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legal-foundations

Legal Foundations

Eight Steps to building a solid legal foundation with the EFCA

There are eight steps a new church needs to take to build a solid legal foundation.  State laws vary from state to state.  This framework does not replace consulting with an attorney.  We will do our best to keep these links current.  If a link is outdated please let us know so we can update it.

Also, laws vary from state to state.  The information below is not meant to be comprehensive legal advice but instead provides some basic information to help you get your church started.

EFCA's website is also a helpful resource.

1.  Approval by EFCA Start Churches - Great Lakes District.  

Church planters must go through the church planters assessment process.  If the candidate receives a positive recomendation by the assessment team the church plant will be considered for approval by the leadership team of the Great Lakes District.

2.  Incorporate your Ministry.  

The next step to becoming an EFCA church is to incorporate your plant. In most districts this is done very early in the process. Here are links to Articles of Incorporation for the four states of the Great Lakes District:

Illinois:
Indiana
Michigan
Ohio
Other Helpful Resources for Incorporation:

One area the federal government is concerned about in incorporation is a dissolution clause. The concern is if a church has tax exempt status, gathers assets and would dissolve, no individual or non-exempt group should personally profit from those exempted assets. Every state has laws governing this process. Every incorporation template should include a dissolution clause where assets are directed to the EFCA district.

3.  Obtain an F.E.I.N. (Federal Employer Identification Number) for the church

This is required for your organization to open a bank account and pay employees.

Apply online to get your FEIN.

4.  Get Your Federal Tax Exempt Status

Step four is to get your federal tax exempt status. We recommend filing with the EFCA to be included under the group exemption granted by the IRS to the EFCA. To come under our group exemption, once you receive your FEIN (sometimes referred to as an EIN), call the number into the EFCA administration office (Laura Brice). The national EFCA office needs this number because once a year we submit a report to the IRS listing all the new churches authorized to use our 501(c)(3) status along with their respective FEIN. You must obtain an EIN from the IRS and report that number to us for the IRS to recognize your church as coming under our tax exempt status.

Complete the EFCA's Church Plant Information sheet and send to Laura Brice at Laura.Brice@efca.org and Brett Gleason

If you have any questions, please contact Laura Brice at the EFCA office (800-745-2202). She will walk you through the process for becoming tax exempt 501(c)(3) under the EFCA’s group exemption. 

A church plant needs to get 501(c)(3) status in order for their donors to receive tax deductions in the giving of their tithes and offerings.

If you do not file under the EFCA umbrella we recommend you obtain legal counsel.

5.  Write your Constitution and Bylaws

Church planters often make two major mistakes with constitutions. They spend an inordinate amount of time researching and writing what they feel will be the perfect document that will address all of their problems. There is no such document. We are dealing with fallen people who are mixtures of sinner and saint.

The second major mistake planters make is they borrow a constitution from the parent church or neighboring church. These churches are often much larger with more complex ministries than the plant. They require more leaders than you have available in the new plant. Cut and paste these constitutions, but make them fit your situation.

The principle is to keep the constitution simple. There are only ten things you need in a constitution. They are:

  1. Name
  2. Statement of faith
  3. Standing
  4. Purpose
  5. Membership
  6. Property rights
  7. Government
  8. Officers
  9. Bylaws
  10. Amendments

The basic constitution should not change that much. Where you make most of your changes is in the bylaws and amendments section. The bylaws should be a dynamic document that is constantly changing as your church grows. But even in this area, start out simple.

Read What it Means to be an EFCA for more information on the congregational polity of the EFCA.

Here is a worksheet to write your bylaws.

Here is a constitution and by-laws template for your reference.  

6.  State Sales Tax Exemption

As a purchaser of goods and services, you are obligated to pay these state sales taxes at the point of purchase, unless you complete the state sales tax exemption paperwork.  

Illinois
Indiana
Michigan
Ohio

 

7.  Credentialing and Ordination

EFCA Start Churches - Great Lakes requires candidates to submit their licensing paper for a License leading to Ordination.  For those with a credential from another denomination or credentialing body, they must commit to transferring their ordination within 3 years.  For more information contact Susan Eclov at gldcredentialing@aol.com  

8.  Keep Accurate Corporate Records

Create and maintain a Corporate Record Book.  Click Here for more detailed instructions.