Protecting and Prospering
Your Church
How to protect your people, place and property
so the kingdom of God will grow through your ministry.
Ruth Graham Lott
MULTIPLICATION…
• REVITALIZE
• RECALIBRATE
• REPRODUCE
We struggle not against flesh and blood,
but against the rulers, against the
authorities, against the powers of this
dark world and against the spiritual
forces of evil in the heavenly realms.
-- Ephesians 6:12
Free Methodist Church
Average Worship Attendance
1970 - 2015
120000
100000
80000
60000
40000
20000
0
1970
2015
1 You’re not incorporated.
The imperative of incorporation
 Distinguishes between the corporate entity and its members,
limiting liability for individuals
 Otherwise, an “Unincorporated Association” & all members are
jointly and severally liable
 Ownership of assets is clear and easy to establish
 Eliminates state requirement of having trustees (in most states)
 Allows “religious shield” – include “Sincerely held religious beliefs”
and tie to the Book of Discipline of the FMC-USA
1 You’re not incorporated.
How you ran amuck
 Your church forget to file/pay the annual corporation form/fee
or take your state’s required actions to keep your status in good
standing
 Your church didn’t hold the required annual meeting of
members and election of board
 Your church didn’t keep track of membership and you don’t
know who legally is and is not a member
 Nobody’s looked at the Articles and By-laws in years
 The By-laws don’t include references to the Book of Discipline
1
You’re not incorporated.
Be sure your church…
 IS incorporated and in good standing with your state
 Follows its By-laws
 Maintains accurate membership records
 Holds the required annual meetings and keeps the minutes
 Maintains D & O insurance coverage
 For really spiffy By-laws – go to:
and download the template
fmcusa.org/resource
2
You blew-off employment laws
 Never hire anyone – including volunteers working with
kids – without first doing a background check
 Templates available at www.fmcusa.org/resource
 Must get permission in advance
 Use a job description and include:


“All employees of ____ church are expected to live in conformity with
Chapter Three of the Book of Discipline of the FMC-USA.”
“All employment at _____ Church is strictly at-will, meaning that either party may
terminate the relationship by giving the other party written notice of termination.”
2
You blew-off employment laws
 Is the person an “employee” or a “private contractor”?
Is the work an integral part of the business?
Is there any managerial control?
Does the person own his/her own equipment, or use the church’s?
Is the worker’s skill such that he/she could operate a separate business
and command market value for services from others?
How permanent is the relationship?
How much control does the employer have regarding schedule,
method of work, etc.?
 If NOT, must report hours, be paid by the hour, and they’re subject to
over-time laws
2
You blew-off employment laws
 Is this person subject to wage-and-hours laws?
 To be exempt from the requirement to pay overtime, the following must be met:

$47,476 = minimum thresh-hold as of 12/1/16 (Up from $23,660)
Job duties must comply with one of these exemptions, each has its own
indices
Administrative (management, independent re: matters of
significance)
Executive (manage at least sub-dept, 2+ FTE, hire/fire)
Professional (work=intellectual in nature, dr, lawyer, artistic talent)
Computer systems analyst, programmer, engineer, etc.
Highly compensated (moving to $122K/year +)
You can’t volunteer for roles similar to those for which you are paid
You have to pay income taxes on love offerings 
The $ of Free Methodist Employment
All Pastors: Lead & Associate, Full- & Part-time
Average:
Highest:
2
Update on the housing allowance
 It is safe – for now – for those of you who live in a parsonage
provided by your church. (You won’t have to report the value of
the “free rent”.
 For the rest of us – it’s still here, but it may be going away.
 For now:
 You must claim your annual housing allowance IN ADVANCE
 It must be approved by your B.O.A. with minutes reflecting the
approval
 If you spend less during the year, you much report the difference
and pay income taxes on it.
3 You didn’t follow the
2,000 pages of
Obamacare rules
 For the past year, a church with only ONE full-time employee could pay
everything in pre-tax dollars, legally (just like the good old days).
 “21st Century Cures Act” passed December 13th…
 Applies to churches with 2-50 employees
 Allows church to fund Health Reimbursement Accounts with pre-tax dollars
 You can pay your health-insurance premiums out of these accounts
 Maximum per year is $4,950 for single coverage, $10,000 for families
 Must offer same benefit to ALL employees
 Must provide notice to all employees by 3/13/17 and thereafter by 9/30
annually
4
You broke the laws regarding gifts
Cash: Receipt must include, “No goods or services were
provided to the donor in exchange for this contribution”
Stuff: Never list any dollar value for the gift. Simply the
name of church & donor, date and description of gift.
Services: don’t even think about it! You cannot give
any receipt for services received.
4
You broke the laws regarding gifts
Designated Gifts:
designated.
must be used for only the purpose
 To do otherwise can subject you to criminal prosecution and
punitive damages if civil suit is brought.
 You can’t even borrow from a designated fund.
 Talk to Larry re: a possible caveat if fully disclosed upon
acceptance
Gifts to specific individuals: never qualify for any tax-
deductible receipt. Make checks to: “Youth Mission Trip”, not:
“Billy Bob’s Mission Trip”.
4
Giving to Free Methodist Churches
by church size (worship attendance)
(000’s)
3500
3000
2500
2000
“Average” Free Methodist Church:
Worship Attendance:
113
Membership:
78
Income:
$179,982
Income per Attendee:
$1,593 / yr
Income per Member:
$2,307 /yr
1500
1000
500
0
<50
50-100
101-200
201-350
351-500
501-1,000
>1,000
$43,764
$109,319
$213,321
$453,555
$669,820
$1,092,092
$3,240,234
5
You didn’t protect your facilities.
 Be sure you have sufficient insurance
 fire and casualty for owned property, or renter’s insurance
 Liability (including sexual molestation)
D & O
 Use the “Church Insurance Coverage Worksheet” as a guide
 Use for non-church events:
 Have a Facilities Use Policy
 Use a Facilities Rental Application
 If the application is approved, have the user sign a Facilities
Use Agreement form (all of these are on-line at
fmcusa.org/resources)
 All documents at: www.fmcusa.org/resource
The #1 reason churches & pastors get sued
Personal injury, right?
Property Disputes?
Boring sermons?
TOP 3 REASONS CHURCHES WERE IN COURT
© Simms Showers LLP, 2015
THANK YOU FOR ALL YOU DO!
From all of us at the W.M.C.