“Every good church is messy.” Many Christian leaders promote this idea as a challenge for believers to accept the messiness inherent in all churches in a fallen world. After all, the church is made of sinners who are in the process of becoming like Christ. We should therefore avoid expecting total perfection in a world under reconstruction.
Messiness is a reality we can acknowledge, but it’s something we should hesitate to embrace — especially when it comes to church bylaws and governance.
Each church is a body of believers accountable to God, who instructs His people to do everything decently and in order. Your church should therefore seek to be fittingly accountable to governing authorities by adopting bylaws that are appropriately tailored to your mission and vision.
This article explores the importance of current and comprehensive church bylaws and answers the questions: Why does my church need bylaws, and are church bylaws legally binding? It also explores the imperative relationship between church bylaws and 501(c)(3) tax-exempt status.
Why Does My Church Need Bylaws?
The vast majority of the nearly 400,000 churches in the United States are part of the Corpus Christi and organized under state law as corporate bodies — usually nonprofit corporations.
Church bylaws are an essential church foundation, especially when it operates as a nonprofit corporation. They detail the church’s vision, mission, governance, and operational activities. They also form an internal contract among members that a judge will review if any of the church’s decisions or actions are challenged in court.
When your church operates as a state-recognized nonprofit corporation, it is witness to governing authorities and other neighbors as it pursues legal order and harmony. Ignoring state corporate legal requirements by foregoing church bylaws is messy and discordant and can invite lightning strikes of legal risk to your church.
To be fully accountable to God, each local church must therefore strive to operate in an informed, thoughtful, and orderly manner by adopting deliberate bylaws.
Does My Church Need Bylaws To Operate for Tax-Exempt Purposes?
Your church bylaws and articles create the organizational framework required by the IRS for the church to be “organized and operated” for IRC 501(c)(3) status. This status allows your church to operate for tax-exempt purposes and issue tax-deductible receipts for contributions from your members and donors. As such, you must include your church bylaws if you decide to submit an Application for Recognition of Exemption (i.e., IRS Form 1023).
Unlike other nonprofit organizations, a church (if properly organized) may self-declare 501(c)(3) tax-exempt status. Churches, therefore, do not need to file Form 1023 to enjoy the benefits of tax-exempt status. This historic distinction between churches and other religious or charitable nonprofits helps maintain the separation of church and state.
In many cases, however, it’s beneficial for your church to officially apply for 501(c)(3) status. This could make it easier for your organization to obtain collateral benefits, including local property tax exemptions, third-class mailing discounts, grants from donor-advised funds (DAFs), and private or government grants (some of which are only given to charities that are listed in the IRS Pub. 78 Select Check).
Obtaining IRS official recognition as a tax-exempt church also provides assurance and support for church members and donors who, if audited, must prove the church meets the requirements of a 501(c)(3) organization.
Are Church Bylaws Legally Binding?
Although most states do not require your church to submit its bylaws to incorporate and operate as a nonprofit organization, establishing bylaws is essential to properly organize and curb legal risk. So are church bylaws legally binding?
If your church fails to create and periodically review its bylaws, a judge could deem key actions illegal if challenged in court. Therefore, church bylaws are legally binding as a contract among congregants and leaders. This contract establishes the structure, leadership, decision-making, and other governance procedures for your church to use its property and finances to accomplish its mission.
If a church’s actions or authority are challenged in court, its corporate documents (i.e., articles and bylaws) will be among the primary documents a judge will review to determine if it acted appropriately.
The Importance of Bylaws: An Example
Imagine a pastor is removed from the board by a vote of the other elders due to misconduct. The pastor refuses to stand down because the bylaws require a unanimous vote, and he maintains he did not agree.
Should the church go to a secular court rather than a church or denominational tribunal, the judge will focus on the church bylaws and articles. He/she will also consider other relevant documents, including the pastor’s employment agreement.
The judge notices the bylaws include a conflict of interest clause (which all churches should consider). This clause excuses a board member with a conflicting interest from the final discussion. The board member (in this case, the pastor) may not vote on the conflicting matter.
The judge will likely rule in favor of the supermajority, and the pastor will be removed from the board. (His employment status will be a separate issue governed by the terms of his employment agreement.) If the conflict of interest clause did not exist, the elders’ decision might not stand.
Promote Church Order — Not Messiness
Your church is at risk if clear governing provisions are absent from its bylaws. If they are missing, a judge must decide any matter brought to court on general principles of civil law. This could contradict the decisions of your elders (in some cases years after a decision is made), inviting disagreements and turmoil into the body of the church.
So are church bylaws legally binding? Yes. They function as a contract among church members. Furthermore, although they are not required by law, they are necessary for your church to be tax-exempt under section 501(c)(3). Thoughtful, state-compliant bylaws, therefore, serve as a legal lighting rod to significantly divert potential legal claims and conflicts from striking your church’s assets, mission, and reputation.
If you’re in the process of drafting new bylaws or revising existing ones, review our five tips all churches should follow when creating church bylaws. They will give you a head start on installing those essential legal lighting rods.
When developing and updating your bylaws, you should also consult an experienced church lawyer to make sure they’re well-fitted to your mission and comply with state and federal laws. Our qualified attorneys will protect your church from the high charges of internal and external challenges to the legality of its governing decisions.
Check out our article “What Are Church Bylaws: 5 Essential Tips All Churches Should Follow” for more information.