Like 3500-4500 churches each year in America, this church was thinking about closing its doors. Just over eight years ago, there had been enough energy and hope among somewhere near 200 church members to add a new 300-seat auditorium and several classrooms to their small, aging facility.
But by the end of 2011, in spite of several soul-searching attempts at revival and renewal, church membership was about 50 members with little hope left of turning things around.
This church had a very limited number of choices; without knowing what actually took place, I’m confident that some members probably wanted to hold on and keep trying to grow. “If we just work harder, . . . .” Other members may have been for searching out a partner and merging with a larger established congregation. Other small churches in this area have done that in the last few years.(See “Southlake and The Hills ). I hope none were tempted to maintain their identity until the last person walked out the door and locked up the building, but it wouldn’t surprise me.
Ultimately, the church and its leaders decided that even this process could be damaging to those members still left, so the best thing to do for this congregation was to encourage all current members to seek other church families and to become involved with them. Sunday, May 27 was the last communion service in this building which had been home to this church family for three decades.
But what about the building? What happens to all the things, including the building, when a church disbands?
By law, non-profit organizations—which includes churches—upon dissolution cannot just sell everything and distribute the proceeds to the members. It doesn’t take long to figure out why! Virtually all of the money used to purchase all of the assets would have been charitable donations for which all of the donors received tax benefits. The church property had been tax exempt. And much of the money given charitably to the organization would have been given by people who were no longer associated with the church. The principle is the no one is allowed to “profit” from the sale of a non-profit!
So what happens with all the assets when a church disbands? A church building, for instance, can be sold, but all the proceeds must be distributed to other non-profit organizations. I have known church buildings which were sold and all of the proceeds went to build Christian camps; others gave their funds to other congregations to support mission work; still others have given their funds away to facilitate new church plants.
This church decided to sell the building and distribute all of the funds to a variety of ministries with which the church had been involved.
Let’s Start Talking was a ministry in search of a home; we were going to be evicted on September 30 of this year to make room for a new airport freeway. On July 16, the day after the “For Sale” sign appeared in front of the church building, we contacted the church leaders, who by that time were the only “members” of the congregation left and the ones who were personally maintaining and funding the building.
Because they knew and had actually participated as a church with Let’s Start Talking, they were eager to talk. From the very beginning, they made it clear that they were willing to sell us the building well below its appraised value in order to make it possible for LST to purchase the building.
After just a few conversations, the church leaders made LST a firm offer that could be accepted, a purchase price that was just over 50% of what the church was asking others to pay.
This morning, October 12, we sat around the table with the banker and the lawyer, and the deed to the facility passed from these faithful church leaders to the Let’s Start Talking Ministry. The papers were signed quickly, but afterwards we all just stood around and talked about how God had once again provided in a way that exceeded our imaginations.
Sherrylee asked some of the church leaders if there were any pangs of remorse. Of course there is some sense of loss, but these men all reassured us of the joy it brought them to know that what had been of such great benefit to them was now going to continue to be used for the work of the kingdom and through a ministry in which they believed God was working.
LST is the beneficiary of this great blessing, and we know that all good gifts come from the Father, but we want to commend these church leaders for faithful stewardship of all with which they had been entrusted—to the very end!
They are a great example to the leaders of all of those 3500-4500 churches that are closing each year. The end of your story is not the end of God’s story for you!
1902 land/property donated to deacons for purpose of building church when not used for church purposes to be given back to heirs. Wouldn’t the church building and contents also go to the heirs when it has to close?
I am the church clerk along with 4 members that includes the Pastor. I have sought legal counsel to resolve and am astounded that there is talk of selling fixtures, pews and a portable building used as fellowship hall by members. Non-profit means no profit???
Joy, as much as you don’t want to hear it, the principle is this. The land/property was donated, but the church building and contents was paid for by contributions that were tax deductible. That is why non-profits cannot dissolve and distribute their assets to their “members.” The assets must be given to another non-profit. The money that was donated to a charity must continue to be used for charitable purposes. At least that is my understanding. My best advice is to listen to your legal counsel even though it might seem counter-intuitive.
My thoughts exactly. Since the land is what goes back to the heirs, the church buildings should be sold as deconstruction and all proceeds donated to nonprofit, which would be church missions. Thank you. I will proceed to work with legal.
My great grandpa owned 268 acres of land and built the family church on this acreage. The heirs now own the remaining acreage, having paid taxes on the land for over 50 years. The doors have been shut for 3 years now, and all trustees are now dead. My father was it’s last minister, and he too is dead. The heirs would like to sell a piece, does the right of adverse possession apply? Do they simply add in the errant piece?
I trust you have found others to help you with this question. I apologize for not responding in a timely manner. Since my retirement, I do not come here often. My answer then and now would be that you will need some legal help to answer this question. At some point the “ownership” of that piece of land has to be clarified. Was it ever legally “owned” by the church? Is there a deed of any kind to the church from your grandfather?
We are a church that has dwindled down to very few and are getting ready to sell the building. The core team would like to bless the pastor and his wife, who have served faithfully for 13 years with almost no pay. They have given everything to serve this little body of believers. Is that something that we are able to do with some of the proceeds from the sale? (the rest of the money would go to various charities and funds) Thank you in advance for your advice. This really is heavy on the hearts of the families that remain.
Thank you for your very heart-felt question. It is quite common in this day of closing churches for congregations to want to help their pastors who have often served quite sacrificially. Unfortunately, the question you raise is VERY complicated legally, depending on your state law regarding the dissolution of non-profit organizations, your own bylaws, and federal tax law. I would urge you to seek legal counsel before you do anything, including selling the building. There are also Christian organizations that are helping churches know how to navigate these tricky waters. Check with your denomination, or if you want to look further, I can give you the names of a couple of organizations that I know personally.
can churches distribute the proceeds from the sale of a church is each member pays Taxes on the proceeds
Elizabeth, I am not an attorney and. An offer no legal advice. Everything I read says you need to seek legal counsel before any action because there are a lot of ways to end up in court if members receive distributed funds. That’s the best advice I can offer.
Our church, established in 1827, sadly has dwindled to just 8 members, 2 to 4 of whom regularly attend each Sunday. When our most recent pastor retired in July 2016, we met with our District Superintendent (DS) and his team. The Conference no longer provides us a pastor, but 4 volunteer lay speakers from surrounding communities alternate in bringing us the weekly message. Realizing we can’t go on like this, my husband (our church leader) met with our local Mayor (with the DS approval) to see if our church building might be used in some way for the community. (We already have active community and senior centers in our town of 400 people.) As the Treasurer, I want to be very transparent and careful about our funds, which really belong to God. Our offerings are now about $50 weekly, and our utilities are five times that. We no longer fund outreach programs. I don’t know what direction to take. Praying, but no Word yet.
Our pastor and owner has passed away during the purchase of property we found a clause letter with the deed it states that if the church closes the property reverts back to the original members as the owners of the property. If the property is sold who get the money
There are many questions for you all to answer first. For instance, did the pastor own the building in his own name? Did the church exist as a legal entity? Who are the original members and are they listed on any deed? You probably should start with a real estate agent but you may need to seek legal counsel to know exactly what you should do.
Our church membership has dwindled after more than three decades of service in a small town, the pastor and members who remain lives in another larger city 40 miles away, we think it would be better to sale our church and take the fund and move the ministry to our home town rent a place or buy a building and start to rebuild our church work
can church members keep the money after a church is sold if it is only 7 memebers and they did not by the church themselves
Lisa, in most instances the church has had to form a corporation for legal purposes. This corporation was also granted non-profit status as a charitable organization by the IRS. If that is the case, the members cannot just keep the proceeds if the building was owned by the corporation. Usually the money is given to another non-profit or another church for charitable purposes.
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Could a pastor, or any paid “leaders” of a non denominational church pay themselves back salaries after the sale of a church building and property, after 2 years or more of being unable to receive a salary due to their congregation dwindling to nothing?
There is a way to make things right, but you have to be careful or you are open to serious charges.
Awesome story…