Q: I submitted what I thought was an appropriate amount to meet my housing needs this year, ensuring the request fell within the fair market value of my home, but my church’s board rejected it. Is that legal?
Is a Church Legally Obligated to Approve a Housing Allowance?
No, a church is not legally required to approve a housing allowance for its minister. There is no authority or regulation that grants ministers a legal right to a housing allowance or mandates that a church approve a specific amount requested by the minister.
While a minister may submit a worksheet showing projected housing expenses, the church and its leadership have the discretion to set compensation levels, including the housing allowance, in a manner they deem appropriate.
Can a Church Deny a Housing Allowance Request Entirely?
It would be unusual for a church to deny a housing allowance outright, assuming the minister qualifies for one under the tax code. More commonly, church leadership might adjust the requested amount based on factors such as:
Alignment with the minister’s anticipated actual expenses
The fair rental value of the minister’s home (furnished, including utilities)
To avoid disagreements, clear communication and documentation are essential when requesting a housing allowance.
Best Practices for Requesting a Housing Allowance
To ensure smooth approval of a housing allowance, consider the following steps:
Provide thorough documentation, including projected housing expenses and supporting evidence.
Communicate with the church board beforehand to clarify the mechanics and expectations for the housing allowance.
Seek input from a local real estate agent to verify the fair rental value of your home if necessary.
Can a Housing Allowance Be Adjusted Mid-Year?
While a housing allowance cannot be amended retroactively, it can be prospectively authorized or adjusted for the remainder of the year. If circumstances change or a new amount is desired, the church’s governing board can approve a new housing allowance to apply going forward.
FAQs About Rejecting a Minister’s Housing Allowance Request
Is a housing allowance a legal right for ministers?
No, there is no legal requirement for a church to provide a housing allowance or approve a specific amount requested by a minister.
Why might a church reject a housing allowance request?
A church may reject or adjust the requested amount if it believes the amount is not supported by documentation or is not aligned with housing expenses and fair rental value.
What documentation should a minister provide when requesting a housing allowance?
A minister should provide a worksheet detailing anticipated housing expenses, including rent, utilities, furnishings, and other related costs.
Can a church retroactively approve a housing allowance?
No, housing allowances cannot be applied retroactively. However, a church can authorize or amend a housing allowance to apply prospectively for the remainder of the tax year.
Conclusion
Churches are not legally required to approve a minister’s housing allowance request, but clear communication, proper documentation, and understanding of housing allowance rules can help avoid disputes. When adjustments are needed, churches can amend the housing allowance prospectively.
Ted R. Batson Jr. is a CPA and tax attorney, and serves as a partner and Professional Practice Leader – Tax for CapinCrouse LLP, a national CPA and consulting firm. He speaks and teaches frequently for national conferences and organizations on exempt organization and charitable giving matters.
Image: Tetra Images | Getty
Setting Reasonable Compensation for Clergy
Four steps to avoid triggering costly penalties when setting reasonable compensation.
Many people may feel like the only type of unreasonable compensation in churches is unreasonably low compensation. The reason is that many churches feel they cannot afford to pay market rates for the talent needed to lead and maintain their operations, and the idea that churches may set compensation too high seems like a foreign concept.
However, the megachurch, multisite church, and international church require advanced skills, which usually requires higher compensation. Other churches may face challenges in filling skilled positions. Small and midsize congregations are more involved in technology and other operations requiring specializations than in the past.
Should you use a compensation consultant for senior leadership staff? Read more.
Today, senior pastors, regardless of church size, face decision-making and management responsibilities that are more akin to the duties of a chief executive officer, rather than those handled by the senior pastors of yesteryear. The expectations that come with these expanded responsibilities, and the skills necessary to meet these expectations, are changing the church employment and financial landscape.
Competition further complicates matters. Churches not only compete for talent, but also increasingly compete with other nonprofit and for-profit employers to attract and retain that talent.
Many churches increasingly feel obliged to pay more, contemplating arrangements that move pastors and staff toward the upper end of the pay scale. However, as “reasonable compensation” now encompasses legal connotations as well as social and market connotations, even churches with small or modest budgets can still violate IRS rules related to compensation. Special bonuses, tuition assistance, and other seemingly low-cost ways of financially blessing leaders can trigger penalties.
In short, regardless of size and setting, if leaders are not cautious with how they handle payments and transactions for pastors and staff, problems can arise.
High stakes and costly penalties
Setting reasonable compensation for tax-compliance purposes is required for both for-profit businesses and churches alike. But a significant difference between businesses and churches is the potential tax consequences.
Businesses usually can keep operating, even when they run afoul of the tax rules. Churches, however, face tax penalties and the loss of tax exemption, both of which can threaten their very being. And if an IRS examination occurs, the IRS’s determination is presumed correct and the burden of proving the reasonableness of compensation is on the church (refer to Hendriks Furniture. Inc., TC Memo 1988-133).
Given the high stakes, the task of determining reasonable compensation in churches becomes critical. And it includes both objective and subjective analyses, shaped by the specific circumstances of each church.
There are a number of tools—such as compensation comparison surveys—available to help church leaders set reasonable compensation packages. These tools are a crucial starting point because, once reasonable compensation for a position is determined, it becomes foundational for developing a compensation plan. This determination creates the overall cap on what may be offered to a worker. This cap serves as the umbrella under which all payments and benefits must fit in order to meet IRS requirements.
While not specifically establishing a maximum compensation amount for nonprofit organizations, Congress enacted a new excise tax on compensation packages exceeding $1 million.
According to Internal Revenue Code Section 4960, nonprofit organizations are now required to pay an excise tax on remuneration paid in excess of $1 million to a covered employee. (Remuneration is compensation paid which is subject to federal income tax withholding.) A covered employee is one of the five highest compensated employees of the organization for the current taxable year. While the law excludes payments for certain medical professionals, it does not provide any other specific exclusions. Therefore, current law applies to churches. However, compensation paid to a minister is not compensation subject to federal income tax withholding. Due to this special definition in the tax code, compensation paid to a minister is not subject to the new excise tax, even if it in excess of $1 million.
Four steps for building reasonable compensation
A church can pay any amount up to a reasonable point for any position. By law, a church must formally analyze compensation paid to its pastor and any other senior leadership, due to the “executive” nature of their roles. But as a best practice, a church really should perform this analysis on all compensated positions. Here are four steps for doing so:
1. Establish the umbrella
As mentioned earlier, view reasonable compensation as an umbrella. Once the reasonable amount is determined for a position, it becomes the umbrella used to evaluate all compensation that will fall under it, including benefits provided by the church in exchange for performing services—both cash and noncash benefits, taxable and nontaxable—as dictated by Reg. Sec. 53.4958-4(b)(ii)(B). A church may choose not to pay this full amount it identified, but it must not exceed that amount.
2. Identify benefits
A regular paycheck does not show the complete picture of all the benefits an employee receives, and reasonable compensation does not stop at the analysis of cash.
Excluded Benefits
Certain economic benefits are disregarded. These include:
1) nontaxable fringe benefits described in IRC Section 132; and 2) amounts paid under an accountable reimbursement plan.
Everything benefiting the employee is key and must be reviewed. This includes all forms of salaries, fees, bonuses, deferred compensation, contributions to qualified retirement plans, medical plans, dental plans, life insurance, severance pay, disability benefits, housing allowance, other allowances, expense reimbursements (except for accountable expense reimbursement plans), automobiles, tuition, and any other benefits. Anything benefiting an employee, whether from the church or an indirect arrangement with another organization related to the church, must be included.
In determining reasonable compensation, it doesn’t matter if a benefit is taxable or nontaxable.
3. Establish a value for benefits
Whether a benefit is a cash benefit or a noncash benefit, it has a value. Even if a benefit is difficult to value, it needs to be valued at fair market value and not simply based on some arbitrary amount the church thinks it should be valued.
When a church determines the fair market value of all noncash benefits and adds them to the rest of the individual’s compensation, the total needs to fit under the umbrella of reasonable compensation. If not, then something in the package must be eliminated in order to meet IRS requirements.
4. Document the compensation package
After determining pay plus benefits, document the compensation package appropriately. Churches have different ways to document compensation packages, but the documentation should at least state the decision was made by a properly authorized group or person, and it should contain written documents demonstrating what was used in the process to reach that decision—such as reputable survey data.
For pastors and senior-level leaders—those considered to be at the executive level of the church’s leadership—documentation is most commonly recorded in the meeting minutes of the governing body that approves the compensation.
For nonexecutive level employees, the governing body frequently delegates the compensation authorization to an executive within a compensation policy and budget. Written minutes or other documentation help show that each benefit provided is consideration for the performance of services.
All documentation should be kept in the church’s custody and securely stored. Individual personnel files should contain summaries of each person’s documented compensation package.
Sample of compensation documentation
First Church’s personnel committee is reviewing compensation for the upcoming year. After consulting several salary surveys, the committee determines that reasonable compensation for the senior pastor is $150,000.
The committee then compiles the details of the senior pastor’s compensation, as demonstrated in Table 1.
TABLE 1 SAMPLE OF COMPENSATION DOCUMENTATION
Cash Salary
$80,000
Housing Allowance
$35,000
Medical Insurance
$12,000
403(b) Contribution
$5,000
Youth Camp for 2 Children
$500
Life Insurance Policy
$2,000
Disability Policy
$800
Tuition Assistance Plan
$3,000
Auto Allowance
$2,000
Discount at the Church-Related School
$4,000
Travel Expenses for Spouse(to attend a conference together)
$1,500
Total Value of Compensation Package
$145,800
Umbrella of Reasonable Compensation
$150,000
The sample compensation package in Table 1 fits under the umbrella of reasonable compensation. There is only $4,200 left in the overall value available for any other benefits and/or bonuses that may occur during the year.
The committee will document the package in the minutes of its meeting. The tax treatment of each component will be determined by the church’s accounting department (or the church’s outside accountant) to assure proper reporting on the pastor’s Form W-2.
Tip. The most commonly overlooked items in a compensation package are the benefits provided through tax-favored plans. Examples include the value of health insurance or a benefit received through a special group plan, such as tuition assistance. The key is to review every item that benefits an employee, despite the item’s tax treatment or whether or not it is part of a group plan provided to other employees.
Elaine Sommervilleis a CPA and editorial advisor for Church Law & Tax. This article is adapted from her bookChurch Compensation, Second Edition.
Elaine L. Sommerville is licensed as a certified public accountant by the State of Texas. She has worked in public accounting since 1985.
Image: AdobeStock/ paripat
Key Considerations for Clergy Compensation and Tax Planning
Discover essential tax and compensation considerations for clergy, including salary structuring, housing allowances, and equity planning for retirement.
Compensating clergy and church staff involves unique tax considerations that many church leaders—and even some advisors—don’t fully understand. This article reviews three key components of a church compensation plan:
Salary
Housing Allowance
Equity Allowance
Let’s break down the essential points church leaders need to know when building fair, compliant compensation packages.
1. Salary: Basic but Complex
Two Key Issues:
How much to pay
How to use salary reduction agreements
A. Determining Reasonable Salary
Salaries are typically set by a church’s governing body. Legally, churches may pay any amount—unless the IRS deems it unreasonably high. If that happens, churches risk:
Losing tax-exempt status
Facing IRS penalties known as intermediate sanctions
Example: A court found that a $115,680 annual salary for a religious leader and spouse was not excessive. Another court determined reasonable salaries ranged from $133,100 to $177,156 across four years, based on comparable nonprofit roles.
B. Intermediate Sanctions: What Church Boards Need to Know
When the IRS determines a “disqualified person” (e.g., a minister or other key decision-maker in the church, or one of their relatives) received excessive compensation, the IRS may impose intermediate sanctions:
25-percent tax on the excess benefit (assessed directly to the recipient)
200-percent additional tax if the benefit isn’t corrected
10-percent penalty (up to $20,000) on board members who knowingly approved the excess benefit
C. How to Avoid Penalties: Use the IRS “Presumption of Reasonableness”
Churches can rely on this presumption if:
The compensation was approved by a board or committee independent of the recipient.
The board relied on objective comparability data, such as:
Key Point: If the IRS finds compensation unreasonable, but the above steps were followed, the church may be protected.
D. Caution: Automatic Excess Benefits
The IRS has ruled that unreported taxable benefits—such as personal use of church property, undocumented reimbursements, or personal expenses—are automatic excess benefits.
Examples include:
Using church credit cards or vehicles for personal purposes
Reimbursing personal expenses without documentation
Reporting less income on W-2 or 1099 forms than actually received
Tip: Always issue corrected forms (W-2c or 1099) if a reporting error occurs.
Salary Reduction Agreements: What’s Allowed?
Salary reductions are only valid if specifically permitted by law. Common legal uses include:
Tax-sheltered annuities (403(b) plans)
Cafeteria plans (flexible spending arrangements)
Housing allowances (for ministers)
Important: Salary reductions cannot be used to fund accountable reimbursement plans. The IRS prohibits this common—but incorrect—practice.
In 2013, a federal court struck down the housing allowance as unconstitutional.
In 2014, a federal appeals court overturned the ruling—on procedural grounds (plaintiffs lacked standing).
The Freedom From Religion Foundation (FFRF) then refiled, correcting the standing issue, but the US Court of Appeals for the Seventh Circuit ultimately ruled the clergy housing allowance is constitutional.
No further challenges have been brought.
If the Housing Allowance Were Ever Invalidated:
Ministers will owe more income tax.
Estimated quarterly payments may need to increase to avoid penalties.
Churches may need to increase salaries.
Increases could be phased in to manage budget impact.
Key Point: Ministers should know the housing allowance remains constitutional and available.
3. Equity Allowances: Building Retirement Security
Ministers living in parsonages don’t build home equity. This can leave them at a disadvantage during retirement.
A Good Solution:
Some churches offer an equity allowance—extra compensation placed in a tax-sheltered retirement account.
Benefits:
Helps ministers retire with housing security
Avoids tax penalties when structured properly
What Not to Do:
Giving the parsonage to the minister upon retirement creates problems:
The home’s value becomes taxable income.
The IRS may view it as unreasonable compensation, triggering intermediate sanctions.
Recommendation: Consider equity allowances for ministers who rent, not just those in parsonages.
Virtual currency (also known as cryptocurrency) is gaining popularity—and that makes it increasingly relevant for churches and nonprofit organizations.
What Is Virtual Currency?
The term “cryptocurrency” refers to a digital asset used as a medium of exchange. These currencies:
Exist in digital form only.
Use strong cryptography to secure transactions.
Operate on decentralized ledgers (blockchains).
Allow users to verify ownership and transfer assets securely.
Bitcoin, created in 2009, was the first major virtual currency. Other well-known options include:
Bitcoin Cash
Ethereum
Litecoin
Why It Matters to Churches and Nonprofits
Many people have invested in virtual currencies—and some have made significant gains. Some donors now want to contribute a portion of their holdings directly to churches or nonprofits.
Here’s why that matters:
Donors can give appreciated virtual currency without selling it first.
This helps them avoid capital gains tax.
The church receives the full value of the donation—tax-free.
The IRS treats virtual currency as noncash property, which means the same tax rules apply as with gifts of stock or real estate.
Example: Bitcoin’s Value Swings
Cryptocurrency values can be volatile. For example:
In January 2015, Bitcoin traded at $266 per unit.
By January 2021, it reached nearly $42,000.
In fall 2021, it climbed to over $50,000.
By May 2022, it dropped to around $25,000.
In May 2025, it soared to $102,654.
This volatility means churches should be cautious when handling large gifts of virtual currency.
Tax Benefits for Donors
If a donor holds virtual currency for more than a year and donates it:
They may deduct the full fair market value of the donation.
They won’t pay tax on the appreciated value.
The church, as a 501(c)(3) public charity, won’t pay tax either.
How to Acknowledge Cryptocurrency Gifts
Treat virtual currency like any other noncash donation. Your acknowledgment should include:
A description of the gift (e.g., “3 Bitcoin units”).
The date of the gift.
A statement that no goods or services were provided other than intangible religious benefits (if applicable).
⚠️ Do not include the dollar value of the gift in your acknowledgment.
If goods or services were provided in exchange, you must follow quid pro quo reporting rules.
IRS Compliance Steps for Donors and Churches
Because cryptocurrency is noncash property, donors and churches must follow IRS rules, which may include:
For donors:
Filing Form 8283 with their tax return.
Obtaining a qualified appraisal (for gifts over $5,000).
Asking the church to sign Form 8283.
For churches:
Signing Form 8283 only to confirm receipt.
Issuing a separate acknowledgment letter to the donor.
Filing Form 8282 within 125 days if the currency is converted to cash within 3 years.
Most churches will convert virtual currency to dollars soon after receiving it.
How to Accept Virtual Currency Donations
To accept these gifts, your church needs to:
Open a digital wallet (a secure account for receiving cryptocurrency).
Involve staff or consultants with both tech and finance expertise.
Follow necessary security protocols and test the system before going live.
Choosing the Right Platform
Research platforms carefully. Consider:
Security features.
Supported cryptocurrencies.
Ease of use.
Example: Coinbase (not an endorsement) allows churches to receive Bitcoin, Ethereum, Litecoin, and more.
Alternatively, you can partner with:
A community foundation;
A donor-advised fund sponsor;
Another third party that converts crypto to cash and transfers it to your church.
Let Donors Know You’re Ready
Once your system is set up:
Publicize your ability to accept virtual currency.
Share instructions with interested donors.
Make the process as easy and secure as possible.
This article is adapted from the article “Granny Is Still Investing in Bitcoin,” which originally appeared in BMWL’s Nonprofit Special Alert. Used with permission.We’ve used a combination of AI and human review to make this content easier to read and understand.
Michael (Mike) E. Batts is a CPA and the managing partner of Batts Morrison Wales & Lee, P.A., an accounting firm dedicated exclusively to serving nonprofit organizations across the United States.
The Right Way to Handle Wage Classifications
Properly applying the Fair Labor Standards Act to church employees.
Many church leaders propose that the Fair Labor Standards Act (FLSA) does not apply to churches. That may have once been true, but the church of today is not the church of yesterday. Advanced activities easily make the law applicable to most churches, either on an organizational level (meaning the FLSA applies to the church operations as a whole) or on an individual level (based on an employee’s duties).
Furthermore, every state maintains its own version of the FLSA, either layering additional rules on top of federal rules or applying similar rules where the federal rules don’t apply. The law most favorable to an employee, whether at the state or federal level, always applies.
Key point. The FLSA establishes a minimum wage of $7.25 an hour, maintains a 40-hour work week, and it also sets a minimum salary test for exempt positions to become eligible for overtime at $684 per week (or $35,568 per year). The Wage and Hour Division of the US Department of Labor (DOL) is responsible for enforcing this law.
Under the FLSA and DOL rules, there are three primary classifications for church employees:
Employees meeting the “ministerial exception”
Exempt employees
Nonexempt employees
Vital information about each classification is offered in this article.
The ministerial exception
Established more through judicial application than through any statute, employment law embraces a concept known as the “ministerial exception.” The concept revolves around the idea that the government does not have authority to intervene in the relationship between a church and its ministers. As ruled in McClure v. Salvation Army, 460 F.2d 553 (5th Cir. 1972), matters between a church and its ministers, including salary, are of ecclesiastical concern only, and any governmental intervention violates the First Amendment protections guaranteeing separation of church and state.
Who qualifies as a “minister” for this exception is different from who qualifies as a “minister” for other payroll tax rules enforced by the Internal Revenue Service. According to employment law, a minister is an employee who performs essential religious duties as a required element of the employee’s job.
Unlike the concept of “minister” for the Internal Revenue Code, the employee is not required to have ministerial credentials. Without this requirement, the group of employees eligible for the ministerial exception is wider for FLSA/DOL classification purposes.
Key point. Job descriptions for all employees are important, but especially for those whose work qualifies for the ministerial exception. Employee classifications, and the wage implications related to them, may be won or lost based on job descriptions.
A position qualifying an employee for the ministerial exception may include:
a requirement of previous religious training or ongoing religious training, such as continuing education requirements;
a title reflecting spiritual or religious duties or a spiritual position;
duties supporting and/or conveying the core beliefs of the church;
duties of conveying the message and teachings of the church;
selecting or creating the religious content for a program; and/or
leading others to grow or mature in their faith.
EXAMPLE Suzy is the director of children’s ministry at First Church. She selects the curriculum and leads all the children’s ministry workers in learning the curriculum and preparing for their teaching duties. She also leads children’s church each Sunday morning and Wednesday evening. Suzy is not a licensed or ordained minister and does not qualify to be treated as a minister for federal tax purposes. A review of Suzy’s duties and position indicates she performs essential religious duties and qualifies for the ministerial exception. Suzy is not subject to the FLSA wage and hour rules.
Exempt employees
After reviewing the duties of employees and identifying those who qualify for the ministerial exception, the next step is to categorize the remaining employees either as exempt or nonexempt. Start by determining which employees are exempt before evaluating which ones are nonexempt. There are two tests that help you decide:
1. Salary test. An exempt employee’s compensation must be at least $684 per week (or $35,568 per year) and paid on a salaried basis. This is a minimum salary amount. It is not prorated for employees working part time. An employee who does not receive the minimum salary amount cannot be an exempt employee. A “salaried basis” means the salary is the same rate if paid every week, regardless of the number of hours worked. The employer may not dock the employee’s pay in less than one-day increments for disciplinary reasons. The employer may track paid time off in any time increment, but in most instances, an employee’s wages may not be docked in less than one-day increments.
WORK WEEK DEFINED
A work week is defined by the FLSA as any 7-day period selected by the employer. For federal purposes, a nonexempt employee who actually works more than 40 hours during this 7-day period must be paid overtime for all hours worked beyond 40 hours at the rate of time and one-half the employee’s regular pay rate. Stated another way, hours paid for nonwork time, such as paid vacation time, do not count toward the 40 hours worked to determine overtime hours.
CAUTION Overtime is paid in increments of 6 minutes per federal statute. Overtime is also due to an employee whether or not the overtime has been authorized by the appropriate supervisor. Churches should be aware of potential overtime causes in order to appropriately budget for the additional payroll costs.
—Elaine Sommerville
EXAMPLE George is a church business administrator. His duties include extensive authority over the business administration of the church, and he directly supervises 10 employees. George’s compensation is $600 per week. At his compensation rate, George cannot be classified as an exempt employee. George is a nonexempt employee and is subject to the FLSA wage and hour rules. Even though George’s duties may meet one of the duties’ tests for exempt employees (see below), his duties are never evaluated because he receives less than the $684 per week minimum to qualify as an exempt employee.
Key point. “Exempt employee” and “salaried employee” are not synonymous terms. The existence of an equalized and consistent pay arrangement does not determine if an employee is an exempt employee or a nonexempt employee. A salaried employee is paid a consistent amount each pay period, but the employee still may be classified as a nonexempt employee if the weekly pay is under $684 per week.
TIPThe salary test is more complicated than can be covered in this article. For more details, go see this PDF on the DOL website.
2. Duties test. If an employee passes the salary test, then the employee is evaluated based on his or her duties. To be considered exempt, an employee’s duties must be described in one of four major classifications set by the DOL. Employees become classified as exempt when at least 80 percent of their time is spent on one of these classification’s duties and responsibilities. The four classifications are:
Executive exemption. Manages the organization, or a distinct department, supervising at least two full-time employees (these individuals cannot be volunteers) and possessing the authority to hire and fire employees.
Administrative exemption. Office work or nonmanual labor relating to the management of the organization, exercising significant discretion and independent judgement on matters of significance. These employees may have significant leadership roles, but do not have staff reporting to them to meet the executive exemption. Leadership roles also may be fulfilled by administering an area where volunteer labor is a significant factor in carrying out the programs. Employees should have significant abilities to operate in a manner of authority over an area or a program.
Professional exemption. Employees with a high level of training and a special skill set. Examples include attorneys, teachers (but not daycare workers), engineers, and accountants/CPAs.
Computer professional. Includes systems analysts, programmers, and software engineers. This group does not include network administrators or other general IT employees.
Key point. Administrative assistants rarely have the discretion and the authority in the church to meet this exemption qualification. As such, most administrative assistants do not qualify as exempt employees. This also includes the senior pastor’s assistant.
Nonexempt employees
With both the “ministerial exception” and exempt classifications addressed, the final step is to classify all remaining church employees as nonexempt employees. Nonexempt employees usually constitute the majority of a church’s workforce. This group is subject to minimum wage requirements and overtime pay for all hours worked exceeding 40 hours in the work week.
CAUTIONSome states reduce the required number of hours an employee needs to work before receiving overtime pay. Some states may even apply overtime based on the number of hours an employee works per day. These examples underscore why churches must become familiar with state laws. Remember, the law most favorable to an employee applies.
TIPFor a detailed explanation of what constitutes exempt and nonexempt employees, go to flsa.com/coverage.html.
Churches sometimes receive a communication that can be deemed “hate mail.” Hate mail is a letter delivered to the church, a note placed there, an email, a voicemail left on the church’s phone. It could even be sent through a social media platform.
We spoke with attorney Frank Sommerville about his experience with these situations and how churches should respond when they occur.
What’s a useful, working approach for churches in terms of understanding these messages? How can churches determine when messages need to be taken to local authorities (and when they can be dismissed)?
There is no one response. It depends on who sent it, whether it’s anonymous, whether or not it’s specific, what the threat is: It depends on lots of variables.
If taken to local authorities, would the police do anything with the threat?
Not necessarily. It depends, again, on what kind of threat: how specific it is, whether it’s from somebody who’s known or unknown. For the most part, anonymous ones that are just left at the church, or even through the mail, are a lot less credible. The more specific—the more concrete the threat is—the more you need to take it seriously. That’s about the only pattern you can ascertain from that.
The more specific and concrete the threat is, the more you need to take it seriously.
Sometimes it’s a pastoral stalker—sometimes we’ll get those. The general consensus on stalkers is you want to keep them engaged, because they’ll tell you what they’re going to do if you just keep them engaged. Exchange emails or texts with them, so you know where they’re at and what they’re doing. You want them communicating—they’re not going to communicate with the target because somebody else (probably a police officer) is intervening and playing the target for that person. Usually they’re associated with someone in the church. They may not be a member, but they may be a family member of a family that’s in the church. Or they may be a member, but they may be inactive.
You need to take the threat seriously, every time.
If you get an anonymous message and discard it, and then something happens, is that treated as a foreseeable event? Could the church be held liable?
Again, it’s specifics. If I sent you an anonymous email that said, “On Thursday morning, when you’re having a staff meeting here, I’m going to kill you,” that’s specific enough. And if your organization did not take any precautions to make sure that did not happen on Thursday morning, it could be liable for not taking those. But if you got an email that simply said, “I’m going to kill you,” there’s nothing your organization could be responsible for because it’s not foreseeable when or if that’s going to happen.
But even so, you said to take these threats seriously every time. Does that mean contacting law enforcement immediately?
If it’s a threat of violence, you contact law enforcement immediately.
What about messages that may not explicitly state violence, but that contain the implied possibility—e.g., “I’m going to take care of you”?
Those are harder to take seriously. Law enforcement is going to ask, “Who do you think sent it, and what do you think they mean by that?” You’re going to get two hours of grilling if you send that to law enforcement to help identify who, potentially, that threat came from. If it was via email, they’ll want to get access to your computer so they can trace your IP address back to the address where it was sent from. There are lots of tools out there, but I think if it comes out of the blue with not a clue, there’s not a whole lot law enforcement can do, either. Frequently, you just trash something like that.
In “Responding to Anonymous Allegations,” attorney Richard Hammar provides insight as to how church leaders should respond to anonymous allegations.
Frank Sommerville is both a CPA and attorney, and a longtime Editorial Advisor for Church Law & Tax.
Image: Getty
Creating a Crisis Communication Plan for Your Church
Five questions every church needs to ask when preparing a crisis communication plan
Jamie D. Aten
Last Reviewed: September 10, 2024
Several years ago, I saw firsthand how important it is for church leaders to be ready to communicate in a crisis.
I was visiting a church when a bad storm with strong winds knocked out the power during the service. At first, the pastor tried to awkwardly keep preaching as the generator struggled to start.
After a few minutes, he quickly ended his message and walked off the stage. Another pastor, obviously caught off guard, walked up and abruptly ended the service.
No one addressed the blackout, and no one provided instructions on what to do next. Some people were scared and started to panic. Others hopped into their cars and drove off, only to return moments later because of the dangerous weather outside. Those who did manage to keep driving eventually returned as well, because of a downed tree in the road.
It’s a small miracle no one got hurt.
No matter how much time you spend planning and perfecting your church’s disaster response plan, that plan won’t do you much good if you can’t communicate it to your church during the crisis.
Crisis communication is essential
Crisis communication is an essential element of disaster ministry, one that requires planning and training so you’re ready to go when crisis hits.
To begin creating an effective crisis communication plan for your church, your leadership team will need to walk through the following questions.
Who will be the point person?
Identify who will take ownership of the crisis communication plan and be the “face” that people know they can look to for information when a disaster hits.
You will also want to identify a few back-ups—when disaster strikes, it’s likely that members of your own congregation will be impacted as well.
There’s no way to predict who that will be, so it’s important to identify and train at least a few people in case one or more of the appointed leaders are themselves impacted by the event and unable to fulfill their duties.
Who will need to be contacted?
You will need to gather contact information for not just your leaders and congregation, but also local emergency services (if you don’t already have that information on file).
Doing your research now will save you valuable time and energy so that when disaster strikes, you are ready to point people to the services they need.
Identify the vulnerable members of your congregation, too. These are the people who have distinctive needs or will require extra help in the case of an emergency: e.g., the elderly, children, people with serious or chronic medical conditions, differently abled people, single parents with small children, immigrants and refugees.
These are the people you want to be sure are contacted in the case of an event.
Make sure multiple people know where information is located and how to access it.
Keep secure electronic copies of your congregation members’ information. You might also consider a secure cloud storage system; if you evacuate to a location with internet access, or another church leader has access outside of the emergency zone, the information can be accessed remotely. If you rely on digital copies alone, however, you could end up stuck if power or internet service goes down. Store physical copies somewhere secure and safe from potential damage.
Update these lists on a regular basis, and make sure multiple people know where the information is located and how to access it—but also make sure that confidential information is protected and can only be accessed by authorized users.
What will be communicated?
You can’t know exactly what disaster or crisis you’re going to face, but you can prepare messages ahead of time that can be adapted for possible scenarios.
When disaster hits, it will be much more difficult to think clearly and comprehensively about what people need to know.
By preparing basic information now, you can add relevant specifics when the time comes and get important information to your people much more quickly than if you have to start from scratch.
Here are a few basic guidelines as you script different types of messages:
Craft these messages around the information developed during the risk assessment process, which is ideally your first step into disaster preparedness.
Share what you do or don’t know at the time of the communication.
Provide information about the seriousness of a potential threat or damage.
Stick to the facts. Don’t be tempted to share hearsay, rumors, or what you cannot verify.
Include information about possible resources for assistance.
Discuss when and where services will or won’t take place because of the crisis.
Share what the church leadership and congregation is doing to address the crisis.
Note how and when church leadership will remain in communication.
How will people be contacted?
There’s no need to reinvent the wheel on this one. Think about the ways your church already communicates effectively, and pivot those systems to deliver crisis information.
How do you communicate with your church today? Plan to use those systems that are already in place (e.g., mass texts or calls, mass emails, social media, website, cloud documents). People already know to look there for information and will do so instinctively.
However, you also need to plan for what you will do if technology goes down. Often during extreme weather events, cell phone towers go out or get overloaded. You may not have access to your email accounts or website.
How will we prepare people now?
The church leadership team should prepare their own personal individual and family communication plan and how they will communicate with one another in the midst of a crisis. Not only will this improve your church leadership’s crisis communication capabilities, but it also models the importance of crisis communication planning to others.
Lastly, be sure to encourage your church attendees to also develop their own emergency communication plans (Ready.gov is a great resource you can point them to).
Once you have answered all these questions as a leadership team, it’s time to communicate your strategy to your congregation so they know what to expect if an event occurs.
Jamie D. Aten is a disaster psychologist and the founder and executive director of the Humanitarian Disaster Institute at Wheaton College in Illinois. His latest books include the Disaster Ministry Handbook and Spiritually Oriented Psychotherapy for Trauma . You can follow Jamie on Twitter at @drjamieaten or visit his website jamieaten.com.
Image: getty/kanawaTH
When Expenses Eclipse Your Church’s Budget
Does your church have a plan for responding to when expenses eclipse the budget? Use this resource to guide those conversations.
For churches that view the operating budget as an expense control mechanism, the matter of how to deal with expenditures in excess of budgeted amounts is an important element of policy that is poorly developed in many churches.
For example, a church operating budget will typically include line items for each of the church’s main areas of ministry operations. Line items will exist for worship activities, educational activities, children and youth ministries, missions, and so on.
Set boundaries, establish authority
Suppose a church develops and approves an operating budget for the year reflecting total expenses of $1.5 million, of which $200,000 relates to educational activities. Also suppose that, due to unexpected developments, it appears the church’s expenses for its educational activities will exceed the amount budgeted by $50,000 for the year.
Many churches do not have good answers to these questions. For churches that view the operating budget as an expense control mechanism, it is essential to have an appropriate budget policy that clearly addresses such matters and leaves little room for misunderstanding.
Is it acceptable for the church’s staff leadership to make the additional expenditures for the educational ministries, so long as total expenses do not exceed the total amount of expenses budgeted for the church of $1.5 million?
Question 2:
Even if church staff leaders are permitted to reallocate budget line items so long as the total amount spent remains within the amount of total expenses authorized by the budget, who on the church staff leadership has the authority to make such a reallocation decision? Or should church staff leaders be required to obtain specific authorization to incur expenses that exceed the amount budgeted for the educational ministries?
Question 3:
If authorization is required in order to exceed expenses for an individual line item or for the budget as a whole, who must provide that authorization? If the congregation approved the annual budget, must the congregation be involved in an authorization for such a variance? Or, may such approval be granted by the governing body of the church or by some other group? Would the answer to these questions change, depending on the amount by which actual expenditures are expected to exceed budgeted amounts?
Michael (Mike) E. Batts is a CPA and the managing partner of Batts Morrison Wales & Lee, P.A., an accounting firm dedicated exclusively to serving nonprofit organizations across the United States.
Image: Marvin Meyer / Unsplash
Should Your Church Use Crowdfunding for Fundraising?
A fundraising expert offers insights on this increasingly popular online tool.
Interview with NextAfter’s Brady Josephson by Bob Smietana
Brady Josephson, a self-described “charity nerd” and managing director of NextAfter Institute, spends much of his time helping organizations raise more money online. ChurchLawAndTax.com spoke with Josephson to explore how crowdfunding can work for churches.
What Is Crowdfunding?
Crowdfunding involves raising smaller amounts of money from a variety of donors through an online platform, such as GoFundMe.com, CrowdRise.com, or FundRazr.com. These platforms typically feature tools like funding thermometers, timelines, and social sharing options to encourage participation.
Pros and Cons of Crowdfunding
Pros
Technology and functionality are managed by the platform, saving time and effort for the church.
Easy setup and immediate launch of fundraising appeals.
Tangible goals and timelines create urgency and focus.
Social sharing expands reach and visibility.
Cons
Campaign promotion still requires effort to attract donors.
Costs range from 3% to 7%, slightly higher than managing donations in-house.
Lack of donor information can hinder follow-up and relationship-building.
When Does Crowdfunding Work Best?
Crowdfunding is most effective for specific, tangible projects where donors can easily see their impact. Keep these tips in mind:
Be clear about the problem and how donations will solve it.
Set realistic financial goals—average online donations are around $70.
Focus on smaller, achievable targets rather than overwhelming amounts.
Potential Drawbacks
Impact on Other Fundraising Efforts
Crowdfunding can sometimes draw attention away from ongoing needs or sustainable support. Donors may feel connected to specific projects but less engaged with the broader mission of the organization.
Risks of Crowdfunding
While security risks are minimal on major platforms, smaller or lesser-known sites may be less reliable. Most large platforms are well-secured, often outperforming nonprofit websites in terms of security.
Deciding If Crowdfunding Is Right for Your Church
Consider crowdfunding if your church:
Doesn’t currently engage in online fundraising and wants to test its effectiveness.
Has a specific project with a clear goal and timeline.
Needs a low-cost, low-risk way to start online fundraising.
Crowdfunding democratizes giving and fundraising, offering a simple way for churches to raise money for specific needs. However, long-term success lies in building ongoing support and fostering deeper relationships with donors.
FAQs About Crowdfunding for Churches
What types of projects work best for crowdfunding? Specific, tangible projects with clear outcomes and achievable goals work best. Are crowdfunding platforms secure? Most major platforms are secure and reliable, offering better security than many nonprofit websites. How much does crowdfunding cost? Fees typically range from 3% to 7% of the donation amount, covering platform and processing costs. Can crowdfunding replace traditional fundraising methods? Crowdfunding is a useful supplement to traditional methods but shouldn’t replace efforts to build ongoing support.
What would happen to your ministry if one of your key church leaders dies? Or who would be prepared to step in if one of the pastoral staff gets into a serious car accident and becomes disabled? Are you ready to deal with these occurrences?
Emergency preparation is geared toward anticipating issues that could occur and having plans and people in place to respond to them. The goal is to be able to adequately respond to a situation that does occur, despite carrying out your best prevention practices. There are three areas that a church should concern itself with when thinking about emergencies.
Internal Emergencies. These are threats that specifically affect your church or church members directly. These include accidents, medical emergencies, fires, thefts, arrests, deaths, or natural perils. Upon having an internal emergency, an immediate, planned response gives the best opportunity to be a part of the solution instead of adding to the problem.
Local or Regional Emergencies. These are dangers that occur in your church’s local surroundings, though the church may not be directly impacted. These emergencies include floods, chemical spills, tornados, or anything involving mass injuries or deaths. As a caring congregation, you will want to respond effectively.
National Emergencies. These events may impact thousands. Examples include hurricanes, earthquakes, wildfires, and events like September 11, 2001. You may choose to offer aid, but you will want to do this safely, and without overexposing your ministry to liabilities.
You may go years without being involved in tragedies or incidents that affect your congregation. But churches that have emergency plans in place have a much better chance of minimizing damages—and they are faster to recover when danger strikes.
The editorial team of Church Law & Tax is made up of Matthew Branaugh, attorney-at-law, and Rick Spruill, digital content manager.
Q: We are planning the launch of our first multisite campus, including a central accounting hub. Is there anything we need to know? Let’s explore best practices for accounting for multisite churches.
How Should Donations Be Tracked Across Campuses?
Tracking donations by campus is essential. This creates “cost centers” for generating financial health reports for each location. However, it’s crucial to address how to handle mailed-in checks without campus preference and ensure donors can update their campus affiliation. Robust software can help prevent reporting errors caused by donor transitions.
What Are the Implications of Donor-Restricted Funds?
Designating gifts to specific campuses creates donor-restricted funds. By law, these funds must be used exclusively for the designated campus. Using funds for other purposes could result in legal violations. Communicate clearly that all gifts go to the church’s general fund and campus preference is used for reporting only.
What Communication Strategies Should We Use?
Ensure your team, including preachers and communications staff, delivers consistent messages. For example: “All gifts support the church’s general fund. Campus preference helps us understand financial health.” Monitor language on websites and publications to avoid unintended donor restrictions.
How Can Multisite Churches Maintain Compliance?
Develop clear policies for tracking donations and expenses by campus.
Inspect financial reports regularly to ensure accuracy.
Train staff on legal requirements for donor-restricted funds.
FAQs
1. Why is tracking donations by campus important?
It provides insights into financial health and allows each campus to work toward self-sustainability.
2. Can donor-restricted funds be reallocated?
No. Legally, funds must be used for their designated purpose. Reallocating them violates donor intent and the law.
3. What are cost centers in accounting?
Cost centers track income and expenses for specific locations, enabling detailed financial reporting.
4. How can software improve campus accounting?
Advanced accounting software can accurately allocate donations and provide detailed reports by campus.
Final Thoughts
Multisite churches face unique accounting challenges. By tracking donations accurately, complying with donor restrictions, and communicating clearly, you can ensure financial health and legal compliance. For more resources, visit Church Law & Tax.
David Fletcher has more than 35 years of experience as a pastoral leader in churches. In 2003, he founded XPastor, a resource website for executive pastors, and XP-Seminar, an annual church leadership conference.
Image: Breno Assis / Unsplash
Can a Retired Minister Receive a Housing Allowance?
Discover how retired ministers can receive housing allowances and navigate IRS rules for maximum benefit.
Can a retired minister receive a housing allowance? This is a common question, and the answer depends on specific IRS regulations and definitions. Let’s explore the guidelines and considerations related to housing allowances for retired ministers.
What Does the Tax Code Say About Housing Allowances?
According to Treas. Reg. 1.107-1(b), “The term rental allowance means an amount paid to a minister to rent or provide a home, if such amount is designated as a rental or a housing allowance pursuant to official action taken in advance of such payment by the employing church or other qualified organization.”
Note: The IRS uses the term “rental allowance,” but it applies to both rented and owned housing. For simplicity, this article uses “housing allowance” to encompass both scenarios.
Can Denominational Pension Plans Declare Housing Allowances?
Yes, denominational pension plans can designate housing allowances for retired ministers under Revenue Ruling 75-22. The IRS recognizes denominational pension plans as “other qualified organizations,” allowing them to declare a portion—or all—of retirement benefits as a housing allowance. This is permissible as long as the retired minister has severed their relationship with the local church.
What About 401(k) or 403(b) Plans?
For secular 401(k) or 403(b) plans, or 403(b) plans established by a local church, clarity is limited. However, if the plan was developed by the employing church, it likely qualifies under the IRS regulation’s reference to “the employing church.” Consult detailed guidance, such as the Church & Clergy Tax Guide, for further insights.
Can Spouses of Deceased Clergy Receive Housing Allowances?
No, spouses of deceased clergy cannot receive housing allowances. To qualify for a housing allowance, the recipient must meet two criteria:
They must be a credentialed minister.
The allowance must represent compensation earned from ministerial duties.
A spouse who later becomes a credentialed minister would need to earn compensation from their own ministerial duties to qualify for a housing allowance.
How Does the Housing Allowance Apply to Assisted Living?
The IRS provides specific guidance regarding assisted living arrangements:
If a lump sum fee is paid to enroll in an assisted living facility, the housing allowance can only be applied to the payment in the year it was made.
If annual fees are paid instead of a lump sum, the housing allowance can apply to the fees, provided they are connected to housing-related expenses (e.g., rent or utilities).
Expenses for food, housekeeping, medical care, or other non-housing-related services are not eligible for the housing allowance.
Financially, annual fee structures often provide more flexibility for applying the housing allowance compared to lump sum payments.
FAQs About Housing Allowances for Retired Ministers
What is a housing allowance?
A housing allowance is a portion of a minister’s compensation designated for housing-related expenses, including rent, mortgage, utilities, and furnishings.
Can retired ministers receive a housing allowance?
Yes, retired ministers can receive a housing allowance if it is designated by their employing church or a qualified denominational pension plan.
Do housing allowances apply to spouses of deceased clergy?
No, spouses of deceased clergy are not eligible for housing allowances unless they are credentialed ministers earning compensation for ministerial duties.
Can a housing allowance cover assisted living expenses?
Yes, but only for housing-related expenses. Lump sum payments can be applied in the year they are made, while annual fees may qualify if tied to housing costs.
Conclusion
Retired ministers can benefit from housing allowances when properly designated by their employing church or denominational pension plan. Understanding IRS guidelines ensures compliance and maximizes benefits. Always consult resources like the Church & Clergy Tax Guide for detailed advice.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.
Image: AdobeStock/Roman
Who Is a Minister for Federal Tax Reporting Purposes?
Understand the IRS’s five-factor test to determine ministerial status for federal tax reporting.
Q:We have someone on staff we call our pastor of education, but some members on our board aren’t sure she qualifies as a minister when reporting income taxes. How can we know for sure?
In deciding if a person is a minister for federal income tax reporting, the following five factors must be considered:
ordained, commissioned, or licensed status (required);
administration of sacraments;
conduct of religious worship;
management responsibilities in the local church or a parent denomination; and
whether the person is considered a religious leader by the church or parent denomination.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.
Guiding Bivocational Ministers Through the Tax Maze
Key tax tips for bivocational pastors to manage dual roles and stay compliant.
Vince Stover left a full-time pastor’s job and moved 250 miles with his wife, Katie, to a city where the couple didn’t know a soul. He found a job in insurance sales and planted Bible Pathway Baptist Church in Lexington, Kentucky. The couple started a family, welcoming sons Brett and Camden.
Yet it was the prospect of filing his annual tax return—for the first time as a bivocational pastor—that kept him awake some nights.
“I was scared to death,” said Stover, who still pastors Bible Pathway but now sells advertising and programming time for a local radio station. “I had been a pastor before, and we did our taxes ourselves. But I knew there was a lot more involved now.”
Stover sought help from a qualified accountant, a smart move for many bivocational pastors facing complex tax issues. Here’s how others in similar situations can navigate the challenges of tax preparation while serving both in ministry and secular work.
Understanding the Growing Role of Bivocational Pastors
About one-third of pastors hold a secular job alongside their ministry, according to a survey by the National Association of Evangelicals. As churches shrink or budgets tighten, bivocational ministry is becoming more common. Yet, for many, the associated tax complexities can feel overwhelming.
Frank Sommerville, CPA and senior editorial advisor for Church Law & Tax, highlights a common issue: “You have all these additional problems created especially in smaller churches where the treasurer may have no formal training to do all these things.”
A Daunting, Complex Task
Tax law compliance for bivocational pastors is often daunting. Both the church and the pastor must understand their respective roles, including managing housing allowances, reimbursements, and income reporting. Sommerville advises seeking expert guidance early.
Seeking Professional Guidance
Many pastors turn to professionals for assistance. CPA Elaine Sommerville suggests asking tax preparers about their experience with ministers’ returns and their understanding of the housing allowance. A professional well-versed in ministerial taxes can help avoid costly mistakes.
Key Questions to Ask Your Tax Professional
How many ministers’ tax returns do you handle annually?
What do you do to stay current on tax laws affecting ministers?
What is your understanding of the ministerial housing allowance?
The Importance of Record-Keeping
For bivocational pastors, detailed record-keeping is critical. Mileage logs, receipts, and documentation of expenses should be maintained consistently to avoid missed deductions. Elaine Sommerville emphasizes using tools like phone apps or notebooks to log mileage at the time it is driven.
Tips for Effective Record-Keeping
Track all mileage driven for ministry purposes.
Save receipts for church-related expenses.
Use apps or spreadsheets to maintain organized records.
Tax Savings Strategies
Understanding the Housing Allowance
The ministerial housing allowance is one of the most significant tax benefits for pastors. Up to 100% of a minister’s salary can be allocated to a housing allowance, providing substantial tax savings. However, it is still subject to self-employment tax.
Accountable Expense Reimbursement Plans
Switching from taxable allowances to accountable reimbursement plans can lower tax liability. These plans reimburse expenses like mileage tax-free, but they require detailed records.
FAQs About Bivocational Pastors and Taxes
What is the biggest tax mistake bivocational pastors make? Failing to withhold taxes or properly estimate self-employment taxes, leading to unexpected liabilities. Can a pastor allocate their entire salary as a housing allowance? Yes, but it remains subject to self-employment tax. Proper documentation is essential. What if my tax preparer doesn’t understand ministerial taxes? Seek a professional with expertise in this area. Ask specific questions to ensure they are qualified. How can churches support bivocational pastors? Provide training for treasurers and adopt accountable reimbursement plans to help minimize tax burdens.
Conclusion
Bivocational pastors like Vince Stover demonstrate resilience and dedication. By seeking professional advice, maintaining detailed records, and leveraging available tax benefits, they can navigate the complexities of their dual roles with greater confidence.
Image: AdobeStock/ BCFC
Should a Church Own or Rent Vehicles?
Two church leaders weigh in on this question.
Bobby Ross Jr.
First Evangelical Free Church of Fullerton, California—known as EvFree Fullerton—has wrestled a lot with the question of whether to buy or own.
Right now, EvFree, which averages a combined 2,500 people at its three Sunday services, has made the decision to own a variety of vans and buses.
“We don’t really drive our big bus a ton—maybe 10 times a year,” said John Schaefer, assistant executive pastor for discipleship and care. “So when finances are [tight], saying I’m going to spend $20,000 on tires for that bus is tough. But if you’re going to have them, you need to maintain them.”
It’s no surprise, then, that concerns about owning vehicles come up fairly often at EvFree.
“A part of the conversation that we have with our staff, probably every six months, is, ‘Do we really want to be in the vehicle business? Or is it more cost effective to rent a bus?’” said Schaefer.
One possibility would be to charter a bus with professional drivers, he added. But one reason the church decides to avoid that route is the lack of flexibility. For example, the church couldn’t decide at the last minute to take a ministry trip.
If the church suddenly didn’t own its vehicles, explained Schaefer, “it would really change how we do certain ministries.”
John Trotter, elder and administrator for the Edmond Church of Christ in Edmond, Oklahoma, said the 1,200-member congregation rents from a reputable dealer with a high standard of vehicle maintenance.
“When a van gets to about 50,000 miles, they put it up for auction and get a new one,” Trotter said. “For short-term trips, I would highly recommend renting as opposed to owning because of maintenance.”
If a church is going to use a vehicle infrequently, it might make more sense to rent rather than buy, Trotter added. He explained that doing so allows the church to rely on the rental company to provide proper maintenance, and often it will mean the use of newer vehicles.
Tips for handling this critical area of risk-management.
Interview with attorney Frank Sommerville by Bobby Ross Jr.
To help churches better understand some of the issues involved with volunteer drivers, we talked with Frank Sommerville. He is an attorney and editorial advisor for ChurchLawAndTax.com.
What should you know before allowing volunteers to drive on behalf of the church?
You should ask for their driver’s license number and check their driving record, and then you need to ask for confirmation of insurance. The higher the limits, the better is my philosophy. But you want to make sure that they have at least the minimum coverage the state requires.
In your experience, are churches generally aware of the need to protect themselves when someone is driving a personal vehicle on the church’s behalf?
Many churches assume that if it’s not a church-owned vehicle, then the church has no responsibility. And that’s just a falsehood. Anytime somebody is driving on church business, even as a volunteer, the church has some responsibility. That’s what they don’t realize.
Are their special vehicle licenses volunteers and staff need in order to drive the church van or bus?
No, unless it’s a vehicle larger than a 15-passenger van. Buses require a commercial license. The 15-passenger van is so popular because it’s the largest vehicle that can be driven without a special license. But I would caution against using 15-passenger vans. There are too many risks. They are just too unstable on the road. It’s worth mentioning that federal law prohibits school districts from using them.
What other advice would you give churches when it comes to volunteers who drive for the church?
It’s a good idea to have a transportation policy that covers expectations when it comes to your drivers—both staff and volunteers. Further, if you have volunteers who are going to be driving, say, on a church mission trip, they have to be cleared through the church office beforehand. Again, you’ll run the driver’s license, check on their driving record, and verify their insurance.
What about rented vehicles? Are churches covered through their own insurance plan or through the rental company’s plan?
Some insurance companies have a rider—or add-on provision—that covers driving a rental on church business. But that needs to be verified with your insurance company. Generally, it’s a whole lot more expensive to purchase insurance through the rental agency. So, I don’t recommend doing so, just because I’m not sure that it’s a good financial decision. Again, a church must verify that it is fully covered by its insurance company.
Child Abuse Reporting Laws: 22 Facts Church Leaders Should Know
How state laws define who must report actual or suspected abuse, when a report must be made, and how.
Attorneys Richard R. Hammar and Matthew J. C. Branaugh
Last Reviewed: July 28, 2025
1. Every State Has a Reporting Law
All 50 states passed child abuse reporting statutes beginning in the 1960s. These laws are updated frequently—sometimes to clarify language, or sometimes to expand definitions or penalties. In the early 2020s:
At least three states added clergy to their list of mandatory reporters
At least two states increased criminal penalties for failing to report
Action Step: Regularly consult with legal counsel to stay current.
2. Definitions of Abuse Vary
Most states define child abuse to include:
Physical abuse
Emotional abuse
Neglect
Sexual abuse
Some states define abuse broadly, regardless of the abuser’s relationship to the child. Others limit it to parents or custodians.
Important: Abuse doesn’t have to occur on church property or involve church staff to trigger a reporting obligation. Disclosure in a casual conversation or a discovery through observation can still trigger a requirement to report reasonably suspected abuse.
3. Mandatory Reporter Definitions Differ
Some states (e.g., Florida, Delaware) define mandatory reporters as any person who suspects abuse. Others list specific occupations—many now include clergy explicitly.
Church staff who also serve as teachers, counselors, or daycare employees may qualify under these roles even if “clergy” isn’t listed.
4. What About Volunteers and Ministry Directors?
The law is less clear on volunteers and children’s ministry directors. Definitions vary by state. Dennis Watkins, legal counsel for the Church of God denomination based in Cleveland, Tennessee, recommends:
“Find a way to report it—and document it. It’s not worth the risk.”
In “any person” states, ambiguity decreases. Everyone is expected to report.
5. Permissive Reporters
If your state doesn’t designate clergy as mandatory reporters, you’re likely a permissive reporter. You’re encouraged—but not legally obligated—to report abuse.
6. Don’t Rely on Clergy-Penitent Privilege
Confidential counseling doesn’t always exempt a minister from reporting abuse. Laws vary:
Some states exempt ministers from reporting privileged information.
Others prohibit introducing privileged information in court but still require reports to agencies.
Privilege usually applies to court testimony—not to filing a report with authorities.
Even if the privilege applies, it may not cover:
Non-confidential disclosures
Observations and discoveries made outside of counseling
7. Reporting Deadlines Can Be Tight
Most states require reports to be made immediately, often within:
Failure to report promptly can result in prosecution.
“The time limits scare me the most,” says Watkins. “It’s an emotional issue and creates pressure.”
Action Step: Develop a clear, proactive plan using tools like Church Law & Tax’s Reducing the Risk training.
8. There’s a Process to Follow
Reporting usually involves:
A phone call to a designated agency
A follow-up written report (in some states, such as Nebraska)
Details including names, addresses, ages, and the nature of the abuse
Review your state’s statute carefully.
9. Consequences for Failing to Report
Failing to report known or suspected abuse can result in:
Misdemeanor or felony charges
Fines ranging from hundreds of dollars to tens of thousands of dollars
Jail time (up to 5 years in some states)
Example: A Pennsylvania priest was convicted of a felony for failing to report another priest’s abuse.
10. Civil Lawsuits Against Mandatory Reporters
In at least eight states, victims can sue mandatory reporters who failed to act. These suits can be filed years after the failure.
Risks include:
Legal costs
Court-ordered damages
Emotional and time burdens
Public criticism and media coverage
11. Civil Liability for Churches
Some churches have been sued for failing to report, but courts have mostly rejected these claims unless gross negligence is proven.
12. Negligence Per Se
Some states treat failure to report as negligence per se, meaning guilt is presumed without further evidence. This increases legal exposure even in the absence of civil liability laws.
13. Use of Hotlines and Online Forms
Most states offer 24/7 hotlines or online reporting portals. However:
Not all states clarify whether these meet legal requirements.
Some require a follow-up written report after making a phone-based one.
Confirm with legal counsel and state officials before relying on them.
14. Internal Reporting Isn’t Enough
In some states (e.g., New York), mandatory reporters must notify:
The state
A designated leader within their organization
But notifying a church supervisor alone is not sufficient unless state law explicitly allows it (e.g., Missouri).
15. No Blocking Reports
It’s illegal in many states to stop someone from reporting abuse. Church leaders and supervisors must never discourage or delay a report.
16. Retaliation Is Prohibited
Many states protect reporters from retaliation by employers. Churches must avoid punishing employees or volunteers who file reports in good faith.
17. Legal Immunity for Good-Faith Reports
Every state provides limited immunity for individuals who report abuse in good faith. However:
Reports must be based on “reasonable cause”
Malicious or knowingly false reports may result in liability
18. Confidentiality of Reporters
Most laws protect the reporter’s identity from disclosure to the accused. Some allow disclosure to agencies or prosecutors.
A few states require reporters to identify themselves—but still protect their identities from the accused.
19. When an Adult Reveals Past Abuse
If an adult discloses past abuse from their childhood:
Some states (e.g., California) require a report—even if the person is now over 18.
Other states impose limits if too much time has passed.
Check your state’s statute for specific guidance.
20. Faith Healing and Definitions of Abuse
Some states recognize spiritual treatment as a valid alternative to medical care. Children treated only by prayer may not automatically qualify as abused under these laws.
21. Training and Employer Responsibilities
Some states require or encourage training for mandatory reporters. Examples:
Some states apply the “discovery rule,” starting the clock when the abuse is remembered
Others use legal concepts like “tolling” to suspend deadlines
Action Steps:
Retain all records related to staff and volunteer screening
Permanently keep insurance documentation
Consult legal counsel if you learn of historic abuse at your church
Final Advice
The law around child abuse reporting is complex and ever-changing. Church leaders must:
Know their state’s current law
Build a clear reporting plan
Train all relevant staff and volunteers
Seek legal guidance when in doubt
“Leaders need to know there are resources to help. They are not acting alone.” —Dennis Watkins
Richard R. Hammar, J.D., LL.M., CPA, is co-founder and senior editor of ChurchLawAndTax.com. Matthew J. C. Branaugh, J.D., is an attorney and editor of ChurchLawAndTax.com.
We’ve used a combination of AI and human review to make this content easier to read and understand.
Image: Daniel McCullough / Unsplash
Are Criminal Background Checks Legally Required for Youth Ministry Workers?
A California case shows why criminal background checks for youth ministry workers are advisable.
A 2017 appellate court decision in California involving a youth soccer organization holds powerful implications for church leaders.
Why It Matters
In Doe v. United States Youth Soccer Association, the court ruled that organizations have a legal duty to perform criminal background checks on employees and volunteers. If they don’t, they could be liable for sexual abuse committed by unscreened individuals.
This was the first reported case in the U.S. where a court clearly reached this conclusion. Although the ruling is binding only in California, it may influence courts in other states.
Key takeaway: All youth-serving organizations—including churches—must take this ruling seriously.
2. Case Facts & Legal Background
What Happened
A 12-year-old girl was sexually abused by her soccer coach.
She sued multiple soccer associations—national, state, and local—for negligence and willful misconduct.
Her claim: The organizations failed to screen the coach, educate her or her parents, or warn them about the risks of sexual abuse.
Legal Process
A trial court dismissed her case, stating the organizations had no duty to protect her from the criminal actions of a third party.
The plaintiff appealed.
The state appeals court reversed the dismissal, ruling that the defendants had a duty to conduct criminal background checks for anyone interacting with minors in their programs.
3. The KidSafe Program
In 1994, U.S. Youth Soccer recognized that pedophiles were being drawn to youth sports programs. In response, it developed the KidSafe Program.
Program Features
Designed to educate adults and players about preventing and detecting sexual abuse.
Aimed to exclude anyone convicted of felonies, violent crimes, or crimes against persons.
Materials included:
Pamphlets distributed to state associations.
Training guidelines for parents and volunteers.
Lists of red flags and safety tips.
Presentations at national and regional meetings.
Implementation Gaps
Training was not mandatory for local coaches or volunteers.
No meetings were held with parents to explain the program.
The local and state associations did not proactively share the pamphlets with parents.
4. Coach’s Conduct and Organizational Response
After joining a local soccer club in 2011, the plaintiff experienced a series of troubling interactions with her coach that violated multiple safety guidelines.
Violations Included:
Being alone with the minor during practices and travel.
Excessive and inappropriate physical contact.
Use of foul language and harsh discipline.
Grooming behavior: Visiting the family, offering rides, and building trust to gain unsupervised access.
Organizational Response:
After parent complaints, the coach was reassigned—not removed.
He continued to target the plaintiff.
In November 2011, the club suspended him—but did not inform the girl’s parents of the reason, failing to alert them to the risk.
5. Criminal Records Checks and Oversight Failures
Background Screening Policy
U.S. Youth Soccer required its state affiliates to collect and screen criminal conviction data for adults interacting with youth. It even negotiated $2.50 background checks with a national provider and tracked which affiliates complied.
Key Failures
The local club did not run background checks, despite a history of abuse by other volunteers.
When the coach applied in 2010, he lied on his self-disclosure form, denying any past offenses.
He had a 2007 domestic violence conviction, which would have been flagged by a background check.
Despite knowing self-disclosure was unreliable, national youth soccer made screening optional.
Risk management memos acknowledged that not screening could lead to liability.
6. Court’s Ruling and Legal Reasoning
The court ruled that the plaintiff’s negligence claim could move forward, based on the defendants’ failure to:
Conduct criminal background checks.
Warn or educate families about the risk of sexual abuse.
Duty to Protect
Although there’s generally no legal duty to protect someone from a third party’s criminal actions, exceptions exist.
“A defendant may owe an affirmative duty if there’s a special relationship and foreseeable harm.”
The court found such a special relationship between:
The plaintiff (a minor) and the youth soccer organizations.
Entities that control access and supervision of vulnerable children.
Foreseeability of Harm
The court emphasized:
Youth soccer organizations were aware of 2–5 annual abuse cases.
The KidSafe Program acknowledged that youth sports attract predators.
Prior incidents, including those involving a Hall of Fame coach, showed a pattern.
Rebutting the Defense
Defendants claimed the cost and burden of background checks were too high.
The court rejected this, noting:
Most state associations already did background checks.
Checks were inexpensive—and free in California for nonprofits.
900,000 checks at $2.50 would cost $2.25 million—but individuals or teams could bear that cost.
Conclusion:
“Defendants had a duty to require and conduct background checks. Preventing harm to children is a paramount goal. The plaintiff’s complaint states sufficient facts to constitute a cause of action for negligence.”
7. Why This Matters for Church Leaders
Though this case applies directly to California, it sends a clear message to all youth-serving organizations, including churches.
Legal Principle: Negligence
Generally, there’s no duty to protect against third-party crimes—unless:
There’s a special relationship.
Harm is reasonably foreseeable.
In this case, both conditions were met.
Church Application
Like sports organizations, churches that work with minors have a special relationship.
The risk of abuse is reasonably foreseeable, especially when:
There’s a known history of incidents.
Preventive measures like background checks are easy and affordable.
8. Understanding Pedophilia and Offender Behavior
What Is Pedophilic Disorder?
Defined by the DSM-5 as:
Intense, recurrent sexual urges or behaviors involving prepubescent children.
Offender is at least 16 years old and 5 years older than the victim.
Causes distress or has been acted upon.
Key Characteristics (from FBI & ATSA sources):
Promiscuity – Often have many victims.
Predatory Behavior – Grooming through access, trust, and authority.
Incurability – Psychological disorder with no known cure.
High Recidivism Rates – Offenders frequently reoffend.
“Predatory pedophiles, especially those who molest boys, are the sex offenders who have the highest recidivism rates.” — Association for the Treatment of Sexual Abusers
Bottom line: Youth-serving programs—including churches—are prime targets for these offenders. Constant vigilance is non-negotiable.
9. Risk Management Implications for Churches
This case was the first reported ruling of precedential value (a state appellate court) that clearly established a legal duty for youth-serving charities to run background checks.
Why Background Checks Are a Best Practice
National standard: Many nonprofits and public schools already require them.
Community standard: Not following it may be viewed as negligence in court when other organizations in the community use them.
Legal trends: Other courts may adopt similar reasoning in future cases.
10. 14-Point Risk Management Strategy for Churches
Church leaders should adopt a comprehensive risk management strategy, not just background checks.
1. Interview Applicants
Ask about past work with children and assess suitability.
2. Written Applications
Include:
Personal details
Criminal history
List of prior youth organizations
Two or more references
3. Institutional References
Prior youth-serving organizations where the individual has served offer the most reliable insight. Follow up by phone and document conversations if the organization does not respond to a written request.
4. Six-Month Rule
Only allow volunteers with six months of active membership to serve with minors.
5. Benchmarking
Compare your policies with other organizations in your community, including:
Public schools
YMCA
Other churches
6. Legal Review
Have an attorney regularly review your screening policies.
7. Two-Adult Rule
Never allow a child to be alone with an unrelated adult, including rides to and from events and activities.
8. Criminal Background Checks
Run checks on all youth workers. Exclude anyone on a sex offender registry or with other disqualifying crimes.
9. Prompt Abuse Reporting
Know your state’s laws. Report suspected abuse immediately. Keep written records of all reports.
10. Address High-Risk Behavior
Immediately address:
One-on-one trips
Sleepovers
Excessive photo-taking
Private meetings
11. Social Media Policy
Prohibit private messaging between youth leaders and minors. Model your policy on local public schools.
Installing windows on doors for nursery, children’s, and youth ministry rooms
Avoiding early releases
Being vigilant during off-site activities
14. Use of Video Technology
Install cameras in key areas:
Nurseries (for safety and documentation)
Hallways outside restrooms
Entrances and gathering spaces for children and youth
Final Note
Key Point: These strategies are not just about legal compliance—they’re about protecting vulnerable children. When protection is the primary goal, churches are more likely to maintain long-term, consistent safety practices.
We’ve used a combination of AI and human review to make this content easier to read and understand.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.
Image: AdobeStock/Ricochet64
Why Every Church Needs a Sexual Harassment Policy
The growing numbers of allegations highlight the need for appropriate responses.
Churches are not immune to allegations of sexual harassment, yet many church leaders remain without a clear understanding of what sexual harassment is — and how to reduce the risks.
A 2020 study on sexual harassment in the Christian workplace: Learn about the extent of this troubling problem in churches and parachurch ministries.
The Equal Employment Opportunity Commission (EEOC) defines it as:
“Harassment on the basis of sex is a violation of Section 703 of Title VII. Unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature constitute sexual harassment when:
Submission to such conduct is made either explicitly or implicitly a term or condition of an individual’s employment;
Submission to or rejection of such conduct is used as the basis for employment decisions affecting the individual; or
Such conduct unreasonably interferes with an individual’s work performance or creates an intimidating, hostile, or offensive working environment.” (29 CFR 1604.11(a))
Types of Sexual Harassment
Quid Pro Quo Harassment: Employment opportunities are conditioned on submission to a sexual or social relationship.
Hostile Environment Harassment: An intimidating, hostile, or offensive work environment is created through unwelcome sexual conduct.
Important Legal Clarifications
The terms quid pro quo and hostile work environment are not found in Title VII or EEOC regulations. They originated in academic writing and were later adopted by the courts. (Burlington Industries v. Ellerth, 1998)
Title VII does not prohibit minor teasing, offhand comments, or isolated incidents unless extremely serious. Conduct must be “so objectively offensive as to alter the conditions of the victim’s employment.” (Faragher v. City of Boca Raton, 1998)
Voluntary vs. Unwelcome Contact
Consent is not a defense against sexual harassment claims.
The US Supreme Court explains:
“The fact that sex-related conduct was voluntary in the sense that the complainant was not forced to participate against her will is not a defense to a sexual harassment suit… . The correct inquiry is whether [the victim], by her conduct, indicated that the alleged advances were unwelcome.”
Even voluntary contact can be unwelcome and actionable.
How Common Is Sexual Harassment?
Surveys show:
50%–60% of women report experiencing workplace harassment.
Most surveys focus on secular employers; a 2020 nationwide survey conducted by Church Law & Tax revealed it occurred more frequently than many might expectin churches and ministries.
Victims often feel angry, humiliated, or ashamed.
20% of victims never report harassment due to fear of retaliation or belief that nothing will change.
Only half of employers have adopted a sexual harassment policy.
34% of respondents were unsure what to do if harassment occurred.
EEOC Data (between fiscal years 2018 and 2021):
27,291 charges alleging sexual harassment;
With the #MeToo movement’s visible rise in 2017, 7,609 sexual harassment charges were brought in 2018 compared to 6,696 in 2017 – an increase of 13.6%;
Between 2018 and 2021, sexual harassment charges accounted for 27.7% of all harassment charges compared to 24.7% between 2014 and 2017;
78.2% of complaints between 2018 and 2021 were brought by women.
Employer Liability for Sexual Harassment
Employers, including churches, can be liable under several conditions.
Rule 1: Quid Pro Quo Harassment by Supervisors
A supervisor conditions employment benefits on submission to a sexual relationship.
Employer is automatically liable, even without knowledge of the conduct.
Rule 2: Harassment by Nonsupervisory Employees
Employers are liable if:
They knew or should have known about the harassment, and
Failed to take immediate corrective action. (29 CFR 1604.11(d))
Rule 3: Harassment by Nonemployees
Employers may be liable if:
They knew or should have known about harassment by nonemployees and
failed to act. (29 CFR 1604.11(e))
Rule 4: Hostile Environment Harassment by Supervisors (Tangible Employment Action)
If harassment results in:
Firing
Demotion
Failure to promote
Changes in pay or benefits
Employer is strictly liable, even without knowledge. (Ellerth and Faragher rulings, 1998)
Rule 5: Hostile Environment Harassment by Supervisors (No Tangible Employment Action)
Employer may still be liable but can assert an affirmative defense.
Rule 6: Employer’s Affirmative Defense
To claim an affirmative defense, an employer must show:
Reasonable care was exercised to prevent and promptly correct harassment (e.g., sexual harassment policy and training).
The employee unreasonably failed to use complaint procedures.
Why Churches Must Have a Sexual Harassment Policy
A strong written policy:
Does not protect against all liability.
Can serve as a defense when no tangible employment action occurs.
Encourages employees to report harassment early.
EEOC guidance:
“Prevention is the best tool for the elimination of sexual harassment.”
Essentials of a Church Sexual Harassment Policy
A good policy should:
Clearly define quid pro quo and hostile environment harassment.
Encourage prompt reporting.
Protect against retaliation.
Ensure confidentiality.
Outline immediate and firm disciplinary actions.
Tip: Always consult an attorney when drafting a policy.
Additional Steps for Churches
Churches should:
Communicate the policy to all employees.
Investigate all complaints immediately.
Discipline offenders appropriately.
Follow up with victims.
Review insurance coverage for employment claims.
Determine whether state law mandates annual sexual harassment prevention training.
Examples Illustrating Sexual Harassment
Quid Pro Quo by Supervisor
Supervisor conditions employment on sexual favors.
Church is liable, regardless of policy.
Persistent Invitations by Coworker
Repeated dinner requests.
Liability only if behavior is severe and church leadership failed to act.
Supervisor’s Harassment and Termination
Dismissal following rejection of advances.
Church liable even without prior knowledge.
Supervisor’s Harassment Without Termination
Affirmative defense possible if policy exists and employee failed to report.
Churches Not Covered by Title VII
Still may face liability under state laws or other legal theories.
Case Studies: Sexual Harassment in Churches
Sanders v. Casa View Baptist Church (1998)
Church not liable — took prompt corrective action.
Jonasson v. Lutheran Child and Family Services (1997)
Church liable — failed to respond adequately over years.
Behavior inappropriate but not severe or pervasive.
2012 WL 2912516
Church liable despite lack of prior knowledge.
Peacock v. UPMC Presbyterian (2016)
Three isolated incidents not enough for hostile environment.
Conclusion: Key Takeaways for Churches
Sexual harassment is a serious legal and moral issue — and churches are not exempt from liability. To protect both staff and the mission, churches must be proactive.
Key Points to Remember:
Understand the definitions of quid pro quo and hostile environment harassment.
Adopt and communicate a strong sexual harassment policy.
Investigate all complaints immediately and thoroughly.
Review and strengthen insurance coverage for employment-related claims.
Conduct ongoing training for staff and supervisors—whether or not state law requires it.
Recognize that state laws may apply even when Title VII does not.
Final Thought
Prevention is the best defense. By implementing strong policies, taking complaints seriously, and responding swiftly, churches can protect their people, their ministry, and their legal standing.
We’ve used a combination of AI and human review to make this content easier to read and understand.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.
