Is Your Church Incorporated? – WHY NOT!
As a contributing writer to The Church Staff Digest, I have enjoyed the challenge of writing information concerning administrative issues in the local church today.
This writer’s first two articles (December, 2005 and January, 2006) were focused on this subject – Articles of Incorporation. Although more churches have become incorporated over the last two years, it is not nearly enough. More than 800 of the 2068 South Carolina Baptist Churches are NOT incorporated. This bothers me greatly as a Church Administrator. So, why is your church NOT incorporated? Beats me! It seems practical enough – either you want your church to be legally safe or you do not; and why would anyone stand in the way of wanting their church to be legally safe?
There could be several reasons why churches have been reluctant to file an application:
- The church does not think they will ever be sued or threatened legally. This is a misnomer. Churches can and do get sued. In today’s world, there are negligent issues of child abuse/sexual predator, church transportation vehicles/vans/buses, or documentation disputes – fiduciary irresponsibility, contracts, bylaws, personnel, taxation, etc.
- Churches are cheap – they risk multimillion dollar litigation rather than be diligent and providing protection.
- Churches take the “separation of church and state” too far, and declare immunity to law and law-suit – which is a gross miscalculation.
- Churches do not have consistent leadership to qualify needs and follow-through with the responsibility process to complete incorporation.
- Churches do not have their Bylaws in order (and other legal papers) and find the process laborious.
The South Carolina Baptist Convention recommends and encourages all churches to consider incorporation. The two reasons for this encouragement are: 1) to help a church provide clearer rules for operation/administration when Articles of Incorporation and, 2) Bylaws are in place and protection for the church in case of liability.
Incorporation is a legal entity created under state law. In many states, individuals who associate for a common purpose, like a church, may be held individually liable for action of members of the association, UNLESS the group incorporates. When a church is incorporated, members and church leaders are generally shielded from liability. Lawsuits are filed against the church itself (as a corporate body) because the church is a separate legal entity. The liability burden is generally not on the individual members.
Churches in South Carolina do not have to employ an attorney to file an application for Articles of Incorporation with the Secretary of State’s office. HOWEVER, an attorney IS NEEDED to secure proper transfer of church property from the unincorporated association to the incorporated entity. Usually, a new filing for Tax Identification Number (EIN) is also needed.
Church Bylaws are another vital part of the sequence. Most churches have a blend of Constitution AND Bylaws. With Articles of Incorporation in place, existing Constitutions are no longer necessary. Churches may wish to retain some constitutional content like Purpose, Covenants and Mission Vision Statements in an historical document that would not need future amendment procedures. This removal of Constitutional Articles and Sections usually leaves a more pure document known as Bylaws. Often, Bylaws need amending. Most churches have Bylaws that are too wordy or out of sequence order, or contain policies that often need adjustment. Bylaws should be more difficult to amend than Policies and should be very precisely written. Bylaws are a vital part of Incorporation.