Knowledge Center

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This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.
10 Fundamentals of Forming a Church

10 Fundamentals of Forming a Church

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10 Steps to Forming a Church

10 Steps to Forming a Church

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Anti-Sexual Harassment Policy for Churches

Policy and procedures in order to prevent and handle any sexual harassment claims

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Applying for Tax-Exempt Status

Outlines how a nonprofit may apply for tax exempt status

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Approval for Overtime Hours

Approval for overtime hours

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Assumption of Risk/Liability Waiver

Obtaining an assumption of risk/liability waiver may be very appropriate when churches or other charities sponsor activities that are physically, mentally, socially or emotionally demanding.

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Background Screening Obligations and Checklist

It is important for Christ-centered churches and nonprofits to understand their obligations under the Fair Credit Reporting Act (FCRA) when becoming end users of background screening services.

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Church Criteria

Outlines the fourteen criteria used by the IRS to determine what qualifies as a church

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Church Employees and Severance Pay

Determining whether, when, and how severance pay may be provided to church employees who are terminated from church employment is a challenging issue. A memorandum provided to ECFA by Mosher & Wagenmaker, LLC, Attorneys at Law in Chicago suggests that severance pay may be lawful and appropriate under certain circumstances, provided that applicable safeguards are satisfied.

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Church Employees or Independent Contractors?

Churches often pay a number of individuals for which they must determine if the persons or employees or independent contractors.

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Church Tax and Finance Resources

Publications that include tax and finance information for churches

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Churches and 501(c)(3) Status

Discusses the requirements regarding 501(c)(3) status for a church

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Churches in an Election Year - Staying Legal

It is always important for church leaders to understand the federal law concerning political campaign activity—it relates to candidates for any elective office at federal, state, or local levels. But the need to understand the law is heightened in a Presidential election year.

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Closer Looks in Tough Times

Discusses the importance of reference checks when hiring new employees

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Comparison of Churches, Religious Orders, and Other Nonprofit Organizations

Outlines the key distinctions between churches, religious orders, and other nonprofit organizations

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Compensation for a Disqualified Person

Checklist to be used by a nonprofit to document compensation for a disqualified person to avoid future intermediate sanctions problems

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Compensation Survey Resources

Lists several publications that contain surveys of nonprofit compensation

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Determining Reasonable Compensation Related to Earlier Undercompensation

Discusses a Tax Court case in which compensation paid to a company’s founder was found to be appropriate due to previous undercompensation

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Employee Confidentiality Agreement

Sample employee confidentiality agreement that may be used by nonprofits as a guideline to establish confidentiality expectations within their organization

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Employee Handbook -- Sample

Sample employee handbook to modify and adapt for your organization

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Employee vs. Independent Contractor - for Churches

Outlines differences between an employee of a church and an independent contractor

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Employment Evaluation Form Resources

Lists Websites that contain sample employment evaluation forms

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Establishing Executive Compensation for your Ministry

Outlines considerations to be made by a nonprofit when establishing executive compensation

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Excess Benefit Transactions

Discusses and defines excess benefit transactions for 501(c)(3) and 501(c)(4) tax-exempt organizations

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Executive Compensation - Committee Charter

This sample charter includes the purpose, composition, organization, and responsibilities of the committee.

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Executive Compensation - Philosophy Statement

This sample document outlines an organization's philosophy of executive compensation.

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Fiscal Agent

One who acts for or in place of another based on limited financial or accounting authority from the person engaging the agent.

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Fiscal Sponsorship

Charities that have not attained 501(c)(3) status with the Internal Revenue Service (IRS) sometimes ask charities that have 501(c)(3) status to process donations for them as a “fiscal agent” and provide charitable receipts for donors. While it is inappropriate for an organization to be a “fiscal agent” and simply receipt and “pass through” or act as a “conduit” for donations intended for another charity, it may be appropriate for an organization to provide administrative services for another charity. These administrative services are sometimes referred to as “fiscal sponsorship.”

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FLSA Requirements Regarding Enterprise Coverage for Churches

In the context of reviewing the impact of the FLSA changes for our church, if we do not appear to meet the requirements for enterprise coverage, does that mean we do not need to comply with FLSA requirements?

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Four Common IRS Church Audit Issues

Church tax audits can be frightening, more so now than ever, with the prevailing climate with IRS tightening its controls on nonprofits. Attorney Courtney Jones shares four key IRS audit issues and how to manage them.

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Honoraria

Discusses honoraria payments and potential conflicts of interest related to them

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Housing Allowance and Commissioning of School Employees

Discusses IRS ruling on school employees and their eligibility for a housing allowance

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Housing Allowance for Retired Pastors

Outlines the IRS’s position on housing allowance for retired pastors

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Housing Allowance Worksheets

Worksheets that may be used by ministries to officially designate the housing allowance

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Housing for Your Pastor: Parsonage or Housing Allowance?

Should your congregation provide a parsonage to your clergy or provide the funds so the minister can buy or rent his or her housing? This paper presents the advantages and disadvantages of this important issue.

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Implications of Section 4965 - Excise tax on tax-exempt organizations

Section 4965 imposes an excise tax on tax-exempt organizations and their managers for involvement in prohibited tax shelter transactions.

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Integrity and Compliance with the Law

Demonstrating integrity is important for churches because, over time, doing so establishes and reinforces necessary trust with church members as well as those outside the church whom we are called to reach with the Gospel.

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Intellectual Property for Religious Organizations Guidebook

Intellectual Property for Religious Organizations Guidebook and Forms 2015 Edition by The Church Law Group.

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Intermediate Sanctions

Under the Intermediate Sanction rules, the IRS can penalize nonprofit insiders. The sanctions are considered "intermediate" because they penalize the individuals involved without taking away an organization's tax-exempt status.

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IRS Forms for Exempt Organizations

List of IRS forms created for tax-exempt organizations

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Joint Venture Policy (Abbreviated Version)

Organizations should consider adopting a joint venture policy if the organization has entered into or is considering entering into a joint venture agreement. See an abbreviated version of a joint venture policy.

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Leased Employees

Discusses issues relating to nonprofits utilizing leased employee arrangements and the related housing allowance implications

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Loans with Below-Market Interest Rates

Outlines the appropriate tax treatment of loans with below-market interest rates

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Maternity Leave Policy

Establishing a proper maternity leave policy may require compliance with certain federal laws and various other considerations.

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May employees covered under the FLSA donate or volunteer time for their employer?

Ask ECFA Question from ChurchPulse - May employees covered under the FLSA donate or volunteer time for their employer?

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Microsoft Charity Licensing

Many Christian churches and ministries have been uncomfortable with the Microsoft charity licensing program for Office 365 because it requires them to certify they don’t discriminate in their employment practices regarding lesbian, gay, bisexual, and transgender (LGBT) people. On October 8, 2015, Microsoft addressed these concerns and posted changes to its policy on their website.

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Military Leave Policy

Federal law protects members of the uniformed services from certain workplace uncertainties.

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Minister's Compensation Worksheet

In too many churches, salaries are not clearly reported in contrast with fringe benefits and expense.

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Ministers and Social Security Tax

Outlines the applicability of social security tax to ministers

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Ministers Opting Out of Social Security

Ministers may opt out of social security in rare situations. Unfortunately, this option is often promoted as a way for any minister to get out of paying into the social security system. This document clarifies these issues.

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Nepotism Policy

Policy on the employment of related individuals

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Overtime and Minimum Wage Exemption Rules

Outlines revisions to the rules amending the Fair Labor Standards Act

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Ownership of a For-Profit Organization

Outlines the accounting and reporting guide-lines for nonprofits that own all or a portion of a for-profit entity (SOP-94-3)

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Pastoral Ordination, Licensure, or Commissioning Procedure

Outlines the proper steps for a ministry to follow when ordaining, licensing, or commissioning an individual for gospel ministry

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Personnel Files

Guidelines for maintaining quality personnel files

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Political Activity by Churches-Ministries

This is a summary of the rules governing the conduct of activities related to elections by a church (or parachurch organization).

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Qualifications for Ministerial Tax Status

Discusses the qualifications an individual must attain to be granted ministerial tax status

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Reasonable Compensation

Outlines the Internal Revenue Code’s criteria for reasonable compensation

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Reducing Staff Turnover

Discusses workplace and hiring strategies that will help reduce ministry staff turnover

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Reimbursing Interview Expenses

Reimbursing job candidates for interview-related expenses is commonplace. Understanding the tax implications of these reimbursements is important.

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Religious Discrimination in Hiring

Discusses Title VII’s protection of churches’ and ministries’ right to discriminate on the basis of religion in hiring practices, includes a sample nondiscrimination policy

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Religious Order Characteristics

Outlines the IRS guidelines for determining if an organization qualifies as a religious order

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Social Networking in the Workplace -- Legal Implications

Cynthia Coffee brings many excellent perspectives on this contemporary and challenging topic from her experience as General Counsel at Southeast Christian Church in Louisville.  Her recommenda­tions on a comprehensive written policy to govern social networking at a church are extremely valuable.

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State Unemployment Compensation and Religious Organizations

Outlines state unemployment compensation and its application for religious organizations

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Strategies for Structuring Ministerial Compensation

How clergy compensation is structured often has a significant effect on how a congregation stewards its resources. The same total compensation dollars expended by a congregation can result in more or less dollars in the pocket of clergy depending on proper structuring.

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Tax and Reporting Procedures for Congregations

The tax and reporting requirements with which churches must comply often seem to complicate the task of the local church treasurer. Many treasurers who volunteer their services to the church feel the special tax treatment of ministers adds another level of complexity to an already timeconsuming task. Following is an overview of many of the basic federal tax and reporting issues.

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Tax Publications for Exempt Organizations

List of IRS publications relevant to tax-exempt organizations

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The Clock and the Paycheck

One of the primary challenges of the Fair Labor Standards Act (FLSA), is to determine who is covered and who is exempt under the law. The proper classification of workers as employees or independent contractors is also an important consideration in effectively administering the FLSA.

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The Latest in Evangelistic Trends: International Arms Trafficking!

If your church or ministry sends computers and software outside of the United States, you may be violating federal regulations (punishable by jail time and fines) without even knowing it.

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The Minister’s Housing Allowance

The proper designation of a cash housing allowance can result in significant tax savings for the qualifying minister. It is important to follow key steps to maximize the housing allowance exclusion.

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Transparency Required under ECFA’s Standards in Addition to Disclosures Required by Federal Law

Federal law requires charities to disclose Forms 1023, 990, 990-T and 5227 when requests are made in person or in writing. However, ECFA’s Standard 5 goes beyond Federal regulation.

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Tuition Reporting Requirements

Outlines the information reporting requirements for colleges and universities for qualified tuition payments

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Unrelated Business Income Policy

Provides an overview of unrelated business income and a series of questions designed to help your organization determine if you have any unrelated business income

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Use of Email and Internet Services

This policy outlines permissible email and Internet use for church and nonprofit staff.

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What Is a Nonprofit?

Discusses the characteristics of a nonprofit

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Why Congress Adopted The Church Audit Procedures Act And What Must Be Done Now To Restore The Law For Churches And The IRS

This article by Michael Martin, ECFA's director of member services and legal counsel, explains the history behind the Church Audit Procedures Act of 1984 and provides recommendations for improving the law for churches and the IRS thirty years after its adoption.

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Work Made for Hire

Outlines the copyright law regarding work made for hire by employees of a nonprofit organization

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