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Independence From Tithes and Offerings
By Raul Rivera
Recently, a church was notified that space in a retail outparcel became available. The owner stated that he would allow the church to rent the space at the same price as the previous tenant. The pastor knew that now was the time to act, so he accepted the offer. This church had for some time been looking for an opportunity to launch a for profit arm that would impact the community and bring increased cash flow to the church. They had in mind to start a gymnasium that featured a health food café. A 5-year lease was negotiated, which included the owner covering the costs of build out. The church would then focus on getting the workout machines and café equipment. After 5 months of build out and preparations, the new for profit arm celebrated its grand opening. What never crossed his mind was that one day his church would no longer depend on tithes and offerings as its only source of income. While he taught his church the importance of giving, he knew that God had given him a strategy to grow regardless of how much or how little his church received in tithes and offerings; for him it was independence day!
Can a church do that?
At our conferences, whenever we discuss the topic of churches owning businesses, a common question that comes up is, "Can a church do that?" My answer is, "Yes, so long as it is done correctly." In order to do it correctly, a new corporation is formed under section 502 of the Internal Revenue Code. This is a special corporation that is set up as a for profit business controlled by the church. The church owns and controls the business, but it is separated from any liabilities of the business because it is a separate entity.
A shift is coming
Have you considered what attracts people to your church? I believe that a shift has taken place in our society. Millions and millions of people today do not have church on their radar. We have to reawaken our generation to the idea that church can be a part of their daily lives. I believe that churches that successfully learn to do this will have bright and exciting futures. One way of accomplishing this is to interact with them in their daily lives; where they shop, play, and do life.
A biblical case for a for profit arm
At our conferences I cover the details from a legal and biblical perspective. I teach how God always intended for the priesthood to reinvest a portion of the tithe, with the expectation of a return. It was part of His plan to show the priesthood that He was their portion. Though it has been part of God's plan for the church, very few today are actually doing it. Does it sound like something extraordinary? That is because it is; why not be a part of something that is extraordinary?
Three reasons why a for profit arm should be an important part of your church model
- Jobs impact the community: When a church is engaged in the community and it helps to create jobs, everyone takes notice. Your church could be the one place that the city and government turns to when it is looking for answers.
- Profit benefits the church: Once the for profit arm files its tax return, 100% of the profits that are passed to the church are tax free to the church as a donation. The church can then use those funds however it wishes. Imagine receiving enough cash from your for profit arm to pay all of the church's bills? That places you in a different level.
- Since it is a separate entity, none of its liabilities can fall on the church: One of the greatest legal strategies of the for profit arm is that it is incorporated as a separate business. This separates the church from any liability or lawsuit stemming from accidental injury or frivolous attacks.
You can do it
Going back to the church we mentioned in the opening of this article: Several years later, the church has benefited from a successful venture that has been a blessing to both the church and the community. No one ever thought that a small church in a small town could accomplish such a task, but they did. It is possible that many reading this article think they could never do it. I disagree. If the Lord truly meant it when He said, "To him that believes all things shall be possible," then you can do it. You just need some coaching; I know we can help.