Quick-Reference Checklist
Here are key points churches should keep in mind:
- A “work made for hire” is any content created by an employee, including books, articles, theater manuscripts, podcasts, or music, during the course of employment.
- This includes work created on church property, during office hours, and/or using church equipment.
- In such cases, the employer owns the copyright.
- The employer can transfer copyright back to the employee, but only in a signed writing.
- Doing so, though, may risk the church’s tax-exempt status due to possible “inurement.” It may also expose employees to intermediate sanctions.
- By and large, sermons are works made for hire.
Understanding Works Made for Hire
Church pastors and employees often create written or musical works and other content on the job. But they may not realize they don’t automatically own the copyright.
Under the U.S. Copyright Act:
“In the case of a work made for hire, the employer is considered the author and owns the copyright unless otherwise agreed in writing.”
To Qualify as a “Work Made for Hire,” Two Conditions Must Be Met:
- The creator is an employee.
- The work is made within the scope of employment (i.e., during work hours, at the church, with church equipment or staff help).
Even if a staff member is considered self-employed for tax purposes, courts may still deem them employees under copyright law.
Real-World Examples
- Rev. B, the senior pastor, writes a devotional book at church during work hours using church equipment. There is no agreement about copyright. Result: The church owns the copyright.
- Rev. T, minister of music, writes songs at the church, using church instruments and supplies. Again, no agreement exists. Result: The church owns the songs.
- Rev. T writes music at home on weekends, using her own equipment. Result: She owns the copyright—it was created outside the scope of employment.
- Rev. T splits her work between home and church. In such mixed scenarios, courts examine factors like:
- Where most of the work occurred
- Which equipment was used
- When it was created (on/off hours)
- Whether the person kept adequate records
Without strong documentation, courts rely on testimony from staff and witnesses.
Tax-Exempt Risk: Inurement
Transferring a copyright to a pastor or employee could be seen as inurement—a violation that may jeopardize a church’s tax-exempt status.
1. Transferring Copyright = Risk
Giving a copyright to an employee without reporting it as compensation may be viewed as diverting church assets.
The IRS forbids use of nonprofit resources for private gain unless compensated fairly.
Even if rare, the consequences of revocation are severe, so the risk should be taken seriously.
2. Church Retains Copyright + Bonuses Employee
A safer approach:
- Church retains the copyright.
- Royalties go to the church.
- Church pays bonuses to the pastor or employee, reported as taxable income.
✅ This avoids inurement and keeps tax-exempt status safe—but see “Compensation Limits and Intermediate Sanctions” below for an important caution.
3. Encourage Staff to Create at Home
Churches can minimize risks by encouraging staff to:
- Do personal creative work off-site, outside work hours.
- Avoid using church resources for personal projects.
This clearly separates church and personal work.
4. Sermons are Also Works Made for Hire
Generally speaking, sermons are considered works made for hire, which often shocks pastors.
An obscure, decades-old court decision from academia, Williams v. Weisser (1969), found that lecture notes created at a university belonged to the professor—not the school. But it’s not clear whether this relevant precedent would lead a court to conclude a pastor’s sermons, written within the scope of his or her work duties and using church equipment, could remain the property of the pastor.
Churches and pastors confronting the question of sermon ownership should consult with qualified local legal counsel that is ideally well-versed in copyright law.
Compensation Limits and Intermediate Sanctions
When a copyright is transferred to a pastor or staff member, and that work generates income, the Internal Revenue Service (IRS) may treat it as an excess benefit transaction.
Similarly, churches must be cautious about total compensation for an individual and how any copyright transfers or bonuses paid to an individual could result in excessive compensation, triggering consequences.
Consequences:
- 25% excise tax on the excess amount
- 200% penalty if the excess isn’t returned to the church
- 10% tax (up to $20,000) on board members who approved the transaction
Who’s at Risk?
- Only “disqualified persons” (those with substantial influence) are liable.
- In most churches, this includes senior pastors, worship pastors, and executive leadership, but not necessarily junior staff. Churches should exercise caution by reviewing total compensation packages and making certain any copyright transfers or bonuses paid to individuals can be justified as part of a reasonable compensation package.
Key Takeaways
- A church typically owns copyright in works created by pastors and staff during their employment.
- Transferring copyright to the creator must be carefully considered, preferably with legal counsel.
- To avoid legal and tax risks:
- Use written agreements.
- Keep creative work separate from ministry duties.
- Report copyright transfers or bonuses for creative work as taxable income and make certain such payments do not result in excess benefit transactions.
By understanding copyright and compensation implications, churches can safeguard their legal standing and tax-exempt statuses.
We’ve used a combination of AI and human review to make this content easier to read and understand.
