Pastors Do Not Own Their Own Sermons!
By Raul Rivera
Most Pastors Are Unaware That They Do Not Own Their Sermons!
Many pastors have their sermons recorded on Sundays. They are normally saved in church archives and later used to create sermon series that the pastor sells when he travels. However, they are not aware that it is very likely that the pastor does not own these sermons, nor does he have a right to sell them for personal profit. Why? Aren't those his sermons? Did he not preach them? Aren't they his intellectual property? Those are good questions. Under current tax regulation, Treasury Regulation 53, if the sermon was recorded at a church service, using church funds, then it belongs to the church. Any sales of sermons made by the pastor are classified as an excess benefit transaction and will result in penalties of 200% of any sermon sales. Moreover, board members may also be liable for penalties of up to $10,000.00 each.
Why is it an Excess Benefit Transaction?
Section 501(c)(3) prohibits any personal private gain from the church (this does not mean that you cannot earn a salary from the church). This applies to all churches without regard to their 501(c)(3) status (Internal Revenue Manual - 4.76.7.11(1)). When the pastor has his sermon recorded during a church service, it is usually done at a church service where he pastors. In most cases, it is recorded with church owned equipment and church money. At this point, if he takes his recorded messages and reproduces them, he is getting personal private inurement. Because of many other abuses that were taking place in the non profit and church worlds, Congress passed Section 4958. It defines any personal private inurement as an excess benefit transaction. Excess benefit transactions are defined as any special private benefits, outside of normal compensation, that are received by any person who is a member or exercises substantial influence or control over the church (4958(f)(1) and (2)). Taking the sermons that you preached at the church's expense is personal private inurement and a violation of Section 4958(c)(1)(a).
Is There a Right Way For Me to keep My Own Sermons?
YES! As a matter of fact, getting this right is simpler than you might think. A minister is described as a self employed individual under Section 3401(a)(9). This section of the code allows for the minister to negotiate a creative license agreement with the church. Under this agreement, the pastor retains his right to keep the copyright to his own intellectual property, and if the church records his sermons, he will be allowed to keep a copy. In order to avoid an excess benefit transaction, the written agreement must describe how the church will transfer the recorded sermons to the pastor in a way that establishes that such transfer is in keeping with the purposes of the church. Generally, churches have a clause in the purpose statement of their articles of incorporation which states that the church will spread the good news of the Gospel. That clause is enough to allow for a sufficient agreement to be written which honors that clause. Following are three different ways it can be done.
1. Pastor that is on a salary: in order for the pastor to be on salary at the church, he must sign a compensation agreement. As part of that compensation agreement you will want to include an article titled Creative License. That article needs to state that the pastor retains his rights to any and all intellectual property he produces while employed by the church, and that he may use it as he sees fit in order to spread the good news of the Gospel. It must also state that the pastor will reimburse the church X amount for each of the sermons of which he wishes to receive a copy. As we teach in all of our conferences, the board of directors must hold a board meeting and approve the contract.
2. Pastor that is not on a salary: When a pastor is not on salary, an independent Creative License Agreement, covering the points in step one above, is signed between the pastor and the church.
3. Pastor that is coming into an existing church: When a minister is going to become the pastor of an existing church, at the time that an agreement is being signed for him to come, he has a little more negotiating power. This is because he is not considered to be someone of substantial influence until he actually becomes the pastor and, therefore, at the time of signing the agreement he is not subject to the requirements of Section 4958. As a result, the Creative License Agreement does not have to state that he will pay X amount for each of the sermons for which he wishes to receive a copy. So long as that original contract is in place, he can continue to get copies at no charge.
How Much Should the Church Charge?
In my opinion, the charge for each sermon ought to be one that, when interpreted by an outside individual, seems fair. Keep in mind that the charge is just a reimbursement to the church for wear and tear on church equipment. Therefore, $3.00 to $10.00 for each copy should suffice.
I Have Never Given Thought to This Before; What Do I Do Now?
Correcting the problem may not be easy. While the sermon is yours, the actual recording is not. At this point, if you have already been using some of your sermons, a slightly different Creative License Agreement needs to be signed. This agreement needs to mention the date in which the first sermon was preached, and should also state that you reserve your right to retain copyrights to all of your sermons. Furthermore, state that a fee of "x" will be paid to the church for each copy you receive. This guarantees that your sermons, from that day forward, are fully yours to use as you please. It does not guarantee that the sermons you produced and sold before the date of the agreement will meet Section 4958 requirements.
We Will Teach You How To Properly Handle This Issue At One of Our Conferences
This issue should be of great concern to pastors and leaders of ministries. Do not ignore this seemingly small issue. IRS audits will increase now that the IRS Executive Compensation Compliance Project has been completed. Under this project, the IRS has developed an effective way to audit public charities and issue severe fines and penalties for violations. No time is better than the present to educate yourself and to gain the knowledge you need to better manage the ministry to which God has called you.