I've personally seen how common it is among churches. Encourage the pastor to use the monies for goods and services rather than cash assistance, examples: a bag of groceries, taxi fare, bus ticket, a pair of shoes, a doctor bill, which helps to protect the pastor, the church and the persons receiving assistance from accusations of irregularity or private inurement; 3. I would be grateful for your legal assessment of this matter. 1. Reverse the transaction and make the purchase with your own credit or debit card (if you catch the mistake and are still able to do so). Our church does have 501(c)(3) status; however, our pastor is concerned about the legality of using the church as a front for this effort. If the pastor never obtained authorization before the VISA expense was incurred, you and whoever else were present in the meeting should approach the pastor and ask why this occurred. Download your FREE copy today! Pastors and church leaders are notorious for a few things. In other words, your ministry may not be established to personally benefit someone because of his/her position or influence within your church or ministry. Learn more here, 5 Ways to Strengthen Your Church in the New Year, No part of the net earnings of a section 501(c)(3) organization may. free to give us a call at 770-638-3444. This site is meant to be used as a reference work only, As pastor of a church, it is your responsibility to see that the finances are handled in a professional manner and protect the financial foundation of your church. If we can be of any further assistance to you, please feel © Copyright 2021, StartCHURCH All Rights Reserved. (Recommended reading: "Does a Church Need to be 501(c)(3) Approved?"). to the benefit of any private shareholder or individual. When a church is in need – say, they need grants for church repair, or church grants for adding or building on to their space – they write a grant application. How Do Non-Profit Grants Work? If the church uses its funds for anything other than evangelism, edification and benevolence to needy saints, it would be misappropriating the Lord’s money, because all other things are not authorized by the Word of God. Complete control of the checkbook leads to other problems; corruption, … You won't regret it! Our pastor (and other staff members with credit cards) sometimes uses the church's credit card for meals with other individuals when such meals involve meetings where church "business" is being discussed or where a guest speaker or singer is being provided with a meal. In other words, your ministry may not be established to personally benefit someone because of his/her position or influence within your church or ministry. Moreover, if he used the church credit card for personal expenses, then it would be fine; the board had approved it. He was told the credit card was for times when he needed to make purchases for the church. This would then result in penalties (known as intermediate sanctions) of up to 225%. ebook is quickly becoming a solid plan for church plants This arrangement seemed to work fine for a while. A personal charge on a church credit card creates a serious tax problem with the IRS. it looks like to be confident as you plant your church and watch it grow. (1974) (church pastor acted outside scope of his powers in putting up collateral to secure bail bond for murder defendant; indemnity is ultra vires the church, contrary to public policy, and against interest of church members). It is not to be used in replacement of or as a substitute for a lawyer or CPA. At the same time, I have a word of encouragement for you. aim of an accountable plan is for a church to reimburse a pastor by claiming personal expenses as expenses of the church Please review StartCHURCH’s No one starts a church thinking they will get into trouble with the IRS. The story above is a classic example. He has asked me, as treasurer, to research the matter to determine whether we are misrepresenting our involvement thereby misappropriating funds. To view recent posts, go to, Posts in this section were archived prior to February 2010. 7 - Use personal testimonies about how God has taught people to give Once I was asked to come and give a stewardship message at a church in Iowa. Though the intentions of most ministers is not to commit a crime with the church credit card, an IRS agent or revenue officer could conclude that the credit card was used with the intent to never pay it back. Another way the pastor uses his inner-ring to extract cash, is via high pressure offering talks in the church services. The fast pace of ministry life is surrounded by hundreds of state and federal laws that have an impact on the financial and civil aspects of ministry. There is also a sample Letter to the Congregation Regarding the Donation Funds and procedures on how the funds are distributed and also to better educate your congregation on how it will benefit them to give to these funds and much more. Signup for our weekly newsletter to get the latest blogs, updates, and amazing offers delivered directly to your inbox. We have three of the men taking care of it (one to count and make deposits, one who writes the checks, and one who balances the books). We always appreciate good dialogue. While it's easy to believe fraud could never happen in your church, the truth is that no church is invulnerable. One of the church’s inner-ring will take the Sunday offering, which in these money focused churches can turn into a mini-sermon. However, he would need to repay the amount each month when the bill was due. However, if I noticed after I had already left the store, I would immediately write the church a check and explain, in writing, the reason for the check. Because many pastors measure their success through church attendance, they may become disappointed if people leave their church. Section 4958 of the tax code classifies this as an excess benefit transaction. WARWICK, RI — The former pastor of a Catholic parish in Warwick is accused of stealing church funds for personal use. Personal finances, church finances, and stewardship are all important to the pastor. Understanding how to properly use a church credit card is imperative if pastors and church leaders wish to maintain financial accountability, stewardship, and integrity. As pastors, in some cases, we’re unfairly expected to do it all. In extreme cases, personal purchases on a church account could involve not only civil penalties, but criminal charges being filed against the person. Leave a Reply Cancel reply. If your church or ministry has not implemented a credit card policy, and it needs one, call our office at 877-494-4655. A few weeks after being hired as the new senior pastor, Howard was given a church credit card. In the meantime, the pastor opens an account in his/her name, using his/her social security number. We will be happy to provide you with one for free. Yes, many of the ministers repay the church for the personal use of the credit card, but there is also a good number of ministers … From vision to launching your first public service, StartCHURCH's Sequence Perhaps no one else is willing to take on the responsibility, so it falls to the pastor out of necessity. After a while, past mistakes pile up and the legal and financial sides of church become a heavy burden with an internal nagging voice constantly asking the unknown question, gain the knowledge you need to bring your ministry into legal compliance, A step-by-step guide to successfully launching your church, Download Church staff members who charge personal purchases to church accounts should immediately reimburse the amount charged, or the charge should be deducted from … This shows me that a church should have an established procedure for the con… When he was able to make a payment for his personal expenses, it was usually just the minimum amount due. you should seek the counsel of a competent lawyer or CPA. The document Recovering The Pattern of Church Leadership discusses the qualifications of church leaders and pastors. The Apostle Paul taught us in 1 Timothy 5 that even a beloved, gifted leader or a pastor in a church should not be given special favor. Before long, the church credit card had a balance of $5,700.00 from Howard’s personal expenses. Not only is this an unfair expectation, it’s impossible to achieve. Using church money for personal reasons is stealing. When my wife and I started a church, we thought life was fast paced then, but compared to today's world of ministry, our church planting days now appear slow and laid back. After all of their schooling, burdensome debt often exceeds income and leads to anxiety, problems at home, and cycles of shame. Normally the lack of documentation and the type of purchases made, combined with the amount left unpaid, can result in an unexpected prosecution. There are five sample church funding policy and procedures below that your church can use as a guide to create their very own. Arellano worked as church treasurer as her way to give back. Unfortunately, he started missing some payments. West Tulsa Pastor Accused of Using Church Funds for Personal Use. While it is good to repay the church, this is a practice that should be avoided because the legal consequences can be very serious. everywhere. that better serve their business and legal needs. What would happen if, as in the example above, a minister was unable to pay the church back? the use of any of the information discussed on this site. Of the order of worship and the work of the ministry, Paul would have "all things be done decently and in order" (1 Corinthians 14:40Let all things be done decently and in order. by Juan Sanchez . Section 4958 of the tax code classifies this as an. … Can Renting Jeopardize Your Church's Status? Having been a pastor myself, who has provided consults to thousands of pastors, I understand how you feel. Conclusion. Many pastors, soon after starting their churches, begin to lose sleep over the fact that they did not. . Generally, clergy discretionary funds at a local church are for helping the poor and needy. *StartCHURCH provides clerical assistance to help you process your own articles of incorporation and Yes, many of the ministers repay the church for the personal use of the credit card, but there is also a good number of ministers who never do. Please feel free to comment. Sequence, How StartCHURCH Bookkeeping Changed My Church. No part of the net earnings of a section 501(c)(3) organization may inure to the benefit of any private shareholder or individual. Below are some of the consequences that could result from ministers using the church credit card for personal use. This is where the pastor is given the church checkbook and is allowed to treat it like his own personal account. Most Pastors get their major income from Church offerings, and most Pastors have a deciding role, indirectly or directly, in how these financial offerings are used. And receive our free eBook Sequence: A step-by-step guide to successfully launching your church. If your church or ministry has not implemented a credit card policy, and it needs one, call our office at, The fast pace of ministry life is surrounded by hundreds of state and federal laws that have an impact on the financial and civil aspects of ministry. There's nothing Sue Arellano loved more than her church -- Faith 3 Ministries on First Colonial Road in Virginia Beach. One of the very real dangers that ministers are not even aware of is that when the IRS does an audit of the church, it looks at paper trails and other evidence to determine if a crime was committed. StartCHURCH does not provide legal advice. What would happen if, as in the example above, a minister was unable to pay the church back? However, we do moderate each comment to ensure that it is on topic and not derogatory to other participants. They will ridicule you and attack any weakness you might have (or invent weaknesses you might have if they can’t find any). They will demand complete “submission” to the group, its leaders and its teachings. If you will take the time to gain the knowledge you need to bring your ministry into legal compliance, you will soon feel a burden lift from your soul, and your heart will feel set free to dream and soar into the destiny of your ministry. Despite the good intentions of ministers to repay any money they used, the use of church funds (even temporary) is considered a private inurement. An uproar breaks out during a church service after the pastor asked for $1000 offerings from his members. A large number of ministers use the church credit card for both church and personal use. 1204. He has complete control over all finances. prepare your own bylaws. They may preach sermons about unconditional loyalty, using the biblical stories of David and Jonathan, or Elisha and Elijah. This alone is enough for a church or ministry to lose its tax-exempt status. Mistakes happen, and even I have been guilty of accidentally using the church credit card to make a personal purchase. Despite the good intentions of ministers to repay any money they used, the use of church funds (even temporary) is considered a private inurement. ?". How should a church spend the funds it receives? How you proceed depends on the character and spiritual maturity of the pastor and the leadership team of the church. We use cookies to give you the best browsing experience. In the 1960s Time Magazine every year issued small cards with a slogan that expressed the mood of the times. Don’t just consider how you’ll use it today—think about what you’ll need as your congregation grows and find software that can scale with you. The financial and administrative operations are under the control of the pastors. No one on the board has said anything to Howard, and it does not look like he is going to be able to pay off his balance anytime soon. Is it legal for the church to allow the pastor to use a church credit card for personal reasons even if he pays it off each month? For more recent posts, go to the, Pastor accused of diverting church money for personal use. A large number of ministers use the church credit card for both church and personal use. The consequences could affect not only the minister but also the donors. This creates serious commingling issues because now all of the church's money is personally tied to the pastor. The authors and/or publishers are Issues concerning the use of a church credit card and one’s personal expenses can cause serious legal trouble for a church. The pastor starts a church and opens a bank account using the church's name but with his/her social security number: Many pastors start churches in their homes, and meet for a period of time before they officially incorporate and legally establish their ministries. Usually, this management style is pushed upon pastors at first. which may or may not help you make informed decisions concerning your church or ministry. In a desire to help their pastor, many church boards approve arrangements that will not only get their pastor, but also themselves, into trouble with the IRS. “Normally, it’s one of the most trusted people in the church who’s pilfering from the collection plate, or diverting funds from the church budget or investment accounts to feed their spending habits or pay personal … full Terms of Service. Yet, many pastors are beginning to realize that there are several “loose ends” regarding the administrative and legal sides of their churches. If they are insecure, they may actually develop a doctrine in order to stop people from leaving. Consider the following story. Paul sent Titus to the churches of Crete to "set in order the things that are wanting" (Titus 1:5For this cause left I thee in Crete, that thou shouldest set in order the things that are wanting, and ordain elders in every city, as I had appointed thee: See All...).