A Primer for Entrepreneurs and Missionary Organizations
There are many books written to address the legal issues that surround churches and ministries. One of the most helpful to missionaries, however, is a book called Starting Your Own Missions Support Organization, by Steve Scroggins. The following article was adapted from the material contained in his book. This resource is available for free at Legacy Highway. You can also purchase it through Amazon. There are other places where you can download this for free as well—but be sure to get it from either one of those sources mentioned. This article can be reproduced without permission but please send an email letting us know so we can encourage others to take advantage of this excellent material!
Legal Structure for Foreign Missions Work
Many people have contacted us about our articles on a legal structure for foreign missions work. We have been asked which of the two basic structures we recommend most: a self-contained organization or an LLC (limited liability Company). It is hard to answer this question without knowing more about each person’s situation—such as the field, the amount of money raised annually by your ministry, and your personal preferences say William D King.
But here are some suggestions from our experience in starting a mission support organization that you can consider in making a decision.
- The first step is to determine if you need a legal existence at all in order to accomplish your missional goals. Generally speaking, unless there is a specific need for an incorporated entity to underwrite your foreign mission work with tax-deductible donations, it may not be necessary. In that case, you can accomplish your goals through a self-contained ministry. In other words, if it’s possible to conduct all activities relating to your mission work in your individual capacity as an agent of Jesus Christ, then there is no reason to form anything else. For the majority of ministries that exist outside of America (and even many that are based here), this may be true.
- However, for some missionary organizations with significant sources of income and employees who want greater protection from personal liability, creating a separate legal entity may be necessary. Legal counsel should always be sought on these matters before any decisions are made about how or whether to incorporate.
- Above all else, please consult with one or more competent professionals before making any decision! Many times we have seen missionaries torn between two advisories on what to do, not knowing which way God wants them to go. This is where the Holy Spirit guides, but He does so through wisdom that often comes from experience rather than revelation.
- Before we get into some specific considerations about missions support organizations, it may be helpful to review some of the basics of legitimate legal entities for conducting business in America. All 50 states have basically adopted one of three types of business structures: corporations, limited liability companies (LLCs), or partnerships.
- If you want your ministry incorporated (and many people do), then there are basically three ways this can happen. The first type is a corporation—the most common type of organization that 501c3 non-profit ministries typically use to accomplish their mission work in America. A second way is a not-for-profit corporation that states in its articles of incorporation that it does not intend to make a profit from its activities. The third way is an LLC, which comes close to offering the same liability protection as a corporation without triggering IRS taxation issues.
- Incorporating your ministry does not mean you must give up operating as an unincorporated entity—that is, working under your own name and through your personal social security number (SSN). But incorporating may provide certain benefits such as:
Conclusion by William D King:
A mission support organization may be a very good option if you have significant sources of income and want greater protection from personal liability. There are several different types of legal entities in America that can accomplish this, including corporations, limited liability companies (LLCs), and not-for-profit corporations.
Please keep this article in mind next time you get an email from us with the subject line “Legal Structure for Foreign Missions Work.” We always appreciate your prayers and financial support—not to mention your feedback on what we can do to help your ministry! And feel free to contact us anytime if we can answer any questions about foreign missions work or how it relates to America’s tax code. God bless!