Why Your Church Might Need a Patron-Member CDC

By Raul Rivera

Pastor James stood in the parking lot behind his church, watching volunteers load boxes of food into cars lined up around the block. What began as a small ministry during the pandemic had grown into something much larger. His church had launched a food distribution program, a tutoring initiative for local kids, and even a weekend job-readiness course for adults¹ .

But there was a problem.

Every time Pastor James applied for grant funding to expand these efforts, he ran into the same roadblock: “We don’t fund churches.” His programs were helping real people, but they were being turned away—not because they weren’t qualified, but because they were legally part of the church.

That’s when Pastor James decided to take a different approach. With the help of our team at StartCHURCH, he established a patron-member Community Development Corporation (CDC)²—a separate 501(c)(3) nonprofit legally controlled by his church. Within a year, the CDC secured over $75,000 in new grant funding. The church didn’t lose control. It gained structure.

What Is a Patron-Member CDC?

A patron-member CDC is a strategic tool that allows your church to expand its outreach while keeping control. It’s a separate 501(c)(3) organization, but the church becomes its patron member (also known as the sole member) by appointing and removing the CDC’s board of directors. This structure enables your church to maintain alignment, protect its values, and oversee all major decisions—without risking its primary 501(c)(3) status or being disqualified from funding opportunities.

Some argue that creating another 501(c)(3) takes the ministry away from the church. But in reality, it simply removes the risk while keeping the ministry fully intact.

When a Ministry Outgrows the Church Structure

Many churches are already running programs that technically function like independent organizations—they just haven’t made it official yet. Maybe it’s a youth sports league with its own budget, a food pantry with dedicated volunteers, or a weekday school that operates with minimal church oversight. These programs are often funded and staffed separately, and yet they remain under the church’s umbrella, exposing the church to legal liability and limiting future growth.

A patron-member CDC solves this. It gives those programs their own legal identity while keeping them aligned with the church’s vision.

Here’s what that means:

• Legal protection: If the CDC is ever sued or audited, the church’s assets are shielded.
• Clear boundaries: Staff, budgets, and responsibilities are properly separated.
• Growth potential: You can apply for funding the church could never qualify for.

Why Grants Often Require a Second 501(c)(3)

The IRS allows churches to operate programs that benefit the public, but most government and private grantors do not fund overtly religious organizations. That’s not personal—it’s policy. Even if your work qualifies, your legal status as a church could keep you locked out.

That’s where the patron-member CDC opens doors. Because it’s legally separate and focused on public benefit, it becomes eligible for a broader range of grants—especially those restricted to non-religious nonprofits. And since your church remains the sole member, you never have to worry about losing oversight or control.

This setup creates what we call a dual-structure model: one entity for church ministry, and one for public service. Both operate under the same vision, but they serve different purposes and answer to different rules.

A Strategic Example: The After-School Program

Imagine your church has an after-school program that provides homework help, snacks, and a safe place for kids to go while their parents finish work. It’s staffed by volunteers, funded by donations, and wildly successful. But as more families sign up, you start looking for new funding. You find a $100,000 grant through your city—but it’s only available to secular nonprofits.

By placing the program under a patron-member CDC, you can apply for that grant without compromising your church’s beliefs or structure. The program continues under the same leadership, but now with a legal foundation that invites outside funding and partnerships.

How to Know When It’s Time

Here are three signs your church may be ready to start a patron-member CDC:

1. You’re already running a program with its own bank account or budget.
2. You’re applying—or want to apply—for grants but keep hitting barriers.
3. You want to grow your outreach without increasing liability for the church.

If any of these apply, your current model may be limiting what God has placed in your hands.

What You Gain with a Patron-Member CDC

• Control: Your church appoints the board and sets the direction.
• Protection: Liability is limited to the CDC, not the entire church.
• Access: You become eligible for new sources of funding.
• Clarity: Financials, governance, and staffing are easier to manage.

The best part? It doesn’t have to be complicated. At StartCHURCH, we walk pastors through every step—from drafting bylaws to filing with the IRS. We make sure your CDC is set up the right way, with your church listed as the patron member from day one.

Let’s Bring This Home

Pastor James didn’t set out to start a second nonprofit. He just wanted to help his city and fund the work his church was already doing. But as he learned more, he realized that vision alone isn’t enough—structure matters. The right structure protects his church, opens new doors, and gives him the ability to say “yes” to growth instead of “we can’t afford it.”

Your church may already be doing the work. The next step is building the structure to match the mission.

Let us help you get there. Call 770-638-3444 or click here to learn more about our CDC service.

The calling is clear. Let’s build what it takes to carry it further.

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1. _{Pastor James is a fictional character. His story is inspired by real events and reflects scenarios commonly experienced by churches across the country.}
2. _{The terms patron member, controlling member, and sole member are used interchangeably throughout this article. Each refers to the legal structure in which the church is the exclusive member of a separate 501(c)(3) organization (such as a CDC) and retains full authority to appoint and remove board members, thereby maintaining oversight, alignment, and control of the organization’s direction.}

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