This information was compiled in consultation with knowledgeable professionals, but is not presented as, nor should it be considered legal advice. We encourage you to consult an attorney.

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Why are so many churches not incorporated?

In Virginia, churches could not incorporate until 2002 when Thomas Road Baptist Church in Lynchburg sued the Commonwealth of Virginia for the right to incorporate. The Commonwealth did not oppose the lawsuit, and the United States District Court for Western Virginia held that the Commonwealth’s constitutional prohibition against church incorporation was unconstitutional. Because Virginia was the next to last state to allow churches to incorporate, there are thousands of churches in Virginia who have yet to take advantage of incorporation.

What are the advantages of incorporation?

There are several advantages of incorporation, including the following:

(1) Limiting the Potential Liability for Leaders and Members. It should be noted that individuals always remain liable for their own personal actions. However, incorporation substantially limits the liability of church leaders and members provided that the church leaders are not grossly negligent in the performance of their duties.

(2) Ease of Property Acquisition and Transfer.

Incorporation greatly eases the acquisition and transfer of property and incorporated churches no longer must petition a court for approval of such transactions.

(3) Business Dealings.

Many banks and other financial institutions prefer and require a church to be incorporated before dealing with them.

(4) Organizational Stability.

The incorporated structure of the church creates better organizational stability as the members, directors, and leaders change over the course of time. Incorporated churches no longer must petition the Circuit Court to have trustees removed or added and are better able to integrate their leadership structure into the entity.

(5) Flexibility.

There’s no one-size fits all requirement for church governance in order to be incorporated. The corporate organizational structure may be set up to accommodate elder-led churches, congregational churches, and board-led churches.

Doesn't incorporation submit the church to government control?

No, in the Commonwealth of Virginia, incorporation limits the control the government has over the local church. At present, an unincorporated church must petition the circuit court in its jurisdiction to appoint trustees and to obtain permission to encumber or convey the church’s real property. Any efforts to exercise control over churches by the government will be not directed through the incorporation process, but through laws that seek to compel all churches to obey. For example, a locality that imposes a storm water drainage fee, otherwise known as a tax, on churches will do so regardless of whether the church is incorporated or not.

Does incorporation change the way the church operates?

Incorporation does not, in and of itself, have any bearing on how the church operates or is governed. The Virginia Nonstock Corporation Act allows for significant flexibility in the governance model selected by the local church. The local church will have to create a Board of Directors, which can be the current leadership group within the Church or a separate leadership group. The Board of Directors has three (3) primary fiduciary responsibilities: the duty of care, the duty of loyalty, and the duty of obedience. The primary role of the Board of Directors is to ensure that the Church is loyal to its mission and obedient to the laws of the United States and the Commonwealth of Virginia, as well as its own governing documents and policies.

What happens to trustees?

After incorporation, trustees are no longer necessary, as the Church will hold its property in the name of the corporation, rather than the name of the trustees. There are several options for the role of trustees at this point, including (1) complete elimination of the role or (2) transforming the role of trustee into a building and grounds committee to oversee the care of the Church’s property.

Who will sign official documents?

Without trustees, the Board of Directors appoints persons to sign official documents on behalf of the Church. Usually, the President and Secretary are authorized to do so.

How long does the process take and how much does it cost?

The entire process takes between three (3) and six (6) months, including drafting and filing articles of incorporation, revising the Church’s constitution and bylaws, holding the necessary membership meetings to adopt the revised governing documents, petitioning the court for authority to convey property, and recording the deed of gift to transfer the property.

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