By David K. Bernard, J.D
When a new church is planted, it is important for it to be organized legally. The following minutes are a sample of what should be done. The underlined wording will vary depending on the individual situation.
Much of this material can also be used by existing churches as resolutions.
Please note that these minutes are only a sample. They contain general information, but not every provision may apply in every state or to every situation. They are not intended to provide legal advice. For specific advice, please contact an attorney in your state who is experienced in church legal matters.
MINUTES OF ORGANIZATIONAL MEETING OF FIRST UNITED PENTECOSTAL CHURCH OF ANYTOWN. INC.
January 11, 1999
1. Call and Notice of Meeting
These are the minutes of the organizational meeting of First United Pentecostal Church of Anytown, Inc. (referred to as the “church”), a Texas nonprofit corporation. This meeting was held at 100 Main Street, Anytown Texas, on January 11, 1999, at 7:30 P.M. This meeting was called by Pastor, the incorporator named in the articles of incorporation. Notice of the time and place of this meeting was communicated by telephone and mailed on December 11. 1998, to each church board member named in the articles of incorporation.
2. Attendance and Quorum
Pastor and Presbyter were present at this meeting in person. These persons are named as board members (directors) of the church in the articles of incorporation, and their attendance constituted a quorum. District Home Missions Director, the only other board member of the church, attended the meeting by proxy. Also present at the meeting were Pastor’s Wife and Other Persons. The foregoing persons constitute the initial membership of the church, and a quorum.
3. Chair and Secretary
On a motion duly made and seconded, by unanimous vote, Presbyter was elected to act as chair of the meeting and Other Person was elected to act as secretary of the meeting. Both persons accepted the election and acted in their respective capacities.
4. Articles of Incorporation
On a motion duly made and seconded, by a unanimous vote, the church board and membership:
RESOLVED, that the articles of incorporation of First United Pentecostal Church of Anytown Inc. be adopted.
5. Bylaws
A document consisting of seven pages entitled “Bylaws of First United Pentecostal Church of Anytown, Inc.” was presented. After a discussion, on a motion duly made and seconded, by a unanimous vote, the church board and membership:
RESOLVED, that the bylaws presented to and considered at this meeting be adopted as the bylaws of the church. The secretary is directed to certify a copy of the bylaws and insert them in the minute book of the church. The secretary is directed to certify another copy of the bylaws and maintain them in the principal office of the church.
[Alternate: RESOLVED, that the church adopt as its bylaws the Local Church Government in the current Manual of the United Pentecostal Church International, as it may be amended from time to time.]
6. Officers
Pursuant to the bylaws, the church board unanimously chose Pastor as the founding pastor. The church membership unanimously endorsed this choice.
The pastor then appointed the following individuals to serve as members of the church board for a term of one year: Pastor. Presbyter, and District Home Missions Director. The church membership unanimously endorsed each appointment.
The pastor then appointed Other Person as secretary-treasurer for a term of one year. The church membership endorsed this appointment.
7. Bank Account
On a motion duly made and seconded, by a unanimous vote, the church board and membership:
RESOLVED, that the church establish in its name one or more accounts with First Bank in Anytown, Texas, and adopt the resolutions required by the bank, which are stated on its signature card. The pastor and treasurer are authorized to establish accounts for the church. The pastor and treasurer are authorized to withdraw funds of the church from the church’s accounts by signing checks or other instruments. First Bank is authorized to honor and pay any and all checks and other instruments so signed, including those drawn to the individual order of any officer or other person authorized to sign the check or other instrument.
8. Organizational Expenses
On a motion duly made and seconded, by a unanimous vote, the church board and membership:
RESOLVED, that the Treasurer be directed to pay the expenses of incorporation and organization of the church.
9. Affiliation
On a motion duly made and seconded, by a unanimous vote, the church board and membership:
RESOLVED, that the church affiliate with the United Pentecostal Church International, headquartered in Hazelwood, Missouri.
10. Compensation of Pastor
On a motion duly made and seconded, by a unanimous vote, the church board and membership:
RESOLVED, that the compensation paid to the pastor for the calendar year 1999 shall be seventy-five percent of the tithing received by the church. This designation shall apply to all future years unless otherwise provided.
[Alternate or additional: RESOLVED, that the following goal be set for the pastor’s total annual compensation (salary, housing, insurance, retirement, miscellaneous): $40,000.00, plus or minus $5,000.00. It is understood that the church will not be able to pay this amount at present, but the pastor’s compensation will be increased gradually to meet this goal as the budget permits. In the meantime, the compensation may be set below or within this range by mutual agreement of the pastor and secretary-treasurer. However, any increase must be included within the annual budget that is approved by the church board.]
By mutual agreement, at any time the pastor and secretary-treasurer can officially set the pastor’s compensation at any amount less than or equal to what the church or church board has previously authorized.
The pastor shall retain the copyright on all books and papers that he writes, and he shall have full rights to all royalties from the sale of his books and papers.
11. Housing Allowance
Of the pastor’s compensation, $20,000 is hereby designated to be a housing allowance pursuant to section 107 of the Internal Revenue Code. This designation shall apply to calendar year 1999 and all future years unless otherwise provided.
12. Nontaxable Benefits for Pastor
On a motion duly made and seconded, by a unanimous vote, the church board and membership:
RESOLVED, that in addition to the foregoing compensation, the church provide the following nontaxable fringe benefits to the pastor, as it becomes financially possible: (1) term life insurance up to $50,000 or the maximum allowed as nontaxable by the Internal Revenue Service, if not provided to him by other employment; (2) medical insurance, with dental coverage, for the pastor and his family, if not provided to him by other employment; (3) reimbursement for all medical costs for him and his family during the calendar year, including dental costs, that are not covered by insurance; and (4) payments, equal to ten percent of the pastor’s annual compensation, to a tax-deferred, qualified retirement plan, if such a plan is not provided to him by other employment.
13. Accountable Expense Reimbursement Policy
On a motion duly made and seconded, by a unanimous vote, the church board and membership adopted the following accountable expense reimbursement policy:
RESOLVED, that First United Pentecostal Church of Anytown, Inc. hereby adopt a reimbursement policy pursuant to income tax regulations 1.162-17 and 1.274-5 (e), upon the following terms and conditions:
1. Any minister now or hereafter employed by the church shall be reimbursed for any ordinary and necessary business and professional expense incurred on behalf of the church, if the following conditions are satisfied: (a) the expenses are reasonable in amount; (b) the minister documents the amount, time, place, business purpose, and business relationship of each such expense with the same kinds of documentary evidence as would be required to support a deduction of the expense on the minister’s federal income tax return; and (c) the minister documents such expenses by providing the church treasurer with an accounting of such expenses, no less frequently than monthly. In no event will an expense be reimbursed if substantiated more than 60 days after the expense is paid or incurred by a minister.
2. The church shall not include in a minister’s W-2 form the amount of any business or professional expense properly substantiated and reimbursed according to the preceding paragraph, and the minister should not report the amount of any such reimbursement as income on his Form 1040.
3. Any church reimbursement that exceeds the amount of business or professional expenses properly accounted for by a minister pursuant to this reimbursement policy must be returned to the church within 120 days after the associated expenses are paid or incurred by the minister, and shall not be retained by the minister.
4. If, for any reason, the church’s reimbursements are less than the amount of business and professional expenses properly substantiated by a minister, the church will report no part of the reimbursements on the minister’s W-2 form, and the minister may deduct the unreimbursed expenses as allowed by law.
5. Under no circumstances will the church reimburse a minister for business or professional expenses incurred on behalf of the church that are not properly substantiated according to this policy. Church and staff understand that this requirement is necessary to prevent the reimbursement plan from being classified as a “non-accountable” plan.
6. All receipts and other documentary evidence used by a minister to substantiate the business nature and amount of his business and professional expenses incurred on behalf of the church shall be retained by the minister. The church may, at its election, make copies of such evidence.
7. Business use of a car will be reimbursed at the standard mileage rate currently allowed by the Internal Revenue Service.
8. This accountable expense reimbursement plan extends to all church employees and all volunteer workers whom the pastor designates. Their expenditures are subject to advance approval by the pastor.
14. No Compensation for Board Members
On a motion duly made and seconded, by a unanimous vote, the church board and membership:
RESOLVED, that no church board member, including the pastor, has received or shall receive any compensation for his duties as a church board member.
15. Medical Insurance for Full-Time Employees
On a motion duly made and seconded, by a unanimous vote, the church board and membership:
RESOLVED, that the church’s medical benefits plan extends to all full-time employees of the church but not to part-time employees.
16. Adjournment
On a motion duly made and seconded, by a unanimous vote, the church board and membership voted to adjourn the meeting.
________________________________
Other Person. Secretary
Approved by:____________________
Presbvter, Chair
Notes on the Pastor’s Compensation, Benefits and Expenses
Under the plan proposed in the foregoing resolutions, the pastor’s compensation would be 75 percent of the tithing. The remaining 25 percent would be available for nontaxable benefits and ministerial expenses. If the pastor does not receive full benefits, such as insurance and retirement, from other employment, then the compensation percentage can be lowered so that more of the tithing is available to pay for nontaxable benefits. To minimize taxes, it is better to receive all the nontaxable benefits possible before receiving taxable income.
As the church’s income increases significantly, the pastor’s compensation percentage will need to be reduced, or else converted to a flat salary. The church board or a special committee can research the typical compensation given to ministers in the United States and Canada and recommend a salary as in the alternate resolution.
The amount designated as housing allowance does not increase the pastor’s compensation. It simply reclassifies compensation in accordance with tax law to provide an additional benefit to the pastor at no extra cost to the church. The actual income may be less than the designated housing allowance, and actual housing expenses may be less than the allowance (in which case the pastor can only claim actual expenses). However, the housing allowance should be set high enough to cover the maximum housing expenses that the pastor might incur in a given year, including down payment, mortgage payments (principal and interest), taxes, insurance, utilities, maintenance, furnishings, and rent. The church board should pass the housing allowance before the end of each year, for the upcoming year.
In addition to reimbursing the pastor for ministerial expenses, the church can also pay bills that he incurs on behalf of the church. The pastor can also charge ministerial expenses to a church credit card used solely for that purpose, and the church can pay the monthly bill. Here are examples of expenses that the church can pay or reimburse: mileage for church business travel, books and periodicals for ministerial research, ministerial budget fees and tithes (which are required professional dues), entertainment of counselees and church guests, purchase of supplies for the church, expenses of attending church conferences and seminars, and long-distance telephone charges for church-related calls. An automobile allowance that is not subject to an accountable expense reimbursement policy must be treated as salary. If the pastor operates an automobile owned by the church, then he must reimburse the church for personal mileage, which includes commuting from home to church.
David Bernard is associate editor in the Editorial Division pastor of New Life United Pentecostal Church of Austin Texas and a member of the Texas District Board. He has a doctorate of jurisprudence from the University of Texas School of Law and is a member of the State Bar of Texas (on inactive status).
THE ABOVE MATERIAL WAS PUBLISHED BY FORWARD MAGAZINE, OCTOBER-DECEMBER, 1998, PAGES 2-5. THIS MATERIAL IS COPYRIGHTED AND MAY BE USED FOR STUDY & RESEARCH PURPOSES ONLY.
