Transcript NLMI – Church Planting: Logistics of Running a Church

New Life Ministries International
Advanced Church Planting
Training
Logistics of Running a Church
Dr. James Flynn
May 17, 2010
Why this Session?
Ministry and church planting rises and falls
on good administration and
management!
 Many preachers and people with vision
 Many leaders who like to be out front
 Few servant leaders behind the scenes
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tending to order
Importance of excellent administration
Importance of solid stewardship (management)
Security of order
Administration and
Management
Church Planters Are Administrators
“Steering the Ship”
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As administrative leaders, our job is to identify
these people that have leadership gift potential,
train, and deploy these gift for useful service in
the church (1 Cor 12:28):
God appoints (ti,qhmi – tithemi -commits, destines, sets,
assigns, places) the gift, just as He does other ministry
offices in the church. The pastor him or herself may not
have this gift. If not, the weakness in his or her life
forces team ministry!
Administration (kube,rnhsij – kubernesis – steer, govern)
pictures a helmsmen of a ship steering the ship. The
helmsman sets the direction at the discretion of the
captain – he or she is only a member of the crew, taking
orders from the captain, yet has a very important
function!
Cont…
Church Planters are Managers
“Setting House Law”
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Stewardship (oivkonomi,a – oikonomia, literally “house law,”
from which our word “economic,” financial law of the house,
comes from) is another essential ingredient. This is the
ability to provide “house law” or direction in the
management of things that belong to another:
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Gen 1:28 – God originally created mankind to manage
the earth and its resources. They were to set and keep
things in order in God’s garden. Mankind has this
longing to set things in order and shape his or her world
because of a built-in need to be a steward of God’s
creation
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Exodus 19:5 – It still all belongs to God – we are just
using/borrowing it for a short while. Our stewardship is
using these resources for the benefit of ourselves and
others, producing a “profit” for the owner – God.
Cont…
Defining our Role as Leaders
Authority and Power
 My foundational role as a senior leader is the
stewardship of God’s authority and power to
accomplish His purposes with His resources, both
human and physical
 Rom 13:1 makes clear that all authority originates
with God. Authority (evxousi,a exousia) is the right to do
something.
 The Greek word of “power” is du,namai – dunamai which
conveys “ability” to do something. Its one thing to
have the right, yet another to have the ability
 Senior leadership is using God’s authority (right) and
God’s ability (power) to accomplish His purpose – this
is the essence of stewardship
The Lonely Struggle
Trust
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BUILDING TRUST: In order to cooperate with God’s plan to
influence others (lead/manage) people must TRUST us. This occurs
as they SEE God’s work and character in our lives, rather than just
hear it from our mouths.
THE LOOK: Talented people may LOOK like their lives are in order
– conformation, but whose lives as sadly in disorder and disarray on
the inside (no transformation) because they have never learned to
abide in Christ (John 15:4).
INTEGRITY: This sets us up for major implosion- the life decays
and crumbles from the inside our, until the corrosion ruptures the
external look of order and success, and we have a “hull breach,”
and decompress. In mechanical engineering terms, this is called an
integrity failure – the objects ruptures at its weakest point, often
followed by loss, damage, and destruction of the vessel or those
around the vessel. Need I elaborate on the parallels to the life of a
leader?
Managing Change
Managing Change
Change Personalities
 Innovators: (2 – 3%) This small fraction of people
actually thrive on change. The like to produce it, work
with it, plan it, and make it happen.
 Early Adopters: (8 – 18%) This slightly larger group will
on board with change fairly quickly, after it has been
explained and processed.
 Middle Adopters: (60 – 80%) This is the majority of the
people in any group. They are not quick to change, and
do not like it to one degree or another. The change must
be explained and then processed for a significant amount
of time. They are cautious, and may need to see it work
for a while before getting on board.
Managing Change
Change Personalities
 Late Adopters: (2 – 18%) These people resist
change and are the last to accept it. They will
fight it for a long time, and must see that it works
or is inevitable before they will come on board.
Some just barely come on board and accept the
change with much anxiety and frustration. In the
end, they are on board, but it takes a long time
 Never Adopters: (2 – 20%) This group of
people will not change no matter what you do.
They are set in their ways, and will wait until
things fall apart, but will not change. You cannot
change them. They will fight you all the way.
They will fuss or leave, but they will not change.
Managing Change
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God has placed all of these personalities in the church
by His sovereign hand. Managing change comes down
to knowing these types of personalities and how to
work with them.
 If all were Innovators, we would follow every whim
and consume ourselves.
 Without the Middle and Late Adopters, there would
be little caution and examination or planning.
 Deal with each personality and the way they relate
to change. Put them in appropriate places in your
leadership structure to help manage change and
transition.
 MAKE ROOM FOR EACH PERSONALITY IN
YOUR ADMINISTRATION & MANAGEMENT!
Cont…
Assembling a Leading
Coalition for Change
Assembling a Leading Coalition for
Change
 In building a coalition of key leaders to lead change,
it is important to have a good mixture of changerelated personalities in my coalition.
 Innovators – we tend to be on the cutting edge and like to “surf”
change. We love new things and ideas. We are the paradigm
shifters that get shot at and the paradigm pioneers that introduce
the changes necessary to move organizations onward. You only
need a few of us – we can wear you out quickly with our ideas,
move from idea to idea, rather than stopping to think, and not
allow enough time to process change before we are at it again.
Only a few of us are needed!
Cont…
Assembling a Leading Coalition for
Change
 In building a coalition of key leaders to lead
change, it is important to have a good
mixture of change-related personalities in my
coalition (cont.):
 Early adopters: tend to be the “high D” personality
types (MBTI – NT/SP) that are right on board with the
innovators in a short time. A board or change
coalition should have a couple innovators, a few more
early adopters, and the rest middle adopters to
balance it out. Innovators should convey the vision to
the early adopters, and they will win the Middle and
Late adopters over for you.
Cont…
Assembling a Leading Coalition for
Change
 In building a coalition of key leaders to lead
change, it is important to have a good
mixture of change-related personalities in my
coalition (cont.):
 Middle Adopters: tend to be high S/C personalities
(MBTI – SJ). They prefer things to be steady and like
to take their time and carefully examine change and
its implications. They slow the process of change
down considerably – which is good and healthy!
They balance out a board and makes its decisions
tolerable and well timed!
Assembling a Leading Coalition for
Change
 In building a coalition of key leaders to lead
change, it is important to have a good
mixture of change-related personalities in my
coalition (cont.):
 Late Adopters: tend to be high C personalities that
are very analytical and uncomfortable with change.
They slow the process of change down even more,
which is ultimately good, and God designed it this
way. They make great strategic planners and
accountability sources! Focus them here!
Assembling a Leading Coalition for
Change
 In building a coalition of key leaders to lead change,
it is important to have a good mixture of changerelated personalities in my coalition (cont.):
 Never Adopters: Forget it. You will not change
them. Reason with them, have them over for dinner,
placate all their wants, give them titles and
recognition, bury and marry their relatives. They will
NEVER change, they will resist and fight you, then
they will leave, take people with them, or stay around
and make your life miserable. Such is life. Mark
them and expect them (2 – 20% of the church,
depending on your church), but love them and make
sure they are not part of your guiding coalition!
Assembling a Leading Coalition for
Change
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God has given you a toolbox for managing
change and transition in the form of a well
balanced leading coalition. As a paradigm
shifter or paradigm pioneer, you role is to lead
through change skillfully. This can be done in
several ways:
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Catch God’s wisdom and timing with change. If it is
His wisdom and His timing, He will work with you to
make the changes and anoint your efforts.
Develop a balanced leadership team that has a few
innovators, some early adopters, and a few middle
adopters. Communicate and sell them on the
paradigm shift first, and they will sell others
Cont…
Assembling a Leading Coalition for
Change
 TAKE TIME! Double or triple the amount of
time you think it will take to make the change.
Everyone and each personality deserves the
chance to come on board. The most common
mistake in change management is trying to
rush change assimilation. Just like a
membrane or filter, to much pressure (change)
at one will burst it, killing a great new paradigm
 Hold your ground, steady and sure. Advance
slowly. Expect opposition, and some who will
never embrace the change. Pay the price for
change as a leader, because your church is
depending on your leadership
Common Legal
Issues
Corporate Bylaws
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Your corporate By-laws are of the utmost
importance – people neglect them and do not
understand their importance!
The by-laws are literally the specific laws that
govern your corporation – they are just as legal
as the laws that govern municipal criminal and
civil codes for your city, state, and federal
government!
When you write or amend the By-laws, you are
acting like a city government or Congress.
Federal and State government will hold you
specifically accountable to the By-laws you
submit to them as submitted and amended.
Corporate Bylaws
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Keep in mind that the contents of the by-laws
should be specific for the kind of ministry you
are starting:
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To see a general template for bylaws click HERE
To see church-specific bylaws click HERE
To see parachurch specific by-laws click HERE
Include name and location of the corporation
Include statements that describe how location and
name can be changed or modified
Include specific legal descriptions that clearly
identify the non-profit 501 (c) 3 nature and function
of the corporation
Corporate Bylaws
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There are several characteristics and
components of by-laws that are well written.
These include (cont.):
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Statements of Faith and other Core Directives that
are legal and guiding distinctives of the corporation
and which clearly identify it as a non-profit public
charity for the public good and not for profit
Trustees: Qualifications, powers, duties,
responsibilities, term of tenure, meeting specifics,
and quorum and manner of legal votes in meetings
Non-liability and indemnification statements about
Trustees: This legally sets in motion the benefits of
a corporation, making the corporation legally and
financially responsible rather than the individual
Trustees for most actions (VERY IMPORTANT!)
Corporate Bylaws
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There are several characteristics and components of
by-laws that are well written. These include (cont.):
 Corporate Officers (President, Vice-President,
Secretary, and Treasurer)
 How these offices work (qualifications, powers,
duties, responsibilities, term of tenure, meeting
specifics, and quorum and manner of legal votes in
meetings)
 How the ministry leaders fill or relate to these offices
(varies by church polity and organization – i.e., is
the pastor the President? Is Executive Pastor the
Treasurer, etc.)
 VERY IMPORTANT to relate church ministry roles
to officers!
Corporate Bylaws
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There are several characteristics and
components of by-laws that are well written.
These include (cont.):
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Committees and how they are formed and operate
Contracts – powers and how they operate are
executed
Records: What is required, how kept, and how
reported
Corporate Seal: makes this your “legal person’s”
(corporation’s) signature!
Tax Exempt statements and provisions according to
IRS standards in section 509 (a) as specific to the
kind of 501(c) 3 corporation you are
Corporate Bylaws
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There are several characteristics and
components of by-laws that are well written.
These include (cont.):
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A specific “dissolution clause” statement that
requires all assets to go to a non-profit organization
of the corporation ever dissolves
Statements about membership, privileges and rights
Statements about how to amend the by-laws
Adoption statements
By-laws become actual law when ratified and
are the standards which the corporation will be
held accountable to by federal and sate
authorities – they are a legal document!
Non-Profit Corporate Status
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IRS Filing: The 1023 can take between 6 months and
1.5 years to clear the federal review process
You may collect donations while your 1023 application
is in process, but must tell donors that you are in
process. Their gifts are tax deductible, retroactive to
the date of your incorporation, IF YOU ARE
APPROVED.
The filing should be very detailed and carefully
prepared to avoid delays or rejection. The more
competent they see you, the more likely you are to be
approved.
The IRS is biased to talking to tax professionals and
lawyers – they like it!
State Corporate Considerations
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Incorporation and laws governing the operation
of corporations vary from state to state
Many times, the IRS 1023 non-profit status,
when granted, is reciprocated by a state
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Contact your state’s non-profit board to determine
specific tax, operational, and reporting requirements
Contact your state’s Department of Consumer
Affairs to check on licensing and permit issues
Contact your state’s Attorney General’s Office to
find out specifics on how to register your non-profit
Insurances: Contact the state to find out what
corporate insurances you must carry and to
determine workman’s compensation law
requirements for each employee
State Corporate Considerations
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Other considerations:
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Contact your state’s business office to find out
about trade marking your name so it cannot be used
(innocently or maliciously) by another entity
Legal Advertisements: Contact your state to find out
what legal requirements are to publish your
incorporation and/or operation within the state
(usually within a law journal or newspaper).
City and County: In addition to state requirements
just described, similar requirements may be in place
for your city and/or county. These may also involve
zoning considerations
SEE WHY I RECOMMENDED A LAWYER!
General Financial
Considerations
Corporate Checking Account
 The by-laws must contain provision that
empowers the corporation to have and hold a
corporate business checking account
 Have as FEW accounts as possible (one by
preference, but not more than three). This
ensures fewer ways “in and out” of the bank
and is easier to track and audit
Corporate Checking Account
 Have as few people authorized to sign as
possible on the checking accounts.
 They should not be related
 They should have at least one officer, preferably the
treasurer
 They should NOT be the pastor if possible
 There should always be at least two signators, not
stamped, but signed
 Signators should be rotated
 Secure the corporate seal!
Specific Financial
Considerations
Employee Compensation
 Non-profit corporations are allowed to have
employees – and pay them fairly!
 Payment for a job or service performed is NOT
inurement to gain!
 All compensation plans must follow by-laws
regulations as well as state and federal
guidelines and requirements
Employee Compensation
 Employee compensation guidelines can be found in IRS
Publication 15.
 Each employee must fill out a W-4 form that gives specific
directions from the employee for tax withholding.
 The corporation must fill out a W-2 form for the employee that
summarized wages, taxes, and withholdings.
 The corporation must file a IRS Form 941 (at least quarterly)
which sates and reconciles withholding of federal taxes from
employee paychecks.
Specific Compensation Issues
 Specific compensation issues have their authority and
origination with the Board of Trustees and are made official
(and legal) by a vote of the Board per by-laws and as recorded
in the Board minutes – this is LAW!
 Specific Board resolutions should be made as close to the first
business meeting as possible near the time of incorporation.
 It is usual to take care of incorporation, non-profit items, and
salary/compensation issues right in the first minutes, using
technical and legally correct format and descriptions. Click
HERE to see a sample of the minutes from a first Board
meeting that contains sample resolutions that can be adapted
to your needs.
Specific Compensation Issues
 These original minutes of the Board may be used to define the
following specific compensation issues (or this may be done
later by revision of the by-laws and addition to the minutes per
vote of the Board:)
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Definition of officers of the corporation by vote
Reiteration of the purpose of the corporation
Definition of ministerial (parsonage) housing allowance
Definition of an Accountable Reimbursement Policy
Salary Package considerations (salary, specific adoption of housing
request, company vehicle and use, retirement, access and limits to
accountable reimbursement benefits, cafeteria plan for benefits)
 This is where solid planning saves time and money!
Ministerial Compensation
 There are multiple ways provided by federal law that can add value to a
minister’s compensation package while assuring the best use of resources.
THE BEST WAY TO COMPENSATE A MINISTER IS NOT BY SALARY
ALONE! Considerations include:
 Base salary (taxable income)
 Housing (parsonage) allowance
 Accountable Reimbursement Policy
 Social Security Bonus (SECA Bonus)
 Pension & retirement
 Health and disability
 Medical and Dependant Cafeteria Plans
 Life Insurance
 Sabbatical, Vacation, Holiday provisions
 Scholarship and Educational Benefits
Base Salary for Ministers
 Base salary is an amount paid in compensation apart from special
considerations. It is the most used method of compensation, but the least
creative and also causes the highest tax consequences for both minister and
ministry.
 A minister is considered “self employed for the purposes of social security”
by the federal government – that means that the minister does not pay FICA
social security taxes (Federal Insurance Contribution Act – 6.2% Social
security tax up to $97,500 income in 2007 & 1.45% Medicare Tax with no
income limit in 2007 – 7.35% total; the employee pays this by deduction, and
the employee contributes the same – total is 15.3%)
 The minister pays SECA taxes on salary (Self-Employed Contribution Act) –
the entire 15.3%!, making the salary portion a big hit in federal taxes (wage
taxes, SECA taxes, state & local taxes)
 Note that the minister should be given a “SECA Bonus” – more later!
Base Salary for Ministers
 Ministerial compensation is traditionally low, but there are good reasons
NOT to make the minister and his or her family “suffer for Jesus:”
 Creates perception to the world that God is cheap!
 Affects the attitude of the minister and his or her family
 May make a second job necessary for the minister
 May make it necessary for the spouse to work and leave family
 Does not fulfill “workman worthy of wages” (I Tim 5:18)
 “Muzzles the ox – not benefit or incentive! (I Tim 5:18)
 Does not honor the “prophet” or God’s point person
 Poor witness to outsiders
 Does not model the character or heart of God (provider)
 Can be a power play or source of control!
Ministers Housing Allowance
 When preparing a housing allowance request, ALL items to buy, maintain, or keep a
house should be included:
 Cost of buying a house (down payment, closing costs)
 Rent or Mortgage (Principle and Interest)
 Real estate taxes
 Insurances
 Improvements (remodeling, roof, room, garage, patio, fences, appliances,
repairs)
 Furnishings (furniture, dishwasher, washer, dryer, freezer, refrigerator, TV, VCR,
Stereo, piano, computer, beds, small kitchen items, cookware, dishes, sewing
machines, garage door openers, lawnmower, hedge trimmers, etc.)
 Decoration Items (drapes, rugs, throws, pictures, knick-knacks, paintings,
wallpaper, bedding, sheets, towels, etc.)
 Utilities (heat, water, sewage, garbage, Cable, phone, Internet, etc)
Ministers Housing Allowance
 A housing request must be submitted to the Board once per year PRIOR to it
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being activated as part of compensation. To see an example of a housing
allowance request click HERE
Another huge advantage is that the mortgage taxes and interest ARE STILL
deductible on Schedule A of the minister’s 1040 tax filing, making this a
“double dip” tax shelter that often adds substantial savings!
Declare as much as possible in your housing request to the Board –
overestimate or add 10% to the final figure you justify. What you don’t use in
a year can be declared on your 1040 tax return and taxes paid – you cannot
go back and increase retroactively if you spend more on housing!
You can resubmit a new request at any time, BUT you cannot make it
retroactive – it is in effect from the day the Board approves
SAVE EVERY RECEIPT (seven year rule!)
Accountable Reimbursement
 The Accountable Reimbursement Policy (ARP) is a PRE-TAX
method to add value to a minister’s (or other employee’s)
compensation plan. It sets aside pre-determined sums of
money for specific expenses that the minister may encounter
through the year, that are accessed by submission of receipts
or advance requests. The accountable amount is them
reimbursed to the employee WITH NO TAX CONSEQUENCES
 The policy must be set up and defined, in the minutes of a
Board meeting, with specific categories, limits of
reimbursement, procedures to reimburse, etc.
 To see an example of a board resolution for setting up an ARP,
click HERE.
Accountable Reimbursement
 Categories to consider for Accountable Reimbursement
include:
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Auto Expenses (Mileage, etc. for business purposes)
Education (tuition and books/fees)
Travel (allowance for business purposes)
Entertainment (meals, time out with guests, etc.)
Miscellaneous (business expenses)
 The ARP is superior to merely deducting business expenses on
Schedule A of the 1040 tax return – it is pretax, so not subject
not any federal, state, or local taxes!
SECA Bonus
 Since a minister is considered “self-employed for the purposes of social
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security,” regardless of whether he or she is self-employed or employed b y
the church, he or she must pay SECA rather than FICA social security and
medical taxes
With FICA, the employee pays half of the 15.3% taxes (7.65%) and the
employer pays the other half (7.65%). When the minister pays SECA, he or
she pays the whole 15.3% by themselves.
The ministry customarily provides a partial offset for this loss, by paying the
minister a SECA Bonus of 7.65%, equivalent to what they would have paid
in FICA taxes anyway.
The SECA bonus is taxable income for the minister but goes a long way
toward making up the difference in loss between FICA employer contribution
and self-employment SECA
The minister usually “withholds” SECA as extra federal tax withholding
requested on the W-4 equivalent to the annual projected SECA taxes
(15.3%) divided by the pay period
Pension and Retirement
 A wonderful pre-tax benefit is savings and corporate
contribution to a retirement or pension account
 There are a series of IRS regulations in sections 403 (b) and
408 (k) that describe the kinds of retirement and pension funds
set up by non-profits, that are usually more flexible and less
expensive than for-profit regulations (section 401 (a)
 Consult a tax professional to construct the pre-tax plan that is
right for your organization and its size
Health and Disability
 Another pretax benefit is a solid Healthcare plan with excellent
medical, dental, and vision benefits
 Check with small business associations to get group rates
 Consider self-funding vision benefits
 Offset deductibles with “Cafeteria Plans” - more later
 Consider self-funding a short and long term disability plan for
key employees:
 Short term absence due to accident or illness might be covered after the
first two weeks absence at 75% of salary for 12 weeks
 Long term absence due to accident or illness might be covered after
short term expires at 50% for up to 28 more weeks
 These benefits can be self funded by the corporation or through an
insurance plan
 Define the plans in Board minutes by resolution
Cafeteria Plans
 An excellent way to allow for pre-tax benefits for specific
medical or dependent care purposes is a “cafeteria plan” that
allows for selection of specific benefits of value to the employee
 In this plan, pre-tax money is set aside by employee
contribution to be applied for medical or dependent care
purposes, and then can be accessed by receipt and
accountable reimbursement
 This saves all federal, state, and local taxes on anticipated
expenses related to medical and dependent care
 Consult a tax professional for specifics on how to set up this
kind of valuable plan
Life Insurance
 Life insurance was actually a Christian idea at first, to enable a community of
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people to cover the loss of one family or individual.
Group Life can be provided for very little cost up to $50,000 with no tax
liability to the employee
Supplemental Life policies can be added by company funded or employee
funded methods – any employee provided insurance over $50,000 have
premium tax consequences for the employee
“Key man” insurance, usually in $1 million increments is often gotten for the
senior leader, in case of sudden loss, to provide a buffer for the ministry
Prudent planning says that I should multiply my annual salary by 10 and
purchase that much simple life insurance face value on a policy. That allows
the survivors to invest the lump sum and live off the interest, without
touching the principle, at roughly the same economic level as before their
loss
Vacation , Holiday, & Sabbatical
 Rest in ministry is not an option, but rather commanded for all
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Christians
Ministers are notorious for long hours, seven-day weeks, with
little or no rest, followed by burn-out
Vacation time off should be defined and fully funded – 3 – 4
weeks per year (may reward time served) is usual
Defined vacation and holidays should be a part of a Board
resolution and minutes of a meeting
The senior ministers should be given sabbaticals or regular
breaks (i.e. 1 month – summers) to recharge and retool –
INVESTMENT IN HEALTH – Freshness!
Corporate Tax Filing
Requirements
Non-Profit Tax Filings
 There are two key tax filing requirements for non-profit
corporations – the 941 quarterly tax withholding reconciliation
(already mentioned) and the yearly CORPORATE TAX
RETURN (990 or 990EZ).
 The corporation must file a yearly tax return, because it is seen
as a “legal person” in the eyes of the law as a corporation.
 The filing date is May 15 of each year, or the Monday after a
weekend on which the 15th falls.
 The form you use to file (990 or 990EZ) depends on the level of
income and assets for your ministry. An example of the 990
and 990EZ can be found in the Supplemental Materials section
of this module as Exhibits # 14 and 15 respectively.
Non-Profit Tax Filings
 The form 990 and 990 EZ filings provide an accountability with
the federal government for your stewardship of the non-profit
tax status you hold. They report on:
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Revenues, Expenses, Fund Balances, Assets
Donors, Board members, officers
Program services and accomplishments
Balance sheets and use of funds to accomplish mission
Audit certifications of finances and financial systems
Other compliance data of interest to demonstrate strict adherence to
501(c)3 code
 The 990 EZ is less involved and complicated to prepare
Non-Profit Tax Filings
 The 990 form is filed if your corporation normally has more than
$100,000 in revenue in a year and/or more than $250,000 in
assets
 The 990 EZ is filed if your corporation normally has between
$25,000 - $100,000 in income per year AND less than
$250,000 in assets
 No filing is required is your corporation has less than $25,000 in
assets per year, BUT you must use a 990EZ form filed with the
box checked “no filing required” to let them know.
 In the event of declining income, the form is determined by the
average of the last previous three years income
Legal Things That Make a
Big Difference
Legal Things That Make a Big
Difference

As administrative leaders, your role can literally make a
difference between success and disaster for a church or
parachurch ministry:

Each year, many church and parachurch leaders get
into legal problems because they miss the details about
law – the “small things.”

Visionary leaders are not wired to think about the small
details of ministry – they must be surrounded by people
who are gifted and called to deal with the “small stuff”
before the small stuff creates big problems!

Each year, neglect of the small stuff results in civil and
criminal actions against churches, parachurch
ministries, and their leadership, costing much in terms
of legal fees, damage to reputation, ministry
effectiveness and even jail time
Cont…
Legal Things That Make a Big
Difference: Common Liabilities




A liability is a risk that one encounters. The degree of risk
is reduced if I understand the risk, AND I take reasonable
actions to minimize or eliminate the risk.
A common fallacy is that all risks are “acts of God” or “in
God’s hands.” While we have no control over some risks, it
is rare that we have no control at all over a risk, as far as
its reduction or elimination. God’s sovereignty cannot be
used as an excuse for a lack of risk assessment or failure
to reduce risk – trying to make that argument in court will
get you a psych evaluation!
A ministry is expected to do formal or even informal risk
assessment by asking itself what risks could exist, and by
taking reasonable steps to reduce or eliminate those risks
– common sense!
This is where an administrative gifting shines!
Cont…
Legal Things That Make a Big
Difference: Common Liabilities

Negligence: This is the most common liability for ministry.
Negligence is simply an unintentional act or omission by an
individual or group that results in the hurt, injury or death or
another person or group of people

Unintentional – note that “I didn’t know” or “I didn’t mean to” is
not an excuse, - in fact it proves negligence. (i.e. suicide
resulting from faulty counsel)

Duty – Negligence assumes that you or your group had a
reasonable expectation and responsibility for duty (i.e.
supervisor in the nursery)

Proximate Cause – Direct cause is what causes the harm.
Proximate cause is what allowed the harm to take place. (i.e.
death from fire, but failure to follow building code is proximate
cause)

Injury – There is no negligence in the eyes of the law if there
is no physical, moral, mental, or other injury as a result of the
real world negligence (i.e. a two foot hole in the floor is not
negligence in the eyes of the law until someone falls in and
breaks their leg)
Cont…
Legal Things That Make a Big
Difference: Common Liabilities




Negligence: One of the final and perhaps most important
consideration in determination of negligence from a legal
standpoint is the age: The younger the individual, the greater
responsibility (duty) there is to reduce or eliminate the risk. This
is because it is reasonable to assume that the younger the person
is, the less able they are to assess and avoid risk themselves!
Risk Assessment and Negligence: The most common excuse
offered for things that happen is that they could not have been
predicted. This make people feel better, because then they do
not have to take responsibility for a problem or disaster, nor
grieve over the injury of another.
Pre-incident Indicators (PINS): Every incident is preceded by
things that indicate the risk of that incident occurring. It is an
administrator’s job (duty) to learn to recognize PINs, look into the
future to construct possible risk scenarios, and build in
reasonable protective systems to reduce or avoid the risk.
This reduces or eliminates negligence (actual) and is the best
argument against criminal (legal) negligence.
Cont…
Legal Things That Make a Big
Difference: Common Liabilities


There are common considerations for church and parachurch
ministry that address the liability of negligence that every
administrator should consider:
Children and Ministry: The unintentional physical, mental,
emotional, or other injury to a child (18 or less) because
reasonable steps were not taken to reduce or eliminate risk
constitutes potential criminal and/or civil neglect.

Environment: Is the area of ministry safe and free of
hazards? Does it meet building (lighting, construction) and
fire codes (sprinklers, alarms, extinguishers) with entrance
and exit (markings, panic bars on doors, emergency lighting)?
Are toys, objects, and furnishings free from hazard?

People: Have the people had a background check (formal!),
people provide references, people are interviewed, record are
kept. No excuse exists for a lack or background checks and
record keeping – this proves negligence! Remember – child
offenders love Christian organizations because we are so
trusting (and gullible!). Trust your intuition! If a person does
not feel right, you MUST respond.
Cont…
Legal Things That Make a Big
Difference: Common Liabilities


There are common considerations for church and parachurch
ministry that address the liability of negligence that every
administrator should consider:
Children and Ministry: The unintentional physical, mental,
emotional, or other injury to a child (18 or less) because
reasonable steps were not taken to reduce or eliminate risk
constitutes potential criminal and/or civil neglect.

Supervision: Each state defines the age of adult
accountability differently. Assume it is under 18 years of age.
It is ASSUMED that it is a duty of those in charge to
completely supervise “children” under the age of 18 at all
times while they are in the custody of those in charge of the
ministry. Under no circumstances are they to be left alone. It
is best that a worker NEVER be left alone as well – so there
are two adults supervising, one as back up and witness!
Cont…
Legal Things That Make a Big
Difference: Common Liabilities


There are common considerations for church and parachurch
ministry that address the liability of negligence that every
administrator should consider:
Children and Ministry: The unintentional physical, mental,
emotional, or other injury to a child (18 or less) because
reasonable steps were not taken to reduce or eliminate risk
constitutes potential criminal and/or civil neglect.

Training: It is ASSUMED that is the duty of those who in
charge to TRAIN the individuals that work in an area of
ministry to be competent to function in that kind of ministry.
This would include training in how to perform functions that
pertain to the ministry itself, but also in critical areas of risk.
This would include rules of appropriate physical contact, how
to spot physical and/or sexual abuse, reporting
responsibilities, safety protocol for fires, weather, or disasters.
Failure to do any of these things invites criminal and/or civil
actions related to negligence.
Cont…
Legal Things That Make a Big
Difference: Common Liabilities


There are common considerations for church and parachurch
ministry that address the liability of negligence that every
administrator should consider:
Children and Ministry: The unintentional physical, mental,
emotional, or other injury to a child (18 or less) because
reasonable steps were not taken to reduce or eliminate risk
constitutes potential criminal and/or civil neglect.

Reporting: Most states REQUIRE the reporting of suspected
physical and/or sexual abuse – this is not an option, or
something that you can decide whether or not to do. The
most common mistake made is for an individual to try to
decide if abuse has occurred or not – this, by definition,
constitutes criminal negligence, because a person or ministry
is REQUIRED to report SUSPECTED abuse – it is assumed
that it the job of the authorities to determine whether or not
the abuse is actual or not!
Cont…
Legal Things That Make a Big
Difference: Common Liabilities


There are common considerations for church and parachurch
ministry that address the liability of negligence that every
administrator should consider:
General Negligence: The unintentional physical, mental,
emotional, or other injury to a child or adult because reasonable
steps were not taken to reduce or eliminate risk constitutes
potential criminal and/or civil neglect.

Failure to Warn: Are there signs that mark tripping hazard,
holes in the parking lot? Are faulty equipment marked and
locked out?

Failure to Protect: Have reasonable measures been taken to
be sure that safety devices (sprinklers, lighting, lightning
arresters, fire extinguishers, electrical wiring and cords, hot
water sources and heaters, heavy objects – filing cabinets,
furniture - and nursery items (sanitized, not broken, not
hazardous)) work properly and/or installed?

Failure to Supervise: The last person to leave is the adult in
charge!

Failure to Train: Training programs and records
Cont…
Legal Things That Make a Big
Difference: Common Liabilities




Defamation: Defamation is the use of words that injure the
reputation of another person or group of people. If these words
are oral, it is called slander. If the words are written, it is called
libel.
Defamation is not a criminal action, but a civil action (a “tort”), and
can result in a civil action filed in civil court to recover damages.
It has been my experience that when some Christians get angry,
there is no consideration of the Scriptures and their exhortation
against “taking a brother to court.” The threat (actually the
intimidation) to sue over defamation is often used to create fear or
anxiety. I have found that in persistent instances of unjustified
intimidation, it is best to give the person the name of your lawyer
and invite them to call and move forward. This usually disarms
the intimidation factor immediately and separates intimidation
(desire to create fear/anxiety) from threat (promise to act).
A ministry leader has a responsibility to examine his or her words
for potential to injure another and to avoid that injury if at all
possible!
Cont…
Legal Things That Make a Big
Difference: Common Liabilities

Defamation: There are several defenses against defamation, if
wrongly accused:



Truthfulness: Establish the truthfulness of all communication to
the best of your ability. What is the reliability of the source?
How can the source’s accuracy be confirmed? What past
indicators give credence to the source and/or the reliability of
the information? How close is the source to the individual or
circumstance? What vested interest does the source have in the
outcome that might skew his or her perception of the truth?
The fact is, in the execution of biblical ministry, we will need to
exercise pastoral confrontation, rebuke, correction, and these
actions will “hurt and individual. They might argue “injury,” but
truthfulness defends against defamation
I was always counseled by my church legal counsel to seek God,
pray for direction, faithfully discharge my duty as I see it, keep a
written or recorded record of my words (spoken or written) and
speak or write the truth – he said it was my (and his) best
defense argument in a civil court of law.
Cont…
Legal Things That Make a Big
Difference: Common Liabilities

Defamation: There are several other defenses against defamation
as well:



Consent: If an individual consents to the disclosure of
information, it cannot be construed as defamation. GET IN THE
PRACTICE OF SIGNED DOCUMENTS RELATED TO
STATEMENTS OR COUNSELING!
Self-defense: I am allowed to use words that defend myself,
even if those words could cause harm to another’s reputation in
the course of that defense. For instance, my words might prove
the person to be a liar, or expose an unseemly motive, and injure
that person’s reputation, but it is not defamation, because it was
done in the context of reasonable self-defense –(again, relies on
the truth!).
Statements for or About Church Business: Your by-laws should
CLEARLY establish which of the senior leaders is the
spokesperson for the church (usually the senior pastor). If in
the execution of your duty to minister, protect, preserve, or
support the church, you must say or write something (i.e.
minutes of a board meeting or publicly address the
congregation), YOU, AS DESIGNATED SPOKESPERSON have a
defense against slander or libel. Your words must be carefully
chosen, recorded, and be “need to know” communication!
Cont…
Legal Things That Make a Big
Difference: Common Liabilities

Defamation: There is also the case or privileged communication
for ministers:



Privileged Communication: This is communication from to or
from a minister, when acting in a professional capacity as a
spiritual advisor (counselor) to a member of the congregation
Did you see the TRIGGER words in this definition? Your by-laws
must define what a minister is (licensing and ordination
requirements), what the lawful and permitted job of minister are
(counseling, etc. – job descriptions!), and who members are (bylaw qualifications for membership). If you cannot point to
written documents, developed in advance of an audit or
investigation, you may not be able to defend against defamation
and civil action/damages! (see why we talked about by-laws
earlier!).
Communication about sexual or physical abuse of a child should
NEVER be construed as privileged communication. It is never
defendable to not report SUSPECTED instances of physical or
sexual abuse!
Cont…
Legal Things That Make a Big
Difference: Common Liabilities

Malpractice: Another common liability is the area of professional
malpractice. Ministry is a profession – a field of knowledge with
established skills and expectations of performance. Malpractice
is failure to perform one’s professional duties to accepted degree
of skill in the discharge of professional duties.



Training: This is why appropriate training for ministerial duties
is not only wise, but also protects fro liability
Profession: There are certain things a minister should and
should not engage in, unless there is proper training and
experience
Duty: Here we go again with “by-laws” and “job descriptions!”
What are the official duties of a minister? Who qualifies as a
“minister” according to the by-laws, and what are the
qualifications? These are questions that will be asked right
away in a civil or criminal action
Cont…
Legal Things That Make a Big
Difference: Common Liabilities

Malpractice: There are several common areas of malpractice
liability associated with ministry. The most common is
counseling!



Pastoral Counseling is mainly intervention! The temptation for a
pastor is to be seen as “the answer guy” who knows all and can
fix anything – this is pride.
Most counseling should involve limited numbers of meetings (3
– 5) in order to intervene (stabilize), correct, and instruct from
the Scriptures, as well as pray and care for the individual.
Most counseling involves people that will not or do not know
how to take responsibility for their own problems and submit to
biblical admonition not to sin. Pastoral counseling is useful to
challenge and bring biblical perspective. It becomes unhealthy
when I enable a victim mentality, especially if it makes me, as
minister, the answer guy and savior, in place of Jesus Christ.
Cont…
Legal Things That Make a Big
Difference: Common Liabilities

Malpractice: There are several common areas of malpractice
liability associated with ministry. The most common is
counseling!




Pastoral Counseling is mainly intervention! If the person seems
to need help beyond 3 – 5 sessions, that is when it is time, in
most cases, to refer the person to properly trained medical,
psychological, or psychiatric professional fro treatment or
therapy.
To attempt to provide these service yourself, without proper
training and experience, constitutes malpractice, and exposes
you and your ministry to grave liability.
Pastoral counseling does not involve the dispensing of medical
advice, recommendations on medication, behavioral or cognitive
therapy, or other psychological or psychiatric advice.
Be careful to build detailed record keeping systems that record
the counseling session with enough detail to refer back to in
case of need. To not keep such records (and to not keep them
confidential) may expose the minister and/or ministry to grave
liability
Cont…

Legal Things That Make a Big
Difference: Common Liabilities
Malpractice: There are also several special cases of pastoral
counseling and intervention that require a great deal of thought
and care:!




Suicide is a difficult and critical pastoral care situation that must
be handled precisely and with skill
Back to pre-incident indicators (PINs): It helps loved ones to
think that there were no PINS and that the suicide came out of
the blue, whereas there are several common PINS that we must
learn to recognize: Male; age 25 – 35; attempted before;
significant life change or crisis; despondency or depression (no
way out/perceived alternatives); talk & especially talk of a
specific manner of suicide; setting things in order (when I am
gone); resolution (things are better for no reason), etc.
It is my professional duty to report SUSPECTED suicidal people
to the police WHO WILL DECIDE IF THE THREAT IS REAL (not
my job). They will then decide on an involuntary treatment or
commitment to intervene
It is my job to secure a suicide location (body and surroundings)
when I arrive at an intervention. I can only move or touch the
body to check for life or to save the life. It must be treated as a
potential crime scene and turned over for investigation
Cont…

Legal Things That Make a Big
Difference: Common Liabilities
Malpractice: There are also several special cases of pastoral
counseling and intervention that require a great deal of thought
and care:!




Abuse is a another difficult and critical pastoral care situation
that must be handled precisely and with skill
If suspected abuse is present for a child (in most states a person
under the age of 18 years old), the suspected physical or sexual
abuse MUST be reported to the authorities for THEM to
determine if actual abuse has occurred.
Reporting adult abuse varies from state to state, but it has
always been my policy that physical or sexual abuse or violence
is NEVER acceptable in ANY case accept self-defense, and that it
is a reportable offense with consequences.
I will not ever counsel a man or woman to remain in house where
there is a threat of physical or sexual violence, because I believe
this constitutes malpractice
Cont…
Other Small Things That
Make a Big Difference

Other Things That Make a Big
Difference: The “Fine Print”
Other “little things” that make a “big difference:”



Workman’s Compensation Insurance: Check your local and
state requirements for workman’s comp insurance that pays
benefits to people injured in the execution of their jobs – it is
often required by law.
Labor Laws: Be aware of age, racial, sex, and other important
factors in hiring and compensation issues. Make clear policy
statements about non-discrimination and follow them! A
religious organization can discriminate based on religion IF they
can demonstrate the need for religious purposes AND it is
clearly spelled out in the by-laws as an essential part of the
ministry (i.e. no Buddhists hired as pastor). Currently, ministries
are allowed to discriminate on the basis of sexual orientation,
but this too must be integrated into policy that is based on
religious conviction and written.
Unrelated Business Income Tax (UBIT): A church CAN engage
in business activity that is not related to its mission, BUT it must
be reported as “unrelated business income (UBIT) and IS
TAXIBLE. A church can run an Internet business for its
Christian School, etc.
Cont…
Other Things That Make a Big
Difference: The “Fine Print”

Other “little things” that make a “big difference:”



Reporting: Remember that a non-profit is required to file an
income tax return once per year on or about May 15. It is also
required to have employees fill out a W-4 to select tax
withholding, a W-3 to transmit the information on tax
withholdings to the government, and a W-2 to report year end
earnings and taxes to the employee and government by January
31.
Miscellaneous Income: A ministry is required to issue a form
1099 to someone who receives $600 or more in income as
compensation or gift (‘love offering).
Other: We could go on and on, but the details never end – not if
you want to do this right. That is the realm of an administrative
leader, and within his or her gift mix. NEVER STOP LEARNING
AND NEVER STOP STRIVING FOR COMPLETENESS AND
EXCELLENCE!
Cont…