Church Law; Top 10 Pitfalls Churches Should Avoid

Be Prepared with Business and Church Law in 2012

By Thomas R. Reich

1)      Lack of or Poor Organizational Documents! You must create and maintain the right organizational documents, to prepare your nonprofit business for Church Law.  You must first determine what type of structure you want your nonprofit business to operate under.  Church Law it does not stop there; there are annual filing requirements and documents that must be maintained.  Don’t be a casualty, do your paperwork!

2)      Lack of Proper Corporate Records! If you say “we are a small nonprofit, Ill remember the records and do them later” you will fail.  Keeping up with records is a must to be prepared in Church law and takes little time if you make it an ongoing process!

3)      Accepting Money from Investors Without Understanding Nonprofit Securities and Church Laws! There are ways to accept investment, endowments and donations in your new nonprofit, that are legal and this is the only way they should be accepted.  Consult a lawyer first if you are unsure of Nonprofit Business Law. This is the rule of thumb; make sure you and your investors are protected before you get yourself in hot water.

4)      Failing to have Founders and Employees Non-Compete Agreements! If you or your new employees have come from a similar business and are now competing with an old employer, make sure there is not aNon-Compete agreement enforce.  By the same token protect

Church Law can have important differences

yourself if what you are doing is of a unique nature.

5)      Weak or Non-Existent Vendor/Client Written Agreements. If you go into your new nonprofit on a handshake agreement to provide services or products to a friend or acquaintance, this is very risky.  Having a simple contract, one with terms and a time period assures that your demand will still be there when you take the plunge and open your doors.  Without a written agreement, one using practical Business Law, you may find the endowment does not materialize and you have no legal recourse.

6)      Litigation! Pure and simple, many new nonprofit owners feel they are in the cat bird seat now and they “Aren’t going to take this anymore!”  You must avoid all litigation if possible, work out problems without filing suit.  Litigation is very expensive and at the small Church level, it can bankrupt a company from the preparation of just one law suit, this is Business and Church Law fact!.  Collections are another matter, but there are professionals for that,STAY AWAY FROM LITIGATION IF YOU POSSIBLY CAN!

7)      Collections! Collections can be a problem in many nonprofits, and it is tempting to take things personally.  First work directly with the donor, sometimes a personal call and request for payment of promised funds does the trick.  Never threaten or harass the donor, you could cross a line that puts them in the driver’s seat legally.  When the account can’t be salvaged with sugar, find good collections groups that work on a percentage and let them sow the vinegar, they are much more likely to be an expert in Nonprofit Business and Church Law, and much more likely to collect!

8)      Non-Performance Alleged Against your Nonprofit! It is most advisable that you do you level best to go overboard and fix non-performance allegations against you.  As a new Church, you do not want negative statements on services like “Rip off Report” or the BBB.  Offer a refund or the bend over backwards to fix the problem.  Defending against a law suit is both unproductive and expensive, avoid if you can, this is the case with all Business or Church Law, avoid litigation if you can.

9)      Non-Performance of Other Service Providers to Your Small Business! Same rules apply; avoid Litigation if you possibly can.  A call from your CEO or Director may do the trick, be cool calm and consolatory.  Remember they do not want negative reports on “Rip off Report” or the BBB either.  Again, Litigation is very expensive, so do you level best to work out difference civilly, but calmly and reserve the right to do what is necessary to receive services or products you have paid for.  Remember how you handled the other side of this issue, and use that experience to look at the other company’s point of view.  Never loose site of your rights under Nonprofit Business and Church Law, but keep your eyes clearly on Public relations and you image in the community!.

10)  No Internal Controls, Guidelines, Manuals, etc! It is important to have written rules and regulations to govern your Church on a daily basis.  Internal Controls, Guidelines and Manuals are welcome by your employees, it lets them know exactly where they stand.  You will find that if rules are in place, you employees will not only follow what is expected of them but be thankful for knowing how to operate within guidelines.  You will be secure in the knowledge that you have done what you can to prepare your nonprofit under Business and Church Law.

If you would like more information on the full range of services offered to set up and service a charity, foundation, church or any nonprofit please contact CharityNetUSA by visiting CharityNetUSA or by calling, toll FREE 1.877.857.9002.  Please follow us on Twitter and Like us on Face Book to receive free daily tips and tricks as well as notification of our FREE Award Winning Webinar series!