Friday, July 4, 2014

Churches unintentionally waste millions of dollars a year on buildings and automobiles

Article 2 Volume 4                                                                             Friday, July 4, 2014
 Republished by demand on Tuesday, November 17, 2015

Church Management


Church Buildings, big and small, are unused an estimated 80 percent of usable time and church owned automobiles go unused an estimated 92 percent of usable time**

The desire to build bigger churches is prevalent today all  across the country. You can go into poor neighborhoods where the need for food and financial assistance is evident.  However, the plea for help from the needy often go unanswered because the local church has a huge monthly mortgage note.  Some churches monthly notes exceed $15,000.

Members of church flocks will spend countless hours raising money to build bigger buildings when there is a slight spite in attendance. So, seeing a larger attendance, church members will launch a drive to raise millions and millions of dollars to build bigger buildings or increase the seating capacity of the current buildings.
But then, what I observe, there is no religious or community base activities planned for the daily or weekly use of the building.  In many cases, the only activity going on during weekdays is choir rehearsal a couple days a week at night for two hours and maybe Prayer Meeting and one or two other activities for one day, with a total usage time of 6 hours.

Well, what is the big deal?  Well, the lack of activities means potential usage time and money is wasted.

A church should be available to the community for a variety of activities. These activities could be day care, community meetings, youth meetings and so on and on.

Many expansions occur because churches get a new dynamic speaking minister or pastor. But what happens when he or she decide to go elsewhere? Then membership decline, income decrease and the church goes into foreclosure. It happens.

In conclusion, often, when an abnormal amount of the income is going into the buildings, the real missionary work of a church goes lacking.

Church Owned Cars and Buses 

Do you ever notice buses that belong to churches generally go unused 6 days a week. Although,   they may used for a few miles on Sunday. Then at the end of the year, the total mileage for the church four vehicles is about 5,000 miles or less.  I am talking about mileage for 4 vehicles that are virtually new and was recently purchased for about $80,000 or more.

This limited usage results in the buses deteriorating due to lack of use. Studies have concluded that vehicles that are rarely used will need more costly repairs than vehicles driven on a daily or regular basis.

I recommend that churches consider buying one and leasing one or more on an as needed basis. This action can save thousands of dollars a year.

It is not my intent to solve the problems but to plant the seed that will lead church officials and members to think about the cost before making financial decisions regarding the use of church money.
  
**based on a survey

Copyright 2014. Grady E. Bryant, Sr


Churches need to properly prepare and document payments and housing allowance to pastors and ministers. It's the law!!


Article 1 Volume 4                                                      July 4, 2014
           Republished by demand November 17, 2015

Church Law

In the past 20 years I have met with and consulted several pastors and church leaders on matters pertaining to church law and finance. The discussions and consultations were generally about doing things the right and legal way.

Surprisingly, many of the persons I talked with had very little knowledge that so many laws existed pertaining to churches.  Many of them believed that churches were exempt from virtually all the laws and could do whatever they wanted to do in handling church affairs.

In some cases, I was informed that churches had auditors and qualified accountants and bookkeepers to do their books.  

In the cases mentioned above, the auditors and reviewers accountability for the dollars were exceptional. Every dollar was accounted for on the books. But compliance with church laws was generally absent because the highly paid auditors and reviewers had little or no knowledge of church laws.  

Thus, the church could be found in violation of critical laws pertaining to housing allowance and accountability for disbursements to contractors, pastors, church members and many other sources.

I recommend that every church, check to determine if their treasurer and financial secretary are familiar with IRS regulations.  

The number one item in my mind right now is the accountability for pastors and ministers income and housing allowance.

The housing allowance has to be approved in advance and properly recorded in the church's minutes before it can take effect.

For example, if you have paid your pastor a housing allowance so far this year and did not document the churches approval in the minutes of the church meeting or some other government approved method before starting the allowance, the housing allowance is illegal and the pastor will have to pay taxes on that income.  That is the law!!

So, for 2014, if you have not already started a legal housing allowance for your pastor, the earliest you can start is August 2014, providing you have a church meeting and grant approval.

Please don't go back and start doctoring the minutes.  Because if you do, that can cause legal issues. 

I have a lot to say on this topic.  Too much for this blog. But on July 19th I will be presenting a seminar at the Northern Virginia Baptist Center, in Gainesville, Virginia pertaining to church tax and management of pastor's and minister's financial matters.  It will be a 4 hour workshop and lecture.

We will provide insight on the following topics:

      1. How to prepare and allocate housing allowance benefits that may save your pastors thousands of dollars annually.

     2.  How to prepare a compensation package for your current or new pastor.

     3.  Why it may not be legal to pay a pastor a stipend or just housing allowance without proper documentation.

     4.  How to prepare tax returns for pastors using rules established by IRS. 

     5.  Determining if your pastor is an employee or contractor. If contractor, benefits may be very limited and illegal.

     6.  Cash payment to guest ministers is illegal. We will show you how to do it the right way.

    7.  Do you give a 1099 to people you hire to do certain jobs for the church?  You should. If you don't the church could be fined by IRS. 

    8.  Should your church be incorporated?  Think twice before you do it.

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I will be discussing the 8 topics above.

The seating is limited.  So, for more information please call Sandy Blackwell,
 between the hours of 10 a.m. and 8 p.m., Monday through Saturday.

telephone:  703-670-3419

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11/17/2015
Please return to this blog site for more information about church tax and management. I am planning to have another workshop soon. Telephone: 571-201-6066

Copyright 2014.Grady E. Bryant Sr.