The nation’s three largest church insurers say massive winter storms hitting warm-weather states have created spikes in property damage claims—many of them triggered by busted frozen pipes that not only cause thousands of dollars in damages but disrupt worship services and other events.
Greater awareness and responsiveness, particularly in regions unaccustomed to severe winter weather, can potentially thwart problems.
“As you get down into the warmer Southern states, the nature of the freeze and the damage that can be done can be pretty eye-opening,” warns Eric Spacek, assistant vice president of risk control for Church Mutual Insurance Company, which covers about 90,000 congregations. “This is a matter of stewardship. We’re always talking about how much better it is to prevent things from happening than to deal with it on the back-end.”
But pastors and leaders, particularly in the lower Midwestern, Southern, and Southeastern portions of the United States, often get caught off-guard by extreme winter weather. Frustrating and costly problems often ensue.
Planning a time of outdoor fun and fellowship for your church’s staff, students, or members this winter? James Cobble offers tips on how to not only arrive safely, but how to stay safe once there.
Historic storms, high claims
Two specific storms in recent memory—Winter Storm Uri (about $200 billion in damages)in February of 2021 and Winter Storm Elliott (about $5 billion in damages) during Christmas of 2022—underscore the size and scope of the emerging problem.
Claims poured in from churches immediately after both storms.
The average number of claims typically filed in December with Brotherhood Mutual Insurance Company, an insurer of more than 65,000 houses of worship in 47 states, hovers between 460 and 560, says Thomas Lichtenberger, the company’s assistant vice president of property claims.
Lichtenberger adds that, within a week of Elliott’s conclusion, 1,300 claims came in — 963 related to frozen pipes.
“Water damage from broken pipes—that’s not new,” says Tom Strong, director of risk control for GuideOne Insurance, which covers about 40,000 houses of worship in 48 states and received 257 claims tied to frozen pipes in the days following Elliott. “Where they occur—that’s the big change.”
Georgia, Texas, Missouri, and Alabama ranked among the top five for pipe-related claims for GuideOne, Strong says, with New York the lone cold-weather state to join them.
Meanwhile, the average size of GuideOne’s claims after Uri was about $30,000, a tally Elliott is expected to match based on early indicators, says James Balzarine, property claims director for the company.
Awareness and anticipation
Pastors and church leaders in traditionally warm weather states rarely encounter temperatures brought on by storms like Uri and Elliott, meaning their first-time experiences likely are unpleasant ones.
During Elliott, Charleston, South Carolina, broke a 33-year record low—20 degrees Fahrenheit—on Christmas Eve of 2022, while Athens, Georgia, did the same one day earlier, dropping to 11 degrees.
“Their history has not given them the idea that they should be prepared for this,” Strong says.
Even places better conditioned for wintry cold got socked by Elliott, leaving leaders scrambling.
Brotherhood Mutual still received 24 pipe-freeze claims from churches in Michigan after Elliott. Another 36 came from Indiana-based churches.
Denver plummeted to -20 degrees on December 22, 2022. One Colorado church insured by Church Mutual was alerted to a temperature drop in its building thanks to a sensor purchased through a company-sponsored program. A church leader discovered a propane outage upon arriving. A refill restored heat before pipes could freeze, Spacek says.
When bad weather comes, Sally Wagenmaker reminds churches that there are several logical—and legal—considerations when shutting things down and sending folks home.
“You want to make sure to have the mindset that this could happen,” Lichtenberger says, adding many churches use their buildings a few hours on Sundays and maybe only one or two other days of the week.
Regardless of geography, when the forecast calls for storms bearing frigid cold, leaders should plan to visit their buildings multiple times each day throughout the storm.
“Be your own sensor,” Lichtenberger says.
Take Action: Fight back against freezes
Awareness and anticipation are valuable. Advanced preparation is, too. Note these tips from the American Red Cross and church insurers.
When cold is on its way or already arrived
Identify all the ways to shut off water in the building.
Know the location of the building’s main valve and how to turn it off.
Also know how to turn off water to the fire sprinkler system. One church hit by Elliott spent an hour searching for its system’s key and “just had to sit there and watch the water run” from a broken line, Spacek says.
Keep building thermostats above 55 degrees around the clock, despite the added expense.
Remember that buildings with one thermostat naturally hold that temperature in the surrounding area, but colder air will build outside its immediate radius, Spacek adds. Setting the temperature higher may be necessary to help rooms further away from the thermostat.
Also recognize situations when a higher thermostat setting may be needed because pipes exist in basements, crawl spaces, and attics or run along exterior walls.
Open cabinet doors below sinks so that warmer room air contacts pipes.
When applicable, temporarily remove ceiling tiles located below plumbing, including fire sprinkler lines, so that warmer air circulates around it. Leaders often forget about fire sprinkler lines, and those often freeze and break. The resulting damage can be worse since water cascades down and spreads.
Allow sink faucets to continuously trickle with hot and cold water—the movement makes it harder for water in the pipes to freeze.
Visit the building multiple times each day during the storm.
When a frozen pipe is suspected or discovered
Turn on faucets throughout the building to try and relieve pressure, especially as efforts to thaw a pipe begin, and to prevent other freezes from developing.
A plumber may be needed to find the location of a frozen pipe and resolve it. Remember that pipes can also freeze in multiple spots.
If you know the location (or locations) of a freeze:
An electric hair dryer or portable space heater also can be used, the Red Cross notes, but keep them away from flammable materials. Avoid using extension cords with devices, adds Spacek.
Towels soaked in hot water (if another water source is available) and wrapped around a pipe also can help.
Never use an open-flame device, such as a blow torch or propane heater, to thaw pipes.
If thawing occurs, but water pressure isn’t fully restored, call a plumber.
If a break occurs, immediately shut off the water source.
When weather is warmer
Consult with professionals about the type of insulation to use in walls and attics. When work gets done in walls or attic spaces, make sure insulation gets put back into place, Lichtenberger says.
Consider using pipe insulation, especially in basements, crawl spaces, and attics, notes Brotherhood Mutual.
Re-caulk around doors, windows, and recessed lighting fixtures.
Research costs for wireless monitors or sensors that detect water leaks as well as air temperature changes. During Elliott, Church Mutual estimates $2.36 million in property damage was avoided because of alerts triggered by sensors installed by its insured churches, Spacek says.
A portable generator may be worth an investment, although these should only be run outdoors and away from doors and windows, Spacek notes. Permanent generators are ideal, but expensive, and should be considered only when the return on investment is apparent. After all, power outages are a common culprit behind frozen pipes.
Matthew Branaugh is an attorney, and the business owner for Church Law & Tax.
What the Respect for Marriage Act Means for Churches
Bipartisan law confirms and protects certain religious liberties.
It requires the federal government to recognize
a marriage between two individuals if the marriage was valid in the state where it was performed.
It guarantees that valid marriages between two individuals are given full faith and credit, regardless of the couple’s sex, race, ethnicity,
or national origin, but the bill would not require
a state to issue a marriage license contrary to state law.These two purposes will have little, if any, effect on churches.
Dig a little deeper with the help of Church Law & Tax’s legal library to gain more insight on the clergy’s authority to perform marriages, along with the legal rights and requirements to do so. For full access to this and other critical resources, consider subscribing to Church Law & Tax today.
This conclusion is underscored by a bipartisan amendment to the RMA that:
Confirms that churches will not be required to provide any services, facilities, or goods for the solemnization or celebration of a marriage.
In a guest opinion column for Christianity Today, constitutional scholar and University of Missouri law professor Carl Esbeck called the RMA “a modest but good day’s work,” on the part of Congress while highlighting for readers several key characteristics of the legislation, including its religious liberty protections.
Guarantees that the Act may not be used to deny or alter any benefit, right, or status of an otherwise eligible person or entity – including tax-exempt status, tax treatment, grants, contracts, agreements, guarantees, educational funding, loans, scholarships, licenses, certifications, accreditations, claims, or defenses – provided that the benefit, right, or status does not arise from a marriage. For instance, a church’s eligibility for tax-exempt status is unrelated to marriage, so its status would not be affected by this law.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.
Image: akinbostanci | Getty
Part 5 of 5
Running a Virtual Church Business Meeting
A quick guide to conducting church business virtually.
Prior to March 2020, virtual business meetings were rare or nonexistent for most churches. Many churches had never even entertained options for including members virtually in a business meeting hosted online. And then COVID-19 changed the world. Virtual church business meetings became a necessity—even commonplace.
Now, hybrid meetings—where some members attend in person and others attend virtually—are the norm in many places. But what are the elements of a properly run, fully virtual or hybrid meeting? How can you be sure that a quorum is present, that members are properly recognized, and that votes are accurately counted?
This article will tackle these and other questions with the goal of ensuring your meetings with members attending virtually follow proper parliamentary procedure.
Series Overview
Church business meetings take place any time church members, boards, or committees get together to conduct official church business—from annual member meetings to weekly or periodic board or committee meetings where votes are taken and decisions are made.
This five-part article series is designed to provide simple and straightforward guidance to church leaders on parliamentary procedure and best practices for business meetings.
Part 4. Taking Minutes at a Church Business Meeting
Part 5. Running a Virtual Church Business Meeting
Are virtual business meetings a permissible option for your church?
The first step to holding a proper virtual church business meeting is to determine whether your church is permitted to conduct business virtually. The default rule under Robert’s Rules of Order Newly Revised, the rule book that many churches follow, is that a church is not permitted to hold a virtual business meeting unless the state law that applies to that church or the bylaws of that church explicitly allow such meetings.
To determine this permissibility, look first in your church’s bylaws for provisions that address telephonic meetings, electronic meetings, or virtual meetings. Sometimes bylaws will state that a church can hold meetings by any method that allows all participants or members to hear each other simultaneously. If this type of provision exists, your church can permissibly hold a virtual business meeting.
If there is nothing in the church bylaws regarding virtual meetings, the next step is to check the state law that applies to your church to see if it includes any blanket provisions allowing organizations to meet virtually even without bylaws language to that effect.
If neither state law nor your church’s bylaws allow for virtual business meetings, holding one and taking action at it is technically impermissible and definitely inadvisable.
If a church needs to take action that simply cannot wait for an in-person meeting, it can hold a virtual business meeting and then ask the members to ratify the action taken at a later, in-person meeting. But this procedure is risky since the church is under no obligation to sanction the decisions made at the virtual meeting.
The best course is to amend your church’s bylaws to include a provision that allows virtual attendance and participation at any business meetings to be held by the members or any smaller group (e.g., deacons, elders, committees, and so on).
How does a church confirm that a quorum is present at a virtual business meeting?
A quorum is the minimum number of members that must be present for an organization to conduct business. This term applies to small boards and committees, as well as general members meetings. For a business meeting of all members, that number, usually expressed as a percentage, should be specified in your church’s bylaws. If your church’s bylaws do not state a quorum requirement, follow the requirement found in the state law that applies to your church.
For a general members business meeting, an accurate roll of church members—or as close to an accurate roll as possible—is the place to start when determining whether a quorum is present. Follow these guidelines:
First, calculate the number needed for a quorum by multiplying the decimal version of the percentage stated in your bylaws or state law by the total number of church members on the most-current membership roll.For example, if the current membership roll includes 150 members, and the bylaws state a quorum requirement of 20 percent, multiply .20 times 150. A quorum for meetings would need to be a minimum of 30 members present either in person or virtually.
Second, organize the roll alphabetically by last name and include the name of each individual member, even if one household includes multiple members.
Third, use a virtual meeting software that allows members to be placed in a waiting room before entering the meeting, and then ask members in the waiting room to change their screen name to be their full name plus the name of the individuals in the household that are attending the meeting through that specific device.For example, if a husband and wife are viewing and participating in the meeting together using the same computer, one of their names should be the primary screen name and the name of the spouse should be in parentheses, like this: Larry Long-Time Member (Lisa). This format indicates to the staff helping with the meeting that there are two members present in that household and that both members should be counted to determine whether a quorum is present.
Even if your church isn’t concerned about meeting its quorum requirements, using this format to identify the individuals present at the meeting is helpful for recognizing members and facilitating discussion.
Fourth, at the announced start time of the meeting, those confirming the presence of a quorum should total the members present in person and those participating virtually, then verify the quorum requirement is met before starting the meeting.
A similar process would be followed for determining that a quorum is present for a small group, committee, or board meeting.
How does a church facilitate discussion at a virtual business meeting?
Discussion in a virtual business meeting can mirror what might happen in person but cannot replicate or replace it.
Meeting in person is still the best way to allow for as effective and inclusive of a discussion as possible on a topic. Virtual meetings may allow for greater attendance, but more people at a meeting does not necessarily equal more participation, and a virtual environment often slows the democratic process such that fewer total members can speak in a given time frame.
When a motion is made and the chairperson asks for discussion, it is helpful to use the reaction buttons within virtual meeting software to seek recognition.
Depending on the size of the meeting and the nature of the topics being discussed, the chairperson could simply ask members who want to speak to select the software’s “raised hand” icon. The chairperson could also provide more options for participation by asking members to select specific icons to indicate that they want to speak in favor or in opposition, or to indicate that they want to make a motion that has priority (such as a point of order).
Caution. Allowing members to engage in discussion on an item of business through a software’s chat feature is undesirable because that format removes all limits on the amount of time or number of times that one member can speak on a topic and, therefore, violates one of the most fundamental principles of parliamentary law—that each member has an equal right to speak.
How does a church facilitate voting at a virtual business meeting?
When determining how to allow virtual voting, the first question to ask is whether both members and nonmembers will attend the meeting. If only members will attend, voting can likely be accomplished through the virtual meeting software that you are using.
The next question to ask is whether votes must be secret (i.e., by ballot). Votes are not required to be secret unless the bylaws specify this requirement or unless a vote is taken to require that all or certain types of votes be conducted by ballot.
If only members are voting and votes do not need to be taken by ballot, you can use the raised hand button in the virtual meeting software to take a vote. On a noncontroversial matter, a chairperson may be able to determine whether a motion is adopted simply by eyeballing the number of hands raised just as would occur if the members were meeting in person.
On a closer vote, though, the chairperson may need to count the raised hands to determine the result. If this is the case, and you have a large group, you may want to consider using the software’s polling feature, which automatically counts the votes. The difficulty with that option is that it does not account for multiple members who are attending under one login. In this case, manual counting would be necessary.
If nonmembers are virtually attending a meeting, there are two main options for taking a vote and ensuring that the non-members are not voting.
Option 1. Transfer all nonmembers to a “breakout room” within the software while the members vote in the main meeting room. Once the voting is completed, you can move the nonmembers back to the main meeting room. This may sound complicated, but it can be done efficiently with a little practice, preparation, and knowledgeable staff.
Option 2. Use a voting software separate from the virtual meeting software and provide that voting link by email to the members in virtual attendance at the meeting. If your bylaws require secret ballot voting, it would be important to select software that allows for that option.
The choice to utilize hybrid or virtual formats
Though many churches have now become very comfortable operating in the virtual space, it is important to realize that meeting logistics become much more complicated when a hybrid meeting format is used. When attendees are present both virtually and in person, leadership will face many more challenges than they would deal with in an all-virtual or all-in-person meeting.
Something intangible is lost by meeting virtually. Though the same decisions can be made, collaboration is minimized, the informal conversations in the hallways disappear, and the “feel” of the group is different when some or all of the participants are not in one physical space together. Additionally, transacting the business in virtual and hybrid meetings takes longer.
In short, physical presence matters. Allowing virtual participation, even with the intent of greater member attendance, is not necessarily better, and leaders should give serious thought to the details of quorum and discussion before allowing a hybrid format.
Sarah E. Merkle is a professional parliamentarian and presiding officer. One of five lawyers worldwide to have earned the credentials Certified Professional Parliamentarian-Teacher (CPP-T) and Professional Registered Parliamentarian (PRP), she helps boards, associations, corporations, and public bodies navigate rules applicable to governance and business meetings.
Key Tax Dates July 2022
File 8274 and 941 forms and meet monthly or semiweekly requirements.
If your church or organization reported withheld taxes of $50,000 or less during the most recent lookback period (for 2022 the lookback period is July 1, 2020, through June 30, 2021), 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 or organization 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, and the employer’s share of Social Security and Medicare taxes.
Semiweekly requirements
If your church or organization reported withheld taxes of more than $50,000 during the most recent lookback period (for 2022 the lookback period is July 1, 2020, through June 30, 2021), 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, and the employer’s share of Social Security and Medicare taxes.
July 30, 2022: File employer exemption—Form 8274
Churches hiring their first nonminister employee between April 1 and June 29 may exempt themselves from the employer’s share of Social Security and Medicare taxes by filing Form 8274 by this date (nonminister employees are thereafter treated as self-employed for Social Security purposes).
The exemption is only available to churches that are opposed on the basis of religious principles to paying the employer’s share of Social Security and Medicare taxes.
July 31, 2022: File Form 941
Churches having nonminister employees (or one or more ministers who report their federal income taxes as employees and who have elected voluntary withholding) must file an employer’s quarterly federal tax return (Form 941) for the second quarter of 2022 by this date. Enclose a check in the total amount of all withheld taxes (withheld income taxes, withheld Social Security and Medicare taxes paid by the employee, and the employer’s share of Social Security and Medicare taxes) if less than $2,500 on June 30, 2022.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.
Image: Andrii Afanasiev | Getty
Q&A: How Do We Measure Online Church Attendance?
How to calculate this important metric for current—and future—planning purposes.
The Editors
My church did not conduct online services before the COVID-19 (coronavirus) pandemic. Now that our state has implemented public-gathering and stay-at-home directives, we began offering them. How should we measure attendance? Based on the number displayed by the platform we use? Based on the total number of “views” we get live and then afterward when the recording is made available? Something else?
Measuring giving and attendance are two typical (and usually straightforward) ways church leaders quantify what happens with worship services and various ministry programs. While sheer numbers do not reflect the intrinsic value of events or directly reflect the effectiveness of discipleship-related efforts, they still shed light on the congregation and its behaviors. They also help with future planning purposes.
Nick Nicholaou and Jonathan Smith discuss technologies for churches during the pandemic, including hardware, software, VPNs, tools for communicating with staffs and congregations (including dealing with Zoom’s flaws), and electronic giving.
In light of the pandemic, and reports that many churches have experienced declines in giving throughout its duration, the ability to effectively gauge how many people attend online can prove useful now for church leaders as far as determining what’s working—or not. Looking ahead, it can also help them understand the types of longer-term investments in time, energy, and, perhaps, budget dollars they want to make in online-related ministries.
With that in mind, we asked church IT experts Nick Nicholaou (a Church Law & Tax advisor at large) and Jonathan Smith (technology director at Faith Ministries in Indiana) to address how they recommend calculating online attendance.
Nicholaou: The question of general attendance comes up a lot with The Church Network’s Metro Network, which consists of administrative leaders serving congregations with more than 2,000 people in weekly attendance A while back, a few of those churches did studies to determine the average number of people in each carload for weekly services—a potentially easier way of gauging attendance rather than attempting to count every head in each service. Surprisingly, each of these churches came to the same conclusion: each carload averaged about 2.1 people.
That seems to be a reasonable approach in the online context, the assumption being that a carload may be most comparable to an online viewing connection. The number of people attending in person per household in a carload may be similar to the number of people in a household viewing online.
Absent actual numbers, I’d suggest a multiplier of 2.1 or so.
Smith: I agree with what Nick said. The number of persons per car is a great starting point, so coming up with a multiplier based on your typical physical attendance and number of cars is a useful approach.
Realistically, though, any approach is just a best guess. When we do conferences we count views, and don’t try to figure out a multiplier because you could have ten people watching from a hotel conference room on a single connection, whereas if those ten people were attending the conference in person they would have brought three cars.
So figure out a multiplier, but remember it isn’t exact.
At Faith Ministries, we usually count the number of people present in physical services and then count the number of online connections—but we do not equate one to the other.
During the pandemic, our goal is to track the number of people who view our services live to determine our online viewing trend. But a church can also count the total views over a set period of time (such as the number of views of the recorded replay throughout the remainder of the day or the week).
Whichever way you decide to count, if you get fewer connections each week, rather than increases in live and replay views, then you may be doing something wrong and you may want to investigate further. Think of this as the church version of the Nielsen television ratings.
Navigating Technology in the Midst of the Coronavirus: Communicating with the Congregation
Church IT experts Nick Nicholaou and Jonathan Smith explore tools churches should consider for small
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Church IT experts Nick Nicholaou and Jonathan Smith explore tools churches should consider for small groups, worship services, and church-wide announcements. Editor Matthew Branaugh briefly explains copyright and confidentiality issues church leaders must remember.
Navigating Technology in the Midst of the Coronavirus: Communication Tools for Staff
Church IT experts Nick Nicholaou and Jonathan Smith join Church Law & Tax Content Editor
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Church IT experts Nick Nicholaou and Jonathan Smith join Church Law & Tax Content Editor Matthew Branaugh to discuss some simple approaches for making communications effective and efficient with church teams of any size.
Legal Considerations for Coronavirus Guidance and Church Gatherings
Government actions that impact constitutional interests must follow certain rules.
Theresa Sidebotham and Nicole Hunt
As the spread of the COVID-19 (coronavirus) continues nationwide, many states have begun issuing guidance—and in some instances, outright bans—regarding public gatherings. What does this mean for churches? Are they bound by directives issued by government officials and agencies? And if they choose to still meet, do they face any legal consequences for doing so?
This article will quickly explore those questions as church leaders weigh how to handle worship services and church events throughout the coming weeks and months.
Government authority and the First Amendment
Legally speaking, states have the authority to use police powers to protect the welfare, health, and safety of their citizens. The parameter of state powers varies based on the state. Generally, it’s a combination of state constitutional power and statutory power executed by the governor via an executive order declaring a disaster emergency.
Attorney David Middlebrook offers three steps for determining government actions affecting public gatherings.
The declaration of a public disaster allows the state to act quickly when responding to community problems like COVID-19. Typically, government officials are required to work their way through a complex legal process to prohibit a public gathering. However, when a state of emergency is declared, the process is expedited and the red tape is temporarily removed.
And yet, while the government may have a significant amount of power during disasters, it is still limited by constitutional parameters. State actions that impact constitutional interests, like the First Amendment’s right of the people to peaceably assemble, must follow certain rules.
The government can limit people from assembling if the restrictions are reasonable, not content-based, and “narrowly tailored” to meet legitimate concerns like public safety, while restricting constitutional rights as little as possible.
With respect to the First Amendment and its guaranty of the free exercise of religion, restrictions either must be neutral and generally applicable (i.e. not singling out religious organizations) or they must meet a very high judicial standard known as strict scrutiny—the government’s interest must be compelling and exercised in the least intrusive manner possible. The government most likely cannot meet this burden unless it treats all gatherings equally.
During the current COVID-19 crisis, many states have recommended or asked organizations to voluntarily restrict large gatherings. A voluntary request made by the state without forcibly requiring compliance may demonstrate to a court that the state attempted to use the least restrictive approach to constitutional rights.
A ban that limited the size of gatherings but did so equally to all gatherings for serious issues of public safety might also be constitutional. A ban that targeted churches, but not other gatherings, would probably not be constitutional.
In crafting policies on banning, some states have decided not to apply the group limitations to airports, libraries, workplaces, grocery stores, athletic events (without spectators), religious gatherings, weddings, or funerals. Other states have created blanket bans for all large groups of people. The public health circumstances, the language of the order, and the enforcement approach for each state must be analyzed individually to determine whether government action is a neutral and generally applicable approach or an act of discrimination.
So what does this mean practically for churches? If your state has issued an emergency declaration, the state government may now legally have special rights to control the size of gatherings in the name of public safety. As a matter of policy and implementation, if the government directive is a neutral law of general applicability and does not target churches in a discriminatory manner, the state’s recommendation or mandate is probably legal.
Are there legal consequences if a church still meets?
Assume the state is legally justified, per its emergency declaration, to restrict the assembly of people. What are the legal consequences for churches that refuse to cancel services? First, it’s important to look at the language of the directive. Is the state recommending that churches refrain from meeting or is the state prohibiting it?
A recommendation, without the threat of enforcement, is not the same as a ban. A state ban on groups of a certain number carries with it the threat of government force if state law is not followed.
In a state where gatherings have been banned, churches that still meet for worship services and events may find their churches being ordered by a court to cease all gatherings. Failure to follow the directives of a court order could result in a variety of consequences, depending on the language of the court order, including financial penalties, forced closure, stripping state benefits from the organization, or even jail time for church leaders. It could also result in free exercise litigation if the church feels the ban was discriminatory. Before deciding to disobey a ban or a court order, consult with a First Amendment attorney to analyze the law and the situation.
Key point. Churches worldwide are implementing creative solutions that balance their theological and ecclesial responsibilities with their roles as members of their local communities. Church Law & Tax helped put together a free downloadable resource addressing some of these solutions. It also has made an Advantage Member article addressing eight ways to develop a coronavirus plan free for a short time. Christianity Today’s ongoing coverage also includes news and perspectives from churches and church leaders about how they are approaching their situations.
The church’s response
The state’s police powers during declared emergencies can be very comprehensive. The legality of the state’s authority to prohibit gatherings depends on the specific public health crisis in that state, the language of the emergency order, and how the law is enforced.
In the face of government recommendations and orders to cancel worship services, there may very well be legal consequences to pay for not heeding state directives and canceling services.
The call of the church to provide pastoral care to its members doesn’t change when global pandemics strike. Uncertain times call for church creativity. Churches can rethink and restructure what church looks like to protect their congregations while continuing their ministry work.
For more definitive guidance and state-specific analysis on the legality of state orders to suspend services, churches are encouraged to reach out to experienced legal counsel.
To learn more about how federal and state courts decide religious freedom cases, and to understand which states have their own RFRAs, check out the50-State Religious Freedom Laws Report,a new downloadable resource from Church Law & Tax.
Adapted from an article that first appeared on Telios Law. Used with permission.
Theresa Sidebotham, an attorney, founded Telios Law in 2012, where she advises organizations in the United States and internationally, with a focus on religious and nonprofit law, employment law, child safety, and investigations. She is an advisor-at-large for Church Law & Tax.
Nicole Hunt is an attorney at Telios Law where she provides legal assistance to individuals, businesses, ministries, and churches on a variety of employment law matters including organizational policies, employment contracts, disputes, and discrimination claims.
The Financial Struggles of Real Pastors
Most pastors feel the financial squeeze, despite the hype surrounding mega-rich celebrity pastors. “Bless Your Pastor” is one way congregations can respond.
Brian Kluth
A TV preacher asked his flock for $54 million last year so he could buy a new private jet. One of America’s most popular pastors owns a $10.5 million mansion and drives a top-model Ferrari. And not long ago, @PreachersNSneakers was launched on Instagram to name and shame pastors who wear designer shoes that cost thousands of dollars.
It’s no wonder, then, that many Americans, and even church-going Christians, have the wrong view of America’s pastors and their money. The real story of America’s legion of humble pastors is unglamorous and largely untold. Ninety percent of pastors feel financial pressure. Hundreds of thousands of pastors make less than $50,000 per year while serving their churches 50-plus hours per week, and many have side jobs to make ends meet.
A 2015 study conducted by the National Association of Evangelicals (NAE) found that nearly 60 percent of pastors do not receive health insurance and retirement from their churches, while many of these faithful ministers owe thousands of dollars in college or seminary loans, or carry large debt from essential medical care. Their financial reality is as far removed from the TV preachers as you could get.
In fact, the vast majority of America’s pastors (four out of every five) in the NAE study speak to congregations of fewer than 200. And 55 percent have fewer than 100 in attendance. Their churches might have annual budgets that are lower than some middle-class household incomes—budgets that are supposed to pay all the church bills and the pastor’s salary.
Getting personal
I identify with the average US pastor today. I felt God calling me to become a pastor in my mid-40s. I left my career and took a $70,000 pay cut to accept a senior pastor position. I don’t say this because I want a pat on the back, but simply to illustrate the personal financial sacrifices many pastors and their families make in order to follow God’s call on their lives to serve others.
Fortunately, my congregation’s generosity and creativity astounded me: medical professionals provided free care; church members babysat our kids for free; families invited us out for meals; others shared their vacation home with us, or gave us some of their frequent-flyer miles; one family loaned us an RV for a cross-country trip.
Undoubtedly our congregation’s biggest act of love came after we learned that my wife—then in her mid-40s—had terminal cancer. Meals, groceries, gift cards, and financial donations to help pay the medical bills . . . the gifts of love kept flowing in. Our church family made sure I never bore the burden of taking my wife to her chemotherapy treatments alone—they were always there, constant encouragers, right by our side.
I felt like the richest man alive.
Why am I writing this piece?
I want to challenge all Christians and churches across America to ignore the hype and controversies surrounding mega-rich celebrity pastors . . . and show your pastor and church staff some tangible love and appreciation.
This month, the NAE launched Bless Your Pastor. I hope this movement will sweep across America’s churches, and Christians everywhere will personally look for ways to show and share God’s love for their pastors and hard-working church staff members. Most simply, it’s an appeal from the heart to show your pastor you care by sharing your talent, your time, your friendship, and your material blessings with them.
To get involved, visit BlessYourPastor.org and download materials that can be shared with your church leadership and congregation. There’s a brief training video and a brochure that can be given to every family in your church.
The Scriptures call all churches and Christians to show and share God’s love for their pastors and church staff. In I Thessalonians 5:12, people are instructed to show their deep appreciation for those who minister among them, and Galatians 6:6 says: “Nevertheless, the one who receives instruction in the word should share all good things with their instructor” (NIV).
Take it from one who knows: your acts of appreciation and kindness, big or small, toward your pastor and church staff will result in tremendous thanksgiving to God. Why not start this week with one, simple act of encouragement to Bless Your Pastor? Go on—show and share God’s love for your pastor
Brian Kluth is the national director for NAE Financial Health and spokesperson for Bless Your Pastor. He is also a pastor, public speaker, and author.
Church leaders should note the potential tax and compensation-setting implications of any collections their churches take up to help ministers during this campaign or any future ones. For more information, check out the following:
Ten notable changes, and what they mean, for churches and their employees.
The Editors
When President Trump signed the Tax Cuts and Jobs Act of 2017 into law, ministers and other church leaders wondered about the new law’s implications for ministry in 2018 and beyond. To help churches better understand key aspects of the law and its possible effects on ministry, Richard Hammar, senior editor of Church Law & Tax Report, gave an informative webinar titled “Tax Reform and Tax Law Changes: What Church Leaders Should Know for 2018.”
For this issue of Church Law & Tax Report, we combined portions of Hammar’s analysis with insights drawn from interviews with Frank Sommerville, an attorney, CPA, and editorial advisor, and Ted Batson, an attorney and CPA with the accounting firm CapinCrouse—all with the goal of giving leaders a better understanding of what the reform does—and doesn’t—mean for churches and their employees.
Issue No. 1: Will charitable contributions suffer?
“The Tax Cuts and Jobs Act retains a deduction for charitable contributions, but the deduction will be available to a smaller number of donors because of a substantial increase in the standard deduction,” said Hammar. “The significantly increased standard deduction will reduce the number of persons who are able to itemize deductions on Schedule A (Form 1040) from 30 percent to as few as 5 percent of all taxpayers. The result will be a significant decrease in the number of taxpayers who can claim a tax deduction for contributions they make to churches and other charities” (see Table 1).
TABLE 1
STANDARD DEDUCTIONS FOR 2018
Joint filers
$24,000
Heads of households
$18,000
Other
$12,000
The Bottom line: 95 percent of taxpayers have lost the ability to receive a charitable deduction. Many speculate that this will negatively affect giving. Will it?
“By one estimate, the increase in the standard deduction will reduce charitable giving by $13 billion,” Batson said. Whether this decline will occur depends. On the one hand, those who give because they get a tax break will tend not to give, he said. On the other hand, “churches and other religious organizations whose donors give as part of their spiritual worship are less likely to be impacted,” he pointed out. “Donors who give because they are vested in the mission of an organization are much less likely to walk away just because they will receive less benefit at tax time.”
Batson added that churches with strong and consistent teaching on biblical tithing and stewardship encourage giving for reasons other than receiving a tax deduction.
Sommerville agreed, stressing that giving is about a connection between the donor and a church. “I think that all giving comes out of relationship, period,” he said. “It’s just more difficult to have that relationship in a secular charity. It can happen … but not as frequently.”
Sommerville also pointed out that giving regularly, consistently, and generously is not about how much money someone makes.
Most givers, he said, “are in the lower income category” and have not itemized in the past.
“You must remember that 70 percent of Americans haven’t itemized in the past,” he said. “So why would we think that raising that to 95 percent is going to change anything? It’s not.”
In other words, Sommerville believes the higher standard deduction will not significantly affect church giving. “I think it’s going to have an impact on secular giving,” he reiterated. “But I think that that is even overstated because you have to have an element of generosity before you even consider a gift.”
For example, said Sommerville, consider a person who has $100 to give to a charity. “If you itemize, you covered maybe 15 or 20 percent of that, but you’re still 85 percent or 80 percent out-of-pocket,” he said.
Sommerville also pointed out that a simplified tax code means that the IRS will no longer need to audit itemized deductions—a bonus savings for the government. “Ninety-five percent of Americans aren’t going to have deductions, so there’s nothing left to audit. And it greatly lessens the cost of checking compliance.”
Issue No. 2: Why church giving might actually increase
Changes in the tax code will mean more take-home pay for many people. This could actually lead to greater giving. The seven new percentages for withholding are 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and 37 percent. The past percentages were 10 percent 15 percent, 25 percent, 28 percent, 33 percent, 35 percent, and 39.6 percent (see Table 2 on page 4 for a breakdown of 2018 withholdings by weekly, biweekly, semimonthly, and monthly payroll periods).
“Many of those in the lower-to-mid-income level will see an increase in their take-home pay,” Sommerville said. And remember, he added, that a lot of people tithe off of their take-home pay rather than their gross income.
Sommerville sees this an opportunity for churches to ask their congregants to increase their giving because they now have a larger paycheck. “Maybe a church needs to increase its offering or missions giving or children’s ministry or some other area,” he said.
Issue No. 3: Evaluating “bunching” with charitable deductions
For larger donors who want to receive a deduction, Hammar discussed the possibility of “bunching,” in which a donor could cover a couple of years of giving in a year’s time.
“Some tax advisors are recommending that donors consider ‘bunching’ their contributions to charity, making no contributions in one year, and doubling contributions in the next so that the augmented amount will exceed the standard deduction and allow persons to deduct their contributions as an itemized deduction,” Hammar said. “Whether this strategy will gain traction with church members remains to be seen.”
Sommerville thinks this strategy could work for a church that takes pledges from its members and then creates a budget based on those pledges. He offered this example:
In December of 2018, a donor not only fulfills a large pledge for December of 2018 but also fulfills a large pledge for all of 2019. If this “bunching” pushes the donation above the standard deduction for 2018, this donor could reap the tax benefits of doing so during the 2019 tax season.
Batson recalled a donor who actually let his church know in December of 2017 that he was going to write a check that would fulfill his donations for 2018 and 2019. While donating a large amount in this manner would receive the benefits of a tax deduction ahead of time, Batson said the situation poses a theological question.
“Is it possible to prepay the ‘first fruits’ of your giving ahead of time or must you receive your first fruits and pay it?” Batson asked.
Theological questions aside, there is also the issue of creating a budget around this type of contribution strategy. “In terms of managing cash flow, the approach might not be very favorable for many churches,” he said. That is, it would be difficult for a lot of churches to work bunching into their year-to-year budgeting plans.
Then there is simply the fact that bunching is not an option for most givers. Hammar stressed that such an approach “would only be appealing to the 5 percent of taxpayers whose contributions exceed their standard deduction.”
“Some very wealthy people do this,” Sommerville said. “But I don’t think there’s going to be many that do this. Typical members in the pew aren’t going to be able to do that.”
TABLE 2
PERCENTAGES FOR INCOME TAX WITHHOLDING FOR FOUR DIFFERENT PAY PERIODS: FOR WAGES PAID IN 2018
WEEKLY PAYROLL PERIOD(a) Single person (including head of household)—(b) Married person—If the amount of wages (after subtracting withholding allowances) is:The amount of income tax to withhold is:If the amount of wages (after subtracting withholding allowances) is:The amount of income tax to withhold is:Not over $71 … … . .$0Not over $222 … … . .$0Over—But not over—Of excess over—Over—But not over—Of excess over—$71$254$0.00 plus 10%$71$222$588$0.00 plus 10%$222$254$815$18.30 plus 12%$254$588$1,711$36.60 plus 12%$588$815$1,658$85.62 plus 22%$815$1,711$3,395$171.36 plus 22%$1,711$1,658$3,100$271.08 plus 24%$1,658$3,395$6,280$541.84 plus 24%$3,395$3,100$3,917$617.16 plus 32%$3,100$6,280$7,914$1,234.24 plus 32%$6,280$3,917$9,687$878.60 plus 35%$3,917$7,914$11,761$1,757.12 plus 35%$7,914$9,687… … … …$2,898.10 plus 37%$9,687$11,761… … … . .$3,103.57 plus 37%$11,761
BIWEEKLY PAYROLL PERIOD(a) Single person (including head of household)—(b) Married person—If the amount of wages (after subtracting withholding allowances) is:The amount of income tax to withhold is:If the amount of wages (after subtracting withholding allowances) is:The amount of income tax to withhold is:Not over $142 … … . .$0Not over $444 … … . .$0Over—But not over—Of excess over—Over—But not over—Of excess over—$142$509$0.00 plus 10%$142$444$1,177$0.00 plus 10%$444$509$1631$36.70 plus 12%$509$1,177$3,421$73.30 plus 12%$1,177$1631$3351$171.34 plus 22%$1,631$3,421$6,790$342.58 plus 22%$3,421$3,315$6200$541.82 plus 24%$3,315$6,790$12,560$1,083.76 plus 24%$6,790$6,200$7,835$1,234.22 plus 32%$6,200$12,560$15,829$2,468.56 plus 32%$12,560$7,835$19,373$1,757.42 plus 35%$7,835$15,829$23,521$3,514.64 plus 35%$15,829$19,373… … … …$5,795.72 plus 37%$19,373$23,521… … … . .$6,206.84 plus 37%$23,521
SEMIMONTHLY PAYROLL PERIOD (a) Single person (including head of household)—(b) Married person—If the amount of wages (after subtracting withholding allowances) is:The amount of income tax to withhold is:If the amount of wages (after subtracting withholding allowances) is:The amount of income tax to withhold is:Not over $154 … … . .$0Not over $481 … … . .$0Over—But not over—Of excess over—Over—But not over—Of excess over—$154$551$0.00 plus 10%$154$481$1,275$0.00 plus 10%$481$551$1,761$39.70 plus 12%$551$1,275$3,706$79.40 plus 12%$1,275$1,761$3,592$185.62 plus 22%$1,767$3,706$7,356$371.12 plus 22%$3,706$3,592$6,717$587.12 plus 24%$3,592$7,356$13,606$1,174.12 plus 24%$7,356$6,717$8,488$1,337.12 plus 32%$6,717$13,606$17,148$2,674.12 plus 32%$13,606$8,488$20,988$1,903.84 plus 35%$8,488$17,148$25,481$3,807.56 plus 35%$17,148$20,988… … … …$6,278.84 plus 37%$20,988$25,481… … … . .$6,724.11 plus 37%$25,481
MONTHLY PAYROLL PERIOD(a) Single person (including head of household)—(b) Married person—If the amount of wages (after subtracting withholding allowances) is:The amount of income tax to withhold is:If the amount of wages (after subtracting withholding allowances) is:The amount of income tax to withhold is:Not over $308 … … . .$0Not over $963 … … . .$0Over—But not over—Of excess over—Over—But not over—Of excess over—$308$1,102$0.00 plus 10%$308$963$2,550$0.00 plus 10%$963$1,102$3,533$79.40 plus 12%$1,102$2,550$7,413$158.70 plus 12%$2,550$3,533$7,183$371.12 plus 22%$3,533$7,413$14,713$742.26 plus 22%$7,413$7,183$13,433$1,174.12 plus 24%$7,183$14,713$27,213$2,348.26 plus 24%$14,713$13,433$16,975$2,674.12 plus 32%$13,433$27,213$34,296$5,348.26 plus 32%$27,213$16,975$41,975$3,807.56 plus 35%$16,975$34,296$50,963$7,614.82 plus 35%$34,296$41,975… … … …$12,557.56 plus 37%$41,975$50,963… … … . .$13,448.27 plus 37%$50,963
Source: IRS.gov
Issue No. 4: The expansion of the 529 plan
The new tax reform expands the section 529 plans to now incorporate primary and secondary schools—including religiously affiliated ones.
“A ‘section 529 plan’ (also known as a ‘qualified tuition plan’) is a plan operated by a state or educational institution with tax advantages and potentially other incentives to make it easier to save for college and other post-secondary training for a designated beneficiary, such as a child or grandchild,” Hammar said. “The main tax advantage of a 529 plan is that earnings are not subject to federal tax and generally are not subject to state tax when used for the qualified education expenses of the designated beneficiary, such as tuition, fees, books, as well as room and board. Contributions to a 529 plan, however, are not deductible.”
These plans previously only applied to college savings. But the tax reform “modifies section 529 plans to allow such plans to distribute not more than $10,000 in expenses for tuition incurred during the taxable year in connection with the enrollment or attendance of the designated beneficiary at a public, private, or religious elementary or secondary school,” Hammar said.
The $10,000 “limit applies on a per-student basis, rather than a per-account basis,” Hammar explained. “Thus, although an individual may be the designated beneficiary of multiple accounts, that individual may receive a maximum of $10,000 in distributions free of tax, regardless of whether the funds are distributed from multiple accounts. Any excess distributions received by the individual would be treated as a distribution subject to tax under the general rules of section 529.”
“I think that’s a huge benefit to those churches that are operating a K through 12 school,” said Sommerville. Churches will want to let families in their congregations and communities know about this, he added.
Batson agreed that 529 plans are a good way to save for a child or grandchild’s college and precollege education. Yet Batson said there is a possible “wrinkle”: while the federal government has modified the plan, those modifications might not apply in every state.
“Many states have complementary state laws that provide a state-level tax benefit that may be tied specifically to the funds being used for college education only,” he said. “So, state laws may not permit the use of 529 funds for primary and secondary education. Because these plans are administered by the states or third-parties hired by the states, there will be a period of adjustment before these administrative bodies are able to honor a request for such a distribution.” Until states act to remedy this plan discrepancy, Batson added, this is a “limiting factor on the usefulness of the federal law change.”
On top of that, there is a reason a state might be reluctant about including K through 12 on its 529 plan. Such an inclusion would mean that “states are going to have a whole lot of dollars taken off the tax rolls,” Batson said. “This will maybe take tens of millions of dollars of tax revenue—if not a couple of hundred million dollars—off the table for a given state,” said Batson.
The bottom line: Churches with schools should check with their state plan sponsors to see if 529 plans include precollege savings.
One final note: The House bill originally proposed extending 529 plans to homeschooled students, however, the final legislation did not include homeschooling.
Issue No. 5: The removal of the moving expenses deduction
Prior to tax reform, a pastor’s reasonable moving expenses could be deducted—with certain restrictions. Meals, for instance, could not be deducted. And the move had to meet both a distance test and a time test. The current law, however, no longer allows pastors and other employees to deduct moving expenses.
“The Tax Cuts and Jobs Act repeals both the moving expense deduction, and the exclusion of employer reimbursements of moving expenses under an accountable arrangement—except in the case of a member of the Armed Forces of the United States on active duty who moves pursuant to a military order,” Hammar explained.
Sommerville and Batson said that this exclusion has generated a lot of questions from church leaders. Specifically, churches want to know if pastors and staff members will be taxed for travel expenses the church covers.
“The answer is yes,” Batson said.
Pastors now must pay their moving expenses “out-of-pocket” and “with no tax benefit.”
Pastors now must pay their moving expenses “out-of-pocket” and “with no tax benefit,” he explained. If a church pays for moving expenses, he added, it must be considered taxable income.
Handling taxable moving expenses won’t be a problem for more prosperous churches, said Batson, but less prosperous churches will probably have a tough decision to make about whether or not to hire someone who would have “substantial moving expenses.”
A case could possibly be made for paying a new employee’s travel costs to his or her new place of employment—but not the expenses of the spouse or children—as a nontaxable business expense. Still, Batson admitted, opinions about this kind of scenario would undoubtedly vary greatly among CPAs and tax attorneys who work with churches and other nonprofits.
Batson recalled a conversation he had recently with one of his mission clients in which he was asked, “What about relocating a missionary and his family from the US to their station of foreign service? Are you telling us that we cannot reimburse the moving expenses for the husband, the wife—who’s also an employee—and the children and their household furnishings?”
“You probably could make the argument that moving the husband and the wife, who are employees, to their foreign station is a business expense,” Batson said. “But not the kids, not their household furnishings.”
Of course, no decisions should be made without receiving guidance from a tax professional. Yet, as Batson pointed out, opinions vary greatly among even tax experts. Churches should err on the side of caution.
As Batson reflected on the effect of the travel exclusion on churches, he said that this is an area where a for-profit business will fare better than nonprofits.
“Corporate tax rates were lowered dramatically, so they have the money to pay for moving expenses,” he said. “But nonprofit organizations, including churches, don’t have any kind of benefit like that. Mission organizations where people raise their own support, are going to have to raise more money to handle moving expenses.”
Issue No. 6: The elimination of deductions for work-related educational expenses
Prior to the tax reform, employees could deduct educational expenses—with certain restrictions and limitations.
“The Tax Cuts and Jobs Act eliminates any deduction for unreimbursed employee business expenses, including education,” Hammar said.
“While this is true for an individual employee with educational expenses that are not reimbursed by an employer, it does not apply where an employer pays for educational expenses as a working-condition fringe benefit,” clarified Batson. This includes educational expenses that may be deducted by the employer as a business expense.
Eligibility for this fringe benefit is subject to these conditions:
The education is required by your employer, or by law or regulation, to keep your salary, status, or job; or
The education will maintain or improve skills required in your present work.
Hammar also offered this clarification: “Self-employed taxpayers may continue to deduct work-related educational expenses.”
Issue No. 7: Responding to the elimination of itemized deductions for business expenses
Prior to the new law, certain business expenses were deductible if, in aggregate, they exceeded 2 percent of the taxpayer’s adjusted gross income (AGI), Hammar said.
Some expenses subject to the 2 percent AGI floor included:
overnight out-of-town travel;
local transportation;
meals (subject to a 50 percent AGI floor);
entertainment (subject to a 50 percent AGI floor);
home office expenses;
business gifts;
dues to professional societies;
work-related education;
work clothes and uniforms if required and not suitable for everyday use;
malpractice insurance;
subscriptions to professional journals and trade magazines related to the taxpayer’s work; and
equipment and supplies used in the taxpayer’s work.
The Tax Cuts and Jobs Act, however, “suspends all miscellaneous itemized deductions that are subject to the 2 percent floor,” Hammar said.
The inability to itemize and deduct business expenses “will hit some clergy hard,” Hammar said. He suggested this possible workaround: “Churches could reimburse employees’ business expenses under an accountable expense reimbursement arrangement.”
To be considered accountable, a church’s reimbursement arrangement must comply with the following four rules:
Expenses must have a business connection—that is, the reimbursed expenses must represent expenses incurred by an employee while performing services for the employer.
Employees are only reimbursed for expenses for which they provide an adequate accounting within a reasonable period of time (not more than 60 days after an expense is incurred).
Employees must return any excess reimbursement or allowance within a reasonable period of time (not more than 120 days after an excess reimbursement is paid).
The income tax regulations caution that in order for an employer’s reimbursement arrangement to be accountable, it must meet a “reimbursement requirement” in addition to the three requirements summarized above. The reimbursement requirement means that an employer’s reimbursements of an employee’s business expenses come out of the employer’s funds and not by reducing the employee’s salary.
“I have advocated for years that churches need to get on board with an accountable expense reimbursement plan,” said Sommerville. He then added, “Frankly, I applaud the elimination of the deduction for the unreimbursed employee business expenses,” explaining that far too many churches simply do not properly review and report taxable employee business expense reimbursements. “I’m handling an IRS exam right now on a pastor who didn’t do it right,” he said. “Pastors just don’t do it right. It’s a complicated process.”
Batson, however, is not convinced that an accountable expense reimbursement plan is practical or affordable for many smaller churches.
Churches would need to carefully consider whether or not they can afford reimbursing a pastor’s business expenses, Batson explained, because it would mean more out-of-pocket expenses for the church. Prior to the new law, he said, pastors could claim a “tax benefit,” but now that is no longer the case.
Paying for a pastor’s business expenses could be very difficult for a small church on a tight budget. To emphasize his point, Batson gave this scenario:
A pastor of a rural church makes weekly and multiple visits to homebound parishioners and to hospitalized members. Because the congregation is spread across many miles of countryside, the pastor puts in an average of 10,000 miles per year. At a mileage rate of 54.5 cents a mile, the pastor would incur an expense of $5,450.
Reimbursing a travel expense like that, Batson said, would greatly stretch or even break the budget of a small church and also create a system that’s difficult for a smaller church to manage. Unlike larger churches, smaller churches often lack the staff size and well-defined financial systems that allow them to make use of such a plan. “This will create a quandary for small churches: they will either need to find a way to accommodate an accountable expense plan, perhaps with a cap, or the pastor will suffer the brunt of the tax law change,” Batson explained.
Sommerville feels that setting a cap could make such an accountable plan work for smaller churches. They would just need to establish and adhere to certain stipulations on spending, which includes setting a reasonable and affordable cap. “You let the pastor know that you are going to reimburse his or her expenses up to $4,000, $5,000, or whatever the church can afford.”
Along with that, Sommerville said that the church treasurer or financial manager must commit to reviewing and approving the expense for which the pastor is seeking reimbursement. And that can sometimes create a problem. Nobody wants to get on the pastor’s bad side, he said. Even so, it’s a financial manager’s job to hold a pastor and all church staff accountable for the use of the church’s funds—and an accountable reimbursement plan would help a church financial manager do just that.
Issue No. 8: The exclusion of the transportation fringe benefit
“Under the … tax reform bill, Section 274(a) of the Internal Revenue Code will include a new provision that expressly disallows deductions for ‘the expense of any qualified transportation fringe (as defined in section 132(f)) provided to the employee of the taxpayer.’ Further, the newly-added Section 274(l) generally disallows deductions for any expense incurred for providing transportation, payment, or reimbursement to an employee relating to travel between the employee’s residence and workplace,” reported National Benefit Services.
The loss of this tax deductible fringe benefit may negatively affect urban churches where employees must pay for parking, Sommerville said.
In the past, he explained, a church would pay for parking or the cost of a transit pass “as a tax free fringe benefit for employees.” With the current tax law, a church will now have to file an “Exempt Organization Business Income Tax Return” (990-T) and pay taxes on any employee’s transportation expense.
Batson sees the potential negative effect on urban churches as well.
“One nonprofit I work with has provided a ‘qualified transportation expense’ to employees,” said Batson. “With the changes in the tax law, this employer can no longer claim a deduction for this fringe benefit. While the employee won’t be taxed on this benefit, the nonprofit organization, and this includes churches, will have to treat the benefit as taxable unrelated business income.”
Batson stressed that this will be especially burdensome for churches and employees in urban settings where parking and transportation are expensive.
Update. The provision that disallowed deductions for transportation fringe benefits provided to employees was repealed in late 2019. Churches that had paid the the tax were able to file an amended Form 990-T for a refund.
TABLE 3
FEDERAL INDIVIDUAL INCOME TAX RATES FOR 2017: SINGLE PERSONS
IF TAXABLE INCOME IS:
THEN INCOME TAX EQUALS:
not over $9,325
10% of taxable income
over $9,325 but not over $37,950
$932.50 plus 15% of the excess over $9,325
over $37,950 but not over $91,900
$5,226.25 plus 25% of the excess over $37,950
over $91,900 but not over $191,650
$18,713.75 plus 28% of the excess over $91,900
over $191,650 but not over $416,700
$46,643.75 plus 33% of the excess over $191,650
over $416,700 but not over $418,400
$120,910.25 plus 35% of the excess over $416,700
over $418,400
$121,505.25 plus 39.6% of the excess over $418,400
TABLE 4
FEDERAL INDIVIDUAL INCOME TAX RATES FOR 2018: SINGLE PERSONS
IF TAXABLE INCOME IS:
THEN INCOME TAX EQUALS:
not over $9,525
10% of taxable income
over $9,525 but not over $38,700
$952.50 plus 12% of the excess over $9,525
over $38,700 but not over $82,500
$4,453.50 plus 22% of the excess over $38,700
over $82,500 but not over $157,500
$14,089.50 plus 24% of the excess over $82,500
over $157,500 but not over $200,000
$32,089.50 plus 32% of the excess over $157,500
over $200,000 but not over $500,000
$45,689.50 plus 35% of the excess over $200,000
over $500,000
$150,689.50 plus 37% of the excess over $500,000
TABLE 5
FEDERAL INDIVIDUAL INCOME TAX RATES FOR 2017: MARRIED PERSONS FILING JOINT RETURNS
IF TAXABLE INCOME IS:
THEN INCOME TAX EQUALS:
not over $18,650
10% of taxable income
over $18,650 but not over $75,900
$1,865 plus 15% of the excess over $18,650
over $75,900 but not over $153,100
$10,452.50 plus 25% of the excess over $75,900
over $153,100 but not over $233,350
$29,752.50 plus 28% of the excess over $153,100
over $233,350 but not over $416,700
$52,222.50 plus 33% of the excess over $233,350
over $416,700 but not over $470,700
$112,728 plus 35% of the excess over $416,700
over $470,700
$131,628 plus 39.6% of the excess over $470,700
TABLE 6
FEDERAL INDIVIDUAL INCOME TAX RATES FOR 2018: MARRIED PERSONS FILING JOINT RETURNS
IF TAXABLE INCOME IS:
THEN INCOME TAX EQUALS:
not over $19,050
10% of taxable income
over $19,050 but not over $77,400
$1,905 plus 12% of the excess over $19,050
over $77,400 but not over $165,000
$8,907 plus 22% of the excess over $77,400
over $165,000 but not over $315,000
$28,179 plus 24% of the excess over $165,000
over $315,000 but not over $400,000
$64,179 plus 32% of the excess over $315,000
over $400,000 but not over $600,000
$91,379 plus 35% of the excess over $400,000
over $600,000
$161,379 plus 37% of the excess over $600,000
Issue No. 9: Changes in tax brackets
As mentioned earlier in this article, the tax bill reduced the percentages of the seven income tax brackets to 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and 37 percent. (In 2017, the seven brackets were 10 percent, 15 percent, 25 percent, 28 percent, 33 percent, 35 percent, and 39.6 percent.)
The 2017 and 2018 rates, and income ranges, for both single and married taxpayers, are summarized in Table 3 through 6 (see below and page 8).
Hammar explained that an employee’s “tax liability is not computed by taking the top marginal tax rate times total income. Rather, tax is computed by multiplying income in each bracket times the applicable percentage.” To illustrate, he gave this example:
A married couple has combined taxable income of $100,000 in 2018. Their tax is not their top marginal tax rate of 22 percent multiplied times their taxable income of $100,000 (i.e., $22,000). Rather, they pay 10 percent of their first $19,050 of taxable income, 12 percent of income above $19,050 but below $77,400, and 22 percent of the remaining income above $77,400. This results in a tax liability of $13,879, and an effective tax rate of 13.8 percent. These calculations are built into the tax tables by computing the couple’s tax as “$8,907 plus 22 percent of income over $77,400.” How does this compare with the couple’s tax liability for 2017? Under the tax tables in effect prior to the passage of the Tax Cuts and Jobs Act of 2017, the couple’s tax liability would have been “$10,452.50 plus 25 percent of the excess over $75,900,” or $16,477, for an effective rate of 16.4 percent. The bottom line is that the new law provided tax savings of $2,598 to this couple.
Hammar explained, however, that the computation of tax savings may be more complex because of other factors such as dependent children.
One other point: The new rates are repealed for tax years beginning after December 31, 2025. At that time, the rates revert back to those in effect in 2017 unless extended by Congress.
For specifics on dependent children and possible tax credits, see the sidebar “Enhancement of Child Tax Credit and New Family Credit” (below).
Enhancement of Child Tax Credit and New Family Credit
The Tax Cuts and Jobs Act temporarily increases the child tax credit from $1,000 to $2,000 per qualifying child. The credit is further modified to temporarily provide for a $500 nonrefundable credit for qualifying dependents other than qualifying children (such as aging parents). The provision generally retains the present-law definition of dependent.
Under the conference agreement, the maximum amount refundable may not exceed $1,400 per qualifying child. Additionally, the conference agreement provides that, in order to receive the child tax credit (i.e., both the refundable and nonrefundable portion) a taxpayer must include a Social Security number for each qualifying child for whom the credit is claimed on the tax return. For these purposes, a Social Security number must be issued before the due date for the filing of the return for the taxable year. This requirement does not apply to a non-child dependent for whom the $500 nonrefundable credit is claimed.
Further, the tax conference agreement retains the age limit for a qualifying child. As a result, a qualifying child is an individual who has not attained age 17 during the taxable year.
Lastly, the conference agreement modifies the adjusted gross income phaseout thresholds for the credit, starting with taxpayers with adjusted gross income in excess of $400,000 (in the case of married taxpayers filing a joint return) and $200,000 (for all other taxpayers). These phaseout thresholds are not indexed for inflation.
Key point. A tax credit is more valuable than a tax deduction, since it represents a dollar-for-dollar reduction in actual taxes rather than in taxable income. To illustrate, consider a taxpayer in the 22 percent tax bracket. A tax credit of $1,000 will reduce this person’s actual tax liability by $1,000. But a tax deduction will reduce taxable income, and the tax savings will depend on one’s tax bracket. This means that a person in the 22 percent tax bracket will see taxes reduced by 22 percent, or $220 in this example—much less valuable than a $1,000 credit that reduces taxes by $1,000.
—Richard Hammar
Issue No. 10: Repeal of reduction for casualty or theft
Prior law allowed taxpayers to claim an itemized deduction for property losses arising from fires, storms, or other casualty or theft if they exceeded $100 per casualty or theft. “In addition, aggregate net casualty and theft losses were deductible only to the extent they exceeded 10 percent of an individual taxpayer’s adjusted gross income,” said Hammar.
The tax act modified that law. “Under the provision, a taxpayer may claim a personal casualty loss [subject to previous limitations] only if such loss was attributable to a disaster declared by the President under the Disaster Relief and Emergency Assistance Act,” said Hammar.
He offered this scenario:
A pastor’s home is broken into while she is conducting a funeral service for a deceased member of the congregation. Several items are stolen with a value of $5,000. The loss is not covered under the pastor’s home insurance policy. Prior to the enactment of the Tax Cuts and Jobs Act, the pastor could have claimed an itemized deduction in the amount of the adjusted basis of the stolen property. But, in 2018, no deduction is allowed.
Sommerville explained, however, that such a scenario is extremely rare. “The $5,000 had to be reduced by $100 plus 10 percent of the adjusted gross income of the pastor. If the pastor had $50,000-worth of taxable income, he or she still would not have received a deduction in 2017. This change in the tax law is just not going to affect that many pastors or other taxpayers.”
On top of that, Sommerville said that any loss could be remedied with the right kind of insurance coverage.
“You either buy the insurance or you don’t,” Sommerville said. “In fact, the major losses I have seen in my 40 years of involvement with nonprofits came about because pastors chose not to buy coverage for this or that. A pastor played the odds and lost … . For instance, a pastor thought that there was no need for flood insurance because it couldn’t happen to him, because he’s not in a flood plain.”
The bottom line, said Sommerville, is this: Get proper coverage.
Political Activities Update: Tax Reform Excludes Recommended Changes from House
Churches and other charitable organizations described in section 501(c)(3) of the tax code generally are exempt from federal income tax and are eligible to receive tax-deductible contributions so long as they are organized and operated exclusively for one or more tax-exempt purposes constituting the basis of their tax exemption. These purposes include religious, charitable, and educational.
In addition, charitable organizations may not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of or in opposition to any candidate for public office. The prohibition on such political campaign activity is absolute and, in general, includes activities, such as making contributions to a candidate’s political campaign, endorsements of a candidate, lending employees to work in a political campaign, or providing facilities for use by a candidate. The absolute prohibition on campaign activities was added in 1954 by the so-called “Johnson amendment” (named for then-Senate majority leader Lyndon Baines Johnson).
Many other activities may constitute political campaign activity, depending on the facts and circumstances. The sanction for a violation of the prohibition is loss of the organization’s tax-exempt status, although the tax code provides three other possible penalties: an excise tax on political expenditures, termination assessment of all taxes due, and an injunction against further political expenditures.
An early version of the tax reform bill provided that an exempt organization would not lose its exempt status solely because of the content of any statement that:
was made in the ordinary course of the organization’s regular and customary activities in carrying out its exempt purpose; and
resulted in the organization incurring not more than de minimis incremental expenses.
However, the Senate did not include this provision in its version of the tax bill, and a joint House-Senate conference committee did not adopt the House bill provision in the final text of the new law. As a result, the prohibition of political campaign activity by churches remains intact and unchanged.
2018 Church & Clergy Tax Guide, including a comprehensive supplement containing further guidance about the “The Tax Cuts and Jobs Act of 2017” for churches, clergy, and church leaders.
Church Finance, especially chapters 5 (see the “Accountable business reimbursement policy” section), 8, and 9.
Accountability Systems
One basic principle and six simple steps help protect a church’s finances.
Karl Vaters
I’m not naturally a systems guy. But I’ve learned that good systems aren’t about stifling creativity or spontaneity; they’re about increasing accountability and stewardship.
I spend several hours each week building and maintaining proper systems. I and my church are better off for it.
To protect yourself, your church, and your integrity, begin with this one basic principle: never be alone with the money.
Here are some simple steps to make that happen:
Have two people count every offering;
Deposit the money into the bank as soon as possible;
Set up a simple, accurate accounting system;
Set up a budget;
Stick to the budget;
Have someone other than you or your family members doing as much of this as possible.
Proper systems will never build a healthy church. But bad systems—or no systems—can kill one.
Karl Vaters is pastor of Cornerstone Christian Fellowship in California. He’s been a small church pastor for more than 30 years and is the author of The Grasshopper Myth.
How these tools improve productivity and collaboration.
Justin Deeter
At my church, we recently implemented Google apps into our workflow, and it has greatly helped our productivity, communication, and teamwork. Google apps are free to nonprofit organizations—including churches—that apply for a charity license.
Here are six ways we use Google apps that your church can try.
Sermon Uploads
Each week, our tech team records sermon audio and video and then exports those files (which takes several hours) onto a Google Drive folder that goes straight into our cloud-based account. The next day, a staff member uploads the video to our website. Google Drive eliminates the need to copy files onto a hard drive or physical server, which has streamlined our sermon-upload process.
Meeting Agendas
We create meeting agendas within Google Docs for our weekly staff meetings. Staff members can then quickly share or edit the document from wherever they are, and during each meeting, a staff member can type action items into the agenda so that anyone on the team can go back and access them at any point.
Visitor Outreach
Visitor data can often get lost as visitor cards get shuffled from person to person. Our welcome center volunteers use a shared Google Doc on Sunday morning. On Monday, a staff member will open that document in the church office with all the visitor information typed and ready for follow-up.
In addition, pastors can access this information on recent visitors to make phone calls or visits. We have also used this shared document as a contact list when we promote our membership class.
Document Collaboration
Staff members use Google Docs to work together to create, edit, and comment on each other’s documents for presentations and projects, whether they are on location at the church or at the local coffee shop. The document collaboration feature eliminates the messiness of emailing documents back and forth.
Policies and Procedures
Every church has policies and procedures that each staff member needs to have at their fingertips. Put that information in Google Docs, and your team can access it on their mobile device wherever they are.
Attendance and Data
Google Docs helps us keep track of attendance patterns. A neat feature of Google Docs is the ability to use forms. Each week, we have a secretary type in the attendance data through a Google Form. Google Forms automatically imports that data into a spreadsheet. From within that spreadsheet, we can calculate averages, trends, and charts.
In addition, since it is on a shared Google Drive, anyone on our team can check attendance statistics anytime they’d like.
Sister-publication Christianity Today has previously reported on Google’s ban of churches from its program for sharing tools with nonprofits as well as Google’s subsequent reversal to allow churches to use its tools. Churches may wish to note, however, that organizations that share their tools via nonprofit programs include several terms a church must abide by. In the case of Microsoft, churches have an exemption to use its tools without complying with its nondiscrimination clauses regarding sexual orientation and/or gender identity. In the case of Google’s terms, however, no exception for religious organizations using its tools exists (at the time of publishing).
Justin Deeter is senior pastor of Forest Hills Baptist Church in North Carolina. Find him atJustinDeeter.comand@JustinDeeter.
4 Apps to Help Church Staff Collaboration and Productivity
Managing ministry is easier with these tools.
Justin Deeter
Collaboration is easier than ever before. A plethora of tools and apps allow church teams to work more effectively, boosting productivity and increasing communication. Tools that help with this are:
Google Drive is a comprehensive, cloud-based, collaboration and file management tool. Google Drive syncs your team’s files in the cloud and gives each person the ability to modify or edit from anywhere around the globe. For church staff and pastors always on the go, Google Drive is a life saver.
Google Drive comes with its own collection of apps, including Google’s own version of a word processor, slide creator, and spreadsheet tools. Any team member can create documents and share them with other members on the team. Google Drive keeps all of your team’s information in one place and facilitates collaboration without the hassle of emailing documents back and forth.
Google offers Google Drive and Apps for free to nonprofits who apply for it. (Churches may wish to note, however, that organizations that share their tools via nonprofit programs include several terms a church must abide by. In the case of Google’s terms, organizations are expected to abide by a nondiscrimination clause in hiring/employment practices with regard to sexual orientation and/or gender identity. No exception for religious organizations using Google’s tools currently exists.)
Tools like Buffer help pastors and leaders stay connected to social media, without dominating a great deal of their time. Scheduling a week’s worth of your church’s social media posts takes just a few minutes each day. You can add social media posts to multiple outlets, and Buffer will automatically format and schedule each post for you.
A good task manager helps organize your life and enables you to get things done. There are many task managers on the market but none as powerful or as beautiful as Omnifocus. There is a bit of a learning curve to Omnifocus, but once you get the hang of it, you will wonder how you lived without it. Pretty soon, Omnifocus will be your digital brain as you dump tasks and action items into it. Omnifocus makes it easy to organize and prioritize these tasks so that you never forget what needs to be done.
Planning Center Online (PCO) is a tool designed for churches. Originally designed for planning worship services, PCO has grown into a full suite of apps and tools that largely replace a traditional Church Management System. It is a series of web-based tools with a full collection of mobile apps.
At my church, we use PCO to collaborate in service planning, manage volunteer schedules and communication, and manage our children check-in system. The user interface is beautiful, and the features are powerful, with great customer service to boot.
The 8 Best Ways to Spread Information to Your Congregation
Use these different tools—both print and online—to effectively communicate to everyone in your church.
Justin Deeter
There are more options for communication today than ever before. Church leaders may feel overwhelmed by the sheer number of them and therefore not use them, and miscommunication often ensues when a church does not have a comprehensive communication strategy that includes many communication methods.
People also have different preferred methods of communication, so reaching each person can be difficult. This is another reason church leaders need to strategically implement a communication strategy that addresses a variety of fronts.
Some methods of communication to implement in a communication strategy are:
1. The Weekly Bulletin
The weekly bulletin is often the first line of offense for communicating effectively. Include a few essential announcements in them each week about what’s coming up. Also, promote your other avenues of communication in the bulletin, including your website and social media accounts.
2. On-the-Stage or Video Announcements
Announcements during worship can create a distraction if not done well, so it is best to keep announcements in the service at a minimum. Only promote the most vital ones. Announcements in a service, whether in person or by video, remain an essential component for communication.
3. Announcement Slides
Most churches now have screens in their worship center or sanctuary. As part of your communication strategy, utilize the screen before and after the service with well-done, professional announcement slides. This is a great way to catch people’s attention and update them with what’s coming up in the life of your church.
4. Website
Any effective communication strategy involves a strong web presence, and that starts with the website. Your website should provide information on upcoming events, ministry news, and church-wide announcements. Your other communication channels should direct your members and visitors to this information pit-stop, driving your web traffic. Make sure your website looks great, is easy to navigate, and regularly produces solid content and updates.
5. Social Media
If you are not using social media, you are missing out on a huge avenue for communication. Most people receive all their news from some sort of social network, primarily on Facebook and Twitter. Your church should strive to engage your people in these spaces with announcements, updates, and content. Though the elderly in your congregation may care less about your church’s social media presence, if your church wants to engage a younger generation, using social media outlets is a non-negotiable.
Many tools exist that can help you get started using social media. Once your Facebook page or Twitter account is setup, you can harness the power of tools like Buffer or Hootsuite to train a staff member to schedule updates each week.
6. Email Marketing
Just about everyone has an email account. How about sending out an eNewsletter each week filled with updates and announcements for church members? You can use an email marketing service like MailChimp to help manage your mailing list and send out your emails. Email marketing campaigns will help your church reach email inboxes and drive more traffic to your website.
7. Phone Calls and Text Messaging
Some members of your congregation will not participate in Facebook or email. They resist these innovations and prefer old-fashioned means of communication. A service like PhoneTree, which records a message and calls phones with this message, can remain an effective way to communicate. In my experience, our younger members tend to hate pre-recorded phone messages, and our older members love it. Also, you may want to use a text messaging system to increase communication.
8. Conventional Mailings
As the cost of postage increases, physical mailings can get pricy. Today, there are so many free methods of communication and physical mailings are time-consuming. Yet, this remains the preferred means of communication for some people. At my church, we infrequently send a mailing to the entire congregation, but we do mail documents to our elderly and shut-in members so that they can stay in the loop of what God is doing at our church. Though churches are using conventional mail less and less, it has its function and can still assist you in creating a comprehensive communication strategy.
Communicating from Every Angle
If you wish to communicate effectively in your church, learn to utilize different avenues of communication, and you can learn to target each individual with their preferred method. Whether your updates appear in a person’s Twitter feed or as a message on their voicemail, using diverse methods will increase your effectiveness.
Sit down with your leadership team and map out a comprehensive communication strategy that implements some of the avenues mentioned above. Put it in writing. Delegate the responsibilities to the appropriate team member.
Many foreign countries have no sophisticated system of receipting expenditures and many mission trip leaders fail to understand the documentation standards placed on a US exempt organization. The trip leader should understand the following:
The dollars he or she cannot specifically account for will be his or her responsibility to return to the church at the end of the trip. There is no presumption of exempt purpose;
Where possible, receipts must be obtained for expenditures;
A detailed log of all the trip’s expenditures must be maintained, indicating dates, identities of those who received the money, amounts, and purposes of the expenses;
If funds are given to individuals for benevolent purposes, the trip leader will have the recipient sign that they received the funds and will document the benevolent need that necessitated the support.
At this time, the IRS is very focused on exempt organizations’ activities in foreign countries. It is always best to remember that the IRS never presumes any expense is spent on exempt purposes until it is proven, and with expenses in foreign countries, the IRS tends to presume that the money was personally spent by the trip leader—or worse, with a terrorist.
Elaine L. Sommerville is licensed as a certified public accountant by the State of Texas. She has worked in public accounting since 1985.
How to Respond to Reports of Child Abuse
Reasons why training and a legal and ministry-minded response plan are needed
Interview by Ashley Emmert
Churches need to be aware of how children are being protected at church from sexual, mental, and physical abuse. To help in this effort, we’ve interviewed a group of leading experts on preventing sexual abuse at church. This is the first of two interviews. See our second interview with the experts on common blind spots for church leaders.
Ashley: What are common mistakes churches make when abuse is reported to them? I know there are churches that try to keep it within the church and that that’s a huge mistake. But can you talk about those common mistakes in reporting abuse and the ramifications of those mistakes?
Brian: In our church, and in any church in Illinois, any person who does any kind of pastoral work is required, by law, to report known abuse. But training volunteers so that they feel a sense of empowerment to report—that’s the hard part.
We want to make sure volunteers are reporting anything they see. You don’t want to leave it just to clergy or other staff. You want to make sure that the entire team that’s involved in children’s ministry understands that there’s an inherent need for them to report anything they find that seems off—at least to staff members. The staff can then report it to the police and to the Department of Children and Family Services.
Ashley: What happens to a church if they don’t report correctly?
Boz: I’m more concerned with what happens to the victims. What happens is that you have victims who are most likely mistreated by the church, sometimes unintentionally. What’s communicated to a victim when a church tries to handle abuse internally is that the victim is not the most important person in the situation. (Leaders are) saying that there are other factors the church is weighing to make a determination to report. And that’s very damaging.
It’s amazing how many survivors I encounter who say, “You know the abuse was horrific, but what impacted my life even more was the failed response of the church.”
There are many legal liabilities as well. I think you have to create an environment where victims and advocates feel empowered to come forward—a place where they’re not discouraged from speaking up. I think that’s significant because there are many people who remain quiet because of fear, or because they have witnessed or observed how the church responded in another situation. They don’t dare say anything to anybody about what’s happened to them, whether they’re a child or an adult, because they’re afraid of the past repeating itself.
I also think that as the Church, our first priority in any abuse case is the victim. Our second priority is the other vulnerable people in our congregation. We have to protect them. The alleged perpetrator is a priority, too. And that’s what makes it so difficult in churches—it’s when the alleged perpetrator is a well-known person, a charismatic person, an influential person; that’s where I have found things fall apart.
You can have the best preventive policies in the world, but when somebody makes an allegation against somebody in the church that is well-known or well-liked, things begin to spiral out of control. And so I think the key is creating these environments, and part of that is policies that say, “We will respond to an abuse disclosure the same way in every case regardless of who is being accused.”
Finally, I would say that ultimately, if the church has to sacrifice, it must sacrifice to the one who’s claimed to be hurt. At times the church might realize they goofed, they didn’t catch the situation in time, they didn’t address it, they didn’t interview or screen well enough, and I think that’s where that church has to say, “We goofed here, and our primary priority is this victim.”
There are false allegations of victims, of disclosures of abuse. I hear that a lot, and I’ve dealt with some of the prosecutors. But study after study has shown that false allegations of child sexual abuse take place anywhere from one to about seven percent of the time, and so statistically there’s a very strong chance that what that person has disclosed is actually true, and you need to respond appropriately.
Frank: One of the things that the church needs to be mindful of is the personal relationships that come into play. This is going to impact the church. You have the legal issues. You’ve got the public relations issues. You’ve got the criminal aspect. And all of those things need to be managed.
We strongly suggest that you have a reporting mechanism that’s flexible, because you don’t want to have a situation where the only person that receives these reports is a senior pastor, and the senior pastor is the abuser. We’ve seen that happen. You want to have some flexible means for dealing with that.
Once you receive a report, the church needs to put together a committee—a task force, as I call it—to address these different facets. It needs to include some people from your governing board. It needs to include some people that are going to be dealing with the insurance. You’re going to have a lawyer. You’re going to have a PR person or spokesperson. The church is going to have to manage all of these different facets. It’s even more challenging if the church is smaller and doesn’t have all of those in-house resources to handle all of it.
One of the first things that I tell a church to do in an abuse case is to assign someone to minister to the victim and the victim’s family. That’s an incredibly important piece of abuse response.
You also have to deal with the employment law issues if the perpetrator is an employee. And you have to deal with the perpetrator and their family. Sometimes their family isn’t aware of the abuse allegations, so we typically ask to assign someone to minister to that perpetrator’s family.
In child abuse cases the attorney-client privilege frequently does not apply, and the clergy privilege doesn’t apply. And so you want to be smart about how you address all these different aspects of it, so that it’s a coordinated, cohesive response, and the people who need to know and should know have the correct information.
Ashley: How quickly should the police be notified? Because I know there was a church that tried to deal internally with a report for a period of time, and some staff members ended up with short jail sentences because of the delay.
Frank: That’s a state law issue. In Texas you have 48 hours to report it to either the child protective services or the police. Most states have some sort of time limit like that for mandatory reporters. Not all states have mandatory reporters, but more and more of them are getting there.
Also, and this is important to note, most states have an immunity for reporting abuse, as long as it’s done in good faith. So you’re not worried about a legal liability for reporting abuse.
Boz: I would just add that, ultimately, what should drive us to reporting isn’t the law but the protection of the child. If you learn an explicit disclosure, calling right away could make a difference in that child’s life. It actually could make a life and death difference. Bureaucracies can take a long time. That’s why [it’s important to have] a policy in place that creates a protocol so that when something happens you go to it right away and you’re not trying to guess, “Should we report or shouldn’t we?”
I think it’s helpful especially to the staff of the church. When folks call me, I say, “When in doubt, report.” Let’s say the situation ends up being nothing. It’s going to be inconvenient. Some people may be offended that a report was made. But at the end of the day it’s better to report than to not report and then find out, maybe years later, that that child was being victimized and nobody did anything or took too long to do something about it.
Youth Ministry Roundtable: Part three of a five-part series focused on issues related to risk and safety.
Andrew Finch and Ashley (Moore) Emmert
With the “Youth Ministry in America” survey results as a starting point, we continue our roundtable discussion. Today we discuss the important–and sometimes overlooked–issue of safety training in churches.
If you missed the any of the other weeks’ blog posts on the top concerns facing youth ministry, you can find them here:
Roundtable participants: Brian McAuliffe, CFO at Willow Creek Community Church in Illinois; Garland Owensby, professor at Southwestern Assembly of God University in Texas and a volunteer youth worker; Brad Neese, teaching pastor at Berrien Center Bible Church in Michigan; Laura Leonard, associate editor of BuildingChurchLeaders.com and a volunteer youth leader in Illinois; and Wes Trevor, youth director at Central Presbyterian Church in Colorado. Ashley Moore, assistant editor for the Church Law & Tax Group moderated this roundtable–with assistance from editorial resident Andrew Finch.
Ashley (Moore) Emmert: According to our research, about one-third of youth pastors and youth workers say that their church provides training on child abuse awareness and reporting. More than three in ten respondents say they didn’t receive any training. Do your churches have any safety training?
Wes Trevor: We have a policy manual that dictates reporting structure, but we do not have annual abuse awareness training. I have been here two years and I still have not received formal training from the church.
Brian McAuliffe: We try to go over our manual during our leaders’ meetings once a year. We also have a reporting structure. So if our leaders or volunteers see something alarming, they bring it up the chain. We usually get pastoral and church staff involved in the reporting.
We also do a lot of online training. Anybody who volunteers in any of our children’s or vulnerable adults’ ministries has to go through the training before they can volunteer.
Garland Owensby: The only formal training I’m aware of is for people who work with foster children. We have a foster child ministry, and everyone involved in that ministry goes through not only the background check but also through specific training, because of the government regulations on interacting with foster children.
Laura Leonard: We don’t have any kind of formal training for child abuse. Our youth pastor’s wife, who also functions as a youth pastor, is a social worker who works in that field. So I know that is something she definitely pays attention to, but we as leaders haven’t been trained on recognizing abuse.
Brad Neese: We have a child protection policy manual. When somebody volunteers or comes on as a leader, they read through it and then they sign off that they’ve read it. This goes along with doing background checks. But there’s no annual or semi-annual specific training on child abuse.
Ashley (Moore) Emmert: Is it enough to have something for people to read on their own? Or do you think that there’s a need for training that helps people spot possible signs of child abuse?
Brian McAuliffe: It’s so hard for people to spot. I think training does help, as well as having a manual with some guidance. But more important is the desire to have skilled people in the group that really understand the issues, so when people have a question they can ask someone who seems more adept at understanding those types of issues. One thing you don’t want is people raising a lot of red flags when there aren’t any. That creates a lot of angst for everybody.
Garland Owensby: Because I’m in the academic world, and I’m so used to syllabi and students looking for loopholes, I want something spelled out for me. I want procedures. I want a manual.
I think this is important because so much of what we deal with is both spiritual and physical. Sometimes people think, Well, if I just pray about it … they want to do the spiritual side but not deal with the physical: Man, I need to get involved in this person’s life and I’m going to need to talk to somebody about this. If we don’t spell these issues out, if we don’t have a manual that provides guidelines, people are going to go into denial mode. They’ll think, Maybe they really did fall down the stairs, or Maybe I’m just making this up, and talk themselves out of stepping in.
Brad Neese: Eight years ago, when we first started at our current church, they didn’t have anything set up. They said, “Everybody knows everybody. Our church is like 600 people. We just know. They’ve been here for years, and they would never hurt anybody.” They were taking a small church approach to safety.
The thing is, we weren’t a church of 200, but we were acting like it. It was almost like a cultural shift that we had to take in letting people know that we aren’t as small as we used to be, and we don’t know everybody coming in the door. For a year or two it was a big shift with our leaders and our volunteers. Part of the reason they put together the child protection manual was to show that we wouldn’t be negligent in a court of law. It was that kind of attitudinal shift that we had to embark on.
Wes Trevor: We are in the process of establishing a more official training program. I would say that we had a small-church mindset, but because of the inappropriate relationship a youth pastor had with one of the students ten years ago, we had to shift. It has taken ten years to get to where background checks are normal for working with minors and training for volunteers is expected.
For us it really comes from a mindset where we don’t think as a corporation; we think as a church. We think we know everyone, so we don’t need to go through this training. But in 2008, we finished up a four-year lawsuit as a result of that situation ten years ago, and we finally realized, “Oh, we’re still a corporation. We’ve got to cover ourselves better and make sure that we are taking care of our staff and volunteers and try to prevent any of these types of situations from happening again.” So we’re in the middle of a very long process of that culture shift to being more proactive in doing the research ahead of time as opposed to reacting after something happens.
Brian McAuliffe: Many churches I talk to around the country haven’t made the decision that they’re both a church and a corporation. They don’t understand the exposures that they have and that their ministry can get obliterated with one bad claim. They think they know everybody, and it’s really scary that they don’t understand the risk.
I think the question for a lot of us is, “How do these youth programs grow?” Most of the time it is through peer and school connections. So they’re bringing in a lot of new youth that are not from the church or a part of the church. That is the whole point, to bring in youth that are not saved so they can find their way to Christ. But that’s where you find a lot of the issues.
We had a problem two years ago at our winter retreat where some new girls snuck vodka in through water bottles. They were not part of the regular youth group at one of our campuses, and they were the ones that created all the issues. So to say “We know everybody” gets really scary. So many churches bury their head and say “We’re just a church.” That’s not going to protect them in a court of law.
Garland Owensby: Our denomination has a rule that if the church is too small, it’s owned by the district. One of these small churches, because they were so small, hired the pastor’s son as the youth pastor. He didn’t go through background checks, and he molested a student. That family not only sued the church and the pastor but then was able to take it up the line to the point that the district was thinking they are going to have to sell a bunch of small churches to be able to bring justice financially to this family. In reading the survey the thing that concerned me was this: the smaller the church, the less background checks and training they were doing. And this isn’t just a small church issue. This could then spread to a church that is planting a church. The legal ramifications are huge.
Does Your Youth Ministry Have a Communication Policy?
Youth Ministry Roundtable: Part two of a five-part series focused on issues related to risk and safety.
Andrew Finch and Ashley (Moore) Emmert
With the “Youth Ministry in America” survey results as a starting point, we continue our roundtable discussion. This time around participants talked about concerns and policies related to how youth leaders communicate with their students.
This is the second post in our series. If you missed the any of the other weeks’ blog posts on the top concerns facing youth ministry, you can find them here:
Roundtable participants: Brian McAuliffe, CFO at Willow Creek Community Church in Illinois; Garland Owensby, professor at Southwestern Assembly of God University in Texas and a volunteer youth worker; Brad Neese, teaching pastor at Berrien Center Bible Church in Michigan; Laura Leonard, associate editor of BuildingChurchLeaders.com and a volunteer youth leader in Illinois; and Wes Trevor, youth director at Central Presbyterian Church in Colorado. Ashley Moore, assistant editor for the Church Law & Tax Group moderated this roundtable–with assistance from editorial resident Andrew Finch.
Ashley (Moore) Emmert: During my work on the “Youth Ministry in America” survey, I came across a number of youth pastors who lacked solid communication boundaries with their students. I read one tweet from a student to a youth pastor that went something like, “Isn’t it funny that my youth pastor is my number one friend on Snapchat?” There’s always a tension between trying to reach students where they are, while still protecting yourself and your leaders from anything inappropriate.
At your churches, are there policies and procedures for how youth leaders should communicate with students?
Brian McAuliffe: At Willow Creek, parents have to be notified before there’s any kind of electronic communication with their kids, and they need the parents’ permission. In terms of what’s communicated and what’s said, the leaders are trained about how to recognize if it’s getting away from where it should go, so that they can ask for assistance or communicate with parents.
Brad Neese: Our church doesn’t have any communication rules or policies that I know of. One of the things that I do, personally, is make sure my wife has access to everything that I have. So whether it’s passwords, a Twitter account, Facebook, text, or e-mails, there is just no-holds-barred access. When we entered into student ministry in 2001, we followed those personal guidelines. Ever since then, she’s had access to everything.
From years of experience as a youth pastor, I tell the youth leaders at my church this: You’re not there to be their best friend. You’re there to turn their hearts back to their parents. You’re there to turn them back to their moms and their dads. That might kind of push against some of you, but that’s the emphasis that we’re taking. Our student ministry director is taking that same approach of making sure we’re guiding students back to their parents.
Garland Owensby: We tell our leaders that we have to convince our students and ourselves that privacy is an illusion. If you’re doing something electronically it’s out there on a tower. It’s on somebody’s server, and even though our students have no idea what the NSA is, they do know what hackers are. In Scripture we hear “sin will come out” or “whatever you do in private will be made public.” Well, in this electronic world, “delete” means nothing.
Wes Trevor: We are sort of an archaic church–we just got Wi-Fi last year. So this conversation is well beyond the capacity of many of the leaders of our church. So when I came to this church, I decided to create my own policies for student ministry communications, because the church has been very slow to catch up to this issue.
We follow that same idea, that privacy is an illusion. In a court setting, I believe anything electronic can be subpoenaed. So we always keep in mind the thought of, if this transcript ends up on a courtroom floor, what would be read? We train our people to never use personal language. Instead of texting “I want you to be there,” we say “We want you to be there,” or “The group wants you to be there.” And whenever there is an emergency, something inappropriate, or something that needs personal conversation, you can always copy and paste the conversation and send it to your supervisor. You can screen-capture the conversation, and then that needs to be reported to the church.
Legally, my church is responsible for my actions on the job. So we have a policy of reporting for any level of abuse, any level of sexual inappropriateness, anything like that. Then it becomes a matter of the elder board and the senior pastor. Those are not policies that were put in place by the church. Those were policies that were put in place by myself when I got to the church a few years ago to help us be ahead of the “safety net curve” on this one.
Ashley (Moore) Emmert: Wes, did you feel like that policy needed to be put in place because your volunteers didn’t have enough safeguards?
Wes Trevor: We are a church that has a history. Ten years ago, the old youth pastor had a two-year inappropriate relationship with a student. So we have to be above reproach on a lot of that stuff. In this incident, there wasn’t a lot of technology involved. There was just a lot of alone time between the student and the youth pastor. That has left a lot of scars that propel us toward needing to have policies in this new era, where technology is so accessible and readily used to communicate.
Laura Leonard: My church doesn’t have any kind of formal policy on social media, or at least not one that’s been communicated to me as a volunteer. We do have a group text that our whole youth group is on. We have 15 to 20 kids on it. Any communication that we have with kids in terms of whether youth group is happening or not, where it’s happening, a change of plans–that all happens in the context of that group text. So it’s not private at all. But I personally have a couple of students I mentor one-on-one, so I will text one-on-one with them. They’re both female. I wouldn’t one-on-one text with male students.
We’re a very informal church, and a very small youth group. I definitely think, though, it would be helpful for us to have a formal policy in place.
Editor’s Note: In part three of the Youth Ministry Roundtable, we will look at safety training and policy manuals.
Christ commands us to love one another. Since the church follows his commands, the church wants to express that love, usually by blessing someone with a love gift. Frequently, the church will receive a love offering for someone in need or in appreciation of a member.
The Internal Revenue Service does not mind love gifts as long as the church follows the tax rules.
Donor Rules
In all instances, the church must approve the love gift and take control of the contributions. For example, if Ms. Myway wants to bless Pastor Loving by giving him a love gift through the church, then the church should not accept that gift. Ms. Myway is controlling how the money is spent. On the other hand, if the church decides to bless Pastor Loving with a love gift, it may accept the donation from Ms. Myway. If the church controls how the money is spent, then the donation qualifies for charitable contribution credit. On the other hand, if Ms. Myway is using the church as a conduit to give a personal gift to Pastor Loving, then she does not have a tax-deductible contribution and the church has risked its tax-exempt status.
Four Types of Love Gifts
The church may give love gifts in four circumstances: (1) to meet a benevolent need, (2) to compensate a visiting minister, (3) to compensate an employee, or (4) to bless a ministry. Each type of gift has rules that are specific to that type.
Benevolent Love Gifts
Benevolent love gifts have two characteristics: (1) the recipient has a need, and (2) the recipient cannot presently meet that need. The IRS has avoided defining “need,” preferring to allow the courts to define the term. Since no court has defined it so far, churches should use the common, everyday meaning of “need.” Generally, “need” is a synonym for “necessity.” As a result, the church should only meet needs that represent a necessity for the recipient. Most commentators believe a need should relate to food, shelter, clothing, transportation or health care items. The church must document these two elements in writing. The documentation is intuitive: the church must confirm the need and the lack of resources.
For example, if a family cannot pay the rent, the church may call the landlord and confirm the rent has not been paid. The person making the call writes a memo to be filed, documenting the conversation. The church then secures a written statement from someone who is knowledgeable about the family’s finances that the family does not have the money to pay the rent. Many churches find a written application helpful in documenting benevolent requests.
Assuming the church properly documents the factors described above, no tax reporting is required unless the recipient is an employee. Benevolent gifts must be limited to the amount of the need. Sometimes, the love offering will exceed the amount of the need. To solve this problem, the church should notify donors through the benevolence committee (or other governing body) that any excess amounts received above the designated amount will be transferred to the church’s general benevolence fund.
Visiting Minister Love Gifts
All love gifts to visiting ministers and missionaries are taxable and should be reported to the IRS on Form in Box 1 on Form 1099-NEC, unless the church designates a portion of the payments as housing allowance. The church should not report the amount designated as housing allowance to the IRS as taxable income.
Love Gifts for Employees
All love gifts are taxable to the employee, even if it meets the requirements to be a benevolent gift described above. However, this is not the end of the analysis. The church has responsibility to assure that an employee does not receive more than a reasonable amount of compensation through a non-benevolent love gift. For example, if a church took a love gift on pastor appreciation Sunday and a donor placed a check for $1 million dollars in the gift offering. The church should not give the entire offering to the pastor because it may cause his compensation to exceed a reasonable amount. This could cause the church to lose its tax-exempt status. It could also cause the pastor to owe an intermediation sanction up to 200 percent of the amount his compensation exceeded a reasonable amount.
To solve this problem, the church should notify donors that the personnel committee (or other governing body) has set a maximum amount that will be given to the pastor from the love offering. The church should also tell them if any amounts are received above the designated amount, the excess amounts will be transferred to the church’s general fund.
Another Ministry
Frequently, the church will want to assist another ministry. This ministry may be the employer of a guest speaker or missionary. At other times, the ministry will perform a charitable or religious service in the community. Benevolent gifts would still need to be limited to the amount of the need.
The church should first determine whether the IRS recognizes the ministry as a tax-exempt organization. Before the church receives a love offering for a ministry, it must have written confirmation of its tax-exempt status. Typically, the ministry would provide the church with a copy of their IRS determination letter. After confirming the ministry’s tax-exempt status, the church may pay the ministry a love gift without any restrictions.
If the ministry is not recognized as tax exempt or is unable to present written proof of its tax- exempt status, then the church may not give it a love gift. Instead, it may only pay for services rendered. Like employees, the amount is limited to a reasonable amount for the services rendered to the church.
Frank Sommerville is a both a CPA and attorney, and a longtime Editorial Advisor for Church Law & Tax.
Image: DNY59 | Getty
Q&A: Can This Estate Gift Be Challenged by “Undue Influence”?
Church leaders should never try to receive such a gift through “force, coercion, or over-persuasion.”
An elderly man in our congregation passed away recently. Our church was surprised to learn from the local probate court that he had left most of his estate to the church. He was a widower, with no children.
Some of our church board members are concerned that his collateral relatives will challenge the validity of the will on the ground of undue influence. What exactly is undue influence? Can this gift be nullified on this basis?
If the recipient of a gift “unduly influenced” the donor into making the gift, the donor (or a legal heir) may have the gift canceled. This rule applies both to direct gifts made during one’s lifetime and to gifts contained in documents (such as wills) which take effect at the donor’s death.
There are five points to note about undue influence.
First, it is more than persuasion or suggestion. It connotes total dominion and control over the mind of another. As one court noted, “undue influence is that influence which, by force, coercion or over-persuasion destroys the free agency” of another.
Second, undue influence generally must be inferred from the circumstances surrounding a gift, since it seldom can be proven directly. Circumstances commonly considered in determining whether 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 advice (ideally, by an attorney who is not a member of the donee church)
For More on Undue Influence
Turn to the “Undue Influence” section of the Legal Library for additional insights plus several pertinent case studies.
Third, 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.
However, some courts have ruled that a “presumption” of undue influence may arise when a gift is made by a church member directly to his or her minister, or when an attorney who drafts a will leaving a gift to a church is a member of the same church. This presumption is rebuttable.
The bottom line is that 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 and had independent legal advice.
How to Encourage Estate Gifts
Find out how to effectively—and legally—promote estate giving.
Fourth, persons who would challenge a gift made to a church on the basis of undue influence must not delay in seeking redress for an unreasonable length of time, since unreasonable delay will bar any recovery.
Fifth, church leaders should recognize 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 from attorneys hired by disgruntled relatives, 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.
