blessing the family of God - that's OK - isn't it?

By Stephen Matthews | 18 March 2014

"Church" is the people of God fulfilling the biblical command to love others (whether associated with the church or not). Also, in the UK they are normally structured as a legal charity governed by charity law with a charitable purpose. This can include supporting those in financial need; the "relief of poverty". There are times, however, when members of the church will rightly want to bless others in the church family in ways that are more about friendship than for charitable purposes. Examples would include: gifts in recognition of a marriage; an expression of appreciation; or as an act of friendship.

Funds used to meet either aim are often known as benevolent funds and in many churches, this distinction between church as a charity and church as a family appears to be a subtle one and is therefore often ignored or not even considered. However, the funds are used for different purposes and have different legal implications. Churches that start out with the best of intentions can find themselves falling foul of charity law if they operate in this space.

To some the distinction might appear trivial, however, the ramifications are significant and the treatment that applies to each fund is very different. A benevolent fund which falls within UK charitable law as part of a church charity will attract Gift Aid on eligible gifts; interest earned on balances held can be retained gross of tax; and the fund can be intermittently "topped up" from general church funds as and when required.

Not so for a non-charitable fund whose aim is to support the church family. Such a fund does not operate within the legal charity and as such gifts to it can't generally attract Gift Aid; interest must be received net of tax: and the fund can be fed from a church's charitable funds as it falls outside of its charitable work.  As the distinction between the purpose of these funds is not always understood or appreciated, often both are treated in the same way or more than likely one fund is used to meet both aims.

At Stewardship, we suggest that any fund that is held whose aim is essentially to support the church as a family is kept completely separate from any other church funds. To avoid confusion, we would suggest that the account has a different and distinct name from any other used within the church and that those that give to this fund are clear in their understanding that they are not giving to a UK charitable cause but are giving to something that is totally different from the other work of the church and that Gift Aid can't be claimed.  Monies that flow through this fund do not form any part of the church's financial accounts.

Although not part of the church's accounts, there is still potential for the funds to be used inappropriately and we would encourage a level of control to be exerted to ensure that the fund is used for the stated purpose. Where monies are paid to church employees, these will be taxable if they are paid because the individual is an employee rather than for a completely different reason.

We would not want to hinder churches generously supporting church as a family, but any benevolent fund operated for this purpose must be done with eyes open and in recognition that it is not part of the UK charity.

To find out more about this, download our briefing paper here.

tags:

church legal

churches starting and running shops - is it a good idea?

By Stephen Matthews | 18 February 2014

Much like churches, shops come in all shapes and sizes. At one extreme there is the small church bookshop, operating from the church premises most likely after church services and other events have finished. Although there will be some considerations to think through, they are likely to be minimal. At the other extreme, operating a trading shop from commercial premises with the aim of raising funds or furthering the charitable activities of the church will require considerably more thought and planning.

Why do it?

 

Regardless of the size and nature of the proposed shop, the most important question of all to consider is 'why do you want to run a shop, what is its purpose?'. The bookshop might be intended to help church attendees grow in their discipleship and walk with God. A café might be a bridge into the community, raising the profile of the church and providing an evangelical opportunity. A commercial trading operation may seek to help the needy, or may provide funds for the church to use in other ways.

 

The list of what to think about grows longer as the size of the shop increases (see below), but the first and most important question is always 'why does our church want to run a shop?' A casual glance down most town High Streets confirms that many shops fail, so as a church you need to understand why, and also be confident that you have, or can obtain, the necessary skills and experience to make it work.

 

If you can't come up with a solid God-led answer to the 'why' question, or are not confident that you can access the necessary skills and experience, we suggest that you go no further.

 

Some stuff to think about

 

1. Where does it operate from?

If it is in the church, then where does a shop fit?  Often after church services, churches are active places, perhaps with children running around and refreshments being served to facilitate conversation and fellowship.  Yes, you want your shop to fulfil its purpose, but maybe not to the detriment of other activities or ministries, so deciding where it goes needs a little thought...

If it is in the church, then where does a shop fit?  Often after church services, churches are active places, perhaps with children running around and refreshments being served to facilitate conversation and fellowship.  Yes, you want your shop to fulfil its purpose, but maybe not to the detriment of other activities or ministries, so deciding where it goes needs a little thought.

If you are looking outside the church then premises and location are very important.  Using your “why” question as a starting point, we would suggest that you do your homework.  You might want to consider:

1. The community that you are seeking to attract

2. The prominence of any site

3. The footfall within the locality

 

Look and feel is always important and disabled access is likely to be a consideration too. 

Remember that if you take on premises that are currently being used for purposes other than as a shop, you will need to get permission for change of use.  Depending upon where you are situated, this may not always be forthcoming.

2. What time to open?

Again, for the church bookshop this is likely to be a relatively straightforward answer however, for an off-site operation, perhaps not so.

Again, for the church bookshop this is likely to be a relatively straightforward answer however, for an off-site operation, perhaps not so. If a trading operation for example, do you want to keep the same trading hours as other shops in the locality? If you do, where are you going to get your staff from? For a café similar considerations apply.  Day time coffee shops are attractive to those at home during the day, breakfast and evening cafes are perhaps more suitable to commuter communities. The same staffing considerations will apply.

3. What about staffing?

Having the right people staffing your shop is important...

Having the right people staffing your shop is important. While Christians in the church may be forgiving if one week the bookshop is not open, this will not be the case for an offsite café or shop which will trade in part on its reliability and is in competition with wholly commercial operations.  Staff can be employees, volunteers or more likely a combination of the two but it is important that the right people are found.  Using people that have commercial skills or experience will give the shop the best chance of success; relying on something akin to the flower rota to staff a shop probably will not. 

Whether using employees or volunteers there are aspects of legislation that you need to be aware of and comply with.  These range from insurance, through payroll and minimum wage requirements, to health and safety considerations.  Do not let the amount of necessary requirements put you off, but on the other hand don’t bury your head in the sand, because they will not go away and may come back to bite if not properly dealt with. 

www.gov.uk/employing-staff offers a checklist of 6 things to consider when employing staff.  For more detail see www.acas.org.uk/media/pdf/d/m/Employing-people-a-handbook-for-new-firms-accessible-version.pdf which provides a more extensive but useful handbook.

 

4. Should the shop legally be part of the church?

It might be right for some shops to operate as an integral part of the church. 

It might be right for some shops to operate as an integral part of the church.  This will mean that the governance and operation of the shop rests with the church trustees and that the financial records of the shop will form an integral part of the church accounts.  For other shops, it might be right that they are set-up as separate legal entities entirely separate from the church having their own governance structures and accounting records.  Two aspects help contribute to making this decision; rules regarding trading and concerns about image. 

Guidance is provided by the Charities Commission setting out when and how charities may engage in trading.  Although it is mostly directed at trading to raise funds it does explain when a separate trading company should be established to carry on such activity.  The guidance states that trading subsidiaries must be used for non-primary purpose trading that includes significant risk.  The whole guidance can be found at us tax www.charitycommission.gov.uk/publications/cc35.aspx .

In parallel, HMRC also issues guidance to explain the various tax rules relating to trading within charities.  This can be found at www.hmrc.gov.uk/charities/guidance-notes/annex4/sectiona.htm#1 .

The image consideration is not concerned with the legality of trading, but rather the more intangible issue of what the shop says about the church.  You will need to consider whether the shop should carry the church name; what this says to the local community; how it plays into the perception and purpose of the church.

5. Skills, qualifications, licences and other legal requirements

Certain trades will require skilled and qualified staff to operate; others might require licencing or perhaps other legal checks to be undertaken...

Certain trades will require skilled and qualified staff to operate; others might require licencing or perhaps other legal checks to be undertaken.  Cafés  will need to meet food and hygiene regulations; activities involving looking after children will require a child safety policy and the possibility that staff and volunteers are vetted using a Disclosure and Barring Scheme (DBS) check www.ccpas.co.uk , and premises playing background music will need a music licence www.ccli.com .  You are not able to rely on the fact that your church has a music licence, as licences tend to be location specific. 

Health and safety, risk assessment and other legal requirements might also come into play.  Make sure that any shop complies with consumer law and sells goods of an appropriate quality.  For example, selling electrical goods or furniture (particularly second hand) requires goods to be checked beforehand and certified as safe.

6. Accounting and tax considerations

It is important that the financial trading activity of the shop be properly accounted for...

It is important that the financial trading activity of the shop be properly accounted for.  For larger offsite shops that will often operate as a separate legal entity, records will have to be maintained independently from those held for the church.  A small on-site bookstore may be accounted for within the finances of the church, perhaps as a sub-account.  The accounting treatment will follow the legal and image considerations covered under 4 above.

Tax can be quite complex and particularly for larger shops seeking a degree of professional advice before you go too far down the line is likely to be appropriate.  At a very broad level, charity shops often benefit from being exempted from corporation tax and are zero rated for VAT on the sale of donated (although not new) goods.  HMRC issues guidance that relates both to direct and indirect taxation.  This guidance can be found at www.hmrc.gov.uk/charities/tax/trading/exemptions.htm for direct taxation and for indirect taxation at www.hmrc.gov.uk/charities/vat/intro.htm . 

Charity shops might also benefit from a reduction in non-domestic business rates.  Eligibility for this reduction will depend upon what the shop is selling and also how it is structured.  Your local council should be able to tell you more about this. 

Normally, donations of goods for sale do not qualify for Gift Aid as this can only be applied to gifts of money.  However, there is an arrangement that exists which is often referred to as the “Retail Gift Aid Scheme” in which the charity acts as an agent for its supporters, selling goods on their behalf in the hope that the donor will then donate the sale proceeds.  Details of how this scheme operates can be found at www.hmrc.gov.uk/charities/gift_aid/rules/retail.htm

 

Conclusion

If the answer to your opening 'why' question is a solid God-led yes, and if you believe that you have the necessary skills and experience; then however daunting the practical aspects might appear to be, they can all be tackled with care, a little research, and a great deal of enthusiasm.

 

tags:

church tax legal

bonus resources for a generous Lent

By Alexandra Khan | 11 February 2014

40acts Together is partnering with HOPE for Lent 2014

 

This year Stewardship have partnered with a number of brilliant organisations to bring you 40acts Together - a new way to do Lent generously as a group.

 

From Wednesday 12th February 2014, you'll be able download resources especially for churches, families, youth groups, schools, work groups and more. Some of the resource packs have been created alongside HOPE, an organisation that helps to equip the church in their local community.

 

You'll find some HOPE resources inside the 40acts event planners when you sign up as a group at www.40acts.org.uk, but there are bonus resources for everyone to benefit from.

 

Download them below.

 

Building community at your event

Activities at your event

Interacting with your attendees

How to join HOPE's Big Weekender

 

 

Beware your volunteers don't 'morph' into employees!

By Kevin Russell | 19 December 2013

Volunteers

The whole area of support for charity volunteers is fraught with difficulties and pitfalls. Paying an intern or volunteer a weekly allowance, for example, could mean that they are no longer a volunteer in law, but an employed worker entitled to the National Minimum Wage and employment rights. If such an arrangement goes unchecked for a number of years, a church or charity could find themselves with a significant bill in unpaid wages.

In collaboration with Anthony Collins, solicitors, we have produced a new Briefing Paper to help you avoid the pitfalls of having volunteers on your team, available here. A related resource is our Volunteer Agreement Pack. This includes a model ‘agreement’ for your volunteers together with suitable health & safety and expenses policies, explanatory notes and a frequently asked questions section here.

                                                           ___________________________________________

Read more like this:

Deeds of Variation and Inheritance Tax

Gift Aid Small Donations Banana Skins

File your charity's accounts on time... or there may be consequences!

 

photo used under Creative Commons Licence by vastateparksstaff

 

 

 

tags:

church charity

how to meet the needs of your local community

By Charlie Osewalt | 11 October 2013

St Luke's Kentish Town - how to meet the needs of your local community.

 

St. Luke’s church in Kentish town lay unused, a dumping ground for Kentish community rubbish for over 20 years. The church building held everything from stoves, to microwaves and minibus seats. The one thing it did not hold: a Sunday church meeting. This Anglican Church was reborn in December 2011. Jon and Sus March, the 30-something vicar and his wife and their three young children, led a small group of founding settlers to reclaim the church building. The church’s mission and vision statement is: ‘to transform communities’ and they do so by engaging people at their point of need. How do they do this?

St. Luke’s is not a ‘top down’ church in structure and practice. Home groups are called ‘Hubs’ and are encouraged to identify people’s needs, face outward to the community, and plan to transform hurts to healings. There are currently eleven of these groups ranging from an Alpha Hub, to a Creative Arts Hub, two Mothers’ or ‘Crumbs’ Hubs, Compassion Hub and a Metal Hub (more on that one later). What needs are being met? The Compassion Hub holds a Tea Party every six weeks for the isolated, elderly and the vulnerable of Kentish Town.  Average attendance is over 20. The local council recognizes St. Luke’s as a befriending community and refers local people in need of friends. The Compassion Hub then opens the church doors to those who are alone and hurting. Recently, one participant said, ‘A year ago the only person I would ever see was my carer once a day. Now I have people from the church visiting me and being interested in me . . . it makes me want to live a bit longer, which I didn’t before.’

At the other end of the spectrum is the Metal Hub. This Hub serves as a bridge in the gap between the church and the Camden metal community. A month ago a Metal music night with Christian metal bands was held at the church. A young attendee on the night said, ‘No one thinks you can be a Christian and into metal music.’ By a wonderful twist, a number of local, older neighbours attended the night. Jon, the Vicar, reached out to an elderly neighbour before the event so she would be prepared for the music. She said, ‘I don’t care how loud the music is. I might even sit in my garden and listen. What your church has done is amazing.’  A Hub leader said, ‘We are showing people that Jesus came for you.’

That is what these two seemingly different Hubs have in common: they build community by serving communities. And they do so by identifying people’s needs and meeting them with Jesus.

How is your church reaching the local community? Let us know in the comments below.

What image does your church give?

By Stephen Matthews | 28 September 2013

We are all aware of the scrutiny that charities in general including churches are coming under from many sectors of society. Whether a general perception that the church is simply “after your money”, to an increasingly cynical media reporting stories that embarrass churches and their leaders, both the substance of what we do as churches and the image that we portray continues to be important for the reputation of church and Kingdom.

 

Money has power far beyond its intrinsic value. It was Jesus himself that elevated money to the status of an alternative god when he said that we can’t serve both God and money. Accepting its power and considering the teaching of 2 Corinthians 8 and 9, to protect the reputation of the church and by implication of Christ himself is a good place to start.

 

No leadership team sets out to bring down the reputation of the church, but that image is either enhanced or diminished by the substance of what the church does, what happens within its buildings and how it carries itself in the community. For example, what impression is created if the building from which the church operates is used for activities that do not support the charitable purpose of the church? We have been aware of church premises being used to run private businesses or as a base for political pressure groups which give the impression that they are operated by the church and share its values.

 

Similarly where the church is involved in legitimate business activities, how it chooses to operate these businesses is important. A poor level of service; poor customer relations; poor employee morale; all reflect badly on the church and serve to feed some of society’s cynicism. Where the church does have legitimate business relationships with the community these should, as far as possible, reflect the image of integrity, generosity and service exemplified by Christ, recognising that there will be times when they may not.

 

An additional level of awareness should be brought to bear where it is the church leaders themselves that are involved in the money making ventures. This is not limited to their own separate businesses but extends to activities where there is an overlap with their church responsibilities. For example, this may occur when the leader’s family owns the church building and seeks to rent it for non-church related activities during the week or where the intellectual property rights that attach to sermons and songs which start out as kingdom enhancing can become a conflict of interest and create tension when subsequently they are used as a source of income to a church leader.

 

Some conflicts of interest can be obvious e.g. appointing a building firm owned by a church trustee to work on a church building project, and of course we need to be conscious to limit these, but other conflicts consist of many small things which in and of themselves may not cause concern, but when put together to form a bigger picture portray the church in a less than generous light.

 

Ever thought what image your church might be giving?

Financial fraud in the church - it would never happen here

By Stephen Matthews | 28 September 2013

We want to believe that the relationships and trust that are central tenants of church life mean that financial fraud would never take place. Sadly, and often all too late, we can come to realise that this is not always the case. Recent statistics from the National Fraud Office showed that charities remained vulnerable to fraud (with 25% of those reported involving those within the organisation) supporting the view from the Charities Commission that many charities have weaknesses within their fraud prevention policies and that their trustees have gaps in their financial understanding.

 

Two recent incidents that have come to our attention, highlighting the potential for financial and reputational damage to churches if they do not (even from the best motives) operate simple controls over their finances.

 

In the first case, a church trustee responsible for putting on conference and other church events requested these to be operated within a personal bank account so that he could deal more efficiently with the numerous suppliers required for these types of events. Some of the money was diverted for personal use with the church hearing of it when the suppliers pressed them for unpaid bills. This cost the church over £10,000 with some difficult pastoral issues thrown in for good measure.

 

In the second case a church was in the midst of a building project and to ease the administrative burden of getting joint signatures to cheques etc. money was transferred into the personal bank accounts of a church member who was responsible for overseeing the project. Unbeknown to anyone within the church that individual had financial difficulties and used some of the money to relieve them, leaving the church out of pocket to the extent of more than £20,000.

 

It is important that churches maintain financial controls over funds recognising that it almost never the most appropriate course of action to transfer management from a church bank account to that of an individual simply to ease an administrative burden, however well trusted and regardless of the position that person might hold within the church. If the administration and controls have been designed correctly at the outset, to try and avoid them, inherently removes the very protection that they were intended to provide.

 

Our briefing paper financial controls in churches and small charities  sets out some of the more basic controls that all churches should try to adhere to.  In addition, the Charity Commission’s paper CC8 internal financial controls for charities  provides further insight.  Making good use of the controls in both papers will serve to prevent many situations similar to those set out above from becoming an issue in your church.

What if the church saw blood and organ donation as part of its giving?

By Alexandra Khan | 19 March 2013

fleshandblood campaign - encouraging the UK church to engage with blood and organ donation


A brand new initiative for 2013, sponsored by Stewardship’s give.net and backed by the NHS, asks a vital question: what if the UK church saw blood and organ donation as part of its giving?


A new survey suggests that while individual church members may have a significant interest in

donating blood and organs, the bigger picture shows that it is not encouraged by UK churches as

part of their committed Christian giving.

 

The survey was conducted by Christian Research on behalf of Kore as part of the fleshandblood

campaign launched earlier this year in partnership with NHS Blood and Transplant (NHSBT).

 

The survey shows that close to 10% of Christians have given blood in the last year compared to 4%

of the general population who have given blood in the last two years, and almost half of all Christians are registered on the NHS Organ Donor Register compared with 31% of the general population.

 

However despite these strong levels of engagement the overall findings reveal that many churches in Britain do not yet see blood and organ donation as a part of its giving, with an extremely low 0.3% of respondents stating that either blood or organ donation was a frequent part of their churchʼs teaching and over 75% saying that neither blood nor organ donation was ever mentioned or encouraged by their church.

 

The Rt Rev James Newcome, Lead Bishop on Healthcare for the Church of England says,

“Extending our understanding of the central Christian themes of generosity and stewardship to

include blood and organ donation has the potential to tangibly transform the giver and the receiver.

The benefit to others is not only life enhancing but can mean the difference between life and death.”

 

fleshandblood Campaign Director, Juls Hollidge commented, “The church has always been known

for its spirit of generosity. We want to encourage churches and church leaders to explore what it

would mean if, alongside all its other great work, the Church were to see blood and organ donation

as a part of that desire to be generous.”

 

This unique campaign seeks to equip individuals and churches as advocates for blood and organ

donation enabling them to raise awareness of this key issue with their family, friends and community and potentially help to save thousands of lives each year.

To find out more, visit www.fleshandblood.org or follow @fleshandblood on Twitter.

Are you a sending church?

By Fiona Mearns | 7 December 2012

Many churches are in the vital role of supporting and encouraging a mission worker, but what does this actually mean? 

In our new paper, Senders’ Guide, Mike Frith demonstrates that mission is a team game and covers the key areas necessary to maintain a strong and enduring partnership between sender and the one who is sent.

Mike is the Director of OSCAR, the UK Information Service for World Mission, and regularly runs workshops for churches to engage with their role as senders.  The next ‘open’ workshop will be at our offices in Loughton on Saturday 2 February.  For more information or to book, visit www.oscar.org.uk/training

 

Churches Exception from Registration - extended to 31 March 2014

By Kevin Russell | 28 November 2012

Readers of this blog will know that some, but not all, churches must register as a charity with the relevant charity regulator (the Charity Commission in England and Wales, the Office of the Scottish Charity Regulator in Scotland, and shortly, the Charity Commission for Northern Ireland). 

In England and Wales, the temporary Exception from Registration for certain denominational churches with a gross income of under £100,000, which was due to end in October 2012, has again been extended - this time to 31 March 2014. 

Churches that should be registered with the charity regulator but haven’t yet done so, are advised not to delay and risk losing out on valuable tax reliefs given to charities. This advice follows a change in tax legislation which means that registration with the regulator is essential. 

Further help: 

  • For more on the exception from Charity Registration in England and Wales, click here
  • For more on why churches should register as soon as possible to preserve tax reliefs, click here
  • For more on the registration requirements, refer to our Charities Act 2006 Briefing Paper here
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