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May church give sale proceeds to outreach charity?

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May church give sale proceeds to outreach charity?

Our church is on the verge of having to sell our church building. Membership has been shrinking and Covid did us in. We want to move to a small rental space and still do our mission work, but we have a separate 501(c)(3) for community outreach. After all the church bills are paid, can the remaining funds be used for our 501(c)(3) community outreach?

The answer to this one will depend on your governing documents, your state law, and perhaps your state attorney general.  From your description of the situation, it sounds as though the church will be selling substantially all of its assets, which may trigger a review by the state attorney general or a court in some states on how the proceeds will be utilized.  It is normal for a church to use the proceeds of a sale of its building to continue its mission work, but it sounds as though you may want to dissolve the church entity and give all of the proceeds to the “outreach” entity.  It is not clear why you would want to dissolve the church or why you couldn’t do your outreach through the continuing church entity.  It may make sense to continue with two entities, but you would need to justify the transfer of some of the assets of the church to the outreach organization if it is not doing church work. Find an attorney in your state who has some experience with these end-of-organizational-life decisions to help you figure out what makes the most sense and how to get there.

Tuesday, March 19, 2024

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