Growing Number of Christian Ministries Seek IRS Designation as ‘Church’ or ‘Association of Churches’

The designation removes the requirement to file a Form 990.

In recent years, some Christian ministries have taken action to avoid the requirement to file a Form 990 return with the Internal Revenue Service.

When Christian ministries qualify as charitable organizations under Internal Revenue Code 501(c)(3), they receive tax benefits and must generally file an information return, the Form 990, with the IRS. But there are exceptions.

Churches and church associations are exempt from filing the Form 990.

Compassion International, the Billy Graham Evangelistic Association (BGEA), Focus on the Family, and the Evangelical Council for Financial Accountability (ECFA) are among a growing list of ministries that have sought the designation.

MinistryWatch takes the position that Christian ministries should complete their Form 990s.

The form includes important information, including annual revenue, salaries of key employees, names of board members and large contractors, and the amount of money the organization spends on its core mission. It also details how much an organization spends on administrative and fundraising. This information is valuable to donors wanting to assess the effectiveness of a ministry.

Nearly a decade ago, BGEA requested a determination letter to be reclassified as an “association of churches.” It gave three reasons when asked by The NonProfit Times: it functions as an association of churches, the designation provides religious liberty protections, and filing the Form 990 had become increasingly onerous.

Focus on the Family also sought and received the designation in 2016. Bob Stephens, a spokesperson for Focus on the Family, told MinistryWatch a driving force behind its decision to see the church status was “protection” of its donors against an increasingly hostile culture.

“Both California and New York were increasingly asking for more information on our donors on schedule B of the 990.  [W]e wanted to avail ourselves of our legal right to protect ourselves from those who might target us because of those deeply-held convictions,” Stephens said.

Stephens confirmed the Focus on the Family’s board of directors approved the decision to pursue church status.

Unlike some other Christian ministries like BGEA, Focus completes the Form 990 and publishes it on its website.

“We spend a lot of time and money to do this because we believe transparency in the non-profit realm is critical to our mission and our donors. We do not take financial integrity lightly,” Stephens said.

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Even the ministry accountability group ECFA has moved this direction. It received the designation as an association of churches in 2019. Similar to BGEA and Focus on the Family, ECFA Vice President Jake Lapp cited “the advice of legal counsel to ensure the appropriate classification as an association of churches to protect ECFA’s religious liberty rights.”

Lapp said he believes ECFA qualifies under the designation. “ECFA works in partnership with, and in support of, churches and other ministry organizations with commonly held Christian beliefs, to pursue the shared mission of fostering biblical institutional integrity. The ECFA association includes hundreds of church organizations, including congregational churches, denominations, associations of churches and integrated auxiliaries,” he wrote to MinistryWatch in an email.

While ECFA doesn’t file a Form 990 with the IRS, it does complete the form and posts it to its website.

The Process

According to rules adopted by the IRS in 1995, the following organizations are not required to file a Form 990: one that is “operated, supervised, or controlled by one or more churches, integrated auxiliaries, or conventions or associations of churches,” or one that is “operated, supervised or controlled by one or more religious orders and is engaged in financing, funding, or managing assets used for exclusively religious activities.”

In order to seek the church or association of churches classification, organizations must electronically file Form 8940.

An IRS publication about churches and religious organizations lists several characteristics that the IRS considers when deciding if an organization qualifies as a church or association of churches. They include factors such as a definite and distinct ecclesiastical government; recognized creed and form of worship; distinct religious history; and regular religious services.

“The IRS makes no attempt to evaluate the content of whatever doctrine a particular organization claims is religious, provided the particular beliefs of the organization are truly and sincerely held by those professing them and the practices and rites associated with the organization’s belief or creed are not illegal or contrary to clearly defined public policy,” the publication states.

The IRS did not respond to an inquiry about the number of charitable groups that have sought this classification change over the last 10 years.

Other Groups

Some groups have been classified as a church from their inception and never had to seek a reclassification from the IRS.

Ethnos360 and Aglow International were classified as churches or the head of a church organization for decades.

Ethnos360, formerly New Tribes Mission, has never filed a Form 990 but “chooses to undergo a very detailed financial audit process” according to its chief operations officer, Dallon Anderson.

“This enables us to receive advice and accountability from professionals who assist us in our call to be above reproach to both the IRS and our donors,” Anderson added.

Aglow International filed Form 990s for about a decade after it was formed in 1973, but said the IRS asked them to stop submitting it because they were exempt. As an aside, unincorporated affiliates of Aglow International must still file their Form 990s.

Still Filing the Form 990

Crown Financial Ministries is a well-known ministry founded by Larry Burkett that continues to file the Form 990. Its president, Chuck Bentley, told MinistryWatch it has been advised to consider the pros and cons of seeking a church designation, especially regarding religious protections for itself and its donors.

In the end, it chose not to. “We think it is a stretch that we could be considered a church in the narrow sense of the definition,” Bentley said. “Further, while the potential benefits of being reclassified as a church are attractive, we have been protected from harm by the Lord since our inception and are comfortable to continue trusting Him for all things.”

Crown Financial says filing a Form 990 “exemplifies transparency and integrity, which increases trust. It allows those whom we have asked to trust us to personally scrutinize our stewardship of their funds.”

“Our donors are grateful that we are an organization that seeks to demonstrate the highest levels of integrity in all our management practices, especially with our finances,” Bentley added.

Compassion declined to reply to our questions about their decision to seek the church status.

A longer, but not complete list of ministries that have a church or association of churches designation by the IRS can be found here.