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Q&A: Establishing a 501(c)(3) Ministry at Church

Do we need to start a separate tax-exempt entity?

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.?

Churches sometimes form separate 501(c)(3) organizations to carry out certain activities that the church itself would ordinarily be able to conduct. The reasons for doing so are typically based on some practical expedience factor, such as a desire to limit exposure to liability (either way), difficulty in attracting grant funds from grant funders who, by policy or preference, are reluctant to make grants to a church, ...

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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.

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Posted:
  • May 11, 2010

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