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kattorney
kattorney, Attorney
Category: Business Law
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Experience:  16 years experience with a concentration in business, corporate and contracts law
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Hello please bare with me and help us out.My father and

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Hello please bare with me and help us out.

My father and I our Pastors of our own ministry, the He is the president and I’m vice president and my mother and younger sister are on the board as well of the ministry. The ministry is affiliate of A large religious denomination and receives 501c3 status from that denomination, but it is a separate entity of itself.
My father purchased a building which he is still paying on, and is the guaranteeor I believe is the word, him and myself. The building was bought in the Ministry name, and he was the only signer.

I recently was able to get a building which is another branch of the ministry in another city and sign off with the mortgage company as a guaranteeor.

My sisters and myself have a non-profit charitable organization that’s not religious and we are trying to do other things like turn these building into a community outreach center, that not only has worship services during the week, but houses a school, and community programs. These other non religious programs will fall under the Charity.

My father is not on the board of the Charity non-profit that’s 501c3 by itself and not church affiliated. Me and my younger sister are on both boards.
My question is how can we legally operate these 2 different non-profits in these building without causing any conflict of interest? Can the building be used by both Non-profit organizations?

See The ministry owns the buildings but My father and Myself are the only signers and responsible parties.
My other questions is Does this mean that I have a conflict of interest in Hiring people or firing people that work for the school, and if so what options do we have to work around that?
Last question is we don’t want the charity to be restricted to religious purposes so how can we work with the ministry but stay independent from its beliefs or religious etc. basically we don’t want to exclude helping people because of the religious doctrines, or structure. Maybe this is a problem maybe not. Just want to know?
I have unlimited subscription so fire away. THANKS
Submitted: 2 years ago.
Category: Business Law
Expert:  kattorney replied 2 years ago.

First, the building issue. There is no problem with both of the charities operating out of the same building. There is no conflict of interest here. However, on behalf of the Ministry, which owns the building, in order for you to properly account to the Ministry and be fair, each charity should pay some rent to the Ministry.

 

Second, the conflict of interest. You can hire or fire people for the nonprofit that also work for the school, that is no problem. As long as they have the proper qualifications for the job, and you are hiring them at a fair market rate (not inflated) for what the job is worth, you are fine.

 

Third, your charity does not have to be restricted to religious purposes. Have you already received your 501c3 status from the IRS for the charities? If so, what did you specify as the purposes on the 1023 application? Or is the charity also going to operate under the ministry's 501c3 status. If so, you may be restricted to religious purposes - that depends upon the terms of the ministry's allowing you to use their charitable umbrella.

 

The most important thing in your situation will be entity separation. It will be very important to run each entity - the two charities and the ministry - completely separately. Keep separate books, bank accounts, staff, etc. for each. Make sure they operate at arms length with each other (paying one another for rent, services, etc.). As long as you do that, you won't have any problems with conflict of interest.

Customer: replied 2 years ago.
Okay but because I’m a guranteeor of both buildings and board Vice President of another you are telling me that its okay if My non-profit charity wants to have a school in that building and I want to fire and hire people that there is no conflict of interest as long as I make sure I we hire them with right pay and the other things you suggested?
To answer your question yes the non-profit charity does have its own non-profit status. What’s happening is I’m a minister and dedicated to church like my father and well me and the other siblings are love church work, but we also want to do other ministry, and we so often use or building as only worship centers as Christians but we have so much space to do more, but we don’t want to blend them so close because the Charity might do things the church doesn’t necessarily have to be affiliated with , I hate to see such great building go to use when they can be used for so much more than just Sunday gatherings.
Expert:  kattorney replied 2 years ago.
I totally understand. I think it's great to spread your mission to other areas not exclusively church related. Again, it is perfectly fine for the church to lease space to other nonprofits. Just so long as all entities are separate, and everyone is paying their own rent and bills, and keeping all company functions separated, you are fine. There is no conflict of interest in regard to the IRS rules for nonprofits. If your church has a problem with it, that would be an internal matter - not a legal one. If that is what you are asking, if the larger religious denomination will have a problem with it - you will have to ask them specifically. That would be up to their own internal policies. Interesting question: how does the church own the building but you hold the financing? Most banks require the person on the loan to own the building.
Customer: replied 2 years ago.
Well the contract is in the church name and the Loan is in the church name, I'm just the guaranteer on one of the building I'm the only one does this mean I own it, I thought it meant I was just financially liable??
Expert:  kattorney replied 2 years ago.
No, if you are just the guarantor you do not own it. Sorry, I understood from your question above that the loan AND the guarantee were in your name - if it's just the guarantee that is different.
Customer: replied 2 years ago.

I am on both boards however, I founded the Charity and serve as President, and Im am the VP with My father in the ministry. So the building are own by the church that allows are charity to operate schools and different charitable things and all this is okay right as long as we keep everthing seperated right?

 

Just one last question however, Some of the church members like to volunteer with the chairty events we do with the charity should we not all them to be staff members?

 

You have been a great help by the way

Expert:  kattorney replied 2 years ago.
Yes, you are OK legally, as long as the larger denomination is OK with it. As to your last question, no, you do not have to make volunteers staff members. Volunteers are the lifeblood of any charity, you should use as many as you can get, and you should not attempt to make them staff members. It is perfectly fine to use volunteers, as many as you can get.
Customer: replied 2 years ago.
Great, Hey Katie would you consider volunteering your time as our legal advisor, or we can even possibly pay you a small fee? Here's the organization and you can get back with us, email me back at XXXXX@XXXXXX.XXX if that's good for you the charity is plum4us.org. Yeah the Denomination doesn't own the building yes My father Ministry they own it, Dad affliates his seperate church with the Denomiation and through that we have Religous Nonprofit status as a church but he incoporated the ministry as its own entity apart from the Denomination when he started more than 20 years ago.
Expert:  kattorney replied 2 years ago.
Thank you, XXXXX XXXXX not allowed to have direct contact outside of this site with its customers. When your messages come through to me the site blocks personal information, so that all I can see for your email address isXXX@XXXXXX.XXX. Sorry about that.
kattorney, Attorney
Category: Business Law
Satisfied Customers: 1142
Experience: 16 years experience with a concentration in business, corporate and contracts law
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