children. In other cases where security does exist, unmonitored outside doors still allow entrance to this area.

6. Windowless doors in the children’s area. Windows in doors cannot eliminate the possibility of child abuse in a church, but they are at least a deterrent. Solid doors are an indication the church has not taken enough steps to protect their children.

7. “Big people” furniture in children’s rooms. Perhaps you’ve seen a children’s room where the table is lowered a bit, but the chairs are still adult chairs. The furnishings (and often the teaching method in the class) say to a child, “Your job is to act and learn like an adult in this room.”

8. Clutter. The list is long: old literature on tables, “donated” toys no one wants, leftover craft supplies, ugly upright pianos, last week’s bulletins, unwashed dishes, drama costumes. … Somehow the church facility has become a gathering place for junk.

9. Open outlets in preschool rooms. A preschool room electrical outlet without a cover insert is an invitation to trouble. Toddlers typically have not learned not to stick something in the outlet.

10. Dirty carpet. This one surprises me, simply because cleaning a carpet is not that difficult. It may cost a few dollars, but not cleaning the carpet says, “We’re not that concerned about the look of God’s house.”

11. Odors. Again, the list is long: the musty smell of water damage, the hangover of dirty diapers in the nursery or spoiled food in the kitchen, an unfixed clogged toilet. … What’s hard to believe is that people who attend regularly apparently do not notice the smells.

12. Unstocked bathrooms. Sometimes I feel like I’m traveling on a mission trip when I enter a church restroom—that is, I’m out of luck if I didn’t bring my own toilet paper, soap, and towels. Those issues are only magnified when the bathroom is dirty.

13. Poor lighting. Dimming the lighting might be an effective device to focus worship, but a service is hardly facilitated if members strain to read their Bibles. I’m especially sensitive to this one as I get older.

14. Few garbage cans. Church buildings would be cleaner if our buildings included nicely designed, strategically placed garbage cans inside the building. There is a reason garbage cans in bathrooms and kitchens are often overflowing.

15. Faded paint. It’s amazing what a fresh coat of paint will do to a room. It’s also amazing how long some churches wait before adding that fresh coat.

This post was adapted from an article that first appeared at ThomRainer.com on August 19, 2014.

Chuck Lawless currently serves as Professor of Evangelism and Missions and Dean of Graduate Studies at Southeastern Seminary. You can connect with Dr. Lawless on both Twitter and Facebook .

Three Questions to Ask About Your Church’s Financial Management

Do your compensation, reimbursements, and restricted giving practices need a check-up?

Dan Busby

When it comes to staying above reproach in finances, churches generally struggle with the same few issues, over and over again. They play out in different ways but the biggest questions they need to answer in order to assess the health of their financial administration are these three.

1. Does your church have fair compensation?

Is that compensation approved independently of the individuals who receive that compensation? You need to make sure that your staff members aren’t directly or indirectly helping determine how much they will be paid. Another question in this area is, Is all of the compensation that is taxable reported as taxable? Or are you giving the pastors a pass and not reporting taxable compensation? How are fringe benefits being reported? Are they taxable, tax-deferred, or tax-free? Dealing with issues of financial reporting is a large task, but it’s necessary to have guidelines in place in order to protect your pastors, your staff, and yourself.
Get accurate and up-to-date compensation information, including localized salary data, through ChurchSalary, a sister site of ChurchLawAndTax.com.

2. Is anyone at your church challenging your senior pastor’s expense report?

If the treasurer is a volunteer on the board, he or she might have a basis for challenging, but if the treasurer is a paid staff member, who is he or she to tell the senior pastor that the documentation is not adequate? It’s critically important to have your pastor’s expense report independently reviewed. In a 2021 nationwide survey conducted by Church Law & Tax, inappropriate expenses or reimbursements was the top form of financial misconduct reported by churches.

Let’s use a business trip taken by me as an example for expense reporting. I traveled for business purposes, so I’m going to turn in an expense report when I get back. Let’s say I use my personal credit cards to charge everything for this trip. I’ll get reimbursed for those expenses only if I can document the business purposes of all of the expenses on my trip. My organization is not on the line for this trip; I’m on the line. And after my expenses are reimbursed for this trip, my expense report goes to the chair of our board for approval. He gets to look at everything I spent, and everything I was reimbursed for. And so the independent review—which doesn’t happen very often in any churches in America—the independent review of the pastor’s expense reports is extremely important.

3. Is your church handling “restricted gifts” properly?

Churches often encounter “restricted” gifts (also commonly referred to as “designated” gifts). A donor gives a gift for a specific project, but the church doesn’t spend the money for the project, and then what happens with that money? It has to go to that specific project. And then you have the issue of gifts being given for the benefit of an individual, which is a situation that is going to raise a concern in most cases.

Adoption funding is one of the biggest restricted giving issues. There’s a natural desire to help families who are adopting. That’s wonderful. But there’s a difference between giving a gift to a church or a charity to provide the adoption funds, and giving the money specifically for one family. When it’s given specifically for one family, this translates the gift into a personal gift, not a charitable gift. This is happening in the crowdfunding arena as well. People are very well intended, and their hearts are obviously in the right place. But they’re raising money, adoption-by-adoption, family-by-family, instead of raising money for adoption in general and letting the organization decide who should receive the adoption funding. It’s kind of a combination of the high interest in helping people adopt children and some of the new funding techniques, as in crowdfunding, that are beginning to come together that we’re going to have to work through so that it’s done legally and ethically and in good order.

Fundraising needs to be given for projects. When you start naming individuals, that is going to raise a concern about benevolence, adoption, or other issues. If I make a gift that is specified for one person for adoption or is specified for a person for a mission trip, those are generally going to be viewed as personal expenses. But if I only suggest the missionary or preference—so it’s a gift to the church but my preference would be that it would go for Bill for his church mission trip or career mission trip, then that’s generally acceptable. But when we’re restricted, it’s like me giving you a personal gift; it’s not taxable to you, but it’s not deductible to me.

Those are the three hot-button issues that we’re seeing right now. Compensation, expense reimbursements, and restricted giving. Of course, there are other issues that churches struggle with, and we see those on an individual basis, but overall, if you’ve got these three covered, you are doing a lot right.

Want to learn more on best practices for church finances? Check out our resource, Church Finance: The Church Leader’s Guide to Financial Operations.

Q&A: Can Ministers “Opt Out” of Obamacare?

Exploring whether or not Form 4361 exempts ministers from the Affordable Care Act.

Richard R. Hammar, Attorney, CPA
Bio
With the implementation of the Patient Protection and Affordable Care Act (also known as the Affordable Care Act), I have had several people ask me about how the Act mandates may affect ministers who have an IRS-approved Form 4361 (the form ministers use within the first two years of ministry to opt out of Social Security and Medicare). Does a minister’s IRS-approved Form 4361 also exempt them from the Affordable Care Act?
I addressed this in my full analysis of the Affordable Care Act available in the CHURCH LAW & TAX REPORT archives on ChurchLawAndTax.com:
For many years the tax code provided ministers with a limited opportunity to exempt themselves from paying self-employment (Social Security and Medicare) taxes on their ministerial income by filing a timely exemption application (Form 4361) with the IRS. A minister certifies on Form 4361 that “[he or she is] conscientiously opposed to, or because of [his or her] religious principles … opposed to, the acceptance (for services [he or she] performed as a minister … ) of any public insurance that makes payments in the event of death, disability, old age, or retirement, or that makes payments toward the cost of, or provides services for, medical care.”
Many ministers opt out of paying self-employment taxes by submitting a timely Form 4361 with the IRS. Does this exemption apply to the recently enacted health care legislation? Are these ministers exempt from the mandate to have health insurance?
Unlike the related exemption of members of certain religious faiths from the payment of Social Security taxes based on section 1402(g) of the tax code, the health care legislation contains no “religious conscience” exemption for such ministers. As a result, ministers who opted out of Social Security and Medicare by filing Form 4361 with the IRS are not exempt from the provisions of the health care legislation, including the insurance mandate.
Some ministers who opted out of Social Security will undoubtedly claim that the new law’s failure to exempt them from its provisions violates the First Amendment guaranty of religious freedom. It is highly unlikely that such a claim will be successful. To illustrate, a number of ministers who failed to file a timely exemption application (Form 4361) from Social Security coverage have argued that their constitutional right to freely exercise their religion is violated if they are forced to pay Social Security taxes against their will. This contention has been consistently rejected by the courts. The United States Supreme Court observed, “if we hold that ministers have a constitutional right to opt out of the Social Security system when participation conflicts with their religious beliefs, that same right should extend as well to persons with secular employment and to other taxes, since their right to freely exercise their religion is no less than that of ministers.” United States v. Lee, 455 U.S. 252 (1982).

Example. A pastor filed a timely application for exemption from self-employment taxes (Form 4361) with the IRS several years ago, opting out of the requirement to pay self-employment (Social Security) taxes on ministerial income. He does this on the basis of his religious-based opposition to “the acceptance (for services I performed as a minister … ) of any public insurance that makes payments in the event of death, disability, old age, or retirement, or that makes payments toward the cost of, or provides services for, medical care.” This exemption applies only to the payment of self-employment taxes. It does not apply to the minister’s coverage under the health care legislation.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Should Small Churches Worry about Protecting Names?

One small church’s trademark fight with Adidas suggests yes.

Ashley Grace Emmert

Often, trademarking and protecting intellectual property seems like a “big church” affair. It requires lawyers, money, and time that smaller churches might not have. But protecting your church’s name and logos, regardless of your size, may be a wise decision. In fact, it may benefit your church to protect items before it grows any larger.

Consider this recent case:

Christian Faith Fellowship Church, a small congregation near Chicago, trademarked the phrase “ADD A ZERO” in 2006 as a way of encouraging those who purchased something from its small store or tithed to the church to “add a zero” to the total amount. The church publicly said the phrase was a “prophetic word spoken to [its] congregation in the early 2000s, in an effort to raise money for the building fund, food pantry …”

In 2009, Adidas, the sporting goods retailer, tried to register a trademark for “ADIZERO,” a new sub-brand of the company’s clothing line. The United States Patent and Trademark Office denied its application because ADIZERO was too similar to the ADD A ZERO® trademark owned by Christian Faith Fellowship. This put Adidas in a tough spot. Without the trademark, it had no legal protection for the ADIZERO mark, but it had already launched the product line, and invested money to market it. The company also signed professional basketball player Derrick Rose to a $250 million sponsorship deal—in part to promote the ADIZERO footwear.

To try to rectify the situation, Adidas sent Christian Faith Fellowship a $5,000 offer to give up its trademark. The church refused. It said losing its trademark would severely hurt the church’s efforts to raise badly needed funds.

In 2011, Adidas filed a petition with the USPTO to cancel the church’s trademark on the grounds that it hadn’t used it enough in commerce. James Logan, the pastor of Christian Faith Fellowship, wrote a letter in 2011 to Adidas CEO Erick Stamminger, asking him to cease his attempts to take the trademark away from the church.

“I have long been an admirer of Adidas and would not expect a company of your stature, with celebrity endorsers like Mr. Rose, to try to use its wealth and power to bully a working-class church,” Logan wrote. Logan also wrote Rose, asking him to use his star power to make Adidas stand down. Rose, however, remained silent on the issue.

In May of 2013, the Trademark Trial and Appeals board preliminarily denied Adidas’s petition, explaining that the church had sold at least two T-shirts with the ADD A ZERO® mark on them in the past four years. As of May 2014, this case remained open, with all motions pending.

Lessons for small churches

Churches can learn from both sides of this case.

From Christian Faith Fellowship Church, leaders can learn that protecting brands, names, and goods helps prevent your church from being bulldozed by larger churches or companies who may later demand your church to use a different name. Christian Faith Fellowship, a small church in Zion, Illinois, has a lawful right to its trademark, and in proving this, it has been able to defend that right.

However, the church might have had an even easier time proving its ownership by using the ADD A ZERO® trademark more consistently and more broadly. It was on these grounds that Adidas attempted to prove that the church should give up its rights to the trademark. In this case, the two T-shirts sold were able to prove that Christian Faith Fellowship did, in fact, use the trademark, but had the church used it more broadly, Adidas may not have challenged the church in the first place. For today’s churches, broad use could be as easy as featuring this trademark on the church’s website.

From Adidas, churches—especially small churches that may think they don’t need to trademark their Bible study materials and other materials now—can learn that it’s better to protect these things early than to have to go back and change the names of these elements later. Had Adidas done its due diligence and searched for available trademarks before manufacturing its clothing line and creating a marketing plan centered on ADIZERO, it could have found a more available name, trademarked it, and not wasted the past six years trying to fight a small church.

Names to protect

The types of names most worth protecting include:

Church name;
Domain name;
Study materials/curriculum;
Community outreach programs;
Conferences, seminars, and camps hosted by the church

If your church waits to protect, say, a Bible study curriculum name, and an outside church or organization accuses you of infringing a name that it already trademarked, your church may not have legal grounds to keep using that name. It may mean your church will need to change the name of everything in question. Imagine reprinting Bible studies, changing logos for bulletins, graphically re-designing your website, and so on. It’s time-saving and cost-efficient to protect names early on. Think of it as a safety net—a wise investment for your church’s future!

Rebranding your church
Image: Getty/Olivier Le Moal

A Church by Another Name

Legal considerations and steps for changing a church name.

Stephen H. King

Has your church decided on a new name to adopt as it moves forward in ministry?

If so, this wasn’t an easy decision to reach. Your church committees and governing bodies carefully evaluated the potential benefits and drawbacks of the proposed name, and conducted their due diligence for the trademark. They counted the costs associated with a name change, both tangible (signage, letterhead, other printed materials, and so on) and intangible (risk of loss of goodwill developed through years of use of the previous name). It planned how it will use the new name in conjunction with its media ministries, along with its website and social media applications.

Now it is time to implement the change. But what must be done from the legal perspective to bring the new name change to fruition? What documents and registrations need to be updated? To whom does the name change need to be reported?

Here, we will address these legal and procedural issues related to a church name change.

“Official” or “doing business as”

A threshold question related to implementing a name change is whether the church prefers to (1) change its official organization name, or (2) maintain its official organization name but adopt a “doing business as” name (“DBA”) that will be used publicly as the church’s new name. (DBAs, as referred to in this article, are variously called trade names, fictitious names, or assumed names in some jurisdictions. While nomenclature varies, and some jurisdictions may make distinctions between two or more types of name registrations, our use of the term DBA is meant to include any state or local registrations that provide authority to publicly use a particular name for an enterprise.)

While it is generally less complicated to register a DBA than to change the official organization name (as discussed further below), maintaining both a DBA and the legal organization name may prove somewhat more onerous in the long term.

Your answers to the following five questions may influence this decision:

1. Is your church confident that it will maintain this new name for the long haul? If not, registering a DBA may be preferable, given that such registration would be easier to “undo” than a change to the official organization name. However, maintaining for the long term both the official organization name and one or more DBAs does add slightly to the church’s administrative burden and may result in periodic questions and confusion as to why more than one church name exists.

2. Is the current church name utilized in a significant number of agreements and registrations, such that a change in the official organization name would be administratively, and perhaps legally, onerous? If a church name change needs to be implemented quickly and simply, registering the DBA will generally be the quicker, cheaper, and simpler option in the short term. And the DBA registration could be used as an interim step to a later official organization name change.

3. Are there vehicles, real estate, and other titled assets which will each need to be legally retitled in the new name? If so, the DBA alternative can avoid these legal steps that can be somewhat costly and time consuming.

4. Is the current church name used in a significant number of bequests or other planned gifts, in such a way that a change in the official organization name could cause confusion and potential loss of such gifts? Of course, a church is not necessarily aware of how many wills in which it is named, and could reasonably assume that most, if not all, of any such bequests and planned gifts are from those with a continuing connection with the church. And even if the church is referenced in a will or trust by its former name, the executor, administrator, or trustee, even decades after a name change, should normally be able to determine the entity to which the document is referring through corporate, property, and other records. However, some churches, concerned that a change in official organization name may result in lost bequests and planned gifts, may want to register the new church name as a DBA while maintaining the official organization name.

5. Is the new name available in your jurisdiction as an entity name? If not, the church may have no choice other than to investigate whether the proposed new name may be used and registered as a DBA.

How is a DBA registered?

If your church determines that it makes the most sense to change its name through registration of a DBA, it should first determine the particular process for DBA registration in its jurisdiction. The process of registering a DBA varies from state to state. In some states, it is a state-level registration. In others, it is at the county or city level, and may need to be done in each locality in which the name is used. In some jurisdictions, registration may not be required to use a DBA.
Once the new name has been legally adopted as the church’s new organization name, the name change will need to be reported to various agencies, vendors, and constituencies.

After determining the basic registration requirements and process, the church should confirm that the intended name is available for registration. While some jurisdictions will not permit registration of a DBA that is the same as the name of another registered entity or registered name, other jurisdictions do not place such a limitation on DBA registrations. In addition to requirements for name registrations in your state, the trademark issues discussed in Kenneth Liu’s article starting on page 2 must be carefully evaluated. The particular agency administering DBA registrations should be contacted for information about name availability and any other limitations on registered names. Though a DBA can be registered, its use could still infringe a registered trademark, which is a separate legal framework.

The church then needs to ensure that all approvals of church bodies are obtained as required for adoption of a DBA by the church’s governing documents or other policies. Depending on the church’s governing structure, this may include approvals of committees, one or more church boards (whether elder, deacon session, vestry or other board) and the congregation. If church governing documents and policies are ambiguous about the level of approval required to register a DBA, or if the board or congregational approval is not required by church governing documents or policies for such action, church leadership may determine that it is still prudent to seek such approval. If the church is a member of a denomination, the denomination may also mandate review and approval, or otherwise have criteria for a church name that one of its affiliated local churches is publicly utilizing.

Once all internal approvals are obtained, the church will file the required registration (if any) with the applicable agency. In some jurisdictions, the registration process may be different, depending on whether the church is an incorporated or unincorporated entity. In most cases, registration entails submission of a simple registration form and payment of a fee. In most jurisdictions a DBA may only be registered for a specific period of time, and thus must be periodically renewed. To avoid potential loss of the registration, the church should carefully calendar and monitor registration expiration dates and ensure that renewal registrations are timely filed.

Once a DBA is registered, the church may open a bank account under the registered name (or add the registered DBA name to an existing account) and accept checks made out to that name. While contracts may also be entered into in the DBA name, it is advisable that contracts include both the official organizational name and the DBA to avoid confusion. The church may also consider the advisability of reporting the DBA to agencies in which it has registrations. For instance, if the church has obtained IRS recognition of tax exemption (which churches may obtain, but are not required to) it may wish to report its DBA to the Internal Revenue Service. If the church reports its DBA to the IRS, it is still recommended that the church continue to include its official organization name (as well as the DBA) on charitable contribution acknowledgments so as to reduce the likelihood of confusion if a church donor were to be audited.

Legally changing a name

If your church decides to adopt a new organization name instead of registering it as a DBA, it must consider both the provisions of state law and its own governing documents to determine the steps to legally change the church name. The process for officially changing the church’s organization name will differ somewhat depending on whether the church is organized as a corporate or unincorporated entity.

Incorporated churches

To legally change the organization name of an incorporated church, an amendment to the organizing document of the church must be filed with the applicable state agency that administers corporate filings. But prior to filing the amendment, the church first should confirm that the intended new name is available as a corporate name in the state of incorporation. Most states only permit an entity to be incorporated under a name that is distinguishable from the names of all existing entities (corporations, limited liability companies, limited partnerships, limited liability partnerships, and so on) and trade names registered at the state level.

Checking for name availability is an important step. It can often be done online. This is a critical step because it will help a church understand what, if anything, needs to change about their official new name in order to incorporate it. For example, if the proposed new name is Grace Community Church, it is likely that the church will not be able to officially change its corporate name to that exact name. (In a quick Google search, I gave up counting after 10 pages of U.S. churches named Grace Community Church.) If your new church name is a previously registered name in your state, a location designator (Grace Community Church of Anywhere) or some other word may need to be added to distinguish the name from already registered names.

Note that a few states may exempt churches from the requirement of a distinguishable name, so local law should be consulted. The particular agency administering corporate registrations (generally the secretary of state or state corporation commission) should be contacted for information about name availability. In many jurisdictions, a name may be reserved for a period of time prior to submission of incorporation or amendment documents. If it will be a significant period of time until all church approvals necessary to officially amend the corporate organizing document can be obtained, or if the church otherwise anticipates a period of time for laying groundwork before implementing the new name, filing a name reservation is prudent.

The church then needs to ensure that all approvals from church bodies are obtained as required by the church’s governing documents and applicable law in order to amend its organizing document (certificate of incorporation, articles of incorporation, or charter) and other governing document(s) (generally the bylaws or constitution and bylaws) that establish the church name. Depending on a church’s governing structure, this may include approvals of committees, a church board (whether elder, deacon session, vestry, or other board), and the congregation. Even if congregational approval is not required by church governing documents, some churches may determine, as noted in discussing the DBA process, that it is prudent to seek such approval. The church denomination of which the local church is a member may also mandate review and approval at the denominational level, or otherwise have criteria for names of its affiliated churches.

Once all internal approvals have been obtained, the church will prepare and file the document required by state law to amend its incorporating document. In most states, the amending document is called an “articles of amendment” or a “certificate of amendment.” State law dictates the provisions that are included in the amending document. Typically, along with the text of the amendment (which, in the case of a name change, would be the new church name), the amending document must also include certification of the manner in which the amendment was approved and the date of approval. This must be signed by an authorized representative.
Notice of the name change may also need to be reported to state or local government agencies handling property tax exemptions, sales and use tax registrations and exemptions, and applicable local business licenses.

While many states provide templates and instructions for amendments on the websites of their agencies administering corporate registrations, it is recommended that legal counsel review the articles of amendment or certificate of amendment prior to filing, given the unique requirements in each state. Timeframes for state review and approval of amendments varies widely from state to state. Many states provide a process for expedited review (such as 24-hour or same-day service) for an additional fee. Once approval of the applicable state agency has been received, the legal corporate name of the church is changed.

Although amendments to the bylaws of a church do not need to be filed with the state, the church should ensure that all references to the old name in the bylaws are amended in accordance with the procedures provided in the bylaws.

Note that the effective date of the corporate name change will be the date the amending document is filed with the state. A church may wish to time the filing of the amending document to appropriately correspond to the public roll-out timetable of the new name. Roll-out timetable considerations may also affect the timing of internal church approvals, particularly if the name change requires congregational approval.

Unincorporated churches

Many churches are not established as nonprofit corporate entities, but as unincorporated associations. This is particularly true in a few states where churches were not legally permitted to incorporate until fairly recently. If your church is not incorporated, but functions as an unincorporated association, no state filing is required to officially change the organization name in its organizing document. Since an unincorporated association does not submit an organizing document (generally called the constitution or articles of association) with the state to initiate its legal existence, it also need not file with the state to amend its organizing document. Thus, the name change will be effected when all approvals of internal and denominational church bodies are obtained as required by the local church’s governing documents and denominational policies.

If the church, as an unincorporated entity, has filed a trade name or other name registration utilizing its former name, such name registration should be amended with the new name. Additionally, if the church has a governing document in addition to its organizing document (such as bylaws in addition to its constitution or articles of association), the document should also be properly amended to reflect the new name.

Who do we tell?

Once the new name has been legally adopted as the church’s new organization name, the name change will need to be reported to various agencies, vendors, and constituencies. These may include the following:

If the church has received IRS recognition of tax-exempt status, the name change must be reported to the IRS Exempt Organizations Division. While a name change is normally reported in conjunction with the annual Form 990 required by most tax-exempt organizations, since churches are typically exempt from filing the Form 990, a copy of the name change amendment approved by the state of incorporation (or if unincorporated, a copy of the amendment to the articles of association, constitution, or other organizing document, showing the effective date of the change of name and signed by at least two officers, trustees, or members), and a request for an updated IRS determination reflecting the new name should be sent to the Customer Account Services of the Exempt Organizations Division. The current address is:

Internal Revenue Service
Exempt Organizations Determinations, Room 4024
P.O. Box 2508
Cincinnati, OH 45201
Toll-free number: 877.829.5500
Fax: 855.204.6184.

If the church is a subordinate organization under a group exemption, report the name change to the central organization of the group exemption by sending the organization copies of the relevant documents indicated above.

Even if the church has relied on its automatic tax-exempt status and never filed to receive IRS recognition of exemption, if it remits payroll taxes (and thus has an Employer Identification Number (EIN)), it will report the name change to the IRS for payroll tax filing purposes. The name change will also be reported to state tax agencies with which payroll tax returns are filed.

If an incorporated church is qualified to do business in any state other than its state of incorporation (known as a “certificate of authority” or “foreign corporation registration” in most states), an amendment to the church’s corporate registration in those states must be filed to report the name change. The requirements for filing such an amendment will need to be researched for each state in which the church is qualified to conduct affairs. Note that only churches that have campuses or other operations in more than one state would normally be registered to do business in a state other than their state of incorporation.

Real property ownership records may need to be amended to reflect the new entity name as well as other documents showing ownership of titled property (such as vehicles). Legal counsel should be consulted regarding necessary changes to deeds and other real and titled property ownership issues.

Notice of the name change may also need to be reported to state or local government agencies handling property tax exemptions, sales and use tax registrations and exemptions, and applicable local business licenses.

The name change should be reported to vendors and other entities with which the church has contractual relationships, including:

  • Banks and investment companies with which the church has accounts (which will normally require a copy of the document effectuating the name change);
  • Financial institutions or other parties with which the church has loans;
  • Lessors or lessees under any lease agreements to which the church is a party;
  • Utility companies (including telephone and Internet service providers);
  • Insurance companies;
  • Domain name registries;
  • Credit card companies;
  • Post office (If the church has a nonprofit mail permit, additional steps will likely be required);
  • Telephone and website directory listings;
  • Music and video licensing services (such as CCLI); and,
  • Other parties with which the church has contractual obligations or does recurring business.

The details regarding internal approval processes, required legal filings, and reporting obligations of a church name change will vary substantially depending on jurisdiction and the specific circumstances of each church. All of these issues should be carefully addressed with input from the church’s legal counsel.
Stephen H. King is an attorney with Gammon & Grange, P.C.

5 Apps for Tracking Receipts

Easy does it with these free Internet tools.

Samuel Ogles

Even if you’re the best administrator around, keeping track of office expenses can be difficult. This can be especially true if you’re handling the books for a team of people who aren’t as organized as you are. Well, you’re in luck. Here are five user-friendly apps that can take a lot of the headaches and mistakes out of tracking receipts. And they’re all free.

Genius Scan

Brandon Hilgemann at ProPreacher.com listed this app among the best apps available for pastors. The app lets you easily scan documents, including receipts and handwritten notes, and archive them for later use. The main benefit of Genius Scan is it allows you to export your scans as a JPEG or PDF file for later reference. The free version is fairly basic, but it gets the job done. If you’re looking for an easy way to snap a photo and archive receipts in PDF format, this app has you covered.

Availability: iPhone and Android

Shoeboxed

Shoeboxed is designed specifically for business owners and business travelers so they can easily document expenses in order to maximize their reimbursements and tax refunds. The app also claims that your uploaded photos and data are verified by actual people. Shoeboxed has a website with the same name that syncs with your app so you can manage your expenses wherever you have Internet access. With a recent major update, which greatly improved functionality and a newly added mileage tracking feature, this may be a contender for the best app out there for business travel reimbursement.

Availability: iPhone and Android

CamScanner

This app is specifically designed to scan documents. That means it will certainly handle your receipts as well as give you a searchable database. But the real standout feature is its ability to extract printed text from images and create PDFs. You can export these PDFs or even send your data via fax. If you need to scan documents in addition to saving receipts, you may want to give this app a try. And if you love CamScanner, you can purchase upgraded versions with even more functionality.

Availability: iPhone and Android

OneReceipt

This app stands out for its organizational capabilities. Not only does it scan receipts, but you can create tags and messages to organize your receipts into custom subcategories like “travel expense,” “food,” or whatever else you like. It will also keep track of your e-mail receipts–from online purchases, for example. As an added feature, your OneReceipt account allows you to view your receipts within your bank or credit card statement. If that wasn’t enough, the app will give you a report of your monthly spending summary. Be prepared to never again have a legitimate excuse for losing track of a receipt.

Availability: iPhone

Expensify

This app is designed specifically for taking the hard work out of expense reports. Like the other four apps reviewed here, it allows you to scan receipts by snapping a photo. But unlike the other apps, its “SmartScan” feature will pull the details from the receipt automatically. You can track and categorize expenses at the touch of a button. Perhaps the best feature is that it will generate expense reports for you based on the receipts you’ve uploaded and categorized. If you’re tired of manually inputting your data into a complicated expense report, Expensify is your solution for–according to its developers–”expense reports that don’t suck.”

Availability: iPhone and Android

For more help with your office needs, see the articles “5 Tech Tools to Manage Pastoral Ministry” and “Tracking Expenses–Why Churches Must Do Better.”

Q&A: Is a Pastor’s Holy Land Trip Tax Deductible?

It’s essential to know the difference between vacation and business expenses.

Richard R. Hammar, Attorney, CPA
Bio
Our church’s CPA says that because a Holy Land trip will serve in the continuing education of our pastor, it would be a tax-deductible expense. Is this correct?
The answer is no. Many churches present their minister with an all-expense paid trip to the Holy Land. This benefit constitutes taxable income if either or both of the following statements are true:
  • The trip is provided to honor the minister for his or her faithful services on behalf of the church.
  • The trip is provided to enhance or enrich the minister’s ministry. While a trip to the Holy Land can benefit one’s ministry, such a trip is not a business expense under current law. The tax code provides that “no deduction shall be allowed … for expenses for travel as a form of education” IRC 274(m)(2).
The church’s payment of the cost of such a trip is treated as the payment of personal vacation expenses, and the full amount must be included as taxable income on the minister’s Form W-2 (or 1099-MISC if self-employed). This includes transportation, meals, and lodging.
If the primary purpose of the pastor’s trip was business related (speaking, teaching, and so on) then his or her expenses may be reimbursable under the church’s accountable plan. Such a conclusion depends on several factors, including the length of the trip, and the time devoted to business and personal purposes, respectively.

For further help navigating any funding of overseas activities by your church, see Chapter 4 of the Church & Clergy Tax Guide.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.
Image: PeopleImages | Getty

Q&A: Should We Allow Multiple Bank Accounts?

The risks of allowing each church group to have one.

Vonna Laue, CPA
Bio
Most of our church’s Sunday school classes and groups have their own bank accounts, but use the church’s federal identification number for those accounts. The finance committee has no oversight of these accounts, and no control over the funds or how they’re spent. Is this appropriate?
It seems convenient to let each group have an account so that each can tap into its budgeted money when needed. But such an approach isn’t advisable. The conventional wisdom in the church finance world is for churches to limit the number of bank accounts the church uses. Ideally, a church should use only one or two. The logic is generally based upon the following five tips:
  1. The more accounts created, the easier it is for someone to disguise and/or mask fraudulent activity;
  2. The more accounts created, the more administrative work required to monitor, oversee, and reconcile accounts on an ongoing basis;
  3. The more accounts created, the greater the likelihood of having funds erroneously deposited or withdrawn from the wrong accounts;
  4. The more accounts created, the more chances created for outsiders to steal account numbers that can be used for electronic fraud;
  5. The more accounts created, the more checkbooks created, and the harder it will be to track and to secure blank checks.
Vonna Laue has worked with ministries and churches for more than 20 years. Vonna was a partner with a national CPA firm serving not-for-profit entities through audit, review, tax, and advisory services. Most recently, she held the role of executive vice president for a Christian ministry that works to enhance trust in the church and ministry community.

Q&A: Is a Pastor’s Holy Land Trip Tax Deductible?

Specific rules dictate the tax treatment for pastors and donors.

Matthew Branaugh, Business Owner
Bio

Update: This post was updated on 5/22/14 to clarify the tax deductibility of contributions made by donors toward a trip.

Our church’s CPA says that because a Holy Land trip will serve in the continuing education of our pastor, it would be a tax deductible expense, and that anyone who contributes to the pastor’s trip may receive contribution credit. Is this correct?
There are two questions here: (1) Whether the trip is a tax deductible benefit for the pastor; and (2) whether donors may receive contribution credit for giving toward the trip.
Regarding the first question, Richard Hammar directly addresses it in Chapter 4 of the Church & Clergy Tax Guide. Basically, he notes many churches present their minister with an all-expense paid trip to the Holy Land. This benefit constitutes taxable income if either or both of the following statements are true:
  • The trip is provided to honor the minister for his or her faithful services on behalf of the church.
  • The trip is provided to enhance or enrich the minister’s ministry. While a trip to the Holy Land can benefit one’s ministry, such a trip is not a business expense under current law. The tax codes provides that “no deduction shall be allowed … for expenses for travel as a form of education” IRC 274(m)(2).
Attorney Frank Sommerville, an editorial advisor for Church Law & Tax, further explains:

The only way that the trip is a business expense is if (the pastor) is leading a church group on a church-sponsored trip. If he or she provided the education to the participants as a representative of the church, then the trip expenses are not taxable,” he said. “If he is simply a participant, it is taxable income. I always tell clients to look at who is benefitting from the trip. If the pastor is benefitting, it is taxable because it is outside the U.S.

A spouse accompanying the pastor has to meet the same rules, Sommerville added.
Should you conclude that the trip is not business-related, the church’s payment of the cost of such a trip is treated as the payment of personal vacation expenses, and the full amount must be included as taxable income on the minister’s Form W-2 (or 1099-MISC if self-employed). This includes transportation, meals, and lodging.
Regarding the second question, a donor can give to the church toward the trip–regardless of whether it represents taxable income for the pastor–and receive a contribution credit from the church if the following is true:
  • the church retains “full control of the donated funds, and discretion as to their use”; and
  • the donor understands that his or her recommendation is advisory only and that the church retains full control over the donated funds, including the authority to accept or reject the donor’s recommendations.
I highly recommend you and your CPA obtain a copy of the tax guide to help you navigate these types of questions.
For further help navigating any funding of overseas activities by your church, see Frank Sommerville’s article, “Funding Foreign Activities,” along with the Church & Clergy Tax Guide.
Matthew Branaugh is an attorney, and the business owner for Church Law & Tax.

Q&A: Can Our Church Buy Crosses from a Foreign Business?

Check export and import rules, and suspected terrorist lists.

Frank Sommerville, Attorney, CPA
Bio
We want to purchase some olive wood crosses from a business in Jerusalem to use in our high school ministry in the season leading up to a significant religious holiday. Are there any steps we need to take with respect to U.S. rules and regulations before making an international transaction like this?
As long as your church satisfies Israel’s export requirements and the United States’ import requirements, then the only requirement will be to check the suspected terrorist lists operated by the U.S. Department of the Treasury’s Office of Foreign Assets Control to make certain the business is not on any of those lists. You can find these lists at the following websites:

treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx

state.gov/j/ct/list/index.htm

treasury.gov/about/organizational-structure/offices/Pages/Office-of-Foreign-Assets-Control.aspx

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

IRS Notice 2013-54 Poses Changes for Many Churches

Church-paid medical insurance premiums face taxation.

Richard R. Hammar, Attorney, CPA
Bio
Church Law and Tax

IRS Notice 2013-54 Poses Changes for Many Churches

Church-paid medical insurance premiums face taxation.

Richard R. Hammar

Church leaders have flooded us recently with questions about a new Internal Revenue Service notice that addresses the tax treatment of employer-paid medical benefits. Before the enactment of the Affordable Care Act, employers could provide private health insurance, tax-free, to employees either by directly paying the costs of that insurance to health insurers or by reimbursing the employees for the substantiated cost of their premiums.

But several ACA-related reforms called into question the tax-free treatment of these arrangements heading into 2014. The IRS addressed this question directly in late 2013 when it issued IRS Notice 2013-54. The implications of this notice are significant for churches because, in many instances, these arrangements are no longer allowed and may be subject to substantial penalties.

Churches and Ministers Should Be Aware of the Following Deadlines in May and June of 2014

Note: If a date listed below for filing a return or making a tax payment falls on a Saturday, Sunday, or legal holiday (either national or statewide in a state where the return is required to be filed), the return or tax payment is due on the following business day.

Semiweekly requirements

• If your church or organization reported withheld taxes of more than $50,000 during the most recent lookback period (for 2014 the lookback period is July 1, 2012, through June 30, 2013), then the withheld payroll taxes are deposited semiweekly. This means that for paydays falling on Wednesday, Thursday, or Friday, the payroll taxes must be deposited on or by the following Wednesday. For all other paydays, the payroll taxes must be deposited on the Friday following the payday. Note further that large employers having withheld taxes of $100,000 or more at the end of any day must deposit the taxes by the next banking day. The deposit days are based on the timing of the employer’s payroll. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes (7.65 percent of wages), and the employer’s share of Social Security and Medicare taxes (an additional 7.65 percent of employee wages).

Monthly requirements

• If your church or organization reported withheld taxes of $50,000 or less during the most recent lookback period (for 2014 the lookback period is July 1, 2012, through June 30, 2013), then withheld payroll taxes are deposited monthly. Monthly deposits are due by the 15th day of the following month. Note, however, that if withheld taxes are less than $2,500 at the end of any calendar quarter (March 31, June 30, September 30, or December 31), the church need not deposit the taxes. Instead, it can pay the total withheld taxes directly to the IRS with its quarterly Form 941. Withheld taxes include federal income taxes withheld from employee wages, the employee’s share of Social Security and Medicare taxes (7.65 percent of wages), and the employer’s share of Social Security and Medicare taxes (an additional 7.65 percent of employee wages).

Note: You must use electronic funds transfer to make all federal employment tax deposits. Generally, electronic fund transfers are made using the Electronic Federal Tax Payment System (EFTPS). If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, or payroll service to make deposits on your behalf. If you fail to make a timely deposit, you may be subject to a 10-percent failure-to-deposit penalty. EFTPS is a free service provided by the Department of the Treasury. For more information about EFTPS, visit the EFTPS website,eftps.gov.

May 10

• Churches having nonminister employees (or one or more ministers who report their federal income taxes as employees and who have elected voluntary withholding) may file their employer’s quarterly federal tax return (Form 941) by this date instead of April 30 if all taxes for the first calendar quarter have been deposited in full and on time.

May 15

• An unrelated business income tax return (Form 990-T) must be filed by this date by churches and any other organization exempt from federal income tax that had gross income from an unrelated trade or business of $1,000 or more in 2013.

• Annual certification (for calendar year 2013) of racial nondiscrimination by a private school exempt from federal income tax (Form 5578) must be filed by this date by schools that operate on a calendar-year basis. Fiscal year schools must file the form by the 15th day of the fifth month following the end of their fiscal year. This form must be filed by preschools, primary and secondary schools, and colleges, whether operated as a separate legal entity or by a church.

June 15

• Ministers (who have not elected voluntary withholding) and self-employed workers must file their second quarterly estimated federal tax payment for 2014 by this date. A similar rule applies in many states to payments of estimated state taxes. Nonminister employees of churches that filed a timely Form 8274 (waiving the church’s obligation to withhold and pay FICA taxes) are treated as self-employed for Social Security purposes, and accordingly are subject to the estimated tax deadlines with respect to their self-employment (Social Security) taxes unless they ask their employing church to withhold an additional amount of income taxes from each paycheck that will be sufficient to cover self-employment taxes (use a new Form W-4 to make this request).

• A church must make quarterly estimated tax payments if it expects an unrelated business income tax liability for the year to be $500 or more. Use IRS Form 990-W to figure estimated taxes. Deposit quarterly tax payments electronically using the EFTPS system.

June 30

• Now is a good time to review the 2014 housing or parsonage allowances designated for all ministers on staff. If an allowance designated for 2014 is clearly below actual housing expenses, then the church board should consider declaring a larger portion of the minister’s remaining compensation as a housing or parsonage allowance. Clergy who own their homes may never claim a housing allowance exclusion greater than the fair rental value of the home (furnished, including utilities). Therefore, the allowance ordinarily should not be significantly more than this amount. Also, any changes made only apply prospectively, never retroactively.

For more information, the Feature Article for the May 2014 issue of Church Finance Today goes deeper on this matter; the article also is included in the all-new Affordable Care Act: Church Administrators Survival Guide available at ChurchLawAndTaxStore.com.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

What Can Youth Pastors Learn from Therapeutic Boundaries?

Clinical psychologist Dr. Lauren Widman Eggerth explains why clear boundaries and a no-shame reporting structure are essential.

Ashley Emmert

In the psychology field, therapists are encouraged to recognize feelings of attraction toward their clients, and deal with them in a professional manner. Unfortunately, this same recognition is enshrouded in shame in most church settings. This leads to youth pastors feeling isolated, battling feelings they know they shouldn’t have, afraid to tell anyone for fear of losing their jobs.

In this excerpt from our resource, Youth Ministry in a #MeToo Culture clinical psychologist Lauren Widman Eggerth speaks up about what the field of mental health and therapy is doing right—and what the church could learn from a little more self-awareness.

Why do you think youth pastors and therapists both struggle with the possibility of inappropriate attraction to the students or clients they work with?

Youth pastors and therapists both tend to be in a position of power and authority over people who are coming to them for help. And often, youth pastors are younger individuals, working with students who are not that far from their own age. This can be dangerous if boundaries aren’t established.

Should youth pastors be embarrassed about feelings of attraction?

In the field of training clinicians, there is a portrayal of the inevitability of possible attraction to a client. And there’s a real lack of shame surrounding the possibility of having a physical attraction to a client. Because of the nature of our work, you engage with people on a very emotionally intimate level that can foster feelings of attraction to clients. The key is to educate someone on how they can be self-aware and maneuver those relationships for the protection of the client and their self-esteem.

Boundaries need to address the power differential. In a position of power, you have to be responsible for the possible exploitation of a youth or a client.

How can youth pastors be honest with themselves about feelings of attraction?

Part of our training is in self-awareness. Future mental health clinicians are constantly developing self-awareness and introspection. Knowing what our own baggage is and what our tendencies are can be preventive in the abuse or exploitation of clients—but it also promotes healthy boundaries.

Beyond self-awareness, there is also encouragement to really be aware of what is going on between you and the client. Feelings are normal—attraction between two people is normal. And even more so, clients come in and often feel an attraction toward the therapist. So those things need to be resolved in a way that really preserves the professional boundaries of the therapeutic relationship and protects the therapy process and treatment goals, but also helps bolster the self-esteem of the client so that you’re not shaming them for feelings of attraction.

In a youth ministry setting, the relational awareness absolutely falls on the youth leaders and pastors. Teenagers aren’t fully developed emotionally or cognitively; they don’t have the self-awareness they need to always make good decisions.

In the field of psychology, if there is a feeling of attraction, no matter how small, you don’t ignore it. You seek consultation, talk to someone you trust and respect who can give you an objective reflection. They really fight the culture of shame that is still very present in the church.

What are some signs of possible attraction?

Some signs that might alert you that you have a higher potential of risk of acting on attraction to someone who is in your pastoral care are as follows:

1. Thinking about your student outside of ministry time.

2. If you’re grooming more or wearing a different outfit because you maybe want them to think you are special, you’re trying to impress them with your clothing.

3. Looking forward to times with particular students more than other students.

4. Hoping that you see your student out in the public, at the local grocery store, and so on. Hoping you’ll have an excuse to engage with him or her more personally.

5. Having trouble concentrating in small group or ministry time because you’re thinking about having contact with them outside of this setting.

6. Trying to elicit more information out of curiosity rather than because it pertains to ministry efforts or spiritual development.

7. Flirting.

(See more from Koocher &Keith-Spiegel (2008), Ethics in Psychology and the Mental Health Professions.)

If you do have an attraction to a student, don’t ignore it. Seek consultation, talk to a supervisor. In therapy, most people do that and never act on the physical or sexual attraction to a client.

In therapy, if you speak to your supervisor about feeling attracted to a client, what happens?

Well, all of that self-awareness and self-analysis is brought into supervision. One of the greatest risks in instances of abuse in a therapeutic relationship, or in a ministry relationship, is when someone is very isolated professionally—they don’t have supervisors, pastors, or colleagues they can trust and talk to. This puts them in a place where they can’t seek supervision and have someone hold them accountable for their actions.

The same goes for burnout. If a pastor or a mental health professional has no one to go to, and they have high demand roles and are being depleted, that’s when it gets risky. That’s when they might to start leaning on the people they’re working with in a counseling setting to get some sort of emotional closeness. The same goes for youth pastors and leaders.

Catching these signs that can be harmless is so necessary—early awareness is the best thing. Saying that you’ve been thinking about your student outside of ministry times once or twice—that needs to be then brought to your supervisor. And it might turn out to be nothing. It might be something where you’re just more worried about their safety or a situation they’re facing. So it could be totally harmless. But you want to process that in supervision. In the mental health field, the nature of supervision is to process these relationships under therapeutic supervision, which is something I don’t think pastors probably have. They need to have people they can speak to, safely, about the relationships they’re working in every single day.

No matter what the feeling is—what if you’re feeling angry about your student? What if you don’t like your student? That should be brought into supervision. It’s okay to have your own stuff that you bring into a relationship.

In pastoral care, it probably seems more okay to tell another pastor or supervisor that you don’t like a certain student. That feeling is accepted. But it might feel incredibly awkward to say that you like a student more than you should. There’s a real discomfort in the church about some of those feelings, whereas a lot of those feelings are normal—especially if you have a 24-year-old youth pastor hanging out with 17-year-olds. The nature of training in psychology is that there shouldn’t be shame placed on feelings. Instead, you should be given an outlet for processing those feelings, and then putting up boundaries that are for the best interest of the client or student.

What is the next step for pastors in this situation?

In youth ministry, you would need to talk about your feelings toward your student with either your supervisor or another pastor. And then you would, in that reporting structure, process through what you need to do next.

If these feelings or signs aren’t caught early, this can mean termination of a mentorship.

Where do you draw the line? When does a pastor or volunteer need to be removed from ministry?

Part of the meeting process with your supervisor or reporting pastor is to decide what should happen next. In therapy, it’s part of the consultation process. You decide together how strong these feelings are. Does it have to do with an actual sexual feeling of attraction? Or does it have to do with the ministry process? Are you feeling overly close with a student because you’ve been working with them really intensely?

Those questions need to be taken into account. If you’ve already seen this student outside of a ministry setting, that’s a sign that you’ve started to go too far. Have you been making excess contact with that student? Then you need to remove yourself, hopefully in a temporary manner, and the church needs to work with you to figure out if these are issues that need to be dealt with so you can return to ministry, or if you need to step away from ministry on a more permanent level.

That’s when the supervisor should say, “It’s not in the students’ best interests for you to continue to pastor them, because you’ve now started to serve your own needs and wants. You’ve reached out to a student in ways that are inappropriate and boundary-crossing.”

What I’m saying is, when it starts to become about the pastor and not about the student, that’s when a problem develops. In really good cases, those feelings are caught early, talked about in supervision, and then boundaries are specifically set in place and accountability is held, so that the pastor continues a good ministry relationship. That’s the goal.
Lauren Widman Eggerth, Psy.D., is in practice in Aurora, CO.

IRS Form 8822-B: A New Reporting Requirement for Churches

What church leaders should know now, including an upcoming deadline.

Richard R. Hammar, Attorney, CPA
Bio

Any church that has employees, files employment tax returns, or has a bank or brokerage account, must have an “employer identification number” (EIN). This includes nearly every church in the United States. An EIN is obtained by filing a Form SS-4 with the IRS using the IRS website (irs.gov) or by submitting a paper form. Since 2010, line 7 of Form SS-4 has asked for the name and Social Security number of a “responsible party” of the applicant.

The IRS became increasingly frustrated by its inability to communicate with responsible parties identified in employers’ SS-4 forms, usually because the responsible parties designated by employers no longer served in those capacities due to any number of reasons, including resignation or death. On November 18, 2013, the IRS adopted an entirely new requirement to address this problem, stating any employer with an EIN must report changes in the identity of its responsible party to the IRS by March 1, 2014, using Form 8822-B.

Many church leaders want to know if this new reporting rule applies to churches. In the upcoming April 2014 issue of Church Finance Today, I go deeper on the rule’s application to churches, including how to complete the form, how to respond to this requirement depending on when your church was founded and obtained an EIN, and how to maintain compliance in future years.

However, to help address some immediate concerns, given the looming March 1, 2014, deadline, here are five key items to note:
  • The Form 8822-B reporting requirement applies to any organization that has an EIN. This includes most churches.
  • The use of the form is mandatory if there is a change in the responsible party identified on the Form SS-4 that a church filed with the IRS to obtain its EIN.
  • There are no penalties for noncompliance. However, a church that fails to comply with this reporting requirement, and has a change in the person identified as its responsible party on Form SS-4, may not receive timely notices of deficiencies or demands for taxes from the IRS, which can lead to penalties and additional interest charges.
  • Perhaps the most common scenario involves churches that obtained their EIN many years ago, long before Form SS-4 was amended in 2010 to include the identity of a responsible party. Are these churches required to file Form 8822-B? The instructions to the form do not address this common scenario directly, and the IRS has provided no guidance. But it is reasonable to assume that these churches should file Form 8822-B listing the current responsible party’s name and Social Security number, and either leaving lines 8a and 9a blank (name and Social Security number of the former responsible party) or inserting on those lines the name and Social Security number of the responsible party who served immediately prior to the current one.
  • In most churches, a church treasurer, lead pastor, or member of the church board would satisfy the definition of a responsible party since they have a sufficient level of control that enables them “directly or indirectly, to control, manage, or direct the entity and the disposition of its funds and assets.”

Read more about this development in the upcoming April 2014 issue of Church Finance Today.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.
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A Gift Freely Given?

When an elderly woman named the church a beneficiary to her estate, her family sued for undue influence. How to protect the validity of donor gifts.

Richard R. Hammar, Attorney, CPA
Bio

Gifts to churches by elderly members are common. By some estimates, up to $40 trillion will be passed from the current generation to the next, creating an unprecedented opportunity for charitable giving. In some cases, though, the validity of such gifts is challenged by family members on the grounds of mental capacity or undue influence. With the increasing number of elderly individuals making substantial gifts to their church or favorite charity, these challenges are likely to be raised more frequently.

The resolution of such challenges depends on a careful examination of all the facts and circumstances. A recent decision by the Vermont Supreme Court—Curran v. Building Fund of United Church, 2013 WL 6332676 (Vt. 2013)—provides helpful guidance that will assist church leaders in responding to claims of diminished mental capacity and undue influence. By following the recommendations in this article, church leaders will reduce the risk of gifts being invalidated for undue influence.

Gifts Freely Given—or Coerced?

For more than 60 years, an elderly woman (the “testator”) lived with her husband in a small community where both were active in a variety of community organizations and activities. In 1993, after her husband’s death, the testator placed her assets into a trust. The beneficiaries of the trust were the testator’s brother, sisters, and a niece and nephew. In 2004 the testator amended the trust to delete her brother as a beneficiary, reduce the distributions to some other relatives, and add three local community organizations including her church’s building fund as beneficiaries.

Relatives and others who dealt with the testator during the period from 2004 to 2005 observed personality changes and signs of confusion. Her primary care physician diagnosed dementia or organic brain syndrome in 2004, observed evidence of nighttime confusion later that year, and prescribed several medications in 2005 to help arrest the effects of dementia.

In 2004 the testator turned to a longtime friend and neighbor (John) for assistance in helping her pay her bills. She also asked a local probate court to appoint John as her voluntary guardian. An evaluation by a court-appointed psychiatrist found that the testator had mild senile dementia but that “overall she showed no sign of inability to assist in making decisions about her life,” had a “fair knowledge of her current business dealings and her financial value,” and readily agreed on the need for a guardian to provide some assistance but wished to have a say in who was chosen. Following a hearing the court granted the testator’s petition, finding that she understood the nature and consequences of a voluntary guardianship.

The testator died in 2008, leaving an estate valued at $8 million. Three members of the testator’s family (the “plaintiffs”) whose share of the trust estate had been eliminated or reduced by the amendment, asked a court to revoke the amendment on the ground that the testator lacked sufficient mental capacity to understand what she was doing. The plaintiffs named as defendants the church and other charities that were named as beneficiaries in the trust amendment. The plaintiffs further asserted that the testator’s diminished mental condition made her susceptible to undue influence by her guardian, John.

An eight-day jury trial was held in 2012. The plaintiffs called two mental health experts who testified that the testator suffered from moderate Alzheimer’s disease which, in their view, undermined her capacity to execute an amendment to her trust. The court found sufficient evidence of “suspicious circumstances” to shift the burden of proof to the defendants to show that the trust amendment was not the product of undue influence.
“Undue influence is that influence which, by force, coercion, or overpersuasion destroys the free agency” of another.

The court noted that “undue influence occurs when the donor no longer exercises free will, tainting the resulting transaction,” and that “the burden of proof shifts to the proponent of a trust when the circumstances connected with the execution of the trust are such as the law regards with suspicion.” The court relied on the evidence of the testator’s “mental deterioration during the period preceding the amendment and thus her susceptibility to undue influence,” her inability to manage her daily life and finances without the assistance of her guardian and caregivers, the substantial increase in the number of beneficiary organizations and size of the bequests, and her guardian’s efforts to persuade her to amend the trust to include family members.

The defendants presented the testimony of a mental health expert whose diagnosis of the testator differed markedly from plaintiffs’ experts. The defendants’ expert testified that the testator’s cognitive deficiencies were “relatively mild” and highly situational; they appeared to be worse when she was on her own, and improved after she acquired additional caregivers in the months before she executed the trust amendment. Summarizing his conclusions, the expert concluded that the testator “knew who she would like to give her money to and she knew the amounts and she understood how it happens.” The bequests to defendants represented “places that made sense for her, places that she had ties to.” The defendants also introduced the testimony of several persons who interacted with the testator on a regular basis during the period in question, who recalled that she appeared to be mentally alert and competent.

The jury found that the testator had the capacity to execute the trust amendment, and that it was not the product of undue influence. The plaintiffs appealed.

Undue Influence

The state supreme court agreed with the trial court that the defendants had presented substantial evidence rebutting plaintiffs’ portrayal of the testator as highly susceptible to manipulation by her guardian due to mid-stage or moderate Alzheimer’s disease. It noted that the defendants’ expert neuropsychologist observed that the frequent meetings between the testator and her guardian prior to the amendment to the trust “did not necessarily suggest anything improper, as persons with mild cognitive impairments often require multiple meetings and conversations to understand an issue and make their views clear.” The expert concluded: “I think the guardian tried to provide the testator with an environment in which she could make decisions that she felt were the best decisions to make. And I think he revisited it on many occasions not to try to persuade her but to make sure that she understood.”

Further, the testator’s attorney testified that he had known the testator for 40 years, that she had contacted him about revising the trust, and that he “had no question that she understood what was going on.”

Mental Capacity

The court also rejected the plaintiffs’ claim that the testator’s gifts to her church and several charities were void since she lacked the mental capacity to know what she was doing. It noted that “the test for testamentary capacity is whether the testator had sufficient mind and memory at the time of making the trust to remember who were the natural objects of his bounty, recall to mind her property, and dispose of it understandingly according to some plan formed in her mind.”

Plaintiffs relied on the testimony of their mental health expert who testified that the testator was suffering from moderate Alzheimer’s disease which disabled her from understanding the extent of her property and forming a plan for its disposal; the testimony of the testator’s primary care doctor who noted signs of dementia as early as 2004, prescribed a number medications, and had reservations about her capacity to execute the trust amendment; the testimony of the testator’s former attorney who thought that she had lost her testamentary capacity before executing the trust amendment; and the testimony of family members and others who recounted instances of the testator’s confusion during the period preceding the trust amendment.

However, as the trial court observed, the evidence “also contained substantial countervailing evidence—including the testimony of [the defendants’ medical expert] who was of the opinion that the testator had the mental capacity to understand the natural objects of her bounty and the extent of her property, and to form a plan for its disposition; the testimony of the testator’s attorney whose observation of the testator led him to conclude that she understood the terms of final trust amendment; the testimony of the testator’s guardian who interacted closely with the testator and firmly believed that she understood and made all of the final decisions incorporated into the final trust amendment; and the testimony of others from the community who interacted with the testator during this period and saw no evidence of mental incapacity.

The court concluded that “viewed as a whole … the evidence thus does not support the plaintiffs’ claim that the verdict on testamentary capacity was “clearly wrong and unjust.”

Relevance to Church Leaders

This case is relevant to church leaders because it highlights the way a donor’s gift to a church or charity may be invalidated if the donor was “unduly influenced” into making the gift. This rule applies both to direct gifts made during one’s lifetime and to gifts contained in documents (such as wills and trusts) that take effect at death.

Family members may challenge gifts to churches by elderly or infirm relatives on the ground that the donor’s condition made him or her susceptible to being unduly influenced. But undue influence is more than persuasion or suggestion. It involves dominion and control over the mind of another. As one court noted, “undue influence is that influence which, by force, coercion, or overpersuasion destroys the free agency” of another.

Undue influence generally must be inferred from the circumstances surrounding a gift, since it seldom can be proven directly. Circumstances commonly considered in deciding if a donor was unduly influenced in the making of a gift include the following:

whether the gift was the product of hasty action
whether the gift was concealed from others
whether the person or organization benefited by the gift was active in securing it
whether the gift was consistent or inconsistent with prior declarations and planning of the donor
whether the gift was reasonable rather than unnatural in view of the donor’s circumstances, attitudes, and family
the donor’s age, physical condition, and mental health
whether a confidential relationship existed between the donor and the recipient of the gift
whether the donor had independent legal advice

The most important factor is the donor’s mental condition, since a diminished mental capacity makes a person more susceptible to undue influence. As the Vermont case demonstrates, there often is evidence that both supports and negates undue influence. Most courts have held that undue influence must be proven by “clear and convincing” or “clear and satisfactory” evidence. Proof by a mere preponderance of the evidence will not suffice. This means that in close cases, with credible evidence on both sides, those claiming undue influence often lose.


Reducing the Risk of Undue Influence
Many wills and trusts leaving gifts to churches have been challenged by disinherited heirs on the basis of undue influence. Church leaders who learn that an elderly or infirm person is considering leaving a portion of his or her estate to the church can reduce the risk of having the gift invalidated on the basis of undue influence by ensuring that the person obtains independent legal advice in drafting the will or trust. Ideally, the attorney should not be a member of the same church.

2. The Vermont court applied the test for mental capacity that is applied in most states:

The test for testamentary capacity is whether the testator had sufficient mind and memory at the time of making the trust to remember who were the natural objects of his bounty, recall to mind her property, and dispose of it understandingly according to some plan formed in her mind.

This test reflects a low threshold for demonstrating mental competency to execute a trust or will, meaning that it often is difficult for heirs to prove that an elderly or infirm relative was mentally incompetent to execute a trust or will leaving a substantial gift to his or her church.

3. Many wills and trusts leaving substantial gifts to churches have been challenged by disinherited heirs on the basis of undue influence and lack of mental capacity. Persons bringing such lawsuits often recognize that they have a weak case, but they sue anyway, hoping that the church will quickly settle in order to avoid the potentially adverse publicity associated with such lawsuits. This tactic often works, since church leaders frequently are loathe to do anything that would tarnish the church’s reputation in the community. After all, what church wants to be accused publicly of coercing elderly and infirm members into making gifts to the church?

If your church receives a gift under a will or trust that is challenged on the basis of undue influence or lack of mental capacity, be sure to bear in mind the following considerations:

First, undue influence usually is very difficult to prove, particularly when the decedent was in reasonably good mental and physical health at the time the will was executed.

Second, in many states, undue influence must be proven by “clear and convincing evidence”—a more difficult burden of proof than the ordinary “preponderance of the evidence” standard that applies in most civil cases. A church that becomes aware that an elderly or infirm person is considering leaving a portion of his or her estate to the church can reduce the possibility of undue influence even further by ensuring that the person obtains the independent counsel of an attorney in drafting the will or trust. Ideally, the attorney should not be a member of the same church.

Third, many church leaders believe that they have a moral obligation to assist in implementing the estate plans of deceased members so long as they are satisfied that no improper influence was exercised. If a former member in fact intended that a portion of his or her estate be distributed to the church, and church leaders too quickly succumb to threats by disgruntled family members, then they have violated a sacred trust.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Lay Counseling Within the Church

Making your church a safe place for helping people.

Gary Collins

Lay counseling accomplishes many things: it involves members in the work of the church, provides a fulfilling ministry for lay persons, takes a load off the pastor, and solves people’s problems.

In this age of self-help books and popular seminars, we sometimes forget that proclamation of the gospel and the practical teaching of Scripture is the basis for helping people cope with life. Jesus was a preacher, as were the Old Testament prophets and the New Testament apostles.

These spiritual giants were not content to stay behind a pulpit, however. They met people individually and discussed problems personally. By his life and teaching, Jesus emphasized face-to-face contact, and he encouraged mutual caring among his followers. The writers of the Epistles used the words “one another” almost sixty times, usually in the form of admonitions to care, encourage, edify, teach, confront, and support. James defines “pure and undefiled religion” in terms of both holy living (“keeping oneself unstained by the world”) and compassionate service such as caring for needy widows and orphans.

People-helping is taught in the Scriptures, it is required of all believers (not just pastors); it is urgently needed in all congregations, whatever their size, as people struggle with today’s stress, confusion, and anxiety. Recognizing this need and the biblical mandate to meet it is the first step toward developing a congregation of “people helpers.” Only then can we look at some practical, procedural questions.

How Are Lay Counselors Selected?

Churches will find a variety of selection techniques ranging from open invitation (where anyone who so desires becomes involved) to selection through a process of interviews and tests. Whatever method is chosen, careful selection is a key to lay counseling effectiveness. Many people may want to be involved when a lay counselor program is first announced. In one church the pastor announced the formation of a training class for lay counselors and set up 20 chairs for the first meeting. At the announced time 140 people appeared—almost half the congregation.

To keep classes small and to be more carefully selective, some churches give training by invitation only. This can create resentment among those who want to participate but are not invited. Often many (not all) of these persons are individuals with problems of their own. They come to the class subconsciously seeking solutions for their own needs, or intent upon helping others as a means of sublimating their own struggles. The following approach is suggested for recruiting the right people:

1. Carefully design or choose a program for training lay counselors.

2. Prepare to Screen Your Team. Develop a screening program to review all potential employees and volunteers who desire to get involved in a ministry’s lay counseling activities and administration.

3. Get appropriate approval to start the program and make its existence known.

4. Publicly emphasize the importance of caring, but stress that counseling is a gift which many believers may not possess; that a rigorous training program is required before the potential lay counselor will become active in the church counseling ministry; and that completion of the program will not necessarily make one a qualified lay counselor. It is important to discourage casual involvement in the program.

5. Announce that there will be a selection procedure to enter the program. This may cause some resistance and criticism, but it helps prevent insensitive, immature, and otherwise unsuitable people from entering the program. If you are careful not to “put down” anyone, most people will see the value in some initial screening. Criticism will be reduced (and some personal needs will be met) if you conduct a prior class on the ministry of caring and the discovery of spiritual gifts. This class could be open to everyone, followed by a more in-depth class open only to those who successfully complete the selection screening. Screening might involve:
  • A brief written statement acknowledging the applicant’s adherence to the church’s doctrinal positions, plus a testimony of personal Christian experience. Some churches ask applicants to respond to the questions used in James Kennedy’s Evangelism Explosion program. Also helpful is a statement of the applicant’s reasons for wanting to be in a lay counseling program.
  • A letter of recommendation from two or three people who know the applicant well. At Faith Presbyterian Church in Aurora, Colorado, applicants are asked to submit a letter from their spouse, closest in-town friend, closest non-Christian friend, and others.
  • An interview during which the class leader and another church leader try to assess the spiritual maturity, stability, and motivation of the applicant.
  • A psychological test or two. Many churches use the Taylor/Johnson Temperament Analysis (TJTA), although research has demonstrated that a test known as the 16PF is the best predictor of counseling effectiveness. Such tests have to be obtained and interpreted by a trained psychologist or other competent person.

Some readers may resist this as being too rigorous and time-consuming; but subsequent experience is likely to demonstrate the importance of choosing counselors carefully!

How Are Lay Counselors Trained?

Several programs have been developed for the training of lay counselors. In some congregations there may be access to a competent professional who can “custom design” a training program which will carefully-match the needs of the congregation to the desire for trained lay counselors. Obviously, any training program will be more effective when the teacher has some familiarity with professional counseling techniques and counselor training, although such background information is not absolutely necessary.

It is helpful to divide training into three phases: pre-training, training, and post-training.

The pre-training phase involves selection of materials, announcement of the program, and selection of the participants. If you decide to do an initial course on caring and the discovery of spiritual gifts, you might want to lead the class in a discussion of Stedman’s Body Life or Yohn’s Discover Your Spiritual Gift and Use It.

In the training phase, there must be opportunity for students to learn by listening to lectures, reading, observing, and experience. Most programs involve at least 40 to 50 hours of training (some of which may be completed at home) spread over a period of several months. It is best to keep the training groups small (12 to 15), meet regularly, use at least some printed materials, be flexible, allow time for students to share and express their own needs and insecurities, discuss complex problem issues such as depression or homosexuality, and involve students in “role plays”-brief periods of practice counseling in which class members divide into pairs, counsel each other about some real or assumed problem, and then discuss the practice counseling with the class which has been observing. If a professional cannot teach and comment on the role plays, it might be helpful to secure the services of a professional who could serve as a consultant.

Ideally, the training should include:
  • Basic biblical knowledge, especially that which relates to personal problems, helping people, and the person and work of the Holy Spirit.
  • Knowledge of counseling skills and the opportunity to practice these skills.
  • Some understanding of such common problems as discouragement, anxiety, excessive stress, or spiritual dryness.
  • An awareness of both the ethics and the dangers in counseling.
  • A knowledge of the importance and techniques of referral.

The best programs are committed to increasing a student’s sensitivity and helping skills, based on scriptural principles, alert to the established findings of modern psychology, and committed to giving participants support and practical help.

The post-training phase is a follow-up time of further learning, discussion of cases, and encouragement. When post-training is not implemented, lay counseling programs sometimes have difficulty surviving, although trainees may continue to apply the training to themselves or informally to others.

One creative program was developed at Elmbrook Church in Waukesha, Wisconsin.

The Elmbrook program grew out of a need. The pastor’s wife, Jill Briscoe, teaches a large, women’s Bible study which attracts people from all Over the Milwaukee area. When the women first began approaching her for counseling help, she referred them to professionals; but she soon concluded that most of the problems did not require such intensive and expensive intervention. Slowly, a three-year lay counselor training program developed under the guidance of psychologist David Hubbard.

After taking the “Discover your spiritual gifts” class, women either volunteer or are invited to take a counselor training program, Bible study leaders stay alert to find potential class members who are spiritually mature and who appear to have counselor potential.

During the first year of training, these class members meet biweekly for two hours to study doctrine, practice role plays, and share with one another in open, caring fellowship. During the second year, a variation of the “people helper” program, including more role plays. Periodically (four or five times each year) an outside resource person will conduct a one session, special seminar on such subjects as self-image, alcoholism, or understanding teenage problems. During this year a few of the class members are given counselees; but throughout training, students are told that they may not be given counselees even if they complete the training. At the end of two years, the “graduates” are available to talk with women who want counseling following the Bible study. The counselors meet together weekly for a session with psychologist Hubbard, who gives some instruction, but mostly guidance, as cases are discussed confidentially and anonymously.

How Are Lay Counselors Used?

Lay counselor training is used in three ways. First, the counselors are helping themselves. Professional counselors sometimes talk about the “helper-therapy principle”—a belief that the people who get the most benefit from counseling are the counselors. This has been found repeatedly in lay counselor programs. People appear to mature spiritually and psychologically as a result of the training, even though such training may never be used to help others.

Helping people informally is a second outgrowth of training. Family members, neighbors, work associates, fellow church members, and others appear to benefit from the informal help given by lay counselors, although it is difficult to determine the extent and effectiveness of such informal helping.

Third, there are the more formal church-related programs. Some of these are highly organized; others are not.

Such lay counseling is not limited to church settings. Mission organizations and parachurch groups such as Youth for Christ, Young Life, Navigators, Cru, and others have developed their own training programs or used published programs to train staff members and lay persons in counseling skills. At times, the church can work together with these organizations both in training and in lay counseling.

What Problems Might Be Encountered?

Counseling is emotionally draining work. It involves helping people at times of crisis, and often it is time-consuming and schedule-disrupting. Therefore, in launching a lay counseling ministry several problems can be anticipated. These include the following:
  • In some places laws regulate the licensing of counseling centers. Although these laws often exclude churches or employees of religious organizations, they sometimes restrict the use of the term “counseling,” or raise requirements concerning malpractice. It would be wise to secure legal advice about whether lay persons in your area could be sued for malpractice or for harming counselees through the giving of unsound advice or guidance.
  • Some church leaders, including pastors, are unwilling to involve lay counselors in the church’s ministry. “I’m too busy to make referrals,” “I have no time to supervise,” “The church members insist on seeing the pastor,” or “These issues are too complicated for lay people” are among the reasons given for not using lay helpers. Each of these reasons has some validity, but each may also be an excuse, or mask a desire to retain control of counseling. Lay counseling will only be accepted by the congregation when church leaders enthusiastically support a lay counseling program, refer counselees to lay persons, and encourage church members to give and receive help from one another.
  • Lay counselor training programs often attract people whose own problems could interfere with effective helping. Included are the rescuers, who have a need to control other people’s lives; the pushovers, who have a serious desire to help, but who are unable to resist the manipulative demands of counselees; and the super-enthusiasts, who cannot accept rejection or failure, so they quit whenever they encounter counselees who are not quickly getting better. A careful selection screening can help to discourage such people from lay counseling involvement.
  • Most people are threatened by role plays and often will spend role-play time “getting organized,” discussing counseling techniques, or in other ways avoiding their session for practice. It helps if the leader acknowledges that role plays bother almost everyone, especially at the beginning. Stress the crucial importance of this part of the training. Trainees who refuse to participate should not be permitted to remain in the program.
  • Some instructors are unwilling to permit individual differences in lay counselors and assume that the approach being taught is the only valid approach. Instructors must be alert to such dangers and try to avoid casting all trainees into the teacher’s own image.
  • Some lay counselors are unable to handle the drain of counseling others and are unwilling to admit that the load is too heavy. On-going supervision of lay counselors, preferably by a professional, can help the counselors both to deal with their own tensions and to withdraw gracefully and without embarrassment if the emotional strain is too great.
  • Some lay counselors may become overly involved with counselees both personally and, at times, sexually. Post-training supervision can help to prevent this, and so can training programs which emphasize the dangers of intimacy in counseling, the possibility of counselee manipulation, and the importance of referral.

The director of a counseling center in Colorado recently shared his biggest problem in launching a lay counseling program in his church. “I failed to make enough time available for supervision and follow-up. Training and supervising lay persons has been one of the most exciting and fulfilling ministries that I have ever had, but we can’t just train people and turn them loose to influence the lives of others. Lay counselors need guidance.”

This comment leads to one additional problem with lay counseling ministries: a lack of time for supervision and guidance of the counselors. As with so many other activities, doing the counseling ourselves sometimes is easier than finding the time and trying to muster the effort needed to train others and to oversee the program—especially if problems arise. I have seen this attitude in large churches, but the temptation to forget lay involvement and do it ourselves is especially apparent in one-pastor churches where there is no staff person who can take responsibility for yet another new ministry.

Several solutions to this problem might be possible. An efficient lay counseling coordinator might be recruited to serve as a “clearing house” person who assigns counselors to counselees, and monitors possible problems which should be referred to the pastor or to a lay counseling oversight committee. (People involved in such activities must be able to keep confidences.)

A professional Christian counselor in the community might be hired to supervise lay counselors.

If no professional is available, do not overlook the possibility of supervision which could come from a psychiatrically alert physician or nurse, school guidance counselor, or a local vocational guidance counselor. If none of these people are available, there can be value in a group of three to four lay persons forming a counseling committee that pools its understanding, and gives direction and encouragement to the individual counselors. Whenever possible, however, try to find some professional input. This can help lay counselors avoid problems, and to work much more efficiently in their counseling.

Several years ago, Columbia University Press published a book entitled The Non-professional Revolution in Mental Health. Lay people, it was argued, are becoming more and more involved in “people helping.” This surely is a healthy trend, especially as lay counseling moves into the local church and becomes the responsibility of church members as well as Christian leaders. Such caring is not only part of a trend; it is a biblical requirement commanded by the Lord and taught by the Spirit-inspired biblical writers. They instructed us to reach out in love to help the needy and to bear one another’s burdens. Lay counseling in the local church is an important move in this direction.

This article first appeared in Leadership Journal.

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Furnish It and They Will Come

How to create a kid-friendly environment in your church.

Jennifer Schuchmann

Given a choice, most children prefer the local hamburger joint to a fancy five-star restaurant. Why? A fun but safe playground, chairs that are the right size, and bright colors might have something to do with it.

Now take a look around your church. The food you serve your youngsters’ souls is more important than any hamburger they will ever eat. But is your children’s church environment as attractive and safe as the nearest fast-food chain?

“The children’s area of the church should be unique and designed especially with children in mind,” says Dale Hudson. Dale Hudson, Director of Children’s Ministry at Christ Fellowship Church in Palm Beach, Florida, knows a lot about environment and its effect on ministry. He remembers the impact of environment at a church he used to work at, First Baptist Church in Springdale, Arkansas, which built two age-appropriate children’s areas, Toon Town for the younger ones and Space Place for the older group, attendance by children doubled to more than 500 per week and hundreds have been saved he says.

“The environments we created help capture the kids’ attention and draw them into the message we are trying to communicate each week,” Hudson says.

Church Meets Disneyland

Dale Hudson had a big vision for the children’s worship space at First Baptist Church in Springdale, Arkansas. To make his vision a reality, Hudson approached a top designer of children’s amusement rides, Bruce Barry. Barry had designed the E.T. ride at Universal Studios and stage sets for Nickelodeon.

Barry, not yet a Christian, didn’t really need the work, but his love for children drew him to the project. He accepted Hudson’s offer. As he worked at the church, God’s love worked on him. Barry and his wife became Christians and were baptized the same month the new worship spaces opened.

There are two children’s areas, each age-specific. “I believe it is very important to have age-appropriate environments for today’s children,” Hudson says. “Today’s pre-teens are a world apart from a kindergartner or a first grader. We have recognized the needs of each age and tried to create a unique, appropriate environment for them.”

Toon Town is for first through third graders. Entering the room is like entering a different world, full of animation, 26-foot-tall buildings, puppet stages, lights, bright colors, and video games. The room has pipes that blow out confetti, a water tower bucket that overflows and pours bubbles down on the kids, a prize booth, a firehouse with a hammer that rings a big bell, cars that honk and flash their headlights, an oversized working stoplight, and a tv shop with glowing neon wires and moving satellite dishes. “It is almost like going on a ride at Disneyland,” Hudson says.

The Space Place, with its outer space theme, was designed to appeal to fourth and fifth graders. It features cutting-edge video games, a giant space painting, disco lights, and lots of posters of Christian musicians.

“It is an environment that our preteens feel comfortable in,” he says.

Start with the Walls

Not every church will be able to do what First Baptist did, but church staff can make good decisions when choosing furnishings for children’s areas.

Many recently built churches have large multi-use spaces, so it may be hard to create a separate children’s area. However, several types of partitions are available to subdivide a large space, like the fellowship hall, into smaller classrooms.

Screenflex offers a unique product that contains 32 feet of flexible partition stored inside a portable cabinet that doubles as a workspace and storage container. No teacher will have to carry materials around in milk crates anymore. “In seconds you can divide large areas into smaller, semiprivate areas,” says Rich Maas, vice president of Screenflex. Decorations can be affixed to the partitions, using staples or tacks, so each room can be personalized. Screenflex offers “no-poke-through” hinges for safety, Maas adds, so that children on one side of the partition can’t stick their fingers through to bother children on the other side.

Chuck Topping, president of Curtition, which makes folding walls and accordion partitions, notes several factors to consider when purchasing a partition. First, consider how location affects sound rating. If a partition divides a children’s play area from an adult teaching room, a higher sound rating (better soundproofing) may be needed.

Second, churches need to consider whether their building has the required support structure overhead to accommodate a track and hold up the weight of the wall. A folding wall with a high sound rating can weigh as much as 12 pounds per square foot.

You should also pay attention to the covering or “skin” of a partition. Vinyl wears best, and steel skins make the most sense for high-use areas, such as gymnasiums.

If you need a curved divider, consider a curvilinear, lightweight, semi-rigid space divider from Versipanel LLC. Lee Stevenson, president and chief executive officer of Versipanel LLC, notes that his space divider is extra safe for children’s areas since it has no mechanical parts.

“There is no framework system to trip over, crawl over, or crawl under, and no sharp corners of any kind,” he says.

Carpet for Kids

Consider using multiple colors to coordinate with the walls and to help distinguish different areas and age groups. You’ll also want to choose a design, usually a multicolored design, that will effectively hide the inevitable juice spills. When choosing carpet colors, consider your audience (children) not their parents, says Hudson. He observes that what kids like may not appeal to adults. Adults may remark, “My, that sure is bright,” while their children say, “Wow, this is cool.”

Kid-friendly Tables and Chairs

After deciding on partitions and carpeting, make sure you’ve got enough money available to buy furniture. Leftover adult furniture shouldn’t be donated to the children’s area. Children need furniture that is built to fit their growing sizes.

“If you walk into a Sunday school class and see a child sitting in a chair swinging his legs, you know that the chair isn’t comfortable [for the child],” says Michael Sammons, owner of Church Chair Industries. “To prevent squirming, you need a comfortable chair.”

Since children’s areas are likely to have crafts and food, Sammons suggests choosing molded plastic chairs or two-piece plastic chairs over the traditional upholstered varieties found in the adult areas. Children’s seat heights start at 8 inches and go up to 18 inches, the height of an adult chair.

Consider activity tables in novelty shapes for the younger children. Midwest Folding Products offers children’s adjustable tables with a plywood core and laminate top.

Also, check warranties. Particleboard tables often have a one-year or five-year warranty, while a table with a plywood core may have a ten-year warranty.

For preschool children and those in the first years of elementary school, use adjustable tables with heights ranging from 17 to 22 inches. Older children can use standard adjustable tables with heights ranging from 22 to 29 inches or a basic folding table. Choose tabletops in attractive colors that can both enhance the aesthetics of a classroom and separate different age or interest groups.

McCourt Manufacturing makes activity tables with adjustable legs in height ranges from 15 to 22 inches to 22 to 31 inches. McCourt’s tables come in five colors or wood grains, and a variety of shapes are available—rectangle, round, kidney, flower, clover, horseshoe, and trapezoid.

The Nursery: Keep in Touch

In addition to the standard children’s furnishings, you will need to have specialized nursery equipment for infants.

Safety and convenience are two good reasons to consider a communications system that allows you to quickly find parents whose children are in the nursery. JTECH Communications offers several types of silent paging systems that allow parents to enjoy services with the peace of mind that they can be contacted in case of a problem. Vibrating, numeric, and alphanumeric pagers are available.

“The prices for these systems vary depending on the number and type of pagers needed. Our average system runs between $2,500 and $3,000,” Marion Raymundo, marketing communications manager for JTECH, says.

Attracting Families

Finally, exciting extras will enhance your children’s church environment.

“Children in your community have PlayStations, X-Boxes, cable TV with cartoons 24 hours a day, Disney World, Chuck E. Cheese, the Internet, and a host of other things,” Hudson says. “Beige walls and flannelgraph are not going to make the cut with them.” For this visual generation, children’s ministries should make use of DVDs, PowerPoint presentations, and other technologies, he says.

All to say, then, that while the children’s area may not be at the top of your church budget, it is often the first place new families visit on Sunday mornings. A welcoming children’s area attracts not only children but also their parents. As you build your children’s ministry, you’re building your entire church body.

Jennifer Schuchmann is a management consultant, who formerly worked in sales and marketing for church-management software.
Image: Wimol Wongsawat /EyeEm | Getty

Benevolence Programs that Work

How churches can effectively meet the ever-increasing needs for financial assistance.

Elaine L. Sommerville, CPA
Bio

In churches and other nonprofits, benevolence programs are established to identify and meet the needs of under-resourced individuals—people who are unable to meet essential needs for themselves or their families. Benevolence programs stem from a church’s desire to do good to others, show goodwill, extend kindness, and extend charity to those in need. While benevolence is most commonly considered in light of finances, any program that provides resources is a benevolence program. In the majority of circumstances, no matter the method of meeting a need, there are financial considerations involved.

The concept of a charitable class

For a benevolence program to fall within the parameters of a church’s tax exempt status, the program must serve a “charitable class.” There are several acceptable charitable classes, including children, the elderly, the poor, distressed, or underprivileged. A charitable class must be comprised of either an indefinite or sufficient size to avoid benefiting private interests. For example in Private Letter Ruling 201205011, a nonprofit organization formed to aid children with special needs was denied exemption because all of the children belonged to the same family. While the target group—children with special needs—qualified as a charitable class, the size of the group was too small to constitute a valid exempt program.

If a program does not serve a charitable class, then more than likely, it does not meet the test for being a recognized exempt-purpose program. While churches may operate programs for several charitable classes, most benevolence programs are aimed at providing relief to those suffering a financial hardship or experiencing an unusually stressful situation.

Structure of a benevolence program

The key to operating a successful benevolence program is in the structure of the program. The more structured a benevolence pro-gram, the easier it will be to operate, and the more successful it will be. In order for a program to be in accordance with the exempt status of the church, it must operate according to a formal structure. (Church in Boston, 71 T.C. 102 & PLR 201235022) Additionally, a well structured program protects the church’s employees from being caught in the middle of a person in need and the church’s decision to provide assistance.

Successful benevolence programs provide the following:

A method of verifying the person is a member of a valid charitable class, that a need exists and the applicant does not have available resources to meet his needs. Candidates for benevolence funds should be required to submit an application and interview with a church leader. The application and interview process will also document:
  • the church’s decision to make the payment;
  • proof that the payment is within the guidelines established by the church; and
  • proof that the payment fulfills the church’s exempt purposes.

A set of guidelines so church staff members have the tools to operate the plan. Some common items that are addressed in a benevolence policy include:
  • Who has the authority to approve the request, and how much can they approve?
  • What types of needs will be considered, and what needs will not qualify?
  • What type of third party confirmation will be required to confirm the existence of the need?
  • What proof of other resources will be required?
  • Who is the targeted group that will be considered—just church members, or is it available to the general community?

Caution: Do not link approval of a benevolence request to a person’s tithing records. This could jeopardize their charitable contribution receipt.

  • Are there certain situations that will disqualify an applicant?
  • What does the applicant have to do to qualify for the assistance? Some churches require recipients who are not members of the church to watch an educational video or attend financial counseling before granting a request. The church may not require the recipient to perform any services for or on behalf of the church.
  • What are the rules regarding meeting the need? Benevolence is not taxable to the recipient, but there may be times when the amount is still subject to reporting requirements. For example, some churches provide cash directly to the applicant and this is not reported to the IRS. But many times payments are made to a third party, such as the electric company or the landlord. When a payment is made directly to a third-party business, it must be considered as a payment made by the church in the course of its business transactions. The church therefore needs to determine if the recipient business is one that requires payments to be reported, either on a Form 1099-NEC or a Form 1099-Misc, and then file the appropriate form.
  • How will multiple requests for assistance from the same person be handled?
  • How will requests from employees and their family members be handled?
  • What is the process for making the requests?

A manner of reviewing the above information by persons independent or disinterested from the person making the request.

Areas requiring caution

Discretionary funds

Many churches maintain a discretionary fund for a minister’s use for various business items. It is not uncommon for these funds to be used for benevolence assistance outside of a church’s established program.

The benevolence paid out of this fund should be limited in a dollar amount and must still meet the documentation requirements mentioned above. If the recipient of the benevolence funds does not complete the necessary application, then the minister should complete it for them. This should not be used as an avenue to avoid the church’s formal benevolence program.

Repeat requests

While most benevolence plans are designed primarily to address short-term needs, churches should consider how they will handle situations that require long-term assistance. Some people encounter extended illnesses or circumstances that prohibit them from working and providing for their families. These situations should be cautiously supported by the church. The church should take the following steps:
  • Have the appropriate committee/board approve the situation;
  • Perform regular reevaluations of the situation to document that the need continues to exist; and
  • Assist the recipient in exploring other sources to meet a continued need.

Designated gifts

The most common questions regarding benevolence usually center on the subject of designated contributions. It is not acceptable for a church to accept a contribution that is earmarked for an individual, even one with a need, and pass it through outside of the normal processes of the church. The church is allowed to solicit the congregation for additional funds for its benevolence program, but it is not allowed to raise unlimited or undefined funds for a specific individual.

Example. The Smith’s house burned and the family has lost everything. The church should not raise funds for the Smith family. It should inform the congregation that it is raising money for the benevolence fund in order to be able to assist the Smiths as well as continue to assist others at this time.

The church should have a gift acceptance policy that states repeatedly that any designation is considered a “suggestion” and the final use of all funds is at the discretion of the governing body, such as the finance committee, board of directors, or elders. (I cover this topic in the article, “When Gifts Come with Strings Attached.”)

Employee Benevolence

Benevolence is not taxable to the recipient according to Internal Revenue Code Section 102, which provides an exclusion for true gifts. However, it specifically states that the gift exclusion is not available to amounts paid to an employee. For this reason, benevolence assistance to an employee should be approved as additional income. This income is also subject to employment taxes if the employee is not a minister.

Example. Reverend Jones has been diagnosed with a medical condition requiring expensive treatments. Reverend Jones meets all the criteria to receive assistance from the benevolence fund. The committee meets and determines that he is entitled to $1000 of assistance. Since Reverend Jones is an employee of the church, the $1,000 must be added to his Form W-2 issued by the church.

Special issues with employee benevolence

Employees Considered as Disqualified Persons. This is a special class of people defined by Internal Revenue Code Section 4958, which includes certain employees as well as nonemployees. In general, these are people who are in positions of control and authority. Since all of their income is required to be “reasonable” and “approved in writing,” it is imperative that any additional payments to this group of employees be carefully documented. Failure to follow the correct procedures could result in the assessment of penalties to the employee ranging from 25 percent to 200 percent of the amount of the assistance.

Family Members of Employees. Benevolence to family members of employees is also considered to be income to the employee, if the employee is responsible for the care of the family member. There are times that the relationship may not trigger income to the employee as long as the employee is not a disqualified person. Assistance to family members of disqualified persons is virtually always attributed to the disqualified person.

Exceptions under IRC Section 139. IRC Section 139 was enacted to provide assistance to people involved in a natural disaster. It allows an employer to make assistance payments to employees on a tax-free basis. The disaster must be identified by the IRS. Family members of the employees, as well as major donors, are also eligible as long as they meet a charitable class and are objectively chosen by an independent selection committee.

Benevolence programs give churches a way to provide urgent care to individuals or groups of people facing extreme need. By following a structured policy for the program, churches will be able to maximize resources for the greatest benefit to those in need.
Elaine L. Sommerville is licensed as a certified public accountant by the State of Texas. She has worked in public accounting since 1985.

The Slow, Steady Salary Climb

Church pay shows signs of recovery. But will the new housing allowance ruling and rising healthcare costs offset gains?

Reporting by Kyle Rohane, Cynia Solver, and Andrew Finch

Cottonwood Church, a congregation of 150 in Rio Rancho, New Mexico, has reason to celebrate. For the first time since 2009, the church will be able to give raises to two of its three paid staff members.

“I am employed full-time as senior pastor,” says Dan Cooley of Cottonwood. “We also have a part-time worship pastor, and an administrative assistant who works 12 hours a week. In 2013, we saw slow but steady growth in both our attendance and finances. The budget for 2014 gives the worship pastor and me a 4 percent cost-of-living raise.”

After seven years of cutting expenses and salaries to keep the ministry afloat, this uptick is a boon to Cottonwood.

“In 2007 we were meeting in a shopping center,” says Cooley. Cottonwood’s monthly building expenses hovered around $5,200 a month. When the church’s lease came due in 2008, Cooley says the church decided to “go portable” in order to live lean and give more. It started meeting in a school in December 2008—right about the time the economy crashed. That next year, six other small churches in the area closed. Cottonwood Church survived because it lowered its monthly property expenses to about $1,800, but the church still was rapidly eating through its savings.

“In 2010 the worship pastor and I took a cut in pay, as our savings were almost depleted,” says Cooley. “We thought it wiser to cut salaries than ministries—and there was nothing in property left to cut.”

New Mexico’s economy bottomed out in 2011, a bit later than the rest of the nation, according to Cooley. “We limped through the same lean budget from 2010-2013. In the midst of this crunch, we raised $10,000 for a well in one of our parishioner’s hometown in Haiti. I believe this extra act of giving helped to spark hope for our own church and budget.”

The good news for 2014: The 4 percent pay increase for Cooley and his worship pastor will bring them close to what they earned before the 2010 salary cuts. The bad news: Due to the new healthcare law, the church is no longer able to offer health insurance to them.

“The $500 a month increase is more than the church can handle,” says Cooley. “They’re simply rolling my old insurance payment into my pay for 2014 and no longer providing insurance.”

Cooley’s experience is not unique. Christianity Today’s biannual compensation survey of approximately 7,500 paid staff from more than 3,500 churches, reveals that church staff salaries are continuing their steady (albeit, slow) rise across the country.

According to survey findings, which are published in the 2014-2015 Compensation Handbook for Church Staff, compensation levels for all staff positions grew by an average of 19 percent, with the greatest increases reported by churches with the biggest budgets (from $751,000 to over $1,000,000).

This is a reassuring continuation of the growth observed in the 2012-2013 edition of the survey, which revealed the first signs of economic recovery for churches since the start of the Great Recession. But like Cooley experienced, increased healthcare costs—and the recent housing allowance ruling—may erode any gains in pay.

“Health insurance is the wild card of compensation, especially now when it seems hardly anyone understands the impact of the Affordable Care Act,” says Lee Eclov, senior pastor of Village Church in Lincolnshire, a suburb of Chicago. “Larger churches have been able to get group health plans, with the costs fairly low because of younger staff. Some denominations have health plans, of course, but churches with only one or two staff with no access to group plans have been vulnerable,” says Eclov. “My own independent health policy, at age 62, has been very expensive. Our church used to guarantee coverage. Now they offer me an additional 25 percent of my salary and housing allowance to apply to benefits in whatever way I choose. I worry that health insurance may eat up much of that,” he says.

Right-sizing salaries

The compensation for senior pastors, one of the most highly paid positions in the local church, exemplifies this upward trend. The majority of senior pastors (51 percent) received salary increases in the past year—11 percent more as compared to the previous study.

In 2009, senior pastors earned an average of $80,745 in pay and benefits. 2011 showed an uptick of 2.7 percent for an average of $82,938. This year shows the greatest improvement yet—senior pastors’ average compensation increased by 7.1 percent to $88,814 in pay and benefits, 4.4 percentage points higher than the previous survey’s report. These numbers demonstrate that not only are senior pastors’ salaries growing, but they are increasing at progressively higher rates since the end of the recession. This increase in economic momentum is slight, but it’s moving in an encouraging direction.

Additionally, 3 out of every 5 executive pastors, who tend to serve in larger churches, received a pay increase over the last year, 16 percentage points higher than the 2011 study. Only 38 percent of solo pastors, who serve in smaller churches, received a salary increase, but that’s still 8 percentage points higher from 2 years ago.

At Church of the Resurrection in Wheaton, Illinois, the recession of 2008 kept staff salaries nearly flat for three years. “Then we entered a building program, which kept them flat for two more years,” says Kevin Miller, associate pastor and an editorial advisor for Church Finance Today. “So for 2014, our vestry (church board) is working to right-size staff salaries.”

Geoff Chang, associate pastor of Hinson Baptist Church in Portland, Oregon, says, “Compensation in general is going up across the board, though it has varied depending on position. The elders made a priority of providing for the associate pastors in a way that would allow us to stay here longer term. But we’ve also worked to improve the compensation for our admin staff. We’re not where we want to be in this area, but we’re getting there!”

More churches meeting budget

Many churches are also “getting there” on meeting budgets. Nearly 2 in 5 churches report receiving offerings that exceeded expenses, a 44 percent increase over two years ago. An equal number (38 percent) reports giving levels that met their expenses this year.

For Hinson Baptist, Chang says, “Our budget has been flat, though we’re grateful that we’ve met the budget this past year, for the first time in decades. Part of that is tighter fiscal control, more responsible budgeting. But part of it is also the faithful giving of the congregation.”

Kathryn Callahan-Howell, senior pastor of Winton Community Free Methodist Church in Cincinnati, Ohio, says, “Our compensation has not changed this year, however our giving is up, which may lead to an increase in 2014.”

On average, the survey showed 48 percent of a churches’ budget is devoted to salaries.

While nearly half (45 percent) the churches surveyed report that attendance is stable, 37 percent show an increase in attendance compared with 18 percent reporting a decline.

Benefits boost compensation packages

Nearly 9 in 10 full-time senior pastors receive a housing allowance, which accounts for an average of about a third of their overall compensation, and 64 percent receive health insurance benefits. Callahan-Howell says she receives a housing allowance and flexible benefits—medical and mileage only. Though the effects of the recent federal ruling on housing allowance for clergy are not fully known yet, a loss of this popular benefit would have significant ramifications for clergy, many of whom depend on this key tax advantage.

About 1 in 3 churches (31 percent) provide additional salary to their senior or solo pastors to assist with their Social Security payments. Of churches that help, 78 percent pay half of the Social Security tax, while 22 percent pay all of it. Seven in 10 churches reimburse about 80 percent of a senior or solo pastor’s professional expenses. More than 6 in 10 (62 percent) churches help their senior or solo pastor with auto expenses.

Benefits vary significantly between positions, especially for health insurance and retirement programs. The number of church staff members receiving health insurance varied from 42 percent to 71 percent, depending on the position. Between 41 percent and 67 percent of staff members receive retirement benefits. Very few part-time positions receive fringe benefits, such as health insurance or retirement, but many receive paid vacation.

“Salaries are not the only way churches can compensate their pastors,” says Eclov. “An extra week of vacation may actually cost the church very little but mean a great deal. Church leaders often forget that a pastor never gets a weekend off like most other people. We can’t just skip church some weekend and go camping! Small kindnesses—like a pastor appreciation emphasis in October—affirm a pastor’s value even when his or her salary doesn’t do so adequately.”

More housing for youth pastors

A few notable changes in benefit compensation stood out this year. One in 4 part-time youth pastors receive housing benefits—about triple the number in 2011. And an equal number of full-time custodians received auto reimbursements in 2013, nearly double what was reported in the previous study.

While more youth pastors are enjoying the tax advantage of a housing allowance, the recent federal ruling could jeopardize this benefit for many in the future.

Education affects income for some

It appears that fewer pastors are attaining secondary degrees. The percentage of senior pastors who have graduate degrees dropped 4 percentage points, from 72 percent in 2011 to 68 percent in 2013. Senior pastors who earn a doctorate after their master’s degree not only garner more pay, but also lead churches with greater annual incomes. This correlation between education and salary is not as noticeable for other staff positions.

Gender gaps

As in previous studies, female staff members received significantly lower compensation than their male counterparts. On average, men earned 29 percent more than females.

Full-time male senior pastors receive 40 percent more in compensation plus benefits than females, who only account for 3 percent of senior pastor positions. This pay disparity could be due to the fact that, on average, women serve in smaller churches and churches with a lower average income, both factors that determine higher compensation. This difference may also be explained on the basis of demographic factors, such as education.

The 2013 survey reveals that female children’s pastors do not earn more than male children’s pastors in full-time positions, even though women account for 72 percent of these jobs.

Another noticeable pay gap: male adult ministry pastors make 50 percent more than their female counterparts, and male executive pastors make 46 percent more.

Location matters

Senior pastors serving churches in suburban or metropolitan settings have the highest compensation and benefits packages, perhaps because these churches typically have a higher budget and worship attendance than churches in small towns and farming areas.
‘Small kindnesses—like a pastor appreciation emphasis in October—affirms a pastor’s value even when his or her salary doesn’t do so adequately.’—Lee Eclov

“Our church, with attendance of around 200 in the expensive northern suburbs of Chicago, has to pay higher than average just to allow us as pastors to live in the area,” says Eclov. He says his church hopes to pay its staff in the top one-fourth of the range for its area based on the Compensation Handbook findings.

About 4 in 10 senior pastors serve churches in a small town/rural city setting (41 percent) or suburb of a large city (37 percent). New England and the West-South Central region offer the best average compensation packages, hovering around $96,700 in both areas. By comparison, senior pastors in the East-North Central and Mountain regions report the lowest average compensation and benefits packages at $82,516 and $81,523 respectively.

The human factor

According to Eclov, churches have long struggled to find standards for pastoral salaries. His church relies on data in the Compensation Handbook to match demographic factors, such as education, experience, and responsibility to get an accurate comparison.

“Hidden behind these numbers, of course, are human factors,” Eclov says. “For example, measures of good work are notoriously difficult in the ministry. How do you do an adequate job review for a shepherd of God’s flock? Growth in numbers is a very fickle and unreliable measure. How do you measure a church that is growing in holiness, or affirm a pastor who has had to bear the loss of an inordinate number of people who have moved or been laid off and cut back on giving?”

While the Compensation Handbook provides data points to help guide compensation decisions, Eclov’s right—there’s no statistical measure for compensating church leaders according to the number of saved souls.
Kyle Rohane is a freelancer writer residing in Texas and Andrew Finch is an editorial resident at Christianity Today. Cynia Solver, an analyst for her own research firm, Solver Solutions, conducted the survey for the 2014-2015 Compensation Handbook for Church Staff.
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