Homeless Ministry: Safe and Compassionate Responses for Churches

Discover essential strategies for creating a safe and compassionate homeless ministry in your church while protecting staff and resources.

Last Reviewed: February 11, 2025

Churches play a critical role in serving their communities, and a homeless ministry is a vital extension of that mission. However, assisting transients and others seeking help requires structured policies that ensure both compassion and safety for church staff and volunteers. Without clear guidelines, churches may face security concerns, resource mismanagement, and legal risks.

Developing a Safe Response Plan

Helping the poor is central to the church’s mission, but effective assistance requires preparation. Churches should create policies and provide training to staff members on how to respond to individuals seeking help. Since many church secretaries and administrators work alone, these situations require advance planning.

Key Steps for a Safe and Effective Homeless Ministry

  • Define roles for staff members, including responsibilities for interviews, referrals, voucher distribution, and follow-up.
  • Establish procedures to enhance personal safety while interacting with individuals in need.
  • Train staff and volunteers through role-playing exercises that simulate real-life scenarios.

Security Considerations for Church Staff

Ensuring safety for church employees is just as important as offering assistance. Churches should implement security measures to protect staff, particularly when working alone.

  • Keep doors locked when a staff member is alone in the building. Use an electronic door lock system to control entry.
  • Install an intercom system between the church office and other key areas for easy communication.
  • Maintain a well-lit parking area and designate safe parking spots near the building entrance.
  • Install a panic button in the church office to alert other staff members in case of emergency.

Recognizing and Responding to Con Artists

While most individuals seeking help are in genuine need, some attempt to exploit church resources through deception. Recognizing common tactics can help protect limited church resources while still assisting those in need.

  • Avoid giving out cash; use a voucher system instead.
  • Verify the legitimacy of requests by asking for identification and references.
  • Be cautious of urgency-driven manipulation. Genuine requests may be urgent, but they will also provide verifiable details.
  • Be wary of individuals with no local ties or references but numerous excuses.

Best Practices for Providing Assistance

Churches can offer meaningful support while maintaining structure and security. Consider implementing the following:

  • Maintain a food pantry or partner with local organizations for food assistance.
  • Offer a community resource brochure listing shelters, food banks, and assistance programs.
  • Develop a centralized referral system with local churches, police, and social services.

Some churches offer temporary work to those in need. However, hiring transients without understanding legal responsibilities can create liability issues. Churches should consult with an attorney regarding:

  • Workers’ compensation insurance and liability coverage.
  • Tax responsibilities, including Social Security and withholding.
  • Background checks and employment eligibility verification.

FAQs on Homeless Ministry

How can a church safely assist the homeless?

Churches should establish structured policies, use vouchers instead of cash, and train staff to handle requests safely.

What security measures should churches implement?

Keeping doors locked, installing intercoms, using a panic button, and maintaining good lighting can enhance security.

Should churches give money to transients?

Instead of cash, churches should provide food, vouchers, or referrals to local assistance programs to prevent misuse.

How can churches verify legitimate needs?

Asking for identification, references, and contacting local shelters can help confirm genuine need.

By implementing these policies, churches can build a homeless ministry that is both compassionate and secure, ensuring that resources are directed to those who need them most.

James F. Cobble, Jr., received his master of divinity degree from McCormick Theological Seminary, and also has doctoral degrees from both Princeton Theological Seminary and the University of Illinois.

Staying Above Reproach: Seven Rules To Live By

7 rules to help volunteer leaders protect themselves and the kids they serve.

Teens are among the most unpredictable individuals on the planet. One moment, they’re independent with almost adult-like qualities, but at the next can be childlike and dependent upon adults. Providing the appropriate amount of guidance is a common concern for volunteer youth leader. But there are risks to working with students, too. These seven rules will help provide “defensive” guidance to help you avoid situations that may compromise your ministry and the well being of those you serve.

1. The “never alone” rule. Leaders should take care to always meet with students in the presence of a third party. When a youth worker is alone with a teen, he is placing his future in the teen’s hands, since most authorities will give the benefit of the doubt to the teen, not the adult leader. Avoid this situation by always having a third party present when meeting with a teen. In a one-on-one mentoring relationship, consider meeting in an open, public place.

An easy place to overlook this rule is in the car, but workers should never be alone in with a teen in a car. Even if a student needs a ride, be cautious and responsible and make sure you are not alone. Remember: with only two witnesses present, the authorities tend to believe the teen, not the adult.

2. The “opposite sex” rule. This may seem obvious, but it is important to state: adult leaders should avoid developing close emotional relationships with teens of the opposite sex. What a leader may view as innocent conversation, a teen may see as flirting. Take precautions by asking other leaders for feedback on your interactions with students. If others question your motives or communication, change your style. This is especially necessary with teens that are vulnerable and need affirmation from the opposite sex.

Students’ emotions are basically a rollercoaster, and students are apt to develop crushes on members of the opposite sex whom they respect. If a teen develops an emotional bond with a worker, she may become angry when that worker rejects her attentions. Sometimes this anger can turn into false accusations, including criminal accusations.

Adult leaders should also exercise extreme caution in dealing with teens of the same sex. If a teen is confused about his sexual identity, he may attempt to develop a close relationship with a worker of the same sex. Again, this relationship is fraught with hazards. While the adult leader may counsel the teen regarding sexuality, it is critical to avoid building unhealthy emotional bonds.

3. The “more time” rule. Related to the first two rules, it is important to monitor “off duty” time spent with students. If the amount of time that you spend with a student becomes inordinate, take precautions to avoid awkward situations that could lead to false accusations. If a student frequently seeks out the company of a leader, it might be a sign that an unhealthy relationship is developing. The adult leader should keep track of her time together and discuss the situation with the supervisors and parents of the teen.

A corollary to this rule is this: if an adult leader is meeting consistently with a student to discuss life issues, those meetings should not go on for more than eight weeks. After eight weeks, the chances that a student will become unhealthily dependent on the leader increase dramatically. If the teen needs further assistance, the worker should refer the student to a professional counselor.

4. The “no confidentiality” rule. Youth leaders should never promise confidentiality to a student. Under most state child abuse laws, youth ministry workers are required to report any circumstance where a child has been or is in danger of being harmed emotionally, sexually, or physically. If an authority figure, such as a parent or law enforcement officer, requests information about a teen, the youth leader must fully disclose his or her knowledge. Failure to respond appropriately is not in the best interest of the student and may result in criminal charges against the worker.

For example, if a teen shares with a youth worker that she has been sexually abused, the worker must report this activity to the student’s parents and other authorities, and possibly to the state’s child protective services.

5. The “transparency” rule. Youth leaders need a system of accountability where they can be absolutely transparent about their behavior. Some churches require weekly or monthly statements from all workers stating that they haven’t behaved inappropriately toward their teens. Examples of inappropriate behavior include sending or receiving text messages containing prohibited language or meetings that violate the church’s policies. At the very least, workers should meet regularly with an accountability partner, another trusted believer who will ask direct questions.

6. The “no porn” rule. Youth leaders need to be aware of the reality of pornography in students’ lives. Because pornography dehumanizes individuals, teenagers who seek it out tend to separate sexual activity from relationships, making them much more likely to sexually harass others. Apart from the damage done to the teens themselves, adult leaders are at risk to be sued for inadequate supervision if one teen accuses another of sexual harassment in a church setting.

If a leader finds out that a teen is looking at porn (a picture on a cell phone, for example) the leader should take steps to address the situation. In most cases, this will require informing the parents and referring the teen to counseling. Child pornography is particularly serious matter, and if a worker becomes aware child pornography in the hands of a teen, the church’s attorney should be contacted immediately.

7. The “no fear” rule. The center of judgment in the human brain doesn’t fully develop until about age 25. This explains why teens sometimes lack healthy decision-making skills. In fact, often, they think they are invincible, 40-feet tall, and bulletproof.

Youth leaders must watch for risky activities and behavior, both to protect students and to keep themselves free from accusations of negligent supervision. As soon as a dangerous behavior comes up, leaders need to confront the student. When teens are in the care and custody of the church, there must be adequate adult supervision at all times. It is far better to cancel an activity than to risk harm, injury, or accusations.

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

When Ministry Becomes Business: Understanding the Commerciality Doctrine

Key insights on how the commerciality doctrine impacts churches’ revenue-generating activities and tax-exempt status.

Last Reviewed: January 21, 2025

Churches and religious organizations often engage in revenue-generating activities for two main reasons. Some activities begin as ministries designed to serve the community, incidentally generating nonessential cash flow. Others, however, rely on cash flow to ensure their success. Navigating these distinctions is critical when understanding the commerciality doctrine and how it applies to tax-exempt organizations.

The IRS has intensified its focus on the business operations of tax-exempt organizations to determine whether these activities align with the organization’s mission or function more like standalone businesses subject to taxation. The commerciality doctrine plays a pivotal role in this determination, influencing how churches can manage their revenue-generating operations while retaining their tax-exempt status.

What Is the Commerciality Doctrine?

The IRS permits nonrelated business income, but income—distinct from donations—is taxable if it arises from activities not “substantially related” to the organization’s exempt purpose. According to IRS regulations, “substantially related” means the trade or business must “contribute importantly to the accomplishment of the exempt purpose of an organization.”

To assess whether activities are taxable, the IRS applies these three standards:

  • The activity is not substantially related to the organization’s exempt purpose or function.
  • The activity qualifies as a trade or business.
  • The activity is regularly carried on.

Additionally, income exceeding $1,000 in a fiscal year requires filing Form 990-T. For detailed instructions on filing, visit the IRS instructions for Form 990-T.

Examples of Revenue-Generating Activities

Churches frequently face scenarios where the commerciality doctrine may apply. Here are some examples:

1. Bookstore Ministry

A church opens a small bookstore inside its facility to provide members with study guides and resources. The bookstore operates primarily during church activities and sells items at a profit. Because this activity supports the church’s educational mission, the income is not taxable.

2. Bookstore Business

If the bookstore grows to include a wide array of products, establishes regular hours, and moves to a location accessible to the public, it may no longer be considered part of the church’s mission. In such cases, the income is likely taxable.

3. Newsletter with Ads

A church publishes a newsletter as an evangelistic tool and sells advertising to cover costs. If ad sales generate a profit, that income could be taxable, particularly if it competes with for-profit businesses for the same advertising dollars.

4. Parking Lot Leasing

A downtown church leases its unused parking spaces to nearby businesses during the week. Since leasing space is unrelated to the church’s mission, the income would typically be taxable under the commerciality doctrine.

Steps to Help Avoid an IRS Audit

Church leaders can take proactive steps to minimize the risk of IRS audits and ensure compliance:

1. Clarify Your Mission

A clear mission statement helps determine whether an activity aligns with the church’s purpose. Use it as a guide for decisions regarding revenue-generating activities.

2. Separate Ministry from Business

When a ministry begins to resemble a business, consider incorporating it separately. This is particularly important if the activity accounts for 50 to 80 percent of the church’s income or poses significant liability risks.

3. Use Property Wisely

Be cautious with rental income, particularly when using property for non-ministry purposes. Ensure any plans align with the church’s long-term goals and minimize delays for projects involving donated land.

4. Retain a Skilled Attorney

Consult an attorney experienced in church operations. They can help structure activities to meet exempt purposes and avoid unnecessary tax liabilities. As attorney Chip Watkins advises, focusing on discipleship rather than profit should remain the priority.

FAQs: Commerciality Doctrine for Churches

1. What is the commerciality doctrine?

The commerciality doctrine assesses whether revenue-generating activities of tax-exempt organizations align with their exempt purposes or function as taxable businesses.

2. What triggers unrelated business income tax (UBIT)?

UBIT applies to income from activities not substantially related to a church’s mission, particularly if those activities are regularly carried on and generate over $1,000 annually.

3. Can a church lease property without paying taxes?

It depends on the property’s use. Leasing unrelated to ministry purposes typically results in taxable income under the commerciality doctrine.

4. How can churches avoid tax liabilities?

Churches should clarify their mission, separate ministry from business activities, consult attorneys, and ensure property use aligns with their exempt purpose.

By understanding the commerciality doctrine and adhering to IRS regulations, churches can navigate the complexities of revenue-generating activities while maintaining their tax-exempt status.

Evaluating Your Church’s Next Vendor

Ask key questions to avoid getting scammed.

Last Reviewed: February 11, 2025

Most vendors are honest people who make a living from selling a product or providing a service. But occasionally, church leaders may encounter a salesperson or vendor whose word cannot be trusted.

You wouldn’t sign a 30-year mortgage without knowing a little bit about the lender. Neither should you sign a vendor contract without asking some pertinent questions about the company’s reputation and expertise.

Do Your Research

If you’re going to be investing considerable time or money in a vendor, you’ll want to do a thorough evaluation to ensure a mutually beneficial relationship. Start by asking colleagues at other churches for their recommendations about a specific product or service. If they “adore” (or despise) their new copy machine, for example, they’ll be glad to share some information with you.

Here are some questions to get your investigation started.

Viability

  • Is the vendor financially stable?
  • How long has this person or company been in business?
  • Will the company be in business 10 years from now?

Experience

  • Is this vendor familiar with projects of the same complexity and scope?
  • Has this vendor worked with churches of similar size and characteristics?
  • What’s this vendors’ reputation for quality? Reputation
  • Does this vendor have a strong customer base?
  • What do customers say about their experience with the vendor?
  • How many customers have left this vendor for a competitor?
  • What’s this vendor’s rating and history of complaints with the Better Business Bureau?

Customer Service

  • How available is customer service, when you have a question or problem?
  • Is the vendor’s customer service staff knowledgeable, helpful, and friendly?

Some of these questions you’ll pose to the vendor; some you’ll want to investigate on your own. Of course, the amount of time you spend on research will vary, depending on the size and complexity of the purchase.

Check References

It’s easy to get excited about a company’s offerings during a sales pitch. But there can be a gap between what sales materials promise and what a company can deliver. To get a better sense of what you’re signing up for, it’s important to talk with flesh-and-blood customers.

This means asking your vendor for a list of references, and then contacting at least two of them.

Official References

Most vendors will give you a list of customers who are likely to give the company a glowing recommendation, but they may be worth calling, nonetheless. Customers may be willing to provide honest opinions on the company’s dependability, customer service, and their overall satisfaction with the vendor.

Unofficial references

It’s also good to find customers for “unofficial” references. You might be able to find other customers by looking on the vendor’s website for examples of past work, or by talking with other churches in your region.

Phony References

Checking references may alert you to a scam. For example, a vendor may direct you to a phony website or a satisfied “customer” who’s actually an accomplice. If a vendor provides just an email address, request a telephone number, too.

Accept only references from companies with a verifiable mailing address and telephone number. Ideally, you’ll speak with a receptionist before talking with the actual reference person. It’s generally not a good idea to accept references from customers who call you.

Use a Cheat Sheet

To make the most of your reference checks, write up a list of questions you’d like to ask each of the customers you call. Be specific. Asking, “How’s their customer service?” will generally yield less useful information than: “How many customer service calls have you placed?” and “How long did it typically take for them to fix a problem?”

Take Your Time

Some salespeople encourage you to sign an agreement quickly, often using a price break or some other incentive that expires if you don’t act by a certain date.

Never feel pressured to buy from a salesman. If you’re not satisfied that you know enough about the vendor to enter a written agreement, ask for time to think about the offer. Don’t sign any sales contract until you have reviewed it, preferably with an attorney, and confirmed that it matches the verbal agreement.

If vendors truly want your business, they’ll work with you to establish a solid, trustworthy relationship between themselves and your church.

Research Yields Results

Careful investigation can give you a great deal of insight into what might happen to your church if you were to enter an agreement with a vendor. By doing your due diligence up front, you can save your church the time, money, and heartache of getting duped by a scam.

Protecting the Elderly from Abuse

Create policies and procedures to protect older adults in your church.

Last Reviewed: February 11, 2025

Many churches create child abuse protection plans to keep kids safe from abuse. Older adults, especially those who are housebound and unable to fully care for themselves, deserve our protection too. Seniors who have family members or caretakers that come into their homes to visit and care for them are especially vulnerable to neglect, exploitation, and abuse. Here are three things your pastoral staff should know and do to keep older adults in your church safe.

1. Screen Volunteers

Do you have volunteers who regularly visit shut-ins? Or a ministry to seniors that requires volunteers to serve one-on-one with the elderly? If so, take precautions to screen these workers carefully. Most abuse claims for churches hinge on the screening and selection process used for staff and volunteers. To reduce the risk of negligent screening, take care to select volunteers with clean background checks, strong references, and at least a six month history at the church. Here are some additional tips for selecting volunteers for your ministry:

Fill in the blanks. All prospective workers should complete a written application form. An application provides information that can be used to conduct reference checks and an interview.
Obtain asking rights. Your application form should include a liability release, signed by the applicant, giving you permission to contact references and obtain any criminal records. It also should release from liability the person being asked to provide information.
Check references. Contact all individuals, former employers, and organizations listed in the application. Learning what others say about an individual’s past performance and conduct is a vital part of the screening process.
Schedule an Interview. You’ll get a better sense of whether the applicant will be a good fit for your ministry when you meet in person.
Look for criminal records. Conduct a criminal records check on all paid and volunteer staff, even ministers, before putting them to work.
Evaluate the results. A criminal conviction may not disqualify someone from a church position. You’ll need to evaluate the severity of the offense, how long ago it happened, and whether it pertains to the position being filled. An attorney could help you with this analysis.

2. Recognize Signs of Abuse

Whether volunteers or staff members are visiting the elderly in their homes or counseling them at church, there are red flags that should concern workers. The Administration on Aging gives the following warning signs of abuse:

  • Bruises, pressure marks, broken bones, abrasions, and burns may be an indication of physical abuse, neglect, or mistreatment.
  • Unexplained withdrawal from normal activities, a sudden change in alertness, and unusual depression may be indicators of emotional abuse.
  • Bruises around the breasts or genital area can occur from sexual abuse.
  • Sudden changes in financial situations may be the result of exploitation.
  • Bedsores, unattended medical needs, poor hygiene, and unusual weight loss are indicators of possible neglect.
  • Behavior such as belittling or threats and other uses of power and control by spouses are indicators of verbal or emotional abuse.
  • Strained or tense relationships, frequent arguments between the caregiver and elderly person are also signs. When one or several of these signs are present, church workers should consider reporting an abuse claim to authorities.

3. Responsibility for Reporting Abuse

Similar to child abuse reporting laws, clergy may be mandated to report suspected elder abuse depending on your state’s laws. To find out if you’re a mandatory reporter of your state go to your state’s Department of Aging. Google your state’s Department of Aging to find the web address for your state. For example, a pastor in Illinois would go to the Illinois Department of Aging’s website and look under Elder Abuse and Prevention where it shows that clergy are not on Illinois’ list of mandatory reporters. The National Center on Elder Abuse also provides a directory for prevention resources by state, which can lead you to your state’s reporting laws.

In the article “The Risks of Not Reporting Abuse,” Richard HCopyammar states, “Ministers are specifically identified as mandatory reporters under a few [state] statutes. But even if they are not, they may be mandatory reporters if they fall within a listed classification, such as school or child care workers and administrators, or counselors.” Though Hammar is speaking of reporting child abuse, many state laws follow similar statutes for elder abuse.

If you are a mandatory reporter in your state, you may be required to report both suspected and actual cases of abuse. Failing to report what you know, could be considered a misdemeanor. The Administration of Aging encourages reporters to call 911 or a local police force if someone is in immediate danger, otherwise, you can find a reporting number for your state by visiting the Eldercare Locator website or calling 1-800-677-1116.

It’s important to protect older adults in our congregations, especially when they are incapable of protecting themselves. If you haven’t created policies for protecting the elderly from abuse in your church, make this an agenda item for your next board or staff meeting to start crafting these plans.

Managing Volunteers on Workers’ Compensation: Key Considerations for Churches

Discover how churches can manage volunteers on workers’ compensation, including liability concerns and compliance with state laws.

Q: We have a volunteer who gives a lot of time, maybe 20-30 hours a week. We do not pay him. He is receiving workers’ compensation from an ankle injury. One of our board members is concerned that there may be some liability issues for the church in having him volunteer that many hours while he is on workers’ compensation. Is this a valid concern?


Calculating benefits

Workers’ compensation benefits are based on the nature and degree of an injured worker’s work-related injury. “Total disability” benefits may be awarded upon a finding that the injured employee can no longer perform compensated employment.

As a result, a person’s eligibility to receive total disability benefits is directly affected if he or she begins performing compensated employment.

And, such employment may not only result in a discontinuation of benefits, but also a legal obligation to return benefits already paid.

Is a church subject to any penalties if it knowingly hires and compensates a person who is receiving workers’ compensation benefits? In most cases, the answer is no.

It is the employee, and not the employer, who may be required to return benefits paid while he or she was earning wages from a job.

Consider these precautions

Still, it is a “best practice” for churches to consider the following precautions: If a church employee is injured on the job (either at church or at a “second job”), and is receiving workers’ compensation benefits, be sure the employee is legally permitted to perform compensated employment before allowing him or her to continue working.

Notification requirements

If a church employee is injured on the job (either at church or at a “second job”), and is receiving workers’ compensation benefits, be sure the employee complies with any “notification” requirements prescribed by state law. Persons receiving workers compensation benefits may be required to notify a state agency if there is any improvement in their condition, or if they perform compensated employment. Failure to do so may make the recipient legally obligated to return some or all of the workers’ compensation benefits that were paid.

Note that an injured employee is performing “compensated employment” (which may jeopardize eligibility for workers’ compensation benefits) if he or she is receiving compensation for performing services. The fact that the amount of compensation is small may be irrelevant. And, the employee cannot avoid disqualification by characterizing church compensation as “love gifts.”

Understanding the Americans with Disabilities Act

If your church has at least 15 employees, and is engaged in commerce, then you are subject to the Americans with Disabilities Act. This Act generally prohibits covered employers from discriminating in employment decisions on the basis of the disability of a person who is able to perform the essential functions of a job with or without reasonable accommodation by the employer. There are exceptions. For example, churches are permitted to discriminate on the basis of religion in their employment decisions. Many states have their own disability laws, and some of these laws apply to employers with fewer than 15 employees (and none requires interstate commerce).

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Using Tech to Improve Church Security

Pros and cons of security technology.

Last Reviewed: February 11, 2025

Like security guards, crime-fighting technologies should be implemented as a result of either or both of the following grounds:

(a) A legal duty to install technological devices may exist because the risk of shootings or other violent crimes on church property is highly foreseeable based on the following factors:

  • Whether any criminal conduct previously occurred on or near the property;
  • How recently and how often similar crimes occurred;
  • How similar the previous crimes were to the conduct in question; and
  • What publicity was given the previous crimes to indicate that the church knew or should have known about them?

(b) The use of one or more technological devices is deemed necessary to further a church’s theological and biblical principles, whether or not legally required.

In evaluating the feasibility of various technologies to prevent or reduce the risk of shootings in public schools, the United States Department of Justice noted that the effectiveness, affordability, and acceptability of each technology must be considered. To illustrate, many church leaders would regard metal detectors at church entrances to be unacceptable, even if affordable and effective, because they are incompatible with the concept of “sanctuary” and are at odds with biblical assurances of providence and divine protection. For many smaller churches, such devices would be unaffordable.

Listed below are three different devices that often are used to prevent or reduce the risk of crime. In each case, church leaders should consider the device’s effectiveness, affordability, and acceptability in evaluating its usefulness.

Surveillance Cameras

Surveillance cameras ordinarily cannot prevent shootings and other violent crimes on church property.

Cameras can act as a deterrent to crime, provide a record of what happened, allow church staff to monitor the entire church campus from a single location, and expedite a call to the police.

The downsides? Cameras are expensive and must be monitored by humans with limited attention spans. Cameras also require a level of technical expertise to select and operate. Using cameras in a church may also lead to some debate among members. Cameras are also limited in scope—they cannot provide full coverage of a church campus.

Metal Detectors

While metal detectors may be anathema to many church leaders, they should be considered in terms of their effectiveness, affordability, and acceptability. However, few churches, even those in high crime areas, use them.

And, while they work very well and are considered a mature technology, metal detectors are very expense. They also require someone who is trained and can interpret the results.

Entry Control Devices

There are four ways that places of public accommodation can permit or deny access.

The first and most common approach is manpower intensive, and the remaining three employ technology devices. These four approaches are:

  • A security guard controls entry; ID cards or other means of identification may be checked.
  • Electronic devices, such as a card reader, check special ID cards or badges issued to persons whose access is permitted. Viable card technologies for schools include bar codes or magnetic strips for card-swipe readers (such as those used for most credit cards) or passive or active radio frequency (RF) cards for proximity readers, which can validate a card several inches to several feet away (depending on the cost of the system).
  • A PIN number is issued to persons whose access is permitted, and such persons enter the number on a keypad to gain admittance.
  • A biometric device for feature recognition.

Such measures, like the use of metal detectors at church entrances, would not stop an armed and dedicated assailant. In addition, they would not be acceptable to most congregations since:

  • They would exclude visitors from attending church.
  • They would not accommodate members who forget their badge or card, or forget their PIN number. This could happen to any member, but the elderly would be most vulnerable to unintended exclusion.
  • Card readers do not read cards that have become demagnetized.
  • In the case of keypads and card readers, there is no way to ascertain that only a single authorized person is entering, since unauthorized persons could “tailgate” (follow an authorized person through the checkpoint).
  • Cards and badges can be stolen and used by unauthorized persons.
  • The cost of a card or badge reader, or keypad system, can be substantial, especially if used at more than one entry. e prospect of unhappy church members standing outside in the rain, unable to enter their church because of a machine malfunction, is an unpleasant but virtually certain scenario.
  • Keypads and card readers are prone to malfunction. The prospect of unhappy church members standing outside in the rain, unable to enter their church because of a machine malfunction, is an unpleasant but virtually certain scenario.

Some churches use keypads or card readers during the week to restrict access to church employees.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Church Construction: Building With Security in Mind

Security elements to consider when designing a new building.

Last Reviewed: February 11, 2025

Aesthetics and acoustics used to be the cornerstones of church construction. Today, these concepts are still important, but rising crime rates have added another one: security.

Not long ago, a pastor noticed one of his church’s four-wheeled dollies had been loaded with expensive sound equipment and was sitting beside a propped-open door. When he looked out the door, a van abruptly sped away. This happened on a normal weekday, while church employees were in the building.

Criminals would find it just as easy to walk into the average church office on a weekday, hold a weapon to a staffer’s head, and start making demands.

The days of confidently unlocking the church in the morning and leaving it open all day have passed—if they ever truly existed. If you’re planning to remodel, expand, or even build a new church building, it’s time to make some design decisions that can improve the safety of the people around you and protect the assets you steward.

Access Control

Limiting entry to your building is one of the most basic elements of church security, and you have many ways to do it. Your options range from simple deadbolt locks to electronically controlled access systems.

Locks are the most common option. They’re affordable, easy to install, require little maintenance, and are pretty effective at keeping people out. However, users can compromise their effectiveness by hiding keys outside the building or distributing keys without a monitoring system. One costly drawback is that a locksmith must re-key the whole building if a key is misplaced, lost, or stolen.

For best results, your church should limit key distribution. By placing an identifying serial number on each key, you can track who has which one. When someone leaves your organization, make sure that person returns the same key that you gave him or her.

Electronic systems are becoming popular with churches because they provide more flexibility than locks. They’re costlier and more complex to install, but they come with a wide variety of options that can help to justify their expense.

For example, you can program the system to limit admission to certain sections of a building at certain times of the day. You can make some parts of the building, such as the office area, accessible only to people who hold a certain key card or know a special password. In addition, you can cancel a lost or missing key card instantly without rekeying an entire building.

Zone defense

Theft is no longer a crime committed only in the dark of night. Today’s thieves are brazen enough to walk into a church during business hours or during an activity, gather the items they wish to steal, and then calmly make their getaway.

Design your building so that it can be locked in zones to provide secure havens for the staff people inside throughout the week. For example, you can allow visitors access to a lobby area but lock the office suite and remainder of the building. This gives you time to determine a visitor’s intentions before allowing him or her access to other parts of the facility. Another option is to lock the main doors and give your secretary the ability to “buzz” visitors in after screening them using an intercom and video monitor.

You’ll want to protect areas that are highly valued or are susceptible to vandalism. Your school or nursery areas also require enhanced protection. For nurseries, create a check in and check out area that will impair someone from forcibly removing a child from the church or school’s custody.

Finally, consider providing a secure location for counting church offerings. While most cash control measures are procedural, this is another area in which a church’s design can improve security. If a school for criminals existed, one of the primary lessons would be that churches collect money on Sundays and Wednesdays.

Fire Safety

When securing your building, don’t compromise fire safety. Equip exit doors with crash bars instead of deadbolts, so that people can leave the building quickly in an emergency. You may wish to consider crash bars that set off an audible alarm when someone pushes them, so people won’t prop doors open and defeat your security efforts.

Security Alarms and Video Cameras

In today’s climate, experts often recommend a professionally installed, monitored, and maintained security system to protect your buildings. With central station monitoring, your building is under watch 24 hours a day, 365 days a year. When your system senses an emergency, a signal goes directly to the monitoring station. Trained professionals identify the signal—such as a burglary or other emergency—and notify you and the proper authorities.

For an added layer of protection, you can also install video cameras. These are valuable for a number of reasons. Not only do they allow staff to view target areas of the property, but they can also record valuable information that can help law enforcement apprehend and convict criminals. Today’s cameras are small enough to be hidden inside exit lights, so they don’t draw attention to themselves or detract from your church’s appearance.

Make Security Your Cornerstone

Many people treat churches with special respect. However, some criminals intentionally pursue ministries because they perceive them to be easy targets. As a result, churches and related ministries are not exempt from the criminal elements facing any other organization. While you cannot hope to avoid all possible threats, there are many things you can do to minimize them, starting with basic church design. Make security the cornerstone of your building and you can help protect the people in your ministry and the assets in your care.

Steve Edmonds is a senior loss control specialist for Brotherhood Mutual Insurance Company. This article was adapted, and used with permission.

To learn more about how to build a safe church, purchase the downloadable resource Building with Safety in Mind, available on ChurchLawAndTaxStore.com.

Legal Requirements for Church Pastors Doing Weddings

This eight-point checklist keeps the basics straight for pastors.

Our associate pastor was ordained recently, and is about to perform his first wedding. He is confused about the legal requirements that apply. What should he know?

Here is a checklist of items to consider before performing a marriage:

Am I legally qualified to perform a marriage according to the law of my state? 

Review your state’s law on the qualifications of ministers to solemnize a marriage. If in doubt, contact your local recorder’s office or the office of the attorney general for an interpretation.

Am I legally qualified to perform a marriage according to the law of another state? 

Ministers occasionally are asked to perform a marriage in another state. Whether you can legally will depend on the law of that state. See if you can find it online. Or contact the recorder’s office for the county where the wedding will be performed. Ask if you are authorized to perform the marriage and, if so, what conditions or requirements apply.

Is the engaged couple legally capable of marrying? 

You will need to check your state law for the legal qualifications for marriage. Every state lists certain conditions that will limit a person’s legal right to marry, or even prohibit it. Common examples include persons who are below a specified age, or persons who are too closely related. During premarital counseling, be sure to verify that the couple meets all of the eligibility requirements specified by your state’s law.

Does the engaged couple meet marriage license requirements? 

Be sure you explain to the couple the marriage license requirements prescribed by state law. Again, you need to be familiar with these. They can be obtained from your county recorder’s office or the office of your state attorney general.

Is the engaged couple’s marriage license valid and current? 

Be sure that the couple has a valid marriage license with an expiration date later than the date of the marriage. Check the license several weeks prior to the wedding so that any problems can be resolved without changing the date of the wedding.

Is the license valid with the county? 

Be sure that the marriage license is valid for the county in which the marriage will occur. Generally, a marriage license is valid only if the marriage occurs in the county in which the license was issued.

Am I keeping good records? 

Be sure you make a record of each marriage that you perform, in the manner prescribed by your state law.

Did I complete a certificate of marriage?

Be sure to complete a certificate of marriage (if required by state law), and return it to the appropriate government office.

Remember, if you have any questions, contact the county recorder’s office for information. Many have prepared helpful resources for ministers to assist them in fulfilling the legal requirements. Also, note that in some states an office other than the recorder’s office will have information on marriage requirements. If so, the recorder’s office will be able to direct you to the correct office.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Best Practices for Managing Church Finances and Controlling Expenses

Learn essential practices for effective church financial management, from controlling expenses to safeguarding funds.

Last Reviewed: January 26, 2025

Church leaders who keep expenses within an approved budget will impress their members. A good budget must build in enough allowance for variations, of course, but a reasonable, consistent pattern of expenses will be comforting to a congregation.

By contrast, lack of wisdom or integrity in people who handle expenses will often have an adverse affect on a church budget. Giving should be to the Lord, not in relation to where the money is spent. Nonetheless, congregants may give less if they lose faith in how church leaders are spending money.

The pastor has a great responsibility to interpret—from the pulpit and in printed communication—the financial condition of the church. This includes providing information on both revenues and expenses. The church might also consider the following safeguards on the ingathering and disbursement of funds:

Controls on Expenses

Three elements are key to controlling the disbursement of church funds and safeguarding them from misappropriation:

The person who approves purchases should not prepare the checks for payment.

The person who prepares the checks should not be authorized to sign them.

The check signer should not be the person who approves invoices for payment.

In many small churches, the same individual may perform all three of the above procedures. That’s not an ideal situation and one that could lead to a problem somewhere down the line. At the very least, a church should appoint different individuals to count weekly offerings as to pay the bills. But segregating the duties of purchase approval, check preparation, and check signing is the best way to control the disbursement of funds.

Safeguards

Two signatures. More than one signature should be required on checks over a certain amount. The dollar amount ($500, $1,000, $5,000) could vary, depending on the size of the church. One signature is generally adequate on checks of a modest amount.

The level of a church’s controls on expenditures should help you determine when more than one signature is necessary. For example, if a large church has a business administrator who approves purchases, and all check requests require the approval of the church treasurer before checks are written, then one signature may be sufficient for most checks. However, if a church has no budget and no written procedures for disbursing funds, requiring two signatures on all checks should help offset the missing controls.

Limited signers. Access to a church checking account should be limited to a few individuals. Having more than one signer is very helpful when the treasurer is on vacation or unavailable. But church pastors should not be authorized to sign checks. That would be a serious breach of good internal control.

No blank checks. Checks should never be signed in advance of filling in the amount of the check. Use petty cash for minor cash expenditures. Larger expenditures that might require an immediate disbursement are better handled by establishing open accounts with vendors or charging items on a church credit card. Otherwise, an expenditure should wait until an exact amount can be determined and documented.

More than one account. One bank account is sufficient for a church if its accounting system breaks down various types of funds (for example, operating, building, and scholarship). However, if the church has trust or endowment funds, those funds should be handled through a separate bank account.

Spending Policies

Your church could adopt a number of policies on how it spends money. Some of those policies:

Your church would be wise to establish criteria for individuals who may receive assistance. It should also adopt policies on how benevolence funds should be disbursed. A board-approved benevolence fund is an excellent way to handle gifts for needy individuals.

type of payment. The church board should decide if actual travel expenses should be reimbursed or if it should use a per-diem method. It should also state whether it will reimburse a staffer for the use of a personal vehicle and, if so, at what rate per mile.

Type of transportation. The issue to be decided here is whether the church will pay for air travel and under what circumstances.

Family travel. Will expenses be reimbursed for a pastor’s spouse and children if they accompany him/her on church business? If so, how will the expenses be allocated? How will that be reported to the Internal Revenue Service?

How to Pay Bills

Most bills for a church can be paid once a month. Payments should be based on original invoices and supporting documentation, however. If payment is based on copies of original documentation, it can be easy to pay the same item twice. Invoices should be checked for accuracy before being paid.

Payments should not be made from month-end statements. Typically, such statements do not include the details of products or services provided and are not an adequate basis for payment.

When each check is written, the supporting document should be marked with “paid” as well as the date and check number. If someone other than the treasurer prepares the checks, the treasurer should review supporting documents before signing the checks. The supporting material should then be filed in a paid-bills file alphabetized according to payee.

Checks should never be written payable to cash because it is essential to know what funds are used for. It is acceptable to issue checks to petty cash, however, when replenishing that fund.

How to Approve Expenditures

The approval process for expenditures depends on the policies of a church. In a small church, the treasurer may be authorized to approve expenses if funds are available in an approved budget. In a larger church, an elaborate system of expense approvals may be necessary to manage disbursements.

Although every church should have a budget, many do not. In the absence of a budget, the treasurer must use his/her judgment about the appropriateness of an expense as well as whether funds are available to pay for it. This puts undue pressure upon a treasurer and could be a setup for mismanagement.

Many expenses relate to departments of the church such as Sunday school, children, young people, seniors, and maintenance. It’s a good idea to require the approval of a departmental representative before an expense is paid.

Documentation of Expenses

Every check should have some sort of written document to support it—an invoice, petty-cash voucher, travel-expense report, payroll time sheet.

Written documentation may not be required in all cases, however. For example, a church may have a policy that no documentation is required for travel-related expenses of $75 or less (other than airfare or motels). This policy is reasonable and within guidelines of the IRS.

In other cases, there may be a good reason why written documentation is not available. The treasurer should determine when the lack of documentation is acceptable. For example, an honorarium may be requested for a visiting speaker. A written check request indicating the date of the speaking engagement and the event would normally be sufficient.

Or, a pastor may have lost an invoice for a ministry expense he or she paid out of pocket. If the amount paid is within reason, a written explanation of the item and why documentation is missing should be adequate. Good management of a church’s funds requires an effective system of disbursing funds. Some of the effects of a proper system include adequate internal controls over all expenditures, proper disbursements of funds, and efficient reporting of the use of funds.

Related Topics:

Are Designated Gifts for Individuals Tax Deductible?

Find out how designated gifts for individuals can meet IRS requirements for tax-deductible contributions.

Last Reviewed: January 24, 2025

It’s a common scenario at local churches across the country: A member faces a significant medical condition, racking up major debt in the process. Others at the church learn of this challenge and wish to help. Can they donate to the church, designate their gifts for that member, and still receive tax deductions for the contributions?

IRS Guidelines for Designated Gifts

The Internal Revenue Service (IRS) has addressed this issue in several rulings. According to Revenue Ruling 62-113:

  • If contributions are earmarked by the donor for a specific individual, they are treated as gifts to that individual and are not tax-deductible.
  • A deduction is allowable if the gift is intended for the use of the organization and not for an individual.

The key test is whether the organization has full control and discretion over the donated funds to ensure they are used for its functions and purposes.

Ensuring Tax Deductibility

To meet IRS requirements, contributions to a church’s benevolence fund can be deductible, even if a donor mentions a beneficiary, if the following conditions are met:

  • The donor’s recommendation is advisory only.
  • The church retains full control over the donated funds and their use.
  • The donor understands that their recommendation is non-binding and that the church can accept or reject it at its discretion.

By adhering to these principles, churches can ensure that such contributions align with IRS regulations.

Practical Application for Churches

Here are some steps churches can take to ensure compliance:

  1. Create a formal benevolence fund with written policies outlining the purpose, criteria, and distribution process for funds.
  2. Ensure donors understand that their recommendations are non-binding and that the church retains full discretion over the use of funds.
  3. Keep detailed records of contributions and distributions, including documentation of the need being met.

Conclusion

While designated gifts for individuals present unique challenges, they can be tax-deductible when handled appropriately. By following IRS guidelines, churches can provide support to members in need while ensuring compliance.

For more details on these types of contributions, check out chapter 8 of Richard Hammar’s Church & Clergy Tax Guide.

FAQs About Designated Gifts

  • Can donors specify an individual and still claim a deduction? No, unless the church retains full control and discretion over the use of the funds.
  • What documentation is required for benevolence distributions? Churches should document the need and the distribution process thoroughly.
  • Are all contributions to benevolence funds tax deductible? Only those where the church maintains discretion and control meet the requirements.
  • What if a donor insists on a specific recipient? Contributions in this case are generally not tax deductible as they serve the individual, not the organization.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Rules for Valuing Property Donations to Churches

Discover key IRS rules and best practices for valuing property donations to ensure compliance and donor satisfaction.

Last Reviewed: January 24, 2025

Q: A member recently donated his home to our church. Are there specific rules for the church to value this property, or does the burden rest upon the donor to assign value?


When a church member donates property, such as a house, there are important IRS rules and best practices to follow for valuation. Here’s what churches and donors need to know to ensure compliance and protect tax deductions.

Does the Donor Need to Assign a Value to the Property?

Yes, donors are responsible for assigning a value to donated property. If the claimed deduction exceeds $5,000, the donor must obtain a qualified appraisal from a qualified appraiser. This appraisal must meet specific IRS requirements, including:

  • Being conducted no more than 60 days before the donation date.
  • Prepared according to generally accepted appraisal standards.
  • Excluding any prohibited appraisal fees, such as those based on the donation’s value.

What Documentation Does the Donor Need?

The IRS requires donors to submit an appraisal summary using IRS Form 8283. Here are key requirements:

  • Complete Section B of Form 8283 for donations over $5,000.
  • Attach the qualified appraisal to the tax return if the donation exceeds $500,000 (or $20,000 for artwork).
  • Ensure all required information is included to avoid disallowance of the deduction.

Donors should also understand that property grouped as “similar items” is treated as one property for IRS thresholds.

What Are Best Practices for Churches?

While valuation is the donor’s responsibility, churches can play an important role by providing guidance:

  • Inform donors about IRS requirements for appraisals and documentation.
  • Encourage donors to consult a tax professional for assistance.
  • Provide links to IRS resources, such as instructions for Form 8283, to help donors comply.

By supporting donors, churches can help prevent misunderstandings and ensure compliance with IRS regulations.

FAQs About Valuing Property Donations

  • What qualifies as a “similar property” for IRS thresholds? Properties with comparable characteristics, such as multiple homes or land parcels, are treated as one property for valuation thresholds.
  • What happens if a donor doesn’t get a qualified appraisal? The IRS may disallow the deduction if appraisal and documentation requirements are not met.
  • Are there exceptions to the appraisal requirement? Yes, certain publicly traded securities or donations of vehicles where deductions are limited to sale proceeds may not require appraisals.
  • How should churches handle donor misunderstandings? Be proactive by educating donors on appraisal requirements and offering resources for compliance.

For more guidance on property donations, refer to Church & Clergy Tax Guide for expert insights.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Resolving Church Staff Disputes: The Role of Mediation and Arbitration

Discover the advantages of mediation and arbitration for resolving church disputes. Reduce costs, preserve relationships, and align with biblical principles by adopting a clear arbitration policy.

Last Reviewed: January 28, 2025

Disputes can occasionally arise between church employees or between an employee and the church itself. These disputes are often:

  • Costly
  • Time-consuming
  • Damaging to relationships

If an employee sues the church, the lawsuit may not be covered under the church’s liability insurance policy, due to exclusions for employment practices.
Church board members must take steps to reduce the likelihood of such conflicts.


The Case for Mediation and Arbitration

One solution worth serious consideration is mediation and arbitration.
Using informal dispute resolution methods is an idea whose time has come, especially given the deficiencies of the civil court system:

  • Litigants often leave as enemies.
  • Court delays are notorious.
  • Legal expenses can be substantial.
  • Court results sometimes feel arbitrary.

Many business corporations now use alternative dispute resolution (ADR) methods—and churches can do the same.


How Mediation and Arbitration Work

The process is straightforward:

  1. Mediation first:
    Parties agree to attempt resolving their dispute through nonbinding mediation.
  2. Arbitration if necessary:
    If mediation fails, the parties present their dispute to one or more arbitrators, who make a binding decision.

Using this approach typically results in:

  • Faster resolutions
  • Lower costs
  • Fairer outcomes

Two Additional Reasons to Consider Arbitration

Beyond speed, cost, and fairness, churches have two additional compelling reasons to consider arbitration:

  1. Most Church Lawsuits Involve Insiders
    Many lawsuits against churches are brought by insiders—members and employees. Arbitration is particularly well-suited for these types of disputes.
  2. Scriptural Support for Internal Resolution
    In 1 Corinthians 6:1-8, the apostle Paul urges Christians to resolve disputes within the church, rather than taking them to secular courts.
    This biblical principle aligns closely with the concept of church-based arbitration.

🔹 Quick Benefits of Arbitration for Churches

  • Faster resolutions — Avoid court delays and lengthy trials.
  • Lower costs — Save on attorney fees and court expenses.
  • Fairer outcomes — Use neutral arbitrators who understand church matters.
  • Relationship preservation — Resolve disputes without deepening conflict.
  • Scriptural alignment — Follow 1 Corinthians 6:1-8 guidance for internal resolution.
  • Insurance advantages — Coordinate better with your liability coverage.

Tip: Always involve your insurance company and legal counsel when drafting and adopting an arbitration policy.


Key Considerations When Drafting an Arbitration Policy

If your church decides to implement arbitration, keep the following important points in mind:

1. Implementing the Policy

  • The best approach is for the church membership to adopt an arbitration policy as an amendment to the church bylaws.
  • Since members are bound by the bylaws, this method gives the best chance of making the policy binding.

What Types of Disputes Will Be Covered?

Decide carefully which disputes will be subject to arbitration:

  • Disputes relating to church affairs?
  • Disputes between a minister and members?
  • Disputes between a minister and the board or the church?
  • Disputes between employees and the church?

Recommendation:
Avoid covering disputes solely between members, such as a member tripping and falling at another member’s home. These are not appropriate for church arbitration.


2. Conducting the Arbitration Process

Key questions to address:

  • Selection of Arbitrators:
    Typically, each side selects one arbitrator, and those two choose a neutral third arbitrator.
  • Formality of Proceedings:
    Arbitration procedures are often informal. Involvement of attorneys may be optional.
  • State Law Compliance:
    Some states have arbitration statutes that offer helpful guidance. Always consult state law.

3. Involving the Church’s Liability Insurance Company

Before adopting an arbitration policy:

  • Contact the church’s insurer to confirm whether the company will:
    • Recognize and honor the arbitration policy
    • Pay arbitrators’ awards up to policy limits

Important:
If you later change insurance companies, obtain the same assurances from the new carrier.
The arbitration policy should condition its use on acceptance by the church’s liability insurer, whoever that may be.

Also, work closely with legal counsel to draft the policy properly.


A Wise Step for Church Leaders

We are living in a time of litigation explosion, and churches are not immune.
Many church-related lawsuits today are employment-related.

If you agree that civil litigation is:

  • Expensive
  • Time-consuming
  • Often arbitrary

then it’s time to seriously consider alternatives like arbitration.
As a church board member, you owe it to yourself—and to your congregation—to explore this effective method of resolving disputes.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Can a Church Pay a Bonus for a Pastor’s or Worship Leader’s Creative Work?

Churches can compensate employees for creative works if payments are reasonable and based on industry standards. Here’s what to know.

Last Reviewed: January 30, 2025

Q: Can we pay a ‘bonus’ to a pastor or worship leader for a successful derivative work (i.e. a worship song or a book based on sermons) they created and the church owns?


Yes, as long as the overall compensation of the employee is reasonable

A church cannot compensate any of its employees more than a reasonable amount. A reasonable amount is determined by experts using a facts and circumstances test. This test looks at the totality of the circumstances and compares similarly situated employees working for similar employers. If an employee creates something of great value, then it is reasonable to compensate that employee based on the increased value to the employer and not just the services performed.

An example

When University of Florida professors created “Gatorade” to assist their football team, they created property that generates more than $12 million in royalties annually for the benefit of the university. It is entirely reasonable that the professors be paid a percentage of the royalties (reportedly 25 percent of the royalties received) as compensation. Their compensation far exceeds that of professors that only teach and conduct research with unknown value since they are only compensated for the value of their current services.

Another example

One of the most popular Christian songs is “Shout to the Lord,” authored by Darlene Zschech and owned by Hillsong Music, a part of Hillsong Church in Sydney, Australia. At the time of the writing of this song, Zschech was a part-time worship leader at Hillsong Church. Under copyright law, all songs written by employees within their duties are owned by their employers. According to estimates, this one song generates millions of dollars of royalties for Hillsong Music. It would be entirely reasonable to compensate a part-time worship leader a percentage of the royalties because of the value created by that one song.

I suggest that any bonus be based on comparable data. For example, if songwriters are typically compensated at the rate of 10 percent of the royalties, it would be unreasonable to give them a bonus of 50 percent of the royalties.

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

How to Receipt Charitable Contributions from Divorced Couples

Learn the proper way to receipt charitable contributions from divorced couples to maintain clear and compliant records.

Last Reviewed: January 24, 2025

How should a church receipt charitable contributions for a married couple who gets divorced during the year? Proper handling is essential to ensure compliance with tax regulations and to avoid confusion.


General Guidelines for Receipting Contributions

In most cases, apportionment of income and deductions follows the source of the income. For charitable contributions:

  • Wage income is allocated to the spouse who earned it, as reported on their Form W-2.
  • Personal deductions, like charitable contributions, are generally divided equally unless evidence shows a different allocation is appropriate.
  • If an asset solely owned by one spouse is donated, any tax implications related to that asset should be attributed to the owner.

How Churches Should Allocate Contributions

A church should generally assume that charitable contributions made by a couple prior to their divorce are split equally between the two. For example:

  • If a couple divorces in November, the total contributions made before the divorce should be divided equally.
  • Each spouse should receive a receipt reflecting 50% of the total contributions made during the year up to the time of the divorce.

This approach ensures fair allocation and simplifies record-keeping for the church.

Exceptions to Consider

There may be situations where a court order specifies how deductions should be allocated. For instance:

  • A divorce decree or property settlement may dictate a different allocation.
  • In such cases, the church should follow the court’s directives when issuing contribution receipts.

Best Practices for Churches

To ensure compliance and clarity:

  • Maintain detailed records of contributions throughout the year.
  • Consult with legal or tax professionals if court orders or unique circumstances arise.
  • Communicate with donors to clarify how their contributions will be allocated and receipted.

Conclusion

Properly receipting contributions from divorced couples is essential for accurate records and legal compliance. In most cases, an equal split is appropriate unless directed otherwise by a court. By following these guidelines, churches can navigate these situations effectively.

FAQs

Can a court override the 50/50 split rule?
Yes, a court order can specify a different allocation for deductions.

Can one spouse claim the entire contribution as a deduction?
Only if evidence shows the contribution was made solely from that spouse’s income or assets.

What if the couple made separate contributions?
The church should issue receipts reflecting each individual’s contributions separately.

Should the church consult a lawyer for these situations?
Consulting legal or tax professionals is recommended for court-ordered or complex cases.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Managing Restricted Funds: Guidelines for Church Gifts

Best practices for managing restricted funds and implementing policies for accepting and handling church donations.

Last Reviewed: January 24, 2025

Whether it is a car, jewelry, or real estate, every church has encountered gifts that come with challenges. Some gifts include restrictions, while others come with ongoing costs or minimal practical value. Navigating these situations effectively ensures the church remains mission-focused while managing donor expectations.

Challenges with Restricted Funds and Gifts

  • Restrictions on use or sale: Gifts with donor-imposed restrictions can delay church plans or result in incomplete donations.
  • Maintenance costs: Noncash gifts, such as property or vehicles, can lead to unexpected expenses for insurance, storage, or upkeep.
  • Donor expectations: Rejecting or disposing of gifts may risk donor relationships, especially if expectations aren’t managed upfront.

Benefits of a Gift Acceptance Policy

Adopting a formal gift acceptance policy provides clarity and guidance for handling unusual gifts. It helps the church:

  • Define acceptable and unacceptable gifts
  • Outline receipting and valuation procedures
  • Clarify disposal processes for noncash gifts
  • Ensure regulatory compliance

Key Elements of a Gift Acceptance Policy

Acceptable Gifts

The policy should specify the types of gifts the church will accept, such as:

  • Personal property, such as clothing and household goods
  • Transportation equipment
  • Real estate
  • Securities (publicly traded or closely held)
  • Jewelry and collectibles
  • Life insurance beneficiary designations

Procedures and Authorizations

A strong policy outlines procedures for gift acceptance, including:

  • Who can approve or decline gifts
  • Documentation and IRS forms, such as Forms 8283 and 8282
  • Clear processes for handling restricted gifts

Timing and Due Diligence

Timing considerations should address:

  • Deadlines for completing due diligence (e.g., environmental assessments for real estate)
  • Clear transfer of title or removal of restrictions before gift acceptance
  • Quick disposal of gifts not suitable for church operations

Receipting and Valuation

The policy should state that receipts for noncash gifts will only describe the item and not include a valuation. It should also outline accounting practices for recording and disposing of gifts.

Disposal Guidelines

Disposing of gifts thoughtfully is crucial to avoid donor conflicts. Key considerations include:

  • Real estate: Sell quickly if the property cannot be used.
  • Jewelry and collectibles: Use third-party dealers to avoid personal involvement or undervaluing.
  • Household items: Donate to other nonprofits if they don’t align with church needs.

To prevent conflicts of interest, prohibit the sale of donated items to staff or influential members.

Final Thoughts on Restricted Funds

A clear gift acceptance policy protects the church from costly obligations and ensures all gifts align with its mission. It empowers staff to navigate complex donor relationships and meet compliance standards effectively.

FAQs about Restricted Funds

  • What are restricted funds? Restricted funds are donations with specific usage limitations set by the donor.
  • Can churches refuse a gift? Yes, churches can decline gifts that are unsuitable or burdensome.
  • How should churches receipt noncash gifts? Receipts should describe the gift but not include a valuation.
  • What if a donor imposes unreasonable restrictions? Churches should clarify that ultimate decisions about gift use rest with their governing body.

For more expert advice on church finances, visit Church Law & Tax.

This article first appeared in Church Finance Today in December 2012.

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

Understanding the Minister Housing Allowance

The minister housing allowance is a vital tax benefit that clergy can use for housing expenses, reducing their taxable income.

Last Reviewed: January 2, 2025

The minister housing allowance is the most important tax benefit available to ministers who own or rent their home. This article breaks down how it works, who qualifies, and the key rules to follow to take advantage of this essential tax break.

  • Ministers can exclude a portion of their income designated as a housing allowance from federal income taxes.
  • Eligible expenses include mortgage payments, rent, utilities, and home maintenance.
  • The allowance must be designated in advance and cannot exceed the fair rental value of the home, including utilities.

What is the Minister Housing Allowance?

The housing allowance exclusion allows ministers to exclude from federal income taxes the portion of their salary designated as a housing allowance, provided:

  • The allowance represents compensation for ministerial services.
  • The allowance is used to pay for eligible housing expenses.
  • The amount does not exceed the fair rental value of the home, including utilities.

Eligible housing expenses include mortgage payments, rent, utilities, repairs, furnishings, insurance, property taxes, and maintenance costs.

Key Rules for Housing Allowance Designation

To maximize this tax benefit, it’s important to follow these guidelines:

  • No Retroactive Designation: Housing allowances cannot be designated retroactively. They must be approved in advance.
  • Documentation: Most churches base the allowance on a housing expense form submitted by the pastor to the board or compensation committee.
  • Amendments: Housing allowances can be amended during the year to reflect changes in expenses, but amendments only apply prospectively.

Who Qualifies for the Housing Allowance?

Only credentialed ministers performing ministerial services are eligible. For example:

  • Ordained, licensed, or commissioned ministers qualify if they perform ministerial duties.
  • Non-credentialed church staff (e.g., youth directors or music ministers) are not eligible, even if they perform some ministerial duties.
  • Credentialed ministers performing non-ministerial duties (e.g., bookkeeping) are not eligible for a housing allowance.

Important Considerations

There are additional factors to keep in mind:

  • Taxable Excess: The allowance is taxable to the extent it exceeds the lesser of actual expenses or the fair rental value of the home. Churches should remind ministers of this requirement.
  • Self-Employment Taxes: The housing allowance exclusion applies only to federal income taxes. Ministers must include the allowance in self-employment tax calculations.
  • Reporting: Churches are not required to report the housing allowance on a minister’s W-2 form. Some include it in box 14 (“other”), but this is optional.

FAQs: Minister Housing Allowance

1. What expenses qualify for the housing allowance?

Qualifying expenses include mortgage payments, rent, utilities, insurance, repairs, and home maintenance.

2. Can a housing allowance be amended?

Yes. Churches can amend the allowance during the year, but changes apply only to future expenses.

3. Are housing allowances subject to self-employment tax?

Yes. The allowance is excluded from federal income taxes but must be included when calculating self-employment taxes.

4. Can non-credentialed church staff receive a housing allowance?

No. Only ordained, licensed, or commissioned ministers performing ministerial duties are eligible.

The minister housing allowance is a powerful tax benefit for clergy. Churches and ministers should work together to ensure allowances are designated properly, documented thoroughly, and compliant with IRS rules.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

How to Engage Millennials in Church Capital Campaigns Successfully

Discover how to engage Millennials in church capital campaigns with strategies that focus on authenticity, inclusivity, and meaningful giving.

Last Reviewed: January 27, 2025

This was the largest capital campaign in our church’s history, so my wife and I were asked to meet face-to-face with key leaders.

As Karen and I drove to Caribou Coffee to meet a twenty-something couple in our church, I thought, This meeting may not be easy.

Mark and Debbie care so passionately about social justice, they moved into the lowest-income apartment complex in our area, and they have the bedbug bites to prove their commitment. Now we’d be asking them to give, when much of their gift would build a new sanctuary for our suburban congregation.

We warmed up by asking what Mark and Debbie thought about Sunday’s sermon, when our senior pastor kicked off the public phase of the campaign with a passionate message about God’s call to Abram to “Go.”

Mark was direct: “C’mon, just because God told Abram to go to a new land, doesn’t mean God is telling our church to go to a new building.”

Hmmm. Raising money from Millennials is not going to be easy, I realized.

Modifying the traditional campaign

Church capital campaigns follow a pattern: private phase, public phase, advance- commitment night, commitment Sunday, and so on. While this traditional pattern has been tested over decades, it’s important to remember it was not designed by Millennials (people born roughly between 1980 and 2000). In fact, many campaigns essentially write off Millennials and assume the heavy giving will be done by Builders or Baby Boomers. Not surprising, since Millennials have been criticized, as Drew Dyck wrote in Leadership Journal, as “Restless, entitled, bloated self-esteem, desultory work patterns, twitter-sized attention spans—pick your pejorative.”

But our church did not have that luxury: 80 percent of our adults are younger than age 40. Either Millennials got behind this campaign or we didn’t have one.

So we assertively modified the traditional campaign. This led to animated conversations with our capital-campaign consultant. But that give-and-take made the campaign right for our Millennials. It made us appreciate our consultant all the more (because she was willing to adjust traditional approaches but wisely kept us from jettisoning too much). And it led to a campaign that exceeded our expectations. Here are seven lessons we learned.

1. Provide real help for people in real need.

Millennials’ gift to the church, in my opinion, is their outward focus; they define greatness as serving others. When our church bought a 50-year-old plastics factory and wanted to raise money to renovate it for a sanctuary, classrooms, and office, we got questions. Some of our Baby Boomers worried, “Can we make a deserted factory beautiful enough to reflect our worship of God?” Some of our Millennials worried, “Will we make our own church so nice that we hurt our ability to help people in Section 8 housing?” Our campaign’s tagline was “For the Lord, the Lost, and the Least,” and Millennials were the most likely to ask about that final word.

We won over many Millennials by the undeniable fact that this factory was scrappy and that we purchased it at auction for a startlingly low price.

And, we used the campaign to increase our giving to people in need. “We are not going to build this sanctuary on the backs of the poor and the trafficked,” we said publicly. “We are not going to ask our missionaries to live on less for the next two years. Instead, at the very time when we need every dollar for this building, we are going to boost our outward giving by 26 percent.”

Millennials will dig deep as they see your church trying to “live simply so that others may simply live.”

2. Dial down the hype.

Run each statement, fact, goal, or idea you plan to communicate through a brutal-honesty filter, because the Millennial generation is conditioned to distrust the institution and to question the inauthentic.

For example, on our main campaign video, I didn’t say, “In our rented facilities now, children’s ministry is practically impossible.” Instead, I said, “While not impossible to do now, it’s kind of hard.”

This feels counterintuitive, and you may feel you’re lowering urgency, excitement, and the call to action. But authenticity is non-negotiable.

And because Millennials tend to be skeptical, it’s impossible to communicate too clearly or too exactly where all the money is going.

3. Find ways for everyone to make the team.

Recently I heard a fortysomething pastor mock the fact that Millennials grew up on soccer teams where, at the end-of-year banquet, everyone got a trophy. But why not let that dynamic work for you?

Most capital campaigns, to increase giving, create a culture of exclusivity. The private phase focuses on elite gatherings of high donors. That motivated Boomers—”I got on the elite team.” It bothers Millennials. In our campaign, a few Millennials asked, “Are there secret meetings?”

So in our private phase, we insisted that gatherings include not just high givers, but also high servers, people who give generously of their time. We grew the private-phase invitation list to about a third of our entire congregation. And on advance-commitment night, we didn’t restrict the event to our big givers. Instead, we invited anyone who was ready to make his or her commitment early.

Probably the simplest way and best way to ensure that Millennials won’t feel left out is to recruit some Millennials for your campaign leadership team.

4. Talk honestly about debt.

Debt is a fact of American life: for households with credit-card debt, the average is $15,799. But Millennials feel the vise-grip of debt more painfully than most.

Average debt for graduating college seniors is more than $23,000, and recent graduates stumble in paying this back when the only jobs they’re finding are part-time, lower-paying, service-sector ones. Add in a car loan, and an occasional bad spending decision, and you understand why the most common question I got during the campaign was, “I want to give, but I have a lot of debts to pay off. What should I do?”

The “realpolitik” of debt

So it’s not enough to talk in glowing terms about faith and generosity and “not equal gifts but equal sacrifice.” We have to talk about the realpolitik of debt. I wrote a blog post addressing this question and included the following thoughts: “One reason debt is such a pain is that it limits our freedom, it cuts off our choices. I believe that Christians must honor their creditors and pay off their debts: as Paul taught, ‘Let no debt remain outstanding’ (Rom. 13:8). And Jesus teaches in Mark 7:9-13 that it’s not right to use a charitable donation as a way to avoid our prior commitment to love our neighbor. So the painful reality is that paying off your debts must be a high priority for your financial life. Having said that, I do not advise waiting until your debts are fully paid off before giving to God. You need to give for your spiritual health, for your connection to the church, and for your own dignity. Your giving will be lower than you want it to be right now, but over time, as you pay down debts, you will regain the freedom to give more.”

We also asked Dawn, a thirtysomething leader in our church, to give a testimony. She told how in the past year she and her husband had been hit by car repairs, an unexpected home repair, and medical bills, so they were not sure how they could give extra. As they prayed about it, they discovered selling used books and other items online. Many people told me they appreciated her story because it was their story, too.

5. Keep tech relational.

According to a MillennialDonors.com study, 71 percent of Millennials get information about a nonprofit through web searches, so many people assume the best way to motivate their giving is through technology. But in our experience, though tech is helpful, it will not replace relationship; you still need to schedule as many face-to-face meetings as time will allow. And as you do communicate via tech (we used our church website, blog, Facebook account, and Twitter, plus built a campaign microsite and added online giving, which we didn’t have), don’t think “impressive.” Think “relationship building,” which for Millennials means “authentic,” “fun,” “simple,” and “sharing of stories.”

In all our tech strategies, we invited people to tell their stories of generosity and transformation. Some people wrote brief stories; others created YouTube videos.

Our church must be one of the few left in America that does not show videos in worship services, but we got huge wins with a 14-minute video that we showed after services one Sunday. On it, Jeff and Kimberly, a Millennial couple, talked honestly about their marital separation and loss of a child, and how the church had walked with them through those crises.

In another video, our artists created a fun singalong for kids. One young family visited our church for the first time because they saw the video online.

6. Set the threshold low and the participation high.

We had a financial goal, but what we emphasized more was a participation goal: “We want 100 percent of our members and regular attenders to give.” To increase participation, we did two things.

First, we ran a one-fund campaign (as our consultant astutely advised), in which the general fund and building fund and mission fund are combined. That way, every dollar someone has been giving, or starts to give, contributes. It sets the threshold low so that everyone can participate.

Second, we took the traditional gifts chart—we need so many gifts of this amount, and so many of this amount, and so on—and shifted it downward: fewer of the really big gifts, and lots more of the really small gifts. Many Millennials think, I don’t have much to give. We said, “If every college student here gives $10 a week, that would yield more than $150,000.”

How did we do on participation? We hit 81 percent, a little lower than we’d hoped, but we were delighted that 72 commitments came from people who had never given to our church before.

7. Wrestle your demons to the mat (they can tell if you haven’t).

Millennials can read you as a leader. They may not do so perfectly, but in general, their radar picks up whether you are giving sacrificially, whether you are anxious and therefore pressuring people, and whether this campaign is primarily about you. And though they tend to distrust institutions, they will trust a leader who is honest and unafraid to be in personal contact and let them ask hard questions. This is impossible to do, though, if you’re still anxious about whether your church is going to reach its financial goal. To get free from that anxiety, and therefore, to gain an inner freedom that you can extend to others, comes through prayer and hearing the Word of God. We were already into the public phase of our campaign before I got there, primarily through hearing a sermon by our senior pastor.

It also took me time to break through to the freedom of giving sacrificially. I knew the campaign was coming, months beforehand, when the Lord spoke to me about giving a number that was, for me and my wife, radical. Money is inherently self-deceptive, though, so it took fasting and prayer and conversation before we finally could give that number with unity and joy.

But once I was free from anxiety and free to obey, what a freedom I felt to pastor. With the weak I could be tender and genuinely release them from any pressure to give; with the strong, I could challenge them boldly.

And when I saw the results from Commitment Sunday, I rejoiced. It’s not true that Millennials do not want to commit. It may be that we seldom ask them in ways that release their passion: to belong to an authentic community that is making the world a better place.

What to Expect During an IRS Audit of Your Church

Understand the IRS audit process for churches, from documentation to appeals, and reduce audit-related stress.

Last Reviewed: November 26, 2023

An IRS audit of your church can be a stressful experience:

Does the IRS not trust us?

Will we have to pay more out of our already slim budget?

A lot of this worry is unwarranted—the IRS accepts most church tax returns as filed.

The IRS usually audits returns based on a high probability for error or discrepancies among forms, not dishonesty.


Are you using tax preparation software to file your tax returns? Or even your church’s returns? Noted non-profit CPA Michele Wales offers these helpful tips for finding the right software for your needs.


That’s why an IRS audit often ends without any change in reported tax. Some even result in refunds.

Therefore, knowing what to expect of an audit can remove a lot of anxiety.

An audit is just a mutual examination

The IRS—not a third party—will notify your church if they’ve decided to examine a return(s). They’ll ask you to gather the documentation in support of your return(s). And they will decide, in consultation with you, when, where, and how, the examination will take place.

Information exchange happens through correspondence or in-person. It might happen in your home, your place of business, an IRS office, or the office of your attorney or accountant.

You may act on your own behalf during the audit. Or, you can have an attorney, CPA, enrolled agent (someone enrolled to practice before the IRS), or the person who prepared and signed your return represent or accompany you.

If you choose this option, you must give your representative with power of attorney (Form 2848).

When the IRS finishes the examination, they’ll advise you of any proposed change in your taxes, and the reasons for them.

They’ll ask you to sign off on the changes, and pay any additional taxes.

You can appeal the IRS’ findings

If you do not agree with IRS’ proposed changes, you still have options.

If you decide not to sign the agreement form, the examiner will explain your appeal rights. You may request an immediate meeting with a supervisor to explain your position if your examination takes place in an IRS office.

The case is closed when an agreement is reached.

If an agreement is not reached at this meeting or if your examination occurs outside of an IRS office, you will be sent (1) a letter notifying you of your right to appeal within 30 days; (2) a copy of the examination report explaining the proposed adjustments; (3) an agreement or waiver form; and (4) a copy of IRS Publication 5 (which explains your appeal rights in detail).

If, after receiving the examiner’s report, you decide to agree with it, simply sign the agreement or waiver form and return it to the examiner.

If you still do not agree with the examination report, you may appeal your case within the IRS or take it immediately to the federal courts.

For a complete explanation, download IRS Publication 556.

We adapted his article from Richard Hammar’s Church & Clergy Tax Guide.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.
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Zero Percent Church Financing: A Proven Strategy

Discover how Beracah Bible Church built a debt-free facility with faith, practical strategies, and sacrificial giving from its congregation.

Last Reviewed: January 27, 2025

The only time a church mortgage gives any cause to celebrate is when it’s burned. Otherwise, it’s a drain on resources. Interest payments can easily triple or quadruple the cost of a church building.

Beracah Bible Church decided to forgo the joy of mortgage burning for something better: no mortgage at all. Here’s how it did it:

When our church began, our board of trustees quickly agreed that the congregation would function on a “pay-as-you-go” basis. Simply put, this policy allows us to spend only the money already in hand.

Two factors led to this decision: (1) Several churches and religious organizations in our area had been financially irresponsible, thus tainting the reputation of the rest of us. They assumed huge debts for building projects as a “step of faith.” In reality, it was a step of presumption. They were convinced it was “God’s will,” but it became a stone of burden for the whole Christian community.

Their desperate appeals for funds and their defaulting on payments created a negative image. Banks were reluctant to foreclose on religious organizations, but they weren’t eager to deal with any new churches, either. (2) We had no significant borrowing power anyway. Our only collateral would have been the personal property of members, which is what banks were demanding. Rather than asking individuals to cosign, our trustees unanimously endorsed a policy of nonindebtedness. It has served us well for decades.

For the first 15 years, we were content to meet in a series of nine locations for nominal rent, sometimes only the cost of utilities. We started with five families who gathered for worship in a vacant bank building. Later we used the hospitality room of another bank and eventually moved into a house, where we grew to 125.

At first the makeshift locations didn’t bother people; they came for content, not surroundings. But soon the surroundings were interfering with the ministry. We literally had people sitting on one another’s laps.

After three more moves, our people were ready to forsake the nomadic life. The final straw came when we discovered we could be locked out; one Sunday, for instance, “our” meeting place was preempted by an antique show.

It was then that our policy against deficit spending got its greatest test. Already the cash policy had been successful in paying for several church automobiles, a van, and a parsonage. But the huge estimated costs for a modest auditorium and land to expand was a much larger challenge.

One secret to successfully raising money before the construction, we discovered, was to take immediate action. People will give “green money”—their liquid assets, such as checking account funds, while a project is still in the talking stage. But our farmers usually don’t spend their “brown money”— funds invested in the soil—until they see the project actually begin. People don’t like to donate larger sums and then have the church just sit on them. They’d rather have it earning interest until it’s needed.

So we did three things:

  1. We promised donors that their gifts would be invested in a high-interest-bearing fund until the bills started coming in. Thus, we asked them to donate both principal and the potential interest to us, but we, in turn, would be good stewards and invest it wisely until it was needed.
  2. We promised that the money would be used only for the building project. If plans for the construction fell through, we would return their money to them with the interest earned.
  3. We began the construction as soon as we could. Our designer and builder, a professional home builder and member of our board of trustees, estimated the amount necessary to erect only the enclosed shell of the building. Having a finished exterior was important so that we didn’t have a half-finished building deteriorating in the weather.
  4. When that amount was received, we held a groundbreaking ceremony, and construction began on our 400-seat auditorium. Our hope was that, once begun, the building project would not have to be interrupted by lack of funds.
  5. As the foundation was being dug, we were still $34,000 short of what we needed to complete the interior of the building. Humanly speaking, our resources were drained. Our 150 people had given cheerfully and sacrificially. It seemed unreasonable to assume that they could make up the deficit in time. But before the concrete was poured for the foundation, the rest of the money was in hand.
  6. On the day the cement trucks arrived to pour the foundation, my wife went to the mail chute and opened an envelope addressed to the church. The return address was a bank in Midland, Texas, some 250 miles south of Amarillo. Incredulously, she stared at a cashier’s check for $37,000. This was, of course, $3,000 more than we actually needed to complete the building; that money was later used to landscape the grounds and give the place a truly finished look.
  7. Where did the money come from? We still don’t know. We knew our sister church had a faithful ladies’ prayer band, which incessantly prayed for our building needs. The precise connection between that prayer group and the anonymous gift remains a mystery to us all.
  8. Just one year later, on Easter Sunday, we opened the doors for the first worship service in our new debt-free building amid great rejoicing.
  9. Since that time, we have built a much-needed expansion to our building, including a larger nursery and more Sunday school classrooms. Our policy was the same: We would continue construction only as long as the funds held out. As the paint was drying on the new walls, the last of the needed funds was freely given. We have never been underwritten by people of great means. Most of our donations have been in the $100 range, and almost all of them sacrificial.
  10. This financial policy cannot be explained in terms of a series of lucky breaks; it has been far too long for this policy to work by luck. We don’t believe our approach is the only scriptural position, but God has honored our conviction.
The editorial team of Church Law & Tax is made up of Matthew Branaugh, attorney-at-law, and Rick Spruill, digital content manager.
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