Legal Guidelines for Interview Questions About Attendance

Understand how to address attendance concerns legally during church hiring interviews. Explore compliant questions that avoid discrimination and align with federal, state, and local regulations.

Last Reviewed: January 28, 2025

Q: We are trying to fill a vacant position on our church staff. Because we’re a small church, consistent attendance by our employees is crucial. Is it legal in an interview to ask approximately how many days in the past year a prospective employee has been absent from work? Can I ask the prospective employee’s references this question?


Asking these questions could lead to charges of unlawful discrimination against your church. But first we must determine whether the nondiscrimination statutes apply to your church. If your church is small enough (less than 15 employees), then the federal nondiscrimination statutes do not apply. Second, though you did not indicate your city, county and state, it is helpful to note that most states and many cities also have nondiscrimination statutes. They may apply if the federal statute does not apply. So you will need to research your state, county and city to determine whether nondiscrimination laws apply to your church in any of those domains.

If any nondiscrimination statutes apply to your church, then you cannot ask about prior absences because the answers provided may lead to unlawful discrimination based on the Americans with Disabilities Act (or the state, county or city equivalent). Also, many state workers’ compensation statutes prohibit discrimination against those who have previously filed workers’ compensation claims. Since your question could cause an applicant to reveal prior workers’ compensation claims, your question is illegal in those states.

However, there may be a way to ask the question in such away that it avoids unlawful discrimination. Instead, you may ask, “Since we are a small church, this job demands that you show up for work on time, everyday. Do you know of any reasons you could not fulfill this job requirement? Have you had a similar job requirement in your prior positions? If so, how did you perform on this requirement?” Since you have tied your questions back to your current job description and requirements, it is unlikely that you will be challenged on these questions.

Finally, the same rules apply to reference checks. You can ask the prospective employee’s references the same legally allowed questions that you can ask an applicant.

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

Keeping Winter Outings Safe

What churches should do with skiing, snowboarding, and sledding activities.

Many churches sponsor recreational activities during the winter months. A few safety tips can greatly reduce the potential for serious injuries. In recent years, the number of total injuries to skiers has declined, but the number of head injuries has stayed about the same. However, for snowboarders, both numbers have significantly increased.

The overall accident rate has tripled and head injuries have increased by a factor of five. One important factor is that children are more likely to experience a head injury and are participating in snowboarding in increasing numbers, especially for those between 7 and 11 years of age.

The Consumer Product Safety Commission has estimated that a helmet would have prevented or lessened the severity of two-thirds of the injuries associated with a fall. Falls are the leading cause of head and neck injuries.

In addition to helmets, skiers should also be encouraged to wear wristbands. Wrist injuries often occur as individuals stretch out their arms to break a fall. Sledding also requires careful supervision. Each year, serious accidents occur as the result of collisions with obstacles such as trees and with other children. Sleds can achieve high speeds and sleds with runners can cause particularly bad injuries. Makes sure that sled runs are clear and avoid the use of sleds that have runner blades.

If your church is planning a skiing, snowboarding, or sledding activity, be sure to encourage participants to wear helmets and wristbands. Also, instruct skiers to:

  • maintain a safe speed,
  • stay on trails,
  • use trails for their level of expertise,
  • slow down at points where ski trails merge, and
  • take regular breaks and not to ski when they are tired.

In addition, instruct supervisors to correct inappropriate behavior immediately and basic emergency prodcedures in case of an accident or a health problem.

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.
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A Church Leader’s Guide to Socially Responsible Investing

Church leaders often face challenges in socially responsible investing. Learn how to define ethical priorities, assess investment funds, and ensure strong financial returns while staying true to your church’s values.

Last Reviewed: May 8, 2025

Church leaders today may find themselves overseeing endowments, capital accounts, or even pension funds. Decisions can range from high-level investment policies to more specific choices—such as which funds to include in a 403(b) plan.

But one challenging question often arises:
How do you choose investment funds that align with your congregation’s social or moral values?

Should your church avoid companies that profit from alcohol? Or is the greater concern how companies treat workers in developing countries? Maybe both?


There’s No Perfect Investment

Just like there’s no perfect job or candidate, there’s no perfect investment either. That’s why church leaders need to:

  • Prioritize values based on what matters most to their congregation;
  • Balance those values with risk, return, and cost;
  • Communicate investment goals clearly to staff and board members.

Social Values Don’t Mean Sacrificing Returns

Every investor who cares about social responsibility has different concerns. While risk and return should remain central, moral values can be integrated into investment decisions—without necessarily giving up performance.

In academic finance, what a company does is often ignored; only its risk and return matter. While this may seem out of touch, it offers insights into effective social investing.

For Example:

A fund that excludes tobacco companies might lose performance unless it replaces them with companies that have similar characteristics. Tobacco firms sell branded, addictive consumer goods—but so do:

  • Candy manufacturers;
  • Soft drink companies;
  • Razor brands.

By replacing tobacco stocks with companies that have similar market behavior, a portfolio can stay balanced without compromising values.

Many socially responsible mutual funds perform similarly to their unrestricted peers—largely thanks to smart fund managers.

Don’t expect better performance, but you shouldn’t accept worse, either.


Define What “Socially Responsible” Means

Before making investment decisions, your church needs a clear definition of what counts as “social” or “moral” investing.

  • Denominational churches may have official guidelines;
  • Nondenominational churches will need to reference their own doctrinal beliefs;
  • If guidelines aren’t clear, your investment committee will need to create them.

Examples of Varying Standards:

  • Some churches view gambling as a sin while others raise money through bingo nights.

This diversity makes it crucial to:

  • Set specific exclusions or inclusions;
  • Avoid relying on a vague sense of what’s “good” or “bad.”

Resources for Evaluating Socially Responsible Funds

A helpful starting point is the Social Investment Forum:

🔗 Social Investment Forum – SRI Basics
This guide explains how different mutual funds apply Socially Responsible Investing (SRI) guidelines. It’s a great tool for:

  • Defining your church’s investment policy;
  • Identifying mutual funds that align with your values.

Evaluate Performance, Not Just Principles

Once you’ve found funds that align with your values, the next step is to evaluate their performance.

Free Tools to Use:

  1. Morningstar:
    • Compares social and religious funds by investment objective (growth, bonds, and so on);
    • Helps you assess performance as an investment, not just as a moral stance.
  2. Yahoo! Finance:
    • Offers fund performance data;
    • Lets you compare funds to stock market indexes and bond returns;
    • Reveals how funds are really doing, even in a difficult market.

Note: If a fund consistently underperforms the market—beyond the overall trend—it might be time to look elsewhere.


Be Cautious About Denomination-Branded Funds

Some mutual funds are marketed to specific denominations, but that doesn’t mean they’re the best fit.

Examples:

  • MMA-Praxis Funds target Mennonites but appeal to others avoiding alcohol, defense, gambling, and tobacco stocks.
  • Amana Mutual Funds follow Islamic finance principles:
    • Avoid alcohol, tobacco, gambling
    • Also exclude pork producers and traditional banks—principles some Christian investors may also appreciate

However, some denominational funds may be more marketing than substance and marked by:

  • High fees;
  • Poor performance;
  • Superficial alignment with religious values.

Beware: If a fund sounds “perfect” but performs terribly, it may be appealing more to emotion than fiduciary duty.


Recognize the Limits of Social Investing

No investment policy—no matter how values-driven—can create instant change.

  • Avoiding Molson Coors Beverage Co. won’t put them out of the brewing business.
  • Shareholder activism and boycotts can lead to small changes in corporate behavior over time.

That said, if your church invests in stocks directly:

  • Always vote the proxies during annual shareholder meetings;
  • Social proposals often appear on these ballots;
  • Consider this a service opportunity—perhaps for a young adult group that has financial professionals as members.

Final Thought: Stay Balanced

Social investing doesn’t have to mean poor performance—but it can if emotion outweighs analysis.

As traders say:

“The stock doesn’t know you own it.”

Just because you like a company or admire its values doesn’t mean it will succeed in the market.

We’ve used a combination of AI and human review to make this content easier to read and understand.

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Running a Business in a Church: Key Legal and Tax Considerations

Key considerations for running a business in a church, including tax implications, liability risks, and zoning compliance.

Last Reviewed: January 8, 2025

Q: A member of our church owns a cookie business and wants to use the church’s commercial-grade kitchen to bake cookies for public sale. Can we allow this as an accommodation to her? Are there legal or other concerns we should consider?


While this might seem like a generous accommodation, allowing running a business in a church raises several legal, tax, and operational concerns. Before proceeding, church leaders should carefully evaluate these potential issues.

Allowing a business to operate on church property exposes the church to liability risks. For example, if someone becomes ill after consuming the cookies, the church could face legal claims based on agency principles or other legal grounds. Even with a well-drafted agreement, these risks may not be fully mitigated.

Public Health Regulations

By permitting the use of church facilities for commercial food preparation, the church may become subject to stringent state and local health regulations. These include inspections, certifications, and adherence to commercial food safety standards, which could complicate operations and increase oversight responsibilities.

Unrelated Business Income Tax (UBIT)

If the church receives rental income from this arrangement, it may trigger the IRS’s unrelated business income tax (UBIT) rules. This could necessitate filing an annual Form 990-T and paying taxes on any net income. However, some exceptions might apply, such as if the use of facilities is primarily conducted by volunteers or for activities substantially related to the church’s mission. Learn more about UBIT at the IRS UBIT guidance page.

Property Tax Exemption Concerns

Allowing a commercial enterprise to operate on church property could jeopardize the church’s property tax exemption. In some states, using church property for non-exempt purposes may result in partial or full loss of the exemption.

Zoning Regulations

Local zoning laws may prohibit running a business in a church. For instance, a commercial baking operation might not be an authorized use within the zoning district where the church is located. Violating zoning regulations could lead to fines or legal disputes.

Compliance with IRS Section 501(c)(3)

The church’s tax-exempt status under Section 501(c)(3) requires that it operate exclusively for exempt purposes. Allowing a commercial business to operate within the church could be viewed as inconsistent with this requirement, potentially risking the church’s federal income tax exemption.

Establishing a Precedent

Granting permission to one member could set a precedent, leading to similar requests. Denying future requests may create perceptions of favoritism, while approving them could result in an influx of commercial activities, detracting from the church’s primary mission. As Matthew 21:13 reminds us, “My house shall be called a house of prayer.”

Steps for Churches to Consider

If your church is considering allowing a business to operate on its property, here are some critical steps to take:

  • Consult Legal Counsel: Seek guidance to understand the legal implications and draft agreements that protect the church from liability.
  • Review Local Regulations: Ensure compliance with zoning laws, health regulations, and other local requirements.
  • Assess Tax Implications: Work with a tax professional to evaluate potential UBIT liabilities and maintain compliance with tax-exempt status requirements.
  • Establish Clear Policies: Develop a policy governing the use of church facilities to ensure consistent decision-making and avoid favoritism.

FAQs: Running a Business in a Church

1. Can a church allow a business to operate on its property?

Yes, but doing so may create legal, tax, and operational risks. Churches should evaluate liability, zoning, and IRS requirements before proceeding.

2. Does rental income from a business on church property trigger UBIT?

Rental income may be subject to unrelated business income tax (UBIT), especially if the activity is not substantially related to the church’s mission.

3. Could a business on church property impact property tax exemptions?

Yes, using church property for non-exempt purposes could jeopardize its property tax exemption in some states.

4. How can a church avoid risks when accommodating businesses?

Churches should consult legal and tax professionals, comply with zoning laws, and establish clear policies for facility use.

Allowing running a business in a church requires careful consideration of legal, tax, and operational risks. By taking proactive steps and seeking professional guidance, churches can make informed decisions that protect their mission and resources.

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

Combining a Church’s Constitution & Bylaws

Having both documents often leads to inconsistencies.

Q: Our church has both a constitution and bylaws. We have appointed a committee to review our documents, and propose changes that will be presented at a specially called business meeting for our members to consider. Some members of the committee have recommended that we combine our constitution and bylaws into a single document. Would this be a good idea?


Constitution and bylaws or constitution or bylaws?

In the past, it was common for churches to have both a constitution and bylaws. Routine rules of administration were placed in the bylaws, which could be amended without notice at any duly called membership meeting by a simple majority vote. But more fundamental matters, such as church doctrine and the disposition of property, were placed in a constitution that was more difficult to amend. To illustrate, a church’s constitution might be amendable only with advance, written notice and by a supermajority vote (i.e., two-thirds).

Having both a constitution and bylaws often leads to inconsistencies between the two documents over time. Here’s why. Churches with both a constitution and bylaws typically address many of the same issues in both documents. And, since amendments in one document may not be made to similar provisions in the other, inconsistencies and ambiguities emerge that are either go undetected, or create confusion and possibly dissension among members.

Illustration

To illustrate, assume that at a membership meeting a church’s membership approves an amendment to the bylaws pertaining to the size of the church board. However, the members fail to notice or amend a corresponding provision in the church’s constitution. The two documents are now in conflict.

Consider another example. A church’s constitution and bylaws both require sales of church property to be approved by a two-thirds vote of the membership. At an annual business meeting the church membership votes to amend the bylaws to reduce the two-thirds vote required for a sale of church property to a simple majority. However, the membership fails to amend the constitution to reflect this change. Years later, the church board proposes a relocation of the church and a sale of the church property.

Many members oppose this proposal. A special business meeting is called, and a simple majority votes to sell the church property and relocate. What is the legal significance of this vote? What is the relevance of the fact that the constitution still requires a two-thirds vote? Such inconsistencies are much more likely to occur if a church has two governing documents.

Two governing documents?

Are there potential advantages to having two governing documents? Some contend that it is desirable to have a constitution that contains matters of fundamental importance and that is more difficult to amend than the bylaws. Certainly this is a valid point. But, the same advantage can be achieved in churches having only one governing document (the bylaws) through judicious wording of the amendments section.

To illustrate, the amendments section can provide for amendments by majority vote and without advance notice except for amendments to specified articles that require advance notice and a supermajority vote. An attorney can assist you in preparing appropriate language. In fact, it is a good idea to have your governing documents reviewed by an attorney periodically, especially if they were drafted many years ago and without legal assistance. Note, however, that churches affiliated with a parent denomination need to comply with any denominational requirements pertaining to governing documents. Church leaders should be familiar with such requirements.

In recent years, the more common practice among churches and other nonprofit organizations is to have only one governing document. There are two main advantages of this approach. First, a single document is more accessible since items can more readily be found in one document than in two documents. Second, a single document avoids the inconsistencies that often characterize two documents.

Identifying a single body of rules as the “constitution and bylaws” without any attempt to distinguish between the two is a common but confusing and inappropriate practice.

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

Can a Housing Allowance Cover Legal Fees in an Eminent Domain Case?

Understand the IRS stance on housing allowances and legal fees in eminent domain cases and how to navigate related challenges.

Last Reviewed: January 20, 2025

Q: Our city government informed our pastor a few years ago that it was going to acquire his home in an eminent domain proceeding. Our pastor objected to this and hired an attorney to fight it. He incurred substantial legal fees in what turned out to be a successful challenge. Now he is asking if the housing allowance designated by our church can be applied to his legal fees. Can they?


What Is Eminent Domain?

Eminent domain is the power of the government to acquire private property for public use. This often requires the owner to vacate the property. Property owners are often compensated. However, disputes can arise regarding the fairness of the compensation or the need for the acquisition itself. These disputes sometimes lead to legal challenges, as was the case with your pastor.

Neither the IRS nor any court has explicitly addressed whether housing allowances can be applied to legal fees incurred in eminent domain cases. However, similar rulings suggest that these legal fees likely do not qualify as “housing-related expenses.”

For example, in cases involving home equity loans, ministers have attempted to apply housing allowances to loan repayments by arguing that the loans were secured by their homes. The IRS and the Tax Court have rejected these claims, stating that housing allowances can only be applied to direct housing-related expenses. Based on this precedent, it is likely that the IRS would also rule that legal fees incurred to prevent a home’s seizure through eminent domain do not qualify as housing-related expenses.

Key Precedent: Rasmussen v. Commissioner

In Rasmussen v. Commissioner, T.C. Memo. 1994-311, the Tax Court ruled that housing allowances could not be applied to loan repayments unless the loans were used exclusively for housing-related expenses. The court stated:

“Exemptions from gross income are to be construed narrowly … and [federal law does not] provide for the exclusion of payments on loans secured by a home if they are not used to ‘provide a home.’ The proceeds of the loans were used to pay personal expenses unrelated to their home. Thus … the portion of the parsonage allowance used to repay the loans was not used for the maintenance or purchase of the home.”

This reasoning likely applies to legal fees in eminent domain cases, as the fees are not direct housing expenses but rather costs incurred to prevent the loss of a home.

What Should Churches and Ministers Do?

Given the lack of specific IRS guidance on this issue, it is advisable for churches and ministers to proceed cautiously. Here are some best practices:

  • Consult with a qualified tax professional before attempting to apply a housing allowance to legal fees related to eminent domain cases.
  • Document all expenses carefully, specifying how funds are used to provide or maintain housing.
  • Recognize that applying a housing allowance to legal fees could expose ministers to audit risks if the IRS challenges the interpretation.

FAQ: Eminent Domain and Housing Allowances

1. What is eminent domain?

Eminent domain is the government’s authority to acquire private property for public use, often with compensation to the property owner.

It is unlikely, as these fees do not qualify as direct housing-related expenses. The IRS has not provided specific guidance on this matter.

Housing-related expenses include costs directly tied to maintaining or providing a home, such as mortgage payments, property taxes, utilities, and maintenance costs.

4. What should a minister do if they face an eminent domain case?

Consult with a tax professional and document all expenses related to the case. Avoid assuming that legal fees qualify for a housing allowance without expert advice.

For more information, refer to IRS.gov or consult a tax professional familiar with clergy tax regulations.

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

What Happens If a Church Fails to Obtain Workers Compensation Insurance?

Churches without required workers compensation insurance may face lawsuits or financial liability. Here’s what you need to know about compliance.

Last Reviewed: January 30, 2025

Q: If a church is not exempt from workers compensation law, what is the effect of its failure to obtain workers compensation insurance?


Most workers compensation laws are compulsory.

The employer has no prerogative to remain outside the system.

In a “compulsory” jurisdiction, a covered employer that fails to obtain workers compensation insurance will ordinarily be subject to a direct action by an injured employee. Or it may be treated as a “self-insurer” and accordingly be liable for the damages prescribed by the workers compensation law.

A few states permit employers to elect coverage under workers compensation law. To coerce employers into electing coverage, these states impose various legal disabilities upon employers that do not elect coverage.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.
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Church Food Safety: Don’t Spoil a Good Time

Don’t let bad food spoil a good time at your next church potluck.

Last Reviewed: February 11, 2025

Bring out the food, and the fellowship is close behind. Church dinners offer an excellent opportunity to bring the community together. Poor food preparation can spoil a good time, though, so use the following precautions before your next church potluck.

Food Preparation

Look for warning signs. Don’t purchase or use canned goods that are damaged or rusted. These signs indicate the food may not be safe regardless of how you prepare it.

Separate quarters. Keep raw seafood, poultry, and meat away from other foods. Use separate cutting boards and make sure any juices are contained.

Now you’re cooking. Use a food thermometer to make sure cooked food is heated to the proper temperature. Check the temperature in several places to ensure even cooking.

During the Event

Avoid the danger zone. The danger zone for food is between 40° and 140 °. Keep hot food hot and cold food cold—and all food out of the danger zone.

Keep the evidence. If you suspect a food-borne illness, preserve as much evidence as you can. Save a sample of any suspect food in the freezer—clearly marked as “dangerous.” Retain all packaging if possible and contact the appropriate authorities for investigation.

Clean-up time. Store leftovers in the refrigerator or freezer within 2 hours of preparation or within 1 hour if the temperature is above 90°. Do not re-use a container that held raw foods.

Ministering with Food

Consider outreach opportunities. Look for ways to minister with food beyond the congregation potluck. Food ministries can feed the hungry or provide employment opportunities for those in need.

Examine your facilities. Think about current or future food ministries when considering church improvement projects. Factor in seating, counter space, and whether you cook or simply re-heat food in your kitchen when you plan any improvements.

Understand the regulations. How you use the kitchen may determine what kind of licensing or regulations apply. Check with local authorities as your food ministries grow and change.

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

How Certified Fraud Examiners Help Churches Prevent and Investigate Fraud

Certified fraud examiners offer churches expertise in preventing, detecting, and investigating fraud to safeguard their resources.

Last Reviewed: January 26, 2025

Fraud in churches can lead to severe financial losses, broken trust, and reputational damage. Certified fraud examiners (CFEs) play a vital role in preventing and investigating these issues. With their specialized training, CFEs bring objectivity and expertise to ensure financial accountability within churches.

Key Takeaways:

  • CFEs specialize in fraud prevention, detection, and deterrence.
  • They provide objective investigations free from organizational bias.
  • Fraud investigations often reveal underlying internal control issues that need addressing.

What makes certified fraud examiners indispensable for churches? Their expertise lies in identifying fraud risks and conducting unbiased investigations to protect church resources and integrity.

What Is a Certified Fraud Examiner?

A certified fraud examiner (CFE) is a professional trained in fraud prevention, detection, and investigation. They earn their credentials through the Association of Certified Fraud Examiners (acfe.com), undergoing rigorous exams in four areas:

  • Fraud prevention and deterrence
  • Fraudulent financial transactions
  • Fraud investigation
  • Legal elements of fraud

To maintain their credentials, CFEs complete at least 20 hours of Continuing Professional Education (CPE) annually, ensuring their skills remain current.

The Advantages of Using a CFE

Churches benefit from the objectivity and expertise of CFEs during investigations. Unlike internal teams, CFEs have no personal connections, ensuring impartiality. Here’s how they help:

  • Unbiased Investigations: CFEs approach fraud allegations without preconceived notions, preventing “witch hunts.”
  • Legal Preparedness: CFEs ensure evidence is handled professionally, critical for court cases.
  • Fraud Prevention: CFEs assess and recommend internal control improvements to reduce fraud risks.

Challenges of Using a CFE

Despite their benefits, churches may face challenges when engaging CFEs:

  • Cost: Professional fraud investigations are comprehensive and can be expensive. Churches must weigh the potential financial recovery against the cost of hiring a CFE.
  • Cultural Barriers: Bringing in an external investigator may feel uncomfortable for some congregations. Churches should balance trust with accountability.
  • Organizational Responsibility: CFEs may uncover internal control issues that contributed to fraud, requiring churches to address systemic flaws.

How CFEs Protect Churches

Fraud can devastate a church’s finances and reputation. CFEs assist by:

  • Uncovering fraudulent activities and mitigating losses.
  • Implementing controls to safeguard offerings and donations.
  • Providing evidence for legal proceedings against perpetrators.

FAQs

  • What qualifications do certified fraud examiners have? CFEs undergo training through the Association of Certified Fraud Examiners and must pass exams in fraud prevention, detection, investigation, and legal elements.
  • How can CFEs help prevent fraud in churches? They evaluate internal controls, recommend safeguards, and train staff to identify red flags and fraud risks.
  • What is the cost of hiring a CFE? Costs vary depending on the scope of the investigation, but they are justified when significant financial losses are at stake or legal proceedings are anticipated.
  • Why should churches hire an external investigator instead of handling fraud internally? External investigators provide objectivity, professionalism, and expertise that may be lacking within the church’s staff or board members.

Conclusion

Certified fraud examiners play a crucial role in protecting churches from financial misconduct. By bringing expertise, objectivity, and preventive measures, CFEs help churches secure their resources and maintain trust with their congregations.

Dan Busby is president of the Evangelical Council for Financial Accountability.

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Rules for Editing Church Bylaws

Can we correct grammatical errors without calling a meeting to amend our bylaws?

Q: Is it possible to correct spelling and grammatical errors in our church’s bylaws without going to the trouble of amending the bylaws at an annual business meeting?


This is a common question. Spelling and grammatical errors often result from the adoption of bylaws without a thorough review and editing by a bylaws committee. Once bylaws have been formally adopted, they cannot be “edited” without going through the formal process of amendment, unless the bylaws themselves provide that they may be edited to correct obvious errors. This is not a bad idea. However, you need to be very careful to define precisely what can be edited. If the scope of editing is not clearly delineated, then whoever is tasked with the responsibility of doing the editing (i.e., a bylaws committee, or the church board) may go too far and amend substantive provisions.

Here is an example of a bylaw provision authorizing a bylaws committee (any other board or committee can be substituted) to make non-substantive bylaw changes without a formal amendment:

A bylaws committee shall be appointed by the board from the membership of the church. Members should be selected on the basis of their familiarity with the bylaws and their editorial skills. The bylaws committee shall have the power to adopt such revisions to these bylaws as are, in its judgment, non-substantive modifications or clarifications, reorganization or renumbering, or revisions made necessary because of punctuation, spelling, or other errors of grammar or expression. The action to revise may be taken by motion acted upon in the same manner as any other motion before the committee. Such revisions shall be effective immediately and shall be permanent subject to revocation by the membership at any duly called meeting.

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

Amending a Minister’s Housing Allowance

Can we increase our minister’s housing allowance during the year?

Last Reviewed: June 18, 2025

Q: Our minister would like the church to increase his housing allowance due to the fact that he will be incurring more housing expenses than expected this year. Can our church board amend the allowance for the rest of the year, or must he wait until next year?


Ministers do not pay federal income tax on the amount of their compensation designated in advance by their employing church as a “housing allowance.”

But there are limits.

For ministers who own or rent their home, a housing allowance is nontaxable only to the extent that it represents compensation for ministerial services, is used to pay housing expenses, and does not exceed the fair rental value of the home (furnished, plus utilities).

Sometimes ministers incur more housing expenses than they anticipated during the year. This may mean that their housing allowance is not enough to cover all of their housing expenses. Possible reasons for why this happens include unforeseen housing expenses or the purchase of a new home.


Learn more about parsonage and housing allowances in chapter 6 of Church Law & Tax’s annual Church & Clergy Tax Guide.


Whatever the reason, if a minister’s housing expenses exceed the church-designated housing allowance for the year, but still do not exceed the fair rental value of the home (furnished, plus utilities), then the minister may not be receiving the full value of this important tax benefit.

Amending an allowance the right way

To help your minister facing a situation like this, your church can amend the housing allowance. When your church does this, it must pay attention to the following rules:

  • Proper authorization. Be sure the amended housing allowance is authorized by the same group (usually the church board or congregation) that designated the original housing allowance.

  • In writing. Be sure the amendment is duly recorded in the minutes of the group that approves it. The minutes should be dated, and recorded at or shortly after the meeting in which the amendment is approved.

  • Prospective application. An amended housing allowance only operates “prospectively.” That is, it takes effect on the date it is approved, through the rest of the year. It cannot apply retroactively. To illustrate, a minister’s housing expenses turn out to be $15,000 for 2025, but the housing allowance designated by the church was only $10,000. In December of 2025 the minister asks the church board to retroactively increase the housing allowance for 2025 to $15,000. This cannot be done.

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

Insurance Terms Every Church Leader Should Know

The language of insurance is an important knowledge set for churches today.

Church leaders typically encounter the following insurance terms. Here are their meanings:

Actual Cash Value

The cost of replacing damaged or destroyed property with comparable new property, minus depreciation and obsolescence. For example, 20-year-old church pews will not be replaced at current full value because of two decades of depreciation. In some instances, artistic or antique property may appreciate over time. To receive full coverage, such items must be specifically scheduled in a policy.

Appurtenant Structures

Includes additional buildings on the same property as the principal insured building. Most property insurance contracts cover appurtenant structures.

Business Personal Property (Contents)

As distinguished from personal property, business personal property includes items such as furniture and fixtures, machinery, stock, manufactured or raw goods, and personal property owned by the insured and used in the business while located within 100 feet of the premises.

Certificate of Insurance

A form that verifies a policy has been written. It is often used as proof of insurance in loan transactions and for other legal requirements.

Claim

A demand made by the insured, or the insured’s beneficiary, for payment of the benefits as provided by the policy.

Deductible

Amount of loss that the insured pays before the insurance kicks in. It includes the following types:

  • Absolute dollar amount—Amount the insured must pay before the insurance company will pay, up to the limits of the policy. The higher the absolute dollar amount, the lower the premium.
  • Time period amount—Length of time the insured must wait before any benefit payments are made by the insurance company.

Directors and Officers Liability Insurance

Insurance that protects an entity and its corporate directors and officers against claims alleging financial loss resulting from the wrongful acts or mismanagement of the corporation’s directors and officers.

Employment Practices Liability (EPLI) Insurance

A claims-made coverage for the insured’s liability exposure arising out of employment practices.

Inland Marine

A policy that lists specific pieces of property at a designated value for coverage.

Insurance to Value

The appropriate amount of insurance to cover the value of the property being insured. It affords more complete protection to the policyholder to repair/replace property after a total loss.

Ordinance or Law

Coverage that insures against losses caused by enforcement of ordinances or laws regulating construction and repair of damaged buildings. Communities often have building ordinances that require that a building that has been damaged to a specified extent (i.e. 50 percent) must be demolished and rebuilt according to current building codes, rather than simply repaired. Ordinance or Law coverage pays for items, such as the loss of the undamaged portion of the building, the cost of demolishing the undamaged portion of the building, or the increased cost of rebuilding the entire structure according to current building codes. Without Ordinance or Law coverage, such costs would not be covered by insurance.

Risk Management

Management of the pure risks to which a church might be subject. It involves analyzing all exposures to the possibility of loss and determining how to handle these exposures through practices such as avoiding the risk, retaining the risk, reducing the risk, or transferring the risk, usually by insurance.

Umbrella Policy

Coverage for losses above the limit of an underlying liability policy, such as commercial general liability, business automobile, employers’ liability, and so on. While it applies to losses over the dollar amount in the underlying policies, terms of coverage are sometimes broader than those of underlying policies.

Underwriting

The process of selecting risks for insurance and classifying them according to their degrees of insurability so that the appropriate rates may be assigned. The process also includes rejection of those risks that do not qualify.

—GuideOne, A.M. Best

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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Before Your Church Hires a Maintenance Contractor

Churches often rely on outside contractors for landscaping, repairs, and maintenance. Discover essential tips for hiring qualified professionals, avoiding conflicts of interest, and ensuring responsible stewardship of church resources.

Last Reviewed: May 8, 2025

Churches often hire people skilled in teaching, preaching, counseling, shepherding, and administration. But every church has practical needs, too—like mowing the lawn, patching a roof, or plowing the parking lot. These tasks often require hiring an outside professional.

Before doing so, church leaders must confirm that outside help is truly necessary. If it is, they should follow best practices to make the best hiring decision.

“One of our church’s high values is that we will not outsource something when we have qualified volunteers who can—and wish to—do the work. I stress the word ‘qualified,’” says Jim Boyd, director of support services for Calvary Baptist Church, Winston-Salem, North Carolina.

Ken Meines, director of facility services at Calvary Church in Grand Rapids, Michigan, agrees. He prefers to handle preventive maintenance in-house and outsource major repairs. “I usually try to troubleshoot the problem far enough to either order the part and fix it, or know which vendor to contact,” he says


Matching the Right Job to the Right Contractor

Churches often outsource services like:

  • Landscaping
  • Cleaning
  • Heating and air conditioning
  • Plumbing
  • Electrical work
  • Snow plowing

The goal is to match the project to a contractor’s true expertise.

“Sometimes a contractor will take a job because they need the work. But it may be outside of their primary area of expertise,”
says Frank Sommerville, attorney, nonprofit law specialist, CPA, and Church Law & Tax Senior Editorial Advisor.

Tips for finding the right match:

  • Develop a profile of your ideal candidate;
  • Ask detailed questions to compare candidates against that profile;
  • Use your network—other churches, businesses, and community leaders—to find recommendations;
  • Don’t rely solely on websites or online listings; get second and third opinions.

Start with consumer resources like:

Other churches may still be your best resource. Ask for references and inspect past work, if possible.

“If churches are given as a reference, contact the person who directly worked with the contractor. Ask about both the quality of work and service after the job,” Boyd says.

Your church network can also include groups like:

  • National Association of Church Facility Managers (NACFM);
  • International Facility Management Association (IFMA);
  • Business professionals in your congregation.

Verifying Credentials

Don’t take “licensed and insured” at face value. Always ask for proof—and verify it.

Key items to confirm:

  • Licensing: Requirements vary by trade and location. Roofers, electricians, and builders are usually licensed; janitors and landscapers may not be.
  • Insurance: Ask the contractor’s insurer to send a certificate of insurance directly to your church.
  • Coverage: Ensure liability and workers’ comp are appropriate for the job’s risk level.

“We specify what we expect for coverage and verify it with the insurance certificate. We are named as additionally insured on their policy,” Meines says.

Consider bonding for jobs involving subcontractors. Bonding protects your church if the contractor fails to pay their subcontractors or doesn’t finish the work. Boyd says his church asks for bonding from those who will be using several subcontractors.

Before signing anything, have an attorney review the contract.


Asking the Right Questions

Never hire a contractor without a face-to-face meeting. Ask for:

  • References;
  • Proof of insurance;
  • Licensing and bonding documents.

Ask deeper questions to gauge reliability:

  1. How long have you been in business?
    (Verify with your state’s business filing site.)
  2. How many of your clients are churches?
    Churches often need flexible schedules—like plowing snow Saturday night or prepping landscaping before Sunday.
  3. Are you financially stable?
    For large contracts, ask for financial statements or pay for a Dun & Bradstreet report.
  4. How often have you rescheduled in the past six months? Why?
    Occasional delays are normal (like for rain), but repeated issues could signal problems with staffing, equipment, or safety.

Getting Your Money’s Worth

To be good stewards, churches should compare pricing and performance.

Best practices:

  • Request multiple bids with the same scope of work;
  • Check current vendors’ prices against market rates;
  • Talk to property pros in your congregation—they may offer insight.

“Going out for bids is the only real way to compare numbers. But evaluating quality is harder,” Meines says.

The lowest bid isn’t always the best. Value includes reliability, professionalism, and long-term service.

“Some companies cut costs by hiring undocumented workers or running outdated equipment. That leads to performance problems,” Sommerville says.


Avoiding Conflicts of Interest

What if a board member has a relative who’s a contractor? Or a church member wants the job?

Stay ethical and transparent:

  • Get multiple bids;
  • Evaluate all vendors equally;
  • Exclude stakeholders from the decision process.

Sometimes a member offers a discount. Double-check that it’s a true deal.

Some churches avoid hiring members altogether to protect relationships. If your church allows it, follow strict procedures:

  • Treat the member’s bid like any other;
  • Exclude the member from voting on the decision;
  • Document everything.

Don’t Rush the Process

Unless it’s an emergency, take your time when hiring contractors.

“Don’t be in a hurry to get the contract let. Take a few more days and hours. If you spend more time on the selection process, you spend less time on the management process,” Sommerville says.

A thorough selection process prevents problems and helps ensure you’re hiring the right person for the right job—at the right time and price.

We’ve used a combination of AI and human review to make this content easier to read and understand.

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How to Establish a 501(c)(3) Ministry at Church

Explore the key steps for establishing a 501(c)(3) ministry at your church to expand your programs and comply with tax laws.

Last Reviewed: January 10, 2025

Q: We’re looking for funding to help with summer activities for youth, such as day care programs, field trips, community involvement, tutoring, etc. Since we originally included education as a part of our ministry, would these activities fall under the church’s bylaws, or do we need to establish a new 501(c)(3) as a separate entity apart from the church? If so, would we need to set up a new corporation, complete with board of directors, bylaws, articles of incorporation, etc.?


Key Considerations for Establishing a 501(c)(3) Ministry

Churches sometimes form separate 501(c)(3) organizations to carry out certain activities. While the church itself is a 501(c)(3) organization, there are several practical reasons why a separate entity might be beneficial:

  • Liability Protection: Forming a separate corporation can help insulate the church from liability associated with specific activities.
  • Grant Funding: Many grant funders prefer or require grants to be given to non-church organizations, which can make a separate 501(c)(3) more attractive.
  • Operational Focus: A distinct entity allows for clear management and accountability for specific programs or initiatives.

Since churches are already 501(c)(3) organizations, federal tax law generally permits them to carry out activities similar to those of a subsidiary 501(c)(3). However, the following factors must be considered:

  • Alignment with Mission: Activities must align with the stated mission and purposes of the church as outlined in its governing documents.
  • Amendments to Governing Documents: If activities fall outside the church’s current mission, the governing documents, such as the bylaws, can be amended to reflect the changes. Consult with legal counsel for guidance.
  • Liability Insulation: A separate 501(c)(3) can provide protection from liability and create clarity around operational responsibilities.

Steps to Establish a Separate 501(c)(3)

To establish a new 501(c)(3) ministry, follow these steps:

  1. Draft articles of incorporation and file them with the state.
  2. Develop bylaws that define the organization’s purpose and operations.
  3. Appoint a board of directors to oversee the new entity.
  4. File Form 1023 with the IRS to apply for tax-exempt status.
  5. Establish policies and procedures for governance and operations.

It is critical to work with legal counsel to ensure compliance with state and federal regulations during the setup process.

The decision to establish a separate 501(c)(3) should be made in consultation with legal counsel. They can evaluate whether the activities align with the church’s mission and advise on potential liability risks, amendments to governing documents, and the operational structure of a new entity.

FAQs

  • What is a 501(c)(3) organization?
    A 501(c)(3) is a tax-exempt organization recognized by the IRS for charitable, religious, or educational purposes.
  • Do churches need a separate 501(c)(3) for youth programs?
    Not necessarily. Churches can conduct activities under their existing status if they align with their mission and purposes.
  • How long does it take to establish a 501(c)(3)?
    The process can take several months, depending on state filing timelines and IRS processing times.
  • What costs are involved in creating a 501(c)(3)?
    Costs include state filing fees, legal fees, and IRS application fees, which vary based on the organization’s size.
Michael (Mike) E. Batts is a CPA and the managing partner of Batts Morrison Wales & Lee, P.A., an accounting firm dedicated exclusively to serving nonprofit organizations across the United States.

Church Board Members’ Individual Liability

Are individual board members liable for their own actions as well as other board members’ decisions?

Q: Are individual board members liable for their own actions as well as other board members’ decisions?


As a general rule, individual members are not liable for actions they take on behalf of the church, such as voting at board meetings. Most jurisdictions also allow the church to indemnify board members when there is a complaint, meaning to pay for their defense and not make any claim on behalf of the church against them.

However, sometimes board members are accused of intentional or criminal misconduct, in which case they will be personally liable. One emerging issue that has surprised board members is that they can be held personally responsible by the IRS for a tax debt if they were part of a board that approved unreasonable compensation for an employee of the church.

A board typically acts by majority rule and no single member is going to be liable for board actions. But, if the board was engaged in intentional or criminal misconduct, such as using church funds for personal gain, then they may be responsible. A board member owes the church a duty of loyalty, meaning not only is s/he supposed to only do things that are in the best interests of the church, but s/he must also make sure that other board members do the same.

Protecting Church Board Members from Liability

Can a church board be sued for mishandling a situation involving the pastor?

Q: Can a church board be sued for mishandling a situation involving the pastor? Is there insurance available to cover this liability?


Board is a corporate term (short for “board of directors”) that assumes that the church is incorporated as a nonprofit corporation or its equivalent. One of the benefits of incorporation is that the individual officers and directors are not personally liable for the actions they take on behalf of the corporation.

Many states also offer charitable immunity to persons acting on behalf of their church, although some states are more protective than others. However, whenever there is an allegation against a church, it is now extremely commonplace for the complaining party to individually name the board members as parties to the complaint.

One of the initial challenges in defending a church is to get those individual board members removed as parties on the basis that they are not individually liable or are protected by charitable immunity. If a church is not incorporated, but is known as an “unincorporated association,” then all of its members, including the board, are potentially liable for church activities.

Some organizations obtain a mix of liability insurance as well as errors and omissions coverage for directors in the event there is a liability issue.

When A Sex Offender Wants to Serve in Children’s Ministry

How to properly vet sex offenders who wish to serve.

Q: A background check was done on a volunteer who wants to serve in children’s ministries at our church. The check revealed that this person is a Level III sex offender, with the last offense occurring 21 years ago. I stated that in no way should this person be allowed to serve in this ministry, but some others are trusting his rehabilitation and say he is unlikely to be a threat to children (his victims were all adult women). What recommendation do you have?


Before I answer your question, I want to applaud you for using a criminal background check in screening your volunteer workers. Many churches still do not take this measure when recruiting volunteers, which greatly increases the possibility that dangerous individuals will end up working in various ministries.

Understand the risks

In answer to your question, in most states Level III sex offenders are considered the most likely to recommit a sex crime. In light of the state making this assessment of the individual, the church will likely be held liable if his next victim is associated with your church.

Leave room for grace

I also do not doubt that Christ can transform individuals into new persons and totally heal them from their past sins. At the same time, that transforming nature of Christ will generate external evidence of the new nature in the individual. Church leaders must rely on the leadership of the Holy Spirit in making this decision. But they also must do their homework.

Create a plan of action

The church leadership needs to create a plan of action for evaluating this individual. They must gather all the relevant facts about the past crimes and measure the risk of future harm.

The church should not rely on the word of the former sex offender concerning his crimes.

The church should measure the truthfulness of the former offender against the facts that the church gathers from sources related to his crimes. For example, the church should go to the court and review the files related to his prior crimes. The church should also go to the police department and review copies of the police reports of his prior crimes.

Connect with probation officer

If possible, the church should also receive permission to discuss the individual with his probation officer. The church may also want to discuss this individual’s situation with his family members and close friends. The pastors conducting the due diligence should form an opinion about the character of the individual.

Seek and expect the truth

If the sex offender has been truthful about his crimes, then the church may consider the mitigating circumstance (time since the last offense and age of his victims) related to the types of sexual offenses he committed. If he has not been truthful, then he should be rejected as a volunteer in any capacity.

Ongoing due diligence

The reviewing of the individual’s past and present does not end the due diligence. The church’s favorable evaluation of the evidence must also be weighed against the risk of harm to innocent members.

The church should review its due diligence materials with its attorney and insurance company. If the due diligence and professional advice demonstrate he is unlikely to pose a risk to other members, the church may allow him to volunteer with very close supervision. However, if any hint of his former nature arises through this process or the professionals are unwilling to support his request to volunteer, the church should not allow him to volunteer in any capacity.

Consider a Christian psychologist

To provide additional assurance that our innocent members will not be harmed, the church should also receive professional advice regarding the individual.

Frequently, the church will direct the former sex offender to a Christian psychologist for evaluation. If the Christian psychologist renders a written report stating that he is unlikely to recommit sex crimes in the future, then the church may have a basis for allowing the individual to volunteer in limited capacities.

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

A Church’s Legal Responsibility for Board Decisions

It’s important to understand if board members are acting with “apparent authority.”

Q: Is the church responsible for its board members’ actions?


The church is bound by the actions of its board, assuming those actions were taken following proper procedures such as pursuant to the church’s bylaws or constitution, and were undertaken as a proper function of the board. So, if the board approved a vendor contract to lease a copier, the church is probably responsible. Even if the board acted without authority, the church might still be responsible under what is known as apparent authority. Apparent authority means that the person dealing with the church through the board reasonably believed that the board had authority to act on behalf of the church.


Enforcing Restraining Orders: Tips for Churches

What is our church’s responsibility when presented with a restraining order?

Q: Our church was recently presented with a copy of a restraining order from a member who expects us to enforce it. What are our responsibilities to enforce this restraining order? How far must we go and how do we handle privacy issues when all nursery volunteers have to be informed? We are often told this is confidential.


First step: review the court order

When a church is presented with a court order by anyone, the church first must review the order to see if it is a party to the lawsuit. If the church is not a party to the lawsuit, it is not legally responsible for enforcing the court order. Churches frequently receive copies of court orders arising out of divorces or other family disputes, but rarely is a church a named party.

Safety remains a responsibility

In any case, a church is responsible for the safekeeping of children left in the nursery. The church should use a system to identify the individuals authorized to pick up children from nursery. For example, some churches issue a “claim check” to parents as they drop off their children. Without the claim check, no one is authorized to pick up the children. Assuming this system is followed 100 percent of the time, the church does not need to worry that children will be picked up by unauthorized adults.

If an unauthorized adult attempts to pick up the children, the nursery workers should call the police immediately.

Court orders are public records

No law requires you to keep the court order secret. Indeed, it is a public record. The church may determine the amount and timing of information it shares with the nursery workers and the security team at the church.

Under the ideal circumstances, the church wants to prevent the parents from entering any church building. I suggest that the security team be given the make and model of the cars driven by the parents, along with colors and the license plate numbers.

Involve police if necessary

If the car enters the parking lot, the security team can greet the car and determine whether the occupants have ulterior motives. The security team may call the police if necessary. If the church has specific evidence that the parents may attempt to grab the children at church in violation of the court order, the church should put the local police department on notice prior to the weekend services.

In summary, the church is not responsible for enforcing most family related court orders but is responsible for safeguarding the children placed in the church’s care.

If the church is a named party to the court order, the church should immediately contact an attorney for further guidance.

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

Securing Church Financial Records: Two Steps for Access Control

Discover essential tips for securing church financial records and maintaining access control to safeguard sensitive information.

Last Reviewed: January 26, 2025

Q: We have an office manager, and a bookkeeper, who have separate offices that are connected by an unlocked door. The doors on the outside of both offices are locked. About seven people have keys to the combined office so that they can get in to make photocopies and get other office supplies when needed. Should we have a separate lock on the door leading into the bookkeeping office that only the bookkeeper and treasurer can access?


First of all, it’s critical to understand that the security of information and financial records is critical to your church.

Step 1: Limit access

If items such as giving information, check stock, and payroll records are kept in the bookkeeper’s office, there should be limited access to that room.

Step 2: Understand the exceptions

An exception would be if all items were secured within the room itself such as in a locking file cabinet or a safe. Once that determination is made, be certain you are aware of all individuals with access to the various locked areas. Sometimes we forget that an executive pastor or a facilities employee has a master key and access to safe keys or file keys. All individuals should be considered when determining the appropriate level of access to financial records.

Vonna Laue has worked with ministries and churches for more than 20 years. Vonna was a partner with a national CPA firm serving not-for-profit entities through audit, review, tax, and advisory services. Most recently, she held the role of executive vice president for a Christian ministry that works to enhance trust in the church and ministry community.
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