1 Way to Increase Your Church’s Revenue

By Chaston Asbury

Dear Pastors,

Do you find yourself donating more and more of your personal money to keep your church afloat?

Is your church struggling financially to cover the monthly bills?

Do you find that instead of the church using its finances to feed the homeless, give back to your community, and fulfill the mission of the church, the majority of the church finances are going towards administrative expenses? 

If you answered "yes" to any of these questions, it might be time to consider starting a church-owned business!

At StartCHURCH, we advocate ecclesiastical entrepreneurism as a component of church life and its impact on the community. To start and run a ministry-owned business is to break out of the traditional methods used in times past and create a new stream of income for your church. The days of churches and ministries depending solely on congregational giving are over.

Alternative Sources of Income

Many pastors and ministry leaders frequently ask, "How can my church increase its revenue to further God's kingdom in our area?"

Several churches have found an answer to that question by selling coffee and pastries at weekly church services. 

While coffee bars and cafes can bring in some additional revenue on Sundays, have you ever considered what might happen if they remained open during regular weekly business hours?

You may be surprised at how God can use this type of scenario to financially increase your ministry or church. If you're interested in starting a church-owned business, call us to speak to one of our specialists today 877-494-4655!

While a cafe can be a great additional income source for your church, you need to be aware of important tax information concerning this type of revenue. If the church organization is operating the cafe, the income from this activity would be considered unrelated business income by the IRS. Therefore, it would be subject to unrelated business income tax (UBIT).

Let's explore a little bit more about this topic.

Explaining Unrelated Business Tax (UBIT)

IRS Publication 598 defines unrelated business income as:

"The income from a trade or business regularly conducted by an exempt organization and not substantially related to the performance by the organization of its exempt purpose or function."

If your church participates in these types of unrelated business activities, the church must pay taxes on the income derived from those activities. However, merely paying taxes is not the only task that your church may have to consider.

If your church's unrelated business income constitutes more than an "insubstantial" part of its activities, then your church's tax-exempt status will be in jeopardy of being revoked. To make sure your church's taxes are set in order, give us a call today 877-494-4655!

Rather than taking this risk, the best answer to this potential problem for your church is to start a for-profit arm.

The Benefits of a Church Owned Business

A for-profit arm, also referred to as a feeder corporation, is a business venture where your church is a majority shareholder. In return, the for-profit arm pays the church profits in the form of tax-free dividends. These dividends are considered passive income for the church, meaning that the church does not have to report them as unrelated business income.

A for-profit arm is set up and incorporated separately from your ministry. It will operate independently from your church, having its own board of directors, bylaws, Federal Employer Identification Number (FEIN), and distinct for-profit purpose. Once incorporated, the business and church will enter into a stockholder agreement, and the church can purchase shares of the business.

One important thing to keep in mind is that the for-profit arm will generate profits and losses, incur expenses, and report and pay taxes, just as any other business would. However, a major benefit of establishing a for-profit arm for your church is that the corporation can take on a religious persona, which helps protect the business' decisions. This means that your for-profit arm can still uphold your church's deeply-held religious beliefs. 

What are you waiting for? Now is the time to set up your church-owned business. Give us a call today 877-494-4655, and we will get to work on starting your for-profit arm!

Religious Freedom for your Church Owned Business

Many of you may have heard about a case in Colorado where a local baker, Jack Phillips, refused to make a wedding cake for a same-sex couple. The Supreme Court ruled in favor of Mr. Phillips and set a precedent for for-profit arms to operate and still uphold the church's beliefs. If you want to read more about this case, click here.

StartCHURCH recently established a catering business for a church that caters gourmet food at special events like birthdays and weddings. In the business's bylaws, an article was inserted that prohibits the corporation from condoning, promoting, or allowing any of its assets to be used for activities that violate the majority shareholder's written doctrines. This church was opposed to homosexual marriage and had language stating so in its written doctrines. The catering business is protected by that language. Therefore, if the business were to be solicited by a homosexual couple to cater to their wedding, the catering business could deny the request because it would violate their bylaws.

We know that in today's culture, running a religious-oriented business may seem overwhelming. Don't let the process keep you from fulfilling your calling! We here at StartCHURCH are standing by to strengthen your legal foundation so you can protect what God is calling you to lead. 

Steward Your Church's Finances to Help Your Church Thrive

"For it will be like a man going on a journey, who called his servants and entrusted to them his property. . . When the master returned, the two men who had turned around and multiplied the talents pleased the master. Because he was pleased, the master said, "Well done, good and faithful servant. You have been faithful over a little; I will set you over much."

 - Matthew 25: 14-21

You are most likely familiar with the parable of the talents. I am willing to bet that you have even preached to your congregation a message centered around this principle of being faithful with a little so that God can set you as a steward over much. However, have you considered lately how this parable might apply to your church's finances in this season? As you grow in wise financial stewardship over your organization, you position your church to see a harvest to further advance the kingdom.

Here at StartCHURCH, we understand the many challenges of running a fruitful ministry. We want to see you exceed in your God-given calling. Give us a call today at 877-494-4655 to get started on the right path! Let us help you navigate the challenge of increasing your church's revenue so that you can focus on your calling to make an impact on your community and around the world.

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