Are there any IRS restrictions (moral or legal) for a pastor starting a side ministry of his own, for which he has gotten Section 501(c)(3) IRS approval? The pastor does not take a salary from this side ministry, as all money goes for radio time and mailing expenses, etc. He also uses the church’s grounds, office, and some administrative help.
There are several considerations that should be addressed. All employees, including pastors, owe their church employer a duty to devote sufficient time and effort to accomplish their job duties. Most pastors do not keep traditional hours, so there needs to be some understanding that this side ministry does not take away too much time or effort from the pastor’s main job. Next, all pastors owe their church a duty of loyalty, so there needs to be a fair determination by the church’s leadership that this side ministry does not compete with the church or preach a message that is contradictory to the church’s, or that makes use of opportunities that should have been available to the church. This should be undertaken as a potential conflict of interest investigation where the nature of the side ministry is fully described to the church leadership, and then that leadership votes, without participation by the pastor, that the side ministry is permitted, or under what conditions it is permitted. The church should also determine an intellectual property policy as to which of the pastor’s creative ideas belong to the church and which belong to the side ministry.
Finally, there is a potential compensation issue. If the pastor is working on the side ministry from the church office, or using church support personnel, then there is a value to this that needs to be considered as a form of compensation. If the side ministry sells materials to the church, there is also a compensation issue. Pastors may only receive “reasonable compensation” from the church, so a compensation study or independent compensation committee may be needed to determine and document the pastor’s compensation.