Church incorporation
Talk about church incorporation and you\'d see many eyebrows rise. The thought of incorporating a church is not as easy as filling in the requisite form and submitting it to the Office of the Secretary of State. From an archaic thought that incorporating a church would destroy the testimony that Jesus Christ is "Lord and sovereign" to a new, progressive thought that that church incorporation is an unstoppable element of modernization, the subject of church incorporation is largely entangled in exhausting legal procedures and theological ramifications.
In the United States, church incorporations are completely voluntary and the decisions of the State legislatures in the matter are independent of each other. Like in Virginia State, it is wrong to incorporate a church even to this day. Setting a precedent otherwise was New Jersey\'s Secretary of State, which during the turn of the 20th century, `liberalized their church incorporation laws by formulating `articles of incorporation. Other states have followed suit and formulated their own articles of incorporation, which largely depended upon the circumstances that drove churches to file for incorporation. But since the fundamental concept of church incorporation is in question, the challenges faced by the churches while seeking corporate status are rather big.
The foremost reason why churches want to incorporate is because of Limited Liability Protection. Churches, big and small, consider seeking a corporate status when their present level of activities increases and may want to reduce the risk of liability to their members.
The Convention strongly feels that churches should undertake a thorough research with legal assistance before starting the incorporation process. Much work needs to be done as a church prepares itself for the incorporating procedure. The church should develop its charter based on its specific needs and requirements.
It may be advised to have a step-by-step approach by the church to create its charter. A charter should essentially include obtaining the legal name of the corporation, the tax exempt nature and classification of the corporation, name and address of the registered agent and office (The registered agent is a person who receives official notifications on behalf of the organization. They are usually the church pastor, chairman of deacons, or the church\'s attorney), and the name and address of each incorporator (An incorporator is one who signs the charter and other relative incorporation documents related to the incorporation).
The charter must include the street address of the corporation\'s principal office including county, and the anticipated duration of the existence of the corporation (usually perpetual). The Corporation must specify in the charter that it is a public benefit Corporation, which it is a religious body and will discharge the powers of a corporation as required, and so on.
Meanwhile, the church must proceed with "Indemnification of Parties", prepare the `Primary Purpose Statement, and a statement of prohibited activities. If the church, as an unincorporated organization already owns assets, it will be necessary for all of those assets to be transferred to the new entity. The charter should be signed by the person designated as the incorporator for the church body, after which it may be presented to an attorney for review of the charter draft.
The next task would be to file the charter with the Secretary of State\'s Office for perusal. Then the church will need to prepare a set of bylaws which states how the church, as a corporation will conduct its operations in terms of holding meetings, elect officers and trustees to the corporation, allow voting, and so on. By-laws are the second major corporate document. The bylaws are a contract, an agreement among the members upon how the corporation will conduct its affairs.
Once the change in status has been okayed, the church has to notify the Internal Revenue Service (in order to receive an Employee Identification Number EIN), the revenue department and the church\'s insurance carrier of the status change.
Thereafter, the church becomes a `legal entity and gets a corporate status. It is expected to conduct itself as a corporation by conducting business meetings with its members and adhering to the bylaws.
The process is not quick and most churches take more than a year\'s time to complete the full process of incorporation. Moreover, the cost to incorporate may be onerous for a small congregation. This cost largely includes legal fees. The cost can be reduced if the initial research and draft documentation can be managed by the incorporating members on their own. Church incorporating consultants are of the opinion that it is better to take sufficient time, prepare the documents properly and cycle through the process right the first time.
The fact that incorporated churches are looked at in some sense of government control continues to be questioned by many. Their argument is that "incorporated churches" have seriously compromised the headship of Christ by incorporating. The State is not to claim jurisdiction over the Church, and the Church is not to place itself in such a position. The Church does not need to request the State to grant permission to exist as a legal entity, they charge. The argument continues
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