All around the country, church congregations are establishing separate 501(c)3 nonprofit organizations in order to draw new funding, new people, and new partnerships into the ministry of their church. In these difficult economic times when community needs have increased and the amount of money given through the Sunday offering has decreased for many churches, setting up a church-based nonprofit can be a creative way to bring more resources to your community ministry efforts when your congregation may be less able to underwrite the cost of those ministries.
Through my consulting work around the country, I have witnessed the power of the church-nonprofit structure in bringing new ministry into being and helping it grow. Congregations develop a wide variety of ministries under their nonprofits: schools and day care centers, housing and youth development programs, job training and placement, food shelves and feeding programs, health clinics, and a host of other initiatives.
Many of these congregations have found that the church-nonprofit model brings together the very best aspects of the church with the outside resources that a nonprofit can draw. Congregations bring a great deal to the relationship. Churches frequently have the trust of the broader community in ways that few other institutions do. Particularly if your ministry dream is to offer social service programs, the nonprofit’s connection to the church may help you draw participants who wouldn’t feel as safe approaching a secular nonprofit, a government agency, or a school. Churches also have “captive audiences.” A congregation is a ready-made group of workers, donors, and supporters. If you prepare them, communicate with them and inspire them, your congregation can exponentially increase the power of your nonprofit ministry.
When I served as executive director of the Park Avenue Foundation, a nonprofit connected to Park Avenue United Methodist Church, church members served as a core group of volunteers for foundation programs. Volunteer tutors, mentors, lawyers, doctors, and nurses were all mobilized from within the congregation to do good works every day of the week in the church building. I believe their connection to the church made many of the volunteers more dedicated—they were proud of their church and wanted to ensure that the programs offered were of high quality.
The nonprofit part of the structure brings a lot to the organization’s effectiveness, too. You’ll be able to attract resources from funders that would not support a church directly. New collaborative partners will become interested in what you are doing, and there will be opportunities to recruit volunteers from new sources. One of the most important advantages is the ability to attract the skills you need through new staff and board members from outside your church.
Securing new financial resources for ministry is the most common reason that congregations choose to set up a nonprofit. Particularly now, when your congregation members may not be able to fully underwrite your vision for community ministry, outside funding sources—including foundation grants and gifts from individuals outside of your congregation—may allow you to move forward. However, many foundations and corporations will not make grants to congregations directly (with some it is a stated policy). Other funders have no formal policy against this, but they are uncomfortable giving to religious groups because of fears that contributions for one purpose may be used for something else entirely. Funders might worry that their gift for a church-based job training program might be spent on the Sunday school curriculum or choir robes, for example. A separate legal entity with its own set of books, governance structure, and board members from outside the church will make many funders much more comfortable about giving to a program connected with a church.
Having a separate nonprofit may also allow you to recruit new volunteers from organizations that might be reluctant to send people out to a church. At a time when many congregations are needing to trim their budgets and rely more on volunteers, the ability to attract more people who are willing to give of their time is a real advantage to the church-nonprofit model. Many churches I have worked with found they could recruit volunteers for community programs and services much more readily from other churches, local businesses, corporations or service clubs once they had set up their nonprofit. This is because outside groups are more willing to devote “people power” to programs that are set up to benefit the community, not just the members of one congregation.
Being able to recruit board members from outside the church is another strength of the church-nonprofit model. A church-based nonprofit can choose to have its own board of directors that has at least some members from outside the congregation. These “outsiders” can bring new expertise, connections, and resources to your ministry work. For example, if you are looking for an accountant to serve on your nonprofit’s board, you may not find one in your church congregation, but you might find one outside the church, in a nearby business or congregation. A wider variety of board members can also help connect you to more funding sources and potential partnerships with other congregations and nonprofits.
Having a separate nonprofit may also help you collaborate with some organizations that would be reluctant to partner directly with a church. When a group of like-minded people get together to address a community issue, coming under the banner of the nonprofit might make others at the table less suspicious of your motives for involvement. Some people automatically assume that the hidden agenda behind any congregational involvement is recruiting new church members. If your separate nonprofit has the mission of “responding to the foreclosure crisis in the community,” for example, it makes your purpose clear and shows others that you are willing to devote time and resources to a community issue that others care about as well.
Partnering with other groups is essential right now—collaborations can provide services, resources, and expertise to make up for what has been trimmed out of your own budget. For example, your congregation may provide job training and placement to community members but may no longer be able to offer a feeding program. A partnership with another congregation or nonprofit could allow you to connect your participants with other resources that they need.
If your congregation aspires to develop more community ministry but needs outside funding, people, and partnerships to do it, starting a nonprofit connected to your congregation could help provide some of the resources that you need.
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A large and growing number of congregations are setting up church-based nonprofit organizations in order to operate community development or educational programs. This book outlines the step-by-step procedures for setting up a 501(c)(3) nonprofit organization connected to a congregation using simple, easy-to-understand terminology and examples from churches that have already taken on this task.
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