Churches have historically acted as unincorporated associations, which subjected the church and its personnel to legal responsibility for debts, injuries, and adverse acts performed by workers under the church’s oversight. Can a church be incorporated? Many churches have chosen to incorporate in order to benefit from the benefits.
It gives privileges afforded by the corporate legal system. In other words, the process of merging your church differs by state, but there are several similarities. Therefore, most states allow churches to incorporate as a charitable entity under nonprofit corporations law.
The Church – Non-Integrated
A non-incorporated church is, by definition, a voluntary group of individuals who have agreed to collaborate on a common cause. Some of the legal features of such an organisation are as follows:
- The trustees serve on behalf of the entire membership.
- Religious Organizations Land Act (ROLA) allows trustees to own the property.
- While the church does not have a legal identification independent from its members when it has its own name.
- Cases are brought by or against the trustees if brought against the church. And Trustees, officials, and members are collectively responsible for the church’s behaviour.
- Moreover, church liability insurance does not have a full safeguard.
The Church Incorporated
The group has a distinct legal entity from its members since it is an incorporated church. This gives the membership structure as well as limited liability. The following are some of the legal aspects of a consolidated body:
- Separate legal body – the church operates independently of its membership.
- A corporation can own land in its own right.
- Indefinite life – the company remains in perpetuity.
- Limited liability for members – offers some protection for members’ personal properties.
- Officers’ indemnification – the church can buy Directors and Officers benefits. It provides leadership with insurance against personal loss
- With a few exceptions, the Church will purchase, sell, lease, and mortgage property much like any other company.
Why incorporation of church is done?
When a company becomes incorporated, it gains the same legal rights and responsibilities as an individual. There are numerous reasons why churches and other ministries should think about incorporating. After all, the most important is to shield individual members from personal liability resulting from fellow members’ negligent actions.
If your church or ministry is already incorporated, many states require annual paperwork to maintain your corporate status. This includes submitting a straightforward annual report to the Secretary of State’s office.
The Benefits of Incorporation
The following are a few examples of when integration can be advantageous:
- Building programme or extension carries debt, negligence, third party or volunteer risks. participation
- Taking on debt – a risk associated with fundraising efforts
- Hazardous ministries – unsafe operations such as schools, camps, children’s clubs, or mission trips, etc. ministries to the society
- Jobs – chance of unfair termination, etc.
- Volunteers – threats associated with church discipline, child neglect, and so on.
Disadvantages to Incorporation –
There are certain drawbacks to incorporation that may lead a church to rethink. Among these are:
- Expense – For a small congregation, the cost of incorporation may be prohibitively expensive. The majority of the expense would, of course, be legal fees. If the incorporation committee is capable of doing preliminary research and writing documents. Some lawyers are willing to do pro bono work, particularly if they are church members.
- Time – the process is lengthy, with most churches taking 12 – 18 months to complete the entire process. It is preferable to take one’s time, properly prepare the papers, and go through the process the first time.
- Greater regulation/compliance – It is appropriate to comply with applicable legislation once the church is organised. And also to pay more attention to the procedures outlined in the new bylaw.
How can a church be incorporated?
1. Approval of members-
Obtain the approval of church members before incorporating. Usually, this means convening a conference of the church hierarchy to vote on the suggestion. When the church leadership agrees to integrate and the question is taken to the church members for approval by a general vote of certain denominations.
2. Appointment
Appoint someone to serve as the incorporator, who will handle the paperwork. Anyone who is able to prepare and file the articles of incorporation will serve as the incorporator. It does not have to be a church elder.
3. Registered Agent
Choose a registered agent. A steward is an individual or organisation with a physical address in the state who may receive official mail on behalf of the church. Some states allow the church to function as its own registered agent by using the physical address of the church. Similarly, in certain states, you must appoint a person or a corporation to serve as your registered agent.
4. Non-profit articles
Prepare nonprofit articles of incorporation that are in accordance with the laws of the state in which the church is based. Many states have a template that can be downloaded from the website of the secretary of state. Also, there is another state website for the department that manages business registrations.
The fill-in-the-blank template guides you through the bare minimum of details required to prepare suitable posts. The nonprofit articles of a church should usually identify it as a membership-based nonprofit corporation. Rather than the sort of nonprofit corporation that requires a board of directors. In addition, the church would also almost certainly want to incorporate an intent clause from the church’s constitution or another governing document.
The state must get the filled the nonprofit articles of incorporation. Therefore, the incorporator must sign the papers. States also accept mail and fax by mail for nonprofit publications. Some states have an electronic filing system that can be accessed through the Internet. The article must include the filing fee for the state. The incorporation completes after the approval by the state.
Author’s Note
In conclusion, church incorporation can be done in various ways. The rules differ from state to state. Thus, the incorporation process has both advantages and disadvantages at the same time.
