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Credit Card Woes at the Church

By Raul Rivera

Taking a church from 150 members to 2000 members

In 1998, Pastor Russell Hodgins took the helm of a debt ridden, 150-member church.  Armed with not more than a vision and the motto "Love Jesus and love people" he persevered through the lean years until the church turned the corner.  It was not too long before the congregation realized that the Lord sent him as an answer to their prayers, having asked for a leader filled with integrity, vision and grace.  Today the congregation has 2000 members with satellite churches in various locations. 

Incorrect use of credit cards with mileage points

So, why did he resign his post as the senior pastor?  It all happened because of a church credit card and mileage points.  Many credit card companies offer airline miles for every dollar spent using their credit card.  Because of these perks many pastors use them to build up as many miles as possible.  It is a great idea especially if you are a minister that does a lot of travel.

The problem with Pastor Hodgins came when, in an effort to maximize the number of airline miles earned, he (with the approval of the church) also used the credit card for personal use. Every time he (or his wife) used the church credit card for personal use they reimbursed the church.  All seemed well until on a couple of occasions they used some of those miles to take personal trips.  The miles made the travel cheaper and convenient.  But, was it OK?  Did the law allow them to use those miles for personal use?   No one seemed to have a problem with this until, according to Pastor Hodgins, he terminated an employee who left disgruntled.  In his own resignation, Pastor Hodgins apologized for "procedural mistakes or errors in administrative judgment." 

The damage a disgruntled individual can cause

Never underestimate the damage a disgruntled member or former employee can cause.  In the many years of ministry, I have discovered that in the name of "protecting others" an individual that is disgruntled with their pastor can go to drastic measures to aggravate and disrupt the pastor's ministry.  Understanding the mindset of someone who is disgruntled with you and how it affects the decisions he/she makes when no longer in fellowship with you may be helpful.  Below are two truths that may help to shed some light on this subject.

1.     Those closest to you see your good and bad side:  As with any minister, the people that work closest to the pastor see his/her best and worst side.  It takes people with real maturity to work alongside the pastor and still honor and respect him/her.  Bottom line:  a pastor is no different than any other person, except that he/she will be required to live a higher standard, and if unmet expectations arise (whether reasonable or not) then people tend to lash out when they leave the congregation.

2.     One can never wink at questionable practices:  I cannot stop thinking of pastor Anthony L. Jinwright, who knew several factors of the church's finances were not in order but decided to not do anything about it.  His troubles came because he chose not to address certain issues that were out of compliance at his church, which resulted in an audit, followed by prosecution and conviction.  What issues may seem small today will become a big problem later if you do not take the time to fix them.  What you do not fix today can become the next item used to accuse you later by a disgruntled employee who has been let go or a member who has left the church.

How to properly maximize mileage points

The best way in which you can take advantage of mileage points and be within the best practices of the law is to donate your miles to the church.  If the church has its own credit card that earns mileage points, then all you have to do is donate your own points to the church.  When you make the donation it is not tax deductible unless you purchased the miles.  The IRS ruling is that because airline miles are obtained freely, they are not taxable and if they are not taxable, they are not deductible.

Church credit cards and the troubles they bring

 Many churches get in credit card trouble because they do not have proper controls and policies set in place on who, how and when cards get used.  It is never advisable for the pastor to use the church credit card for personal purposes to build up the mileage points even if he/she reimburses the church.  This is a recipe for disaster.  Our Advanced Compliance System II details the proper policies you should implement for proper credit card usage.

My opinion

From what I have read, it does not appear that Pastor Hodgins did anything wrong.  In fact, everyone that I have spoken to that knows him personally, has nothing but praise and admiration for him.  At worst it was a clerical, or administrative error.  In the same way, you may feel certain that the board gave you permission to use the points earned, but now there is no record that it was approved.  The best way to address this is by putting it in your actual salary compensation agreement.  There should be a line item that includes reward points from the church credit card.  Section 501(c)(3) does clearly state that "no part of the net earnings of which inures to the benefit of any private shareholder or individual."  The personal use of airline miles that belong to the church is considered "private inurement" unless it is clearly stated as a line item in your salary compensation agreement.   

I do ask you and all the readers of this article to pray for pastor Hodgins and his family.  He stepped down from his church because he did not want it to be a distraction to the congregation.  That took guts.  He was more concerned for the sheep than for winning a personal battle against his character.  He will be blessed wherever he goes.

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