When deciding whether to incorporate your nonprofit as a church or a ministry and file for 501(c)(3) Tax Exempt Status, the question often arises: “Should we file as a church or a ministry?”
This is a common query we receive from founders of bible studies, home church plants, and other religious organizations looking to formalize their entity, collect tax-deductible donations, and engage in local service projects.
Yes, there is a difference!
To help address this, Instant Nonprofit offers two distinct nonprofit formation startup plans: Express and Enterprise. The Express package is designed for ministries, while Enterprise is tailored for churches and requires the full IRS Form 1023.
Key Differences Between Church and Ministry Filings
There are three main distinctions between filing as a church versus a ministry:
Financial costs: Both in service fees and government filing fees
Level of customer involvement: Time and complexity of the process
Time for IRS approval
Let’s break these down:
Financial Costs:
Filing as a church involves completing the full IRS Form 1023, which requires significantly more work than the 1023EZ used for ministries. This means the service fees are greater for churches. Similarly, IRS filing fees for the full Form 1023 are more than those of the streamlined 1023EZ.
Customer Involvement:
The Express package for ministries requires around 22 minutes of customer involvement. In contrast, the Enterprise package, designed for churches, typically takes between 1 to 2.5 hours. This is still much faster than the 20+ hours the IRS estimates if you attempt the process on your own.
Time for Approval:
Approval times vary. For ministries using the Express package, it typically takes 8 to 13 weeks, longer than the pre-COVID timeline of 6 to 8 weeks. For churches, the process can take 4 to 6 months. Compared to the nearly one-year approval time for the full Form 1023, these timelines are significantly shorter.
Church vs. Ministry: Key IRS Markers
To determine if your organization should file as a church or a ministry, consider the following criteria the IRS uses to assess church status:
Distinct legal existence
Recognized creed and form of worship
Defined ecclesiastical governance
Formal code of doctrine and discipline
Distinct religious history
Membership not tied to any other denomination
Ordained ministers
Established places of worship
Regular congregations and religious services
Religious instruction, such as Sunday schools
Schools for preparing members
If your organization meets many of these criteria, you should apply as a church using our Enterprise Package.
Filing as a Ministry
If your organization’s primary purpose is community outreach (e.g., food drives, providing support for the homeless) alongside religious services, you may qualify as a ministry if your budget is expected to be less than $50,000. Ministries can apply for 501(c)(3) status using our Express Package, which is faster and more cost-effective.
Key Questions to Help Determine Your Filing Status
Is your goal to start a church? Ministries can include bible institutes, leadership training, and retreats, but not all ministries are churches. Churches are focused on regular worship services and congregation building.
Will you have a congregation? Having a dedicated membership and congregation is a major factor for qualifying as a church. If your organization doesn’t have a regular congregation, it may be classified as a ministry.
Will you hold regular worship services in a fixed location? Churches typically hold services at public locations like churches, auditoriums, or retail spaces. Ministries may host periodic gatherings but might not have a regular, established place of worship.
Are all your activities outreach-oriented? If your organization is focused primarily on community outreach with occasional religious services, filing as a ministry may be the best fit.
Examples of Church vs. Ministry
Example 1: An itinerant speaker travels weekly to different churches and hosts a monthly worship experience across various cities. This would be classified as a ministry and would file using our Express Package.
Example 2: A preacher holds bi-weekly services in a local hotel, with plans to expand to a permanent location. This group has a regular congregation and a simple membership program, qualifying them to file as a church using the Enterprise Package.
What’s Next for Your Organization?
Every organization is unique, and there’s no one-size-fits-all solution for determining your classification. By considering the guidelines outlined here, you’ll be better equipped to decide whether to file as a church or ministry.
Let Instant Nonprofit guide you through the process, helping you establish the legal foundation that best fits your mission.