Many churches that have disaffiliated from the United Methodist Church have done so without legal counsel. The choice to leave without the assistance of an attorney may have been due to timing, cost or simply a decision by leaders that they could complete the process on their own. While the local church may have saved money on legal fees through the process, they may not have set themselves up for success in the future. Considering this, now may be the right time to review your corporate documents with legal counsel to see if your local church is fully protected.
Below are five things to review with counsel to verify that your local church is legally functioning:
- Articles of Incorporation. Depending on the state you are in, you may need to incorporate, amend your existing articles, or merge your prior United Methodist Church entity with a new entity to protect your interest. The United Methodist Book of Discipline suggest that local churches include provisions in their articles of incorporation aligning their governance with the Annual Conference. If you do not remove that language now, you may be subject to drastic consequences in the future. Therefore, a review of the articles of incorporation is required.
- Bylaws. When affiliated with the United Methodist Church, the local church may have been subject to the Discipline as their governance document if they did not adopt bylaws. Now that the local church is out of the denomination, it is incredibly important to adopt bylaws for your new governance system so that your local church is no longer subject to the United Methodist Church and to have a working governance structure that meets the needs of the local church.
- Tax exempt status. Many local Methodist churches relied on the group exemption of the United Methodist Church for their IRS 501 C 3 status. However, once the local church left the United Methodist Church denomination, it can no longer rely on the group exemption. Therefore, you need to apply for IRS 501 C 3 status to protect your donors, your ministry and have an avenue to apply for grants.
- Property deeds. For most churches, the reason for disaffiliation was to make sure that title to the property they purchased, developed, insured, and maintained remained with them post-disaffiliation. However, some local churches have left their Annual Conferences without a deed or release of trust recorded for their property. It is so very important to make sure the title work is completed as soon as possible. Without doing this, the local church may end up losing its property.
- Employment policies and procedures. One area that most local churches fail to plan on is post-disaffiliation employment policies and procedures. The local church is excited to leave, exhausted from the process, and simply want to move on without thinking about issues to resolve prior to the issues becoming headaches and problems. While the temptation may be for the local church to simply copy another churches policy manual, or download a free guide from another resource, the employment issue may only be exacerbated without tailoring the manual to the local church. Therefore, it is highly recommended that local churches work with counsel to craft and adopt policies and procedures for employees, or employment contracts for key staff, to address issues before they become problems.
There are a myriad of other issues to spot and address post-disaffiliation for a local church. Keep in mind that you are running a highly fluid, well-funded and incredibly challenging organization that requires constant vigilance in order to be successful in the future.
We are here to help. Please contact one of the professionals at Dalton & Tomich PLC to walk through these issues and resolve them now before they become major problems in the future.