Is it possible to build a school or nonprofit under our church?

Introduction: How to Grow Your Ministry by Starting Schools and Other Nonprofits

To reach more people, meet community needs, and accomplish their mission, many churches think about building schools or starting more charity programs. This development can create a lot of great opportunities, but it also makes things more complicated when it comes to the law, governance, and operations.

Churches having between 2,500 and 10,000 members, including those supported by Church Law and Strategy's PASTOR SUPPORT PLAN, need to know the legal means to grow and how to follow the rules in order to do so in a way that will last.

This blog is a complete guide to constructing a school or nonprofit under your church. It talks about several types of buildings, legal issues, tax issues, and best practices for running a school or nonprofit.

Different ways to structure schools and its nonprofit branches

Running as a Church Program

You might manage the school or organization as a ministry program under the nonprofit arm of your church. Some of the benefits are:

• The church's board makes it easier to run things.
• Unified tax-exempt status.
• Integration of finances is easier.

But if the application runs in more than one state or makes money from unrelated businesses, this might make accounting more difficult and increase liability exposure.

Starting a Nonprofit Subsidiary

The church runs a distinct 501(c)(3) nonprofit that is a subsidiary of the church. This gives:

• Protection from liability for the parent church.
• Governance and financial independence are separate.
• Ability to customize mission and operations.

Subsidiaries have to file their own taxes and follow the rules, but they can be combined in financial reporting.

Making an Independent Entity

If you want the most freedom, you should build a completely distinct nonprofit school or ministry from the church. However, this requires comprehensive governance, financial, and regulatory procedures.

Things to think about from a legal and regulatory point of view

State Licensing and Registration

Schools and NGOs must follow state rules for education and registering as a nonprofit. These rules include:

• Getting the right licenses and accreditations.
• Registering to ask for donations for charities when necessary.
• Following the rules for nonprofit corporations in the state.

Church Law and Strategy's church legal counsel services can help you understand these complicated requirements.

Tax-Exempt Status from the IRS

Unless they are running as a church program, new schools or NGOs have to seek their own 501(c)(3) status. To keep your exemption, you need to:

• Only do things for altruistic, educational, or religious reasons.
• File Form 990 or 990-EZ every year, if necessary.
• Not do business operations or lobbying that aren't relevant to your business.

Our church 501(c)(3) compliance attorney services help you file your taxes and stay compliant with the IRS.

Best Practices for Governance and Operations

Structure and oversight of the board

There should be clear rules for how schools and their nonprofit branches run:

• Roles and duties that are separate from the church board.
• Meetings on a regular basis and written decisions.
• Policies about conflicts of interest and training on how to follow them.

Managing Money and Risks

Strong financial controls and risk management include:

• Separating budgets and funds.
• Doing audits on a regular basis.
• Getting enough insurance coverage.

The church legal audit and compliance report and the church risk management and liability waivers services from Church Law and Strategy can help with these needs.

Tax and Money Effects

Starting a school or a nonprofit affects money in the following ways:

• Make a budget and raise money separately.
• Possible unrelated business income tax (UBIT) problems.
• Managing payroll and benefits.

Our financial consultancy and evaluation of overhead efficiency help make the most use of resources.

How the PASTOR SUPPORT PLAN Helps Build Schools and Other Nonprofits

The PASTOR SUPPORT PLAN has:

• Legal audits for compliance and risk.
• Executive strategy meetings for planning operations and governance.
• Legal access is a top priority for urgent issues.
• Protection of trademarks and intellectual property.
• Programs that help pastors.

The PASTOR SUPPORT PLAN gives churches the tools they need to handle complicated growth with confidence.

In conclusion

Building a school or nonprofit under your church is a great opportunity to reach more people with your ministry, but it requires making difficult legal and operational choices. Church Law and Strategy's PASTOR SUPPORT PLAN can help you get the expert advice, compliance help, and strategic planning you need to be successful.

Warning

This blog article is simply meant to give you information and is not legal advice. You do not become a customer of Church Law and Strategy or its agents by reading this article. If you need legal counsel that is specific to your church or organization, please talk to a professional lawyer.

Links Inside

• Church Legal Counsel Services
• Church Legal Audit and Compliance Report
• Church Risk Management and Liability Waivers

Links to Other Sites

• IRS Nonprofit Compliance Guide: https://www.irs.gov/charities-non-profits
• State Education Agency Resources: https://www2.ed.gov/about/contacts/state/index.html
• National Association of Independent Schools: https://www.nais.org/