Ministries "Covered" By The Church

When talking with ministry leaders, we often hear the phrase, “We are covered by …”, or “We are covering Brother Joe and Betty Smith’s ministry.”  What is meant by saying “Covered” by one, may be interpreted differently by someone else.  May we suggest, there are at least three realms where “Covering” may apply:

  1. A new “Start-up” church, which has not yet formally organized;
  2. A ministry that is occasionally traveling out from the church – eg the Pastor, or a Missions Team; or
  3. An evangelistic or music ministry, which has developed within the church, and is now traveling in ministry full time.  Such a ministry is often counseled to formally organize, with his own non-profit corporation, getting an IRS “Exemption Ruling Letter” for the 501(c)(3) status – OR – develop a formal relationship with the church, by a well written corporate resolution.  A Sample of such a Resolution is available in our “Covered Ministry Manual,” titled “SAMPLES T-M,”

In each of these cases, the “Mother” church may be willing, and want to offer a covering for this ministry. They are to be commended, but should proceed with caution.  What is being offered should be clearly defined in a carefully written [and adopted] Resolution in the Minutes of the meeting of the church Board of Directors .  What is being established is referred to as a “dba.”  This means the church is “Doing Business As.”

There are three areas which need to be addressed in this corporate resolution when agreeing to be a covering:

  1. Spiritual;
  2. Legal;  and
  3. IRS-wise, eg: how the funds will be handled, any reporting which may be required; If receipts are to be given to donors; And to what degree the church will have a legal responsibility for this ministry.  Always keep in mind, that having responsibility requires maintaining authority.  The church that agrees to “Cover,” a ministry must retain authority, and should require of the “Covered” ministry an accounting of it’s activities and finances.

Spiritually – At first glance, all this may seem ungainly and counter productive, but there are many positive aspects, for the covered ministry, to establish such an arrangement.  First of all – it’s Biblical for every ministry to be held spiritually accountable to an established minister or church.  There are far too many “Lone Ranger” ministers traveling this nation and the world today, with no spiritual accountability.  When we structure our ministries Biblically, God will bless our endeavors with far more success..

Legally – in most cases, the insurance company would be willing to add the ministerial outreach to the church insurance policy, thereby covering the church from any additional liability exposure.  In any case, if there is to be an additional ministry covered by the church, the church insurance company will need to be fully informed, with the ministry’s activities fully communicated, so that the church is protected from any unforeseen liability incurred by the ministry. NOTE – it is likely the insurance coverage will not extend to the dba.

Think of it – no requirement to incorporate, or to file an IRS Form 1023 and no requirement to annually file the IRS Form 990.  Not only are the “start up costs”  eliminated, but the “Hassle factor” of reporting is greatly reduced, and the costs related with having to file an IRS Form 990 annually with the IRS is eliminated.  The churches “501c3″ exempt status is applicable to any ministry the church desires to cover. All this is fully explained in our “Covered Ministry Manual,” titled “SAMPLES T-M,” which contains sample Resolutions that clearly define the relationship between the church and the ministry.

Per Diem – This manual also explains how tax free “Per Diem” works in conjunction with IRS sanctioned provisions.  The use of “Per Diem” is an awesome means for the minister to receive a great portion part of any income, that he might generate within the ministry, on a tax free reimbursement basis.

By the way – all of the above works well for any ministry, whether or not that minister is Ordained, Licensed or commissioned.

The above information is provided as a service to the Body of Christ by ADMINISTRATIVE ASSISTANCE


If you would like more information about similar issues, please consider “The Church Administration ‘How To’ Manual.” This Manual, endorsed by three CPA’s, an EA and two attorneys, was updated again in January, 2011, for the 12th time, since its original publication in 1991.

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