The Corporate Church vs. a Living Body

In this last day, the Lord is calling his remnant out of the large, corporate organizations that have come to define the “American Church”. As these smaller fellowships are forming the following question immediately comes up: should we incorporate and file for a 501(c)(3) non-profit status? In recent decades, this seems to be the trend for the American church. But is this the Lord’s way? Let us begin with the IRS rules regarding 501c3:
 
Copied directly from IRS application for 501(c)(3) status (http://www.irs.gov/pub/irs-pdf/p4220.pdf):

"The term church includes synagogues, temples, mosques, and similar types of organizations. Although the IRC excludes these organizations from the requirement to file an application for exemption, many churches voluntarily file applications for exemption. Such recognition by the IRS assures church leaders, members, and contributors that the church is tax exempt under section 501(c)(3) of the IRC and qualifies for related tax benefits. Other religious organizations that do not carry out the functions of a church, such as mission organizations, speakers’ organizations, nondenominational ministries, ecumenical organizations, or faith-based social agencies, may qualify for exemption. These organizations must apply for exemption from the IRS."
 
It is stated even more directly here in IRS publication 1828 (http://www.irs.gov/pub/irs-pdf/p1828.pdf):

"Churches that meet the requirements of IRC section 501(c)(3) are automatically considered tax exempt and are not required to apply for and obtain recognition of tax-exempt status from the IRS."

In this same publication it states that a church who has not filed for 501c3 is still "generally eligible to receive tax-deductible contributions."

So, if your gathering of believers is a church, you are, by definition, exempted from paying Federal income taxes WITHOUT needing to file for 501(c)(3) non-profit status. If you choose to file, it would be purely VOLUNTARY. Also, if you contribute financially to a church that has not filed for 501c3 you can still LEGALLY deduct your contribution from your income taxes. Now, whether this is wise to do is different matter.

So, if this is true, why do churches apply for 501c3 statues? As stated earlier: "Such recognition by the IRS assures church leaders, members, and contributors, that the church is tax exempt..." The key word here is assure. Remember, we are dealing with the IRS here, and fear is their biggest weapon. Legally, they don't have any teeth, but they try to make people afraid of getting audited and then having to prove that their contributions were really given to a church. So, they offer the 501c3 "solution". However, this solution comes with strings attached:

If your church files for a 501c3 status, then this is what you are LEGALLY obligated to do as a church:

1) The church can have “no substantial part of the activities of which is carrying on propaganda”. Funny thing is, the IRS never defines "propaganda". Does it mean promoting lies and deceptions? Or, does it mean an organized effort to “propagate” almost anything? This question is vital in determining what a church can do when it has “501(c)(3) status”. Unfortunately, few churches have ever looked for an answer. The scary thing is, the IRS gets to decide what "propaganda" is. To date, they haven't really enforced this element of 501c3 prohibitions on a wide scale, but as the days grow darker they will, and many churches with 501c3 status are going to be in a lot of legal trouble.

2) IRS 501c3 code clearly states that "the organization’s purposes and activities may not be illegal or violate fundamental public policy." Wait a minute, isn't a woman's right to choose "fundamental public policy" in this country? Homosexual marriage is fast approaching legalization on the federal level and soon it will be "fundamental public policy". Many, matters of "fundamental public policy" in this nation clearly violate the law of God. Yet, ALL 501c3 churches are LEGALLY obligated to remain silent in their criticism and warnings. Do many 501c3 churches still criticize "fundamental public policy"? Yes! Are they breaking the 501c3 tax law that they voluntarily submitted themselves too? Yes! Is the IRS going after them? Only a small handful of them; but the time is coming when many more 501c3 churches will find themselves in court.

At the founding of this nation, our founding fathers clearly stated in the First Amendment that “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof .” This constitutional mandate had a two-fold design: 1) keep the church from manipulating government authority in an effort to persecute and discriminate people of other faiths. And, 2) keep the government out of the church. Our founding fathers clearly understood that the church was of divine origin and the government had no right to meddle with what rightfully belonged to God. And, clergy were not to "get in bed" with politicians in order to further their particular denomination’s agenda.

However, in the early 1950's, President Lyndon Johnson decided that he didn't like the freedom that churches had. He didn't like that preachers were completely uncensored in their ability to stand in the pulpit and declare the truth of God. He didn't like that preachers were weighing public policy against Biblical truth and implanting those conclusions in the minds of American voters. So, President Johnson set off to find a solution. He couldn't silence the churches outright, but he could develop a voluntary incentives package that could minimize their influence dramatically. And, in 1954, IRS code 501(c)(3) was born.

Unfortunately, President Johnson's plan worked. Churches signed up in droves to get their 501(c)(3) status. Why did they do this? One word: greed. Churches wanted more money - not just more contributions, but more importantly, they wanted larger contributions. And this magic 501(c)(3) status would now give rich contributors and big corporations the "assurance" they needed from the IRS that their BIG contributions wouldn't be questioned by the IRS. Pastors rushed like madmen to get their filing complete so they could increase their salaries and start building their mega churches.

Let me summarize all of this with this quote from another writer in his analysis of the church and 501(c)(3): "The 501c3 church is in an agreement, a marriage, a union, a contract, with the state for financial benefit.  This agreement conforms the church to IRS corporate law and requires the creation of unscriptural church boards, an unscriptural CEO (usually the pastor), unscriptural membership enrollment and requirements, unscriptural recording of one's giving for tax reporting, and unscriptural submission to governmental regulation of what may be taught and preached in the church."

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Now let me turn to the issue of churches "incorporating":

1. The Supreme Court ruled that "A corporation is a creature of the state... Its rights to act as a corporation are only preserved to it so long as it obeys the laws of its creation..." (Hale v. Henkel, 201 U.S. 43).

2."[A corporation is] an artificial person or legal entity created by or under the authority of the laws of a state."
Black's Law Dictionary West Publishing Company, 1991; 6th Edition, page 340.
But, the scriptures teach us that the church is a living person, the body of Christ.
 
3. "A corporation derives its existence and all of its powers from the State and, therefore, has only such powers as the State has conferred upon it.” Len Young Smith and G. Gale Roberson, Smith and Roberson's Business Law, West Publishing Company, 1966, page 796.
But we know that the church derives its existence and authority from the Living God. It is His Holy Spirit that brings unity and appoints leaders in the church.

4. “... the source of this power is the charter and the statute under which the corporation was organized." Len Young Smith and G. Gale Roberson, Smith and Roberson's Business Law, West Publishing Company, 1966, page 796.
The source of the church's power and authority is in Christ, not the state. It is Christ alone who gives the church its charter.
 
There is no law anywhere on the books that state a church must incorporate in order to be recognized as a local body of believers. Yet, in the last hundred years or so, thousands upon thousands of American churches have done so. Why? They think it brings them some measure of liability protection. What liability protection did the early church have? What liability protection do thousands of other churches have in other nations where it is illegal for them to be a church? None! In the book of Acts we read that people sold everything they had and laid the money at the apostle’s feet for distribution to the saints. Did the Roman Empire sanction the accounting methods of the apostles? Could the apostles have taken the money and went on a vacation to visit the pyramids in Egypt never to return? Absolutely! Did wolves come in among the flock and steal money for personal benefit. Most certainly! But the church never dreamed of giving the reigns over to the government - for the government committed far great injuries to the church than the occasional hurt caused by a scammer or the loss from some financial liability.

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This knowledge regarding “501c3” and “incorporation” should help shape the organization of our fellowships and how finances are handled. Christ is the Living Head, and we should be His Living Body. Always be open to suggestions from everyone, but always ask some simple questions first: does this suggestion in any way limit our ability to follow the Lord in ALL matters? Is decision making being transferred to some other organization other than our local servant elders? Remember, our main concern should always be to honor the Lord and give him COMPLETE control over where money goes and how it is used.

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Here is some practical guidance for home fellowships related to the financial matter of giving:

1. Never tell people to give by passing around some kind of "offering bucket". The local assembly is to reflect the servant nature of our Lord who is not a “taker”; rather, He gave up His life even to death. No matter how one may try to argue against this point, the bottom line is this: when leadership “asks” for money, people will feel obligated to give. And the Lord is only honored if financial gifts are given as free will offerings.

2. A responsible husband/wife team (servant elders) should be responsible for accounting of all financial gifts. And, let financial gifts be given directly to them. Also, some have suggested putting out a box somewhere so people can give more "anonymously". The problem is that this may still give the impression that the fellowship "wants" people’s money and this is just a “softer” way of asking. We need to be sensitive to this issue, especially if your fellowship is within a poorer community. What a sad indictment we hear today, that churches only want people’s money. May it not be so among the Lord’s remnant.

4. Make sure the accounting book is always open during fund meetings. This fosters accountability. Have these meetings every one or two months. Make sure everyone feels free (and encouraged) to go over the accounting (all gifts are recorded anonymously).

5. Make sure no one feels obligated to give money in order to be a part of any ministry or leadership function. We are all to give whatever we can - time, resources, and most importantly, love. Judge no one in relation to the amount of their financial giving...period.

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The Lord may call a home fellowship to buy a property and build a small meeting hall or multi-purpose building. How should we do this without forming a corporation?

1. Without the Lord specifically moving in the hearts of particular servant elders in the fellowship to take on ownership of a property for the fellowship, a home fellowship should not move forward in this matter. An elder, or elder and his wife, or small partnership of elders should own the land, and they will take responsibility for liability. However, everyone in the fellowship should stand in oneness with them, and church funds should be designated to pay the bills. Remember, the bond is "trust", not a legal document issued by the state. This bond of trust is what honors the Lord most. When we rely on a legal piece of paper to secure our bond as a fellowship, how is the Lord honored? How is unity and trust fostered?

2. There is nothing wrong with the private owners of the property/building carrying their own private property insurance. Remember, it is just a building! The building is not the church! The church is the people! Water damage, fires, broken windows, and fences – these things WILL happen. Having property insurance is just another way to set aside money to cover these costs.

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Here is some final guidance on the decision making process within a home fellowship:

1. We will not make a decision until ALL brothers are in agreement. We will wait, and pray, and wait and pray, until we are ALL in agreement.

2. We take inputs from everyone, but final responsibility does remain with the servant elders.

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This research is not intended to be legal advice. Quite the contrary: the church needs to learn how to handle her own affairs without needing the counsel of the state. Christ is our husband, and it is time we start acting like his wife.