Overcoming the Challenges of the 21st Century Pastor

By Trey Lewis

As I travel the country to teach and train pastors about church compliance, there is always that moment during each conference when the reality of today’s world hits every individual in attendance. 

The legal landscape for churches and ministries is one that can be difficult to traverse. Over the last twenty years, Congress and the IRS have become very interested in the activities of churches, ministries, and nonprofits.

Their interest has led to the enactment of Internal Revenue Code section 4958 and the creation of the Exempt Organizations Executive Compensation Compliance Project, resulting in increased enforcement presence and millions of dollars in fines.

Pastors and ministry leaders that are unaware of how the legal landscape has been changing may find themselves inundated with tax trouble. Moreover, they also miss out on a number of great benefits and exemptions available.

With that said, let us take a look at the path of churches and ministries. I am going to address five challenges that all churches and ministries face today. These challenges, as well as others, are also discussed at our conferences.

Five statements that I hear from pastors

1. “I did not realize we could not do that.”

By nature, many pastors and ministry leaders have an entrepreneurial spirit. This is a good thing since many of them utilize endeavors in order to grow God’s kingdom.

However, from a legal standpoint, how might this affect the tax-exempt status of a church or ministry?

The activities of churches and ministries on a day-to-day basis need to be in line with the Income Tax Regulation in 1.501. In essence, this regulation states that if an organization substantially participates in an activity that is not tax exempt, the organization jeopardizes its tax-exempt status.

This brings into question some of the activities that churches engage in and could jeopardize their tax-exempt status if audited. 

Such activities may include the following:

• Renting out facilities to the local public,
• Having too many bake sales, and
• Running a café or bookstore during non-church or non-ministry events.

(Recommended reading: "Can Our Church Own a Business?")

It is not that your church cannot engage in any of these activities, but rather these activities, if NOT done correctly, may be deemed by the IRS to be substantial activities unrelated to the church’s charitable purpose. 

If this happens, your ministry may lose its tax-exempt status.

2. “What do you mean the IRS can give me bad advice?”

In the case of David Michael Maser v. Commissioner, the tax court asserted that if an IRS employee gives you bad advice it is generally not binding on the Commissioner. 

This means that you can call the IRS for advice, and if in response you receive wrong advice, then the bad advice is not binding on the IRS.

Can you imagine what that may mean to your church?

The fact is that many IRS employees are not sufficiently trained to answer questions dealing with even the simplest of matters, let alone complex questions pertaining to church and ministry compliance.

So, if you have a question about a matter relating to your church or ministry, do not call the IRS. Instead, give us a call at 877-494-4655. This is one of the reasons why we exist.

(Recommended reading: "IRS Taxes Pastor for Money He Never Received")

3. “I do not have time to work on the legal side of my church.”

There is no doubt that your schedule as a pastor is full. And while it may be accurate that you do not have enough time to work on the legal side of your church, the truth is that we are living in a time when it can be costly not to work on your church’s legal foundation.

Let me explain.

In 1992, the American Bar Association hosted a seminar and discussed how best to sue churches and win large settlements. A Christian attorney in attendance that day described it as “blood being poured into shark-infested waters.”

Since that time, there has been an overwhelming increase in churches being sued. Some statistics indicate that in the United States over 1,000 churches are being sued per month.

For many pastors, the idea of their church getting sued and losing everything is a nightmare scenario. Although there is no sure fire way to prevent your church from ever being sued, there are strategies you can implement to help protect your church.

We teach these strategies at our conferences. 

One such strategy is for your church to establish a tax-exempt holdings corporation. Imagine being able to shelter and protect your church’s assets. For more information on the holdings corporation and how it can benefit your church, you can click here, or simply give our office a call at 877-494-4655.

4. “I can hardly recognize the world we live in.”

Pastors from previous generations served their churches in a culture where “the Church” had respect and moral authority. Pastors today are leading in a completely different culture. 

The Supreme Court’s decision two summers ago to legalize same-sex marriage has been a concern among many pastors and church leaders, and rightfully so. Then last year, North Carolina passed its infamous House Bill 2 (HB2), also known as the “Bathroom Bill,” which was repealed earlier this year due to mounting public pressure. (Both of these issues were addressed in a previous post. Click here to read.)

Recently, the Iowa Civil Rights Commission was forced to amend its brochure on “Sexual Orientation & Gender Identity” after a complaint was filed by Fort Des Moines Church of Christ with help from Alliance Defending Freedom. 

The previous brochure indicated that churches would be required to accommodate bathrooms for individuals based on their sexual identity.

Although the Iowa Civil Rights Commission revised its brochure, this goes to show that religious freedom and expression is a continuous battle, and it is imperative for your church to have proper wording in its bylaws.

As we teach at our conferences, your best First Amendment protection is your church’s bylaws.

Since legislation in our country is always changing, your church’s bylaws need to include necessary language to provide adequate protection. For some of you, this means you will need to update your bylaws. 

It is good practice to regularly review your bylaws to ensure they are up to date with current legislation.

5. “I feel totally unprepared and inadequate to lead effectively.”

It is intriguing to me that most ministry training programs teach ministers strategies that concentrate on the spiritual side of ministry (preaching, teaching, counseling, etc.), yet at the same time fail to adequately prepare ministers to lead as CEO of their church corporation.

It is not until ministers are actually leading a congregation that they realize the full weight of their responsibilities as CEO. In most instances, ministers feel unprepared and inadequate to lead in such a capacity.

The fact of the matter is that most pastors do not have the time or resources to pursue higher education or additional training they feel is necessary to lead as CEO. 

This is one reason why we have put together a one-day conference training that equips pastors and ministry leaders with the necessary tools, resources, and knowledge to help lead their ministries and churches as CEOs in the 21st century. 

If you have not yet been to one of our conferences, we would love for you to join us! You can click here to find out when we will be in a city near you.

Overcoming the challenges before your ministry

So, what do you do with information like this?

I have discovered that though I am announcing it at a level 10 volume, many leaders hear it at only a level 1 volume. The common thought pattern goes, “I will get to that later.” By the time later comes, it usually means that something has occurred and is most likely too late. 

Unfortunately, many pastors are unaware of the compliance issues within their churches. With increased scrutiny and IRS enforcement presence, the years ahead may become more challenging for churches to StartRIGHT™ and StayRIGHT™.

Do not be one of the pastors who says, “I will get to that later.” Be proactive in protecting all that God has given you to lead.

If you have any questions or would like to receive more information about how we can help you and your church, please give us a call at 877-494-4655.

Handpicked articles for you:

• "Why Bylaws Are Important, And How to Make Yours Better"
• "Tither Denied Deduction Because Church was not 501(c)(3)"
• "How to Simplify All of Your Church's Filing Requirements"

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