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10 Sep 2017

No Offerings, No Problem

Raul Rivera

What if there was a way for your church to fulfill its purpose without solely relying on tithes and offerings? You probably think that this scenario is too good to be true, but if I told you it could actually happen, would you be interested in learning more?

Imagine with me for a moment. Imagine that your church starts a for-profit daycare center in a rented facility that has a goal to disciple children. Imagine that after its first year, it has 60 children enrolled and is operated by a handful of employees and volunteers.

Now imagine that in the same building, you open a dry cleaning facility for parents to drop off clothes in the morning and a catering service where parents can place an order to pick up dinner in the evening when they pick up their kids.

Imagine your church owning all of this and still having an impact on the community in a very practical way. At the same time, your church can reap the benefits of owning these businesses. 

If this is a strategy that speaks to you, then keep reading and I will let you know how this can become a reality for you and your church.

A new way for churches to thrive

Many pastors and church leaders are unaware that the tax code allows a 501(c)(3) tax-exempt organization (your church) to own a business and to reap the benefits of its profits. 

This is what we refer to as a for-profit arm, and this is not necessarily a new concept.

For example, the Roman Catholic Church owns more real estate than any other organization in the world, and it uses this investment to generate income for the church. 

In essence, a for-profit arm is a church-owned business that is explicitly established to do business and to make tax-free money for the church paid in the form of donations and dividends.

Your church-owned business can engage in any lawful activity and be open to the general public. The type of business can be anything you want it to be so long as it is a legal business and your ministry feels good about it. 

Whether it is real estate investing, commercial leasing, hauling, dry cleaning, a retail store, a convenient store, a car dealership, or a restaurant, your church can own the business.

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How does a for-profit arm work?

Similar to a nonprofit corporation, the for-profit corporation is formed by filing articles of incorporation with the state. When the church creates the corporation, it assigns a certain number of authorized shares as listed in the articles of incorporation.

The initial purchase of shares not only gives the church ownership in the business, but it also provides the business with start-up money. This is the only time financial benefit flows from the church to the feeder corporation.

Once the business has made a profit, the board of directors of the for-profit arm can pay that profit to the church in the form of dividends.

Why your church should own a for-profit arm

The fact remains that many churches today struggle just to pay basic expenses such as rent and utilities using only the tithes and offerings received. This, in turn, results in the unnecessary stress that many pastors experience.

Since the government has made provisions in the tax code to allow churches and other nonprofits to receive passive income from a for-profit corporation, the question now becomes, “Why not take advantage of this benefit allotted to you and your church?” 

When you start a church-owned business, the sky is the limit when it comes to generating income for the church.

Are you ready to take a step of faith?

I love the Church! When I was a pastor in full-time ministry, I loved serving God and His people within that calling. However, I do not think that much of the stress I experienced was of God, especially when He has called us to be the head and not the tail!

I encourage you to consider implementing both biblical and legal strategies for your church owning a for-profit arm. Imagine the day when you are no longer dependent solely upon the tithes and offerings your church receives. Think about the relief of not having to carry around that worry.

If you have any further questions about this dynamic strategy, please call our office at 877-494-4655 and ask to speak with one of our team members, or register today and join us at one of our Ultimate Church Structure Conferences in a city near you!

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Please feel free to comment. We always appreciate good dialogue. However, we do moderate each comment to ensure that it is on topic and not derogatory to other participants. We ask that you keep your comments brief and pertinent to the topic so that others may benefit.

Blessings,
Raul Rivera

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About the Author

Church Planter. Speaker. Author. CEO. Raul Rivera has had ample experience in the church planting world. His current venture, StartCHURCH, has helped 1000's of churches to start right. Raul has compiled an array of manuals and software tools that help churches stay compliant with the IRS. He also hosts over 35 national conferences per year, training pastors on how to launch their churches. Raul is married to his wife Genel, and they and their five children live in Atlanta, GA.