E-mail received May 11, 2018. Note. This is one of many inquiry about church organization which I receive on a regular basis.
The church Elders of  Church have asked me if I could help find answers about getting “organized” since I have a bit more computer experience than they.
I found your website and felt that this was important information and am hoping that you may give advice.
We have a small fellowship of about 35 – 40 people (including children) in a small, remote community in [name of state]. Our church has had it’s “doors open” for over 25 years, the pastor has transitioned the church into an Elder led church of (currently) five elders, of which he is one. We are not, nor have ever been organized as either a 501(c)(3) or a 508(c)(1)(a). We have simply been a group of believers who meet together in a building on the corner of a brother’s property.
So our questions are this….
What is the best way for the church to enter into a lease agreement? The building is on the property of a brother …. He would like to grant the church a … lease, but we are not a legal entity to do this. Any ideas as to how to proceed?
The elders have been encouraged by other pastors to form a 501(c)(3), but after much prayer have determined that isn’t the direction they want to pursue. The next avenue was to look at 508(c)(1)(a), but it would appear that we are already that by definition.
The other question is how to deal with banking? For the last 25 years everything has been run through the pastor’s personal bank account. We’ve considered just adding the other four elders to the account and leaving it as it is. Not certain at this point if the bank would be okay with that.
I read through your article on a trust and the portions I understood sounded like a good direction to take.
Your insights and advice are welcome.
The way to take care of this is for the church to establish a trust, the right kind of trust. The bank account would be held in the name of the trust, not the church. A lease would be taken out in the name of the trust. If property is acquired, the name of the owner of the property on the deed would be the trust.
You are not a 508 church unless you choose to be so. If you choose to be a 508 church, you submit the church to the rules that come with 501c3. For more on church 508 status, see the following article:
If your church enters into a lease agreement, opens a bank account, buys property, etc. in the name of the church, the church becomes a legal entity, but not the same type of legal entity as a non-profit corporation. If your church adopts a constitution, by-laws or similar documents, but does not incorporate, your church may be setting herself up as a legal entity, an unincorporated association, which is viewed much like a non-profit corporation legal entity.
When a church establishes the right kind of trust (not a business trust, a charitable trust, an ELC trust, etc.), the church does not become a legal entity. All money and assets are held in the name of the trust. The money and assets in the trust estate so held are owned by the Lord Jesus Christ. The trust estate does not hold church property and assets. The trust estate holds property owned by the Lord Jesus Christ. The trust estate is managed by a named trustee who has a duty to manage the estate, not for his benefit, but for the benefit of the owner of the trust estate.
From your inquiry, I assume that you wish to have a church ordered according to the principles of the New Testament, a spiritual entity only, an entity under the Lord Jesus Christ only. A legal entity is under man; that is, it is subject to man’s law. The only way a church can be subject to man’s law in America is to voluntarily act legally, or to organize under man’s law. A spiritual entity is under God only.
This does not mean that church members in a New Testament church are not under man’s law for certain God-ordained purposes, for earthly purposes. If one steals, murders, etc. man’s law is authorized by God to assert jurisdiction. God does not authorize man (civil government) to assert jurisdiction over spiritual matters: “We should obey God rather than man” when man’s law contradicts God’s law. The purpose of organizing a church according to the principles of the New Testament is keep the church under God’s rules only. A church who chooses non-profit corp., 501c3, or 508, business trust, charitable trust, etc. status has voluntarily submitted herself to man’s law. When she does so, she has made the civil governments (state and federal) her authority for many purposes.
Feel free to call me for any reason. I would be glad to talk with you concerning these matters.
For His Glory,