5 Powerful Reasons Your Church Needs 501(c)(3) Status

By America Kimlinger

As church leaders, it's not uncommon to grapple with the decision of whether applying for 501(c)(3) status is truly necessary. The conversation surrounding tax-exempt status often sparks a range of opinions. On one hand, some believe that obtaining 501(c)(3) approval isn't essential for a church to operate effectively or maintain its religious freedoms. On the other hand, many church leaders and advisors strongly encourage securing this status to protect the organization’s financial stability, credibility, and donors. With so many varying viewpoints, it can be difficult to navigate the decision.

However, the significant and tangible benefits of obtaining 501(c)(3) status are often overlooked in this debate. While going through the application process may seem daunting, the advantages it offers your church can have a lasting and positive impact on its ability to grow, serve, and secure the support it needs.

In this blog, we’ll explore five key benefits that 501(c)(3) approval provides to churches. While this list isn’t exhaustive, these benefits represent some of the most impactful advantages to help your church thrive in the short and long term.

1. Tax-deductible contributions for Donors

You might be asking, "Can my church's donors still claim tax deductions if we don’t have 501(c)(3) status?" The simple answer is yes, but it’s not quite that straightforward.
Imagine a donor being audited. If your church isn’t 501(c)(3) approved, that donor has to prove your church qualifies, which is a lot of extra hassle—and uncertainty. Cases like Jack Lane Taylor v. Commissioner have shown how this can discourage potential donors.

The presumption of tax-exempt status does not exist unless the church has been officially recognized by the IRS to meet the requirements of section 501(c)(3). Securing 501(c)(3) status removes any doubt, making it clear that their contributions are fully tax-deductible. This builds trust and encourages generosity, ensuring your supporters can give confidently and reduce their tax liability.

2. Eligibility for Grants and Funding

It’s a common misconception that churches can’t receive grant funding because of their religious nature. However, as shown in Trinity Lutheran Church v. Comer, the U.S. Supreme Court ruled that excluding churches from certain public programs violates religious freedoms under the First Amendment. This is great news for churches!
While some grants may not be available due to specific criteria, having 501(c)(3) status opens the door to many more opportunities, including state and federal grants. The key to your church receiving any grant funding will be whether or not it is 501(c)(3) approved.

3. Discounted Nonprofit Mailing Rates

If your church sends newsletters, invitations, or announcements, you know how quickly mailing costs can add up. With 501(c)(3) status, you can take advantage of nonprofit mailing rates, saving significantly over time.
To access these discounts, simply provide your 501(c)(3) approval letter and submit PS Form 3624 at your local post office. To help make this process easier, we provide a nonprofit mailing guide in our Secretary's Suite.

4. Advertising and Application Discounts

In today’s digital age, online tools and advertising are vital for connecting with your congregation and reaching new members. However, these costs can quickly add up. Here’s some good news: 501(c)(3)-approved nonprofits are eligible for advertising discounts.
For instance, Google AdWords offers discounted rates for qualifying organizations, providing a cost-effective way to amplify your church’s message to a broader audience. Additionally, platforms like Canva Pro, Salesforce, and GoFundMe offer free accounts and licenses to registered 501(c)(3) organizations, giving your church access to valuable resources without the added financial strain.

5. State-Level Benefits

Would you like to save money on state sales tax or even property tax if your church owns property? In many states, nonprofits (including churches with 501(c)(3) status) can benefit from these exemptions, but not all states offer the same advantages. If your state does provide these benefits, your church can take full advantage of them by having 501(c)(3) status, freeing up valuable resources to invest back into your ministry.

The Bottom Line: Why 501(c)(3) Matters

While the benefits of applying for and obtaining 501(c)(3) status are plentiful, securing 501(c)(3) status is more than just a smart move—it’s a safeguard for your church’s mission and future. It provides transparency, strengthens your legal foundation, and helps protect your religious freedoms under the First Amendment. When your church applies for 501(c)(3) status, all of its organizational and governing documents (articles of incorporation, bylaws, written doctrines, etc.) become part of the public record, ensuring transparency and reinforcing its legal foundation.

In a world where churches face increasing legal challenges and scrutiny, securing 501(c)(3) status is a proactive step toward protecting your church’s mission and ensuring its longevity. With this official recognition, you gain peace of mind knowing that your church is compliant with the law and that your rights as a religious organization are upheld.

If you’re ready to take the next step toward protecting your church’s future and religious freedoms, don’t wait any longer. Start the process of applying for 501(c)(3) status today and secure the peace of mind that comes with official IRS approval. Our team at StartCHURCH is here to guide you every step of the way. Contact us today to get started!

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