Article Archives >> To the Point

What is the fundamental difference between a "Non-Profit" ["NPO"] and a bona fide, Christian Church? Over the years, I have observed even lawyers refer to churches as "Non-Profits" or "Non-Profit Organizations". Sounds to me like an oxymoronic, impossible, mutually exclusive concept. But, I am not a lawyer.

This is one of those “all horses are animals, but all animals are not horses” situations. To qualify as a “church” under federal tax law, whether a Christian church or any other, an organization must be nonprofit, that is, no part of its net earnings may inure to the benefit of any individual or shareholder. (See Ready Reference Page: “What Constitutes ‘Church’ Eligible for Exemption?”) But there are a whole lot of organizations that are nonprofit that are not “churches” or even charities under the tax law. (See Ready Reference Page: “What Do We Mean When We Say ‘Nonprofit’?”)

To be eligible for exemption under Section 501(c)(3), the section of the Tax Code that grants exemption to churches and other charities, a church must be an organization, not a single individual. Most churches take the form of corporations, although some exist as some other form of entity. As corporations, they are governed by the state law under which they are incorporated. Although courts are reluctant interfere with the activities of churches, they will apply “neutral principles of law” to resolve disputes where that can be done without becoming involved in doctrinal disputes.

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Article Archives >> To the Point

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Planned giving sounds complicated, with its CRUTs and CRATsCLUTs and CLATS, and CGAs.  It can be incredibly complicated, but it needn’t be. Keeping it simple may be the best way to start a planned giving program for a charity that hasn’t already put one in place.

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