Many church and parachurch organizations have both observable religious and secular operations, missions and facilities. Many such have also found that secular income can fill in gaps that volunteer donations, such as tithing, offerings, and gifts, sometimes cannot. Viable churches that can raise enough money to pay a small staff and keep a facility are usually doing all their members will support. Thus, secular income may become a lifeline, which is why many churches also own daycare centers and other businesses. Of course, there are some churches and parachurch organizations that seem more about their secular business interests than their religious.

In the Matter of the Application of the Holy Spirit Association for the Unification of World Christianity, Petitioner, 2019 NY Slip Op 31678 (U), the non-profit religious organization, which seemed from the opinion to be at the same time a church and a parachurch organization, owned a corporation that owned a hotel in Manhattan. Permission was sought for a $20 million mortgage, $18.5 million to be used to buyout union employment contracts with the hotel and the transaction costs. The purpose of the buyout was to improve the profitability of the hotel. The New York Attorney General objected to the application because the AG did not believe the mortgage was in furtherance of a religious purpose. The Petitioner set about proving it was a church owner of secular businesses by proving it was a church holding worship services, employing a pastor, and conducting a seminary in some of its space. Also, some space was leased to other non-profit organizations. It also claimed $5.7 million in annual donations from congregants. The Court granted the petition for approval holding that the Court had to accept the representations of the church petitioner as long as it did not appear on its face to be a sham or proven by the AG to be a sham. The AG did not attempt to do so.

While the legal proceeding described above would never occur in most states, these issues most often emerge when the issue of tax exemption arises. Churches and parachurch organizations with dual identities should not assume their religious identity is obvious and be prepared to document it. Corporate records like board minutes that memorialize votes on religious mission efforts as well as secular business management are probably dispositive. Such church organizations can also organize and own trusts that then in turn own their secular business interests for the benefit of the church.

• Parachurch Organizations