Are There Any Benefits of 501(c)(3) for Churches?

By Raul Rivera

There is a lot of information on the Internet about whether or not churches should apply for and obtain 501(c)(3) approval. There are those who say churches should not apply for 501(c)(3) approval and there are those who say churches should apply for it. 

I have addressed the question of whether a church needs to be 501(c)(3) approved and provided a link to that blog at the bottom of this post. You do not, however, hear about the benefits available to churches that do obtain 501(c)(3) approval often enough. 

In this blog, I will give you five benefits available to churches that obtain 501(c)(3) approval. While the benefits listed below are by no means an exhaustive list of the benefits associated with 501(c)(3) approval, these benefits carry the most “bang for their buck.”

5 benefits of 501(c)(3) for churches

1. Tax-deductible contributions for donors.

You are probably thinking, “Can those who give to my church take a tax deduction on their tithes and offerings, regardless of whether we obtain 501(c)(3) approval?”

My answer to that is, “Yes, but it is not that simple.” Allow me to explain.

We see in court cases, such as Jack Lane Taylor v. Commissioner*, the burden that is placed on donors of churches without 501(c)(3) status. If a donor is audited, he/she must establish or prove that the church meets the requirements and qualifications of a section 501(c)(3) organization. 

What a burden for an individual to carry!

For this reason, many donors may choose not to donate to organizations without a 501(c)(3) approval.

In addition, the presumption of tax-exempt status does not exist unless the church has been officially recognized by the IRS to meet the requirements of section 501(c)(3). 

Thus, by applying for and obtaining 501(c)(3) approval you are ensuring your donors that their donations will be tax-deductible, and they will benefit from their faithful giving. 

2. Availability of grant funding.

The general thought is that because of their religious nature, churches are excluded from receiving grant funding. This, however, is not totally true.

In the case of Trinity Lutheran Church v. Comer*, the U.S. Supreme Court ruled that a state program providing free playground surfacing to any school or preschool, except for churches or other religious organizations, violated the protection of the free exercise of religion under the First Amendment.

In its ruling, the U.S. Supreme Court noted that “Trinity Lutheran is a member of the community too, and the State’s decision to exclude it for purposes of this public program must withstand the strictest scrutiny.”

This is good news for churches!

Now yes, there are grants that churches will not qualify for because the nature of the grant may be to fund a specific activity or purpose that is in no way related to a church. However, as we see in the case mentioned above, there are instances in which certain state or federal grants may be available to your church. 

The key to your church receiving any sort of grant funding will be whether or not it is 501(c)(3) approved.

3. Discounted nonprofit mailing rates. 

Many churches will oftentimes send mass mailers to thousands of households in their community. Some churches will send upwards of 30,000 mailers inviting those in their community to their church. 

While you may think that saving on postage is not that big of a deal, when you add up what your church has spent in previous years or what your church will spend in future years without the postage discount, you will be surprised to find how much your church can save with the discount. 

To qualify for this discount, your church must be 501(c)(3) approved and you must include a copy of your 501(c)(3) approval letter with PS Form 3624. You will need to submit this form at your local post office.

To help you with this process we provide a nonprofit mailing guide in our Secretary's Suite.

4. Advertising discounts.

The truth of the matter is that we live in a digital age. Most likely you are reading this article on either a mobile device or tablet. If you are sitting in a coffee shop with other people around you, take a look and you will see people on their devices.

As a result of this digital age, churches are utilizing the digital platform to more people than ever before. Churches, however, are not the only ones utilizing the digital platform to get the attention of others. This is known as digital marketing; and, to some extent, digital marketing is a pay to play game.

There are discounts available to 501(c)(3) approved nonprofits through tools such as Google Adwords. If you would like to know more about how your church can utilize this tool in a very cost effective way click here.

5. Benefits at the state level.

How would you like it if your church did not have to pay state sales tax? Or if your church owns property, would you like it if your church was exempt from paying property tax?

While these benefits are not offered in every state, most states offer these or other types of benefits that are only available to nonprofit organizations. In some cases, a state will require that a 501(c)(3) approval letter be included with the application for certain exemptions. 

So if such benefits are available in your state for your church, why not take advantage of them? If you want to know what state benefits are available in your state for your church, give our office a call at 877-494-4655.

The choice is yours . . . what will you do now?

In my firm and honest opinion, while the benefits of your church applying for and obtaining 501(c)(3) are plentiful, I think that applying for 501(c)(3) status is the best First Amendment defense available to your church. 

When you apply for 501(c)(3) status, your organizational and governing documents (articles of incorporation, bylaws, written doctrines, etc.) all become a part of your public record. Our goal at StartCHURCH is to help you establish a solid legal foundation for your church or ministry to build upon.

Remember to pace yourself to run the race that God has set before you, for he will give you the strength and resources you need to succeed.

Recommended articles for you:

• “Does a Church Need to be 501(c)(3) Approved?”
• “No Offerings, No Problem”
• “How to Become an Ordained Minister”

* Sources:

• Taylor v. Commissioner, No. 14021-98, 2000 Tax Ct. Memo LEXIS 17 (U.S. T.C. Jan. 18, 2000)
• Trinity Lutheran Church of Columbia, Inc. v. Comer, 137 S. Ct. 2012 (2017)

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