6 Steps Your Church Should Take at the Beginning of the Year
“Five ... four ... three ... two ... one ... Happy New Year!”
The church erupted with laughter, shouts, hallelujahs, and exclamations of praise. It had been a great year for Pastor Carl’s church. Thus far, his church had made it 10 years. The ministry had a great team, a great space, a great congregation, and more passion for God than ever before.
Although the year had been great, there was a voice inside Pastor Carl whispering remarks of criticism. “You could have done things better, should have done more, should have kept that staff member from leaving, should have saved more, should have, should have, should have ...”.
Pastor Carl looked around and quickly became aware of the joy that he saw in the sanctuary. He observed faces of changed lives, restored families, healed hearts, and people looking forward to a better future. He knew that he could have done things different for his church in the past. However, his church would do things better moving forward, and where it was now should be celebrated in this moment.
Looking forward to things to come
We all have experienced “should have” moments. Like Pastor Carl, there were moments in my ministry when I was overjoyed by the work that I saw the Lord doing in my congregation. On the other hand, I had moments in which I was not sure that I had made the right decision.
One of my biggest areas of uncertainty was in church administration. Through seemingly endless research, study, trial, error, and hard work, we created a great system. It was not only legally compliant, but it also supported our vision for the ministry.
A vision for more
In order to help shape 2017 into one of the best years for your church, I want to share with you 6 steps to strengthen your church’s legal foundation; a foundation that will support and protect your church and all that God has given you to lead.
Every church needs a legal foundation that will support and protect all that God has given them to lead.
1. Review last year’s board minutes
Board meeting minutes are some of the most important documents that your church should maintain on a regular basis. They are the record and proof that your church or ministry is operating in a compliant, legal manner.
Be certain that board minutes exist for all of your church’s board meetings last year. Also, confirm that the minutes accurately reflect what took place during the meeting, and check that each set of minutes was read and ratified at the following board meeting.
If some of your board minutes are missing, or you do not have any board minutes, your board may apply the concept of ratification of prior acts, which is when the board retroactively approves decisions made in the prior year.
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This is a temporary solution that will allow your board to document prior corporate decisions that should have been recorded in board meeting minutes. When ratifying prior acts, it is important to make your most accurate, good faith estimates of times and dates when previous decisions were made.
2. Review board members
It is important to have board members that work well together toward the same goals. The annual board meeting is an ideal time to update your board of directors. Depending on your bylaws, at the annual meeting you may accept resignations, add new members, and remove existing members on the board.
(Recommended reading: “What to do When You Need to Remove a Board Member”)
3. Compensation agreements
The beginning of each year is the perfect time to review, restructure, and reapprove any compensation agreements. Perhaps this is the first year that your church will be compensating you or another staff member. If so, it is important to know whether or not the individual is a ministerial employee or a regular employee. Each individual’s compensation must be approved prior to him/her receiving it.
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Most often this will be done as a compensation package that is approved by the board of directors. If you need assistance, or have questions about compensation packages, please call our office at 877-494-4655.
(Recommended reading: “What You Need to Know About Your Pay, Part 1”)
4. Handling donations
Do you know the difference between restricted and designated offerings? Do you know how to properly handle noncash donations? If a person wants to donate a vehicle to the church, do you know what to do? Does your church have a prescribed method of how tithes and offerings are counted?
(Recommended reading: “How to Handle Year-End Donations, Part 1”)
Being able to answer these questions is an important aspect of being a good steward. Properly handling donations is of utmost importance not only for the purpose of church compliance, but also for the donors who wish to claim a tax deduction for their donation.
The IRS has provided excellent publications on how to manage donations. The Charitable Contributions Publication 1771 summarizes responsibilities of charities and donors for different types of donations. It is wise to use a program that tracks and manages your church’s donations. If you do not use such type of program, then you may want to consider trying our cloud software, Kingdom Steward.
Learn More About How Kingdom Steward Can Help!Click Here
5. Begin saving money
Whether your church is financially soaring or experiencing setbacks, saving little by little is always a smart investment in your ministry’s future. With such diligent conduct, your church will have a substantial amount in its savings account after a period of time.
As Proverbs 13:11 (ESV) says, “Wealth gained hastily will dwindle, but whoever gathers little by little will increase it.”
Perhaps your church has been consistently saving money and has an impressive cushion in its savings account. Have you considered how to best protect your church’s savings?
Sure, the bank can keep it safe, but if one day your church finds itself in the midst of litigation, your church’s savings and assets become vulnerable and exposed.
“Wealth gained hastily will dwindle, but whoever gathers little by little will increase it.” Proverbs 13:11
When your savings becomes substantial, or when your ministry has valuable real and personal property, consider establishing a tax-exempt holdings corporation to protect your church’s assets. The holdings corporation is a great line of defense for your church.
(Recommended reading: “How to Make the Dreams for Your Church Reality”)
6. Consider starting a church-owned for-profit arm
The time for change has come! Life is too short to live satisfied with the traditional way of doing things. There are “new wineskins” that God has for you and your church in this time and season.
Therefore, why not start and run a church-owned business and break out of the traditional methods used in the past? Why not begin to utilize a new way of doing church business?
A for-profit arm is a ministry-owned business that is established to make tax-free money, which is paid in the forms of donations and dividends to the church. The for-profit arm exists as a regular for-profit business that is described in Internal Revenue Code section 502.
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The type of business can be anything you want it to be as long as it is a legal business and your ministry feels good about it. Whether it is a retail store, a convenient store, a car dealership, a restaurant, real estate investing, commercial leasing, hauling, dry cleaning, or any unique business, your church can own it.
(Recommended reading: “Can Our Church Own a Business?”)
Greater things are in store for you this year
As demonstrated in Pastor Carl’s story, it is important to celebrate the blessings of God in the midst of change and growth. However, to fulfill the purpose of God for our ministries, we must never stop dreaming, planning, and working towards greater things through Him. Strengthening the administration of your church will make fulfilling your purpose as a minister much easier.
I invite you to join us at one of our upcoming Ultimate Church Structure Conferences. With information on church compliance and strategies for expanding your ministry, this conference is just what you need to start strengthening your ministry’s foundation in 2017.
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