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If you’re looking for leaders, there are two ways to get them: you can collect them or you can create them.

Some leaders collect other leaders. In other words, they recruit already-existing leaders and call them into the mission. My son’s high school hired a new football coach last year – a former NFL player. He immediately tapped his existing network of former teammates to serve as assistant coaches. He now has the most credible coaching staff in the state.

When you’re starting something from scratch – whether a football program or a church plant – you generally have to be able to collect at least a few existing leaders. But if all you do is collect other leaders, your potential for growth and impact will be limited.

Furthermore, in church planting, the problem with collecting leaders is that you can lose them just as quickly. Leaders tend to be attracted to other leaders – but they also tend to have their own agendas, aspirations, and assumptions. If you fail to sponsor their agenda or embrace their aspirations or honor their assumptions, they will soon move on to follow another leader more to their liking.

The best way to generate long-term impact, build a movement, and honor God’s work in the lives of people is to create leaders. Creating leaders requires identifying leadership potential in people; calling that potential into action; giving them opportunities to try and fail and grow; providing regular and honest feedback; and moving them into greater and greater ownership. This is harder, slower, longer-term work. But it’s also more rewarding. Every leader I know remembers the mentor who believed in him, who called him toward leadership, and who walked alongside him as he “grew up” into leadership.

A healthy church needs to both collect and create leaders, but the creating should outweigh the collecting. Which means the leaders you do collect should be the kind of leaders who love to create other leaders. If the leaders you collect are leader-collectors but not leader-creators, what you end up with is a mutual admiration society – a fan club – but not a movement. You can always tell a church like this because it’s usually plateaued. It’s collected some good existing leaders, and they admire one another. But they’re not building any new leaders. On the surface, it seems to have a culture of leadership; but in reality, it has a culture of territorialism. The leaders it’s collected are protective of their areas of ministry (which, not surprisingly, generally align with their agendas and assumptions). They’re not giving those areas away to new leaders.

By contrast, a church that is creating leaders will have an ethos that is: 1) messy – because lots of young leaders are getting lots of chances to make mistakes; 2) direct – because honest feedback is critical to leadership development; and 3) gracious – because as up-and-coming leaders are trying and failing, they need the good news of the gospel to free them from pride and fear and self-concern.

If you’re a leader, here are some questions for reflection:

  • What leaders around me have I collected (they were already leaders before they got here)?
  • What leaders around me have I created (they weren’t leaders but became leaders while they were here)?
  • What opportunities are there in our context for not-yet-leaders to take risks, embrace their potential, and grow into leaders?

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Church Planters: how well do you understand your tax benefits and liabilities?

Resources abound on issues like ministry philosophy, vision casting, and leadership. But when I was planting Coram Deo Church, I was hard-pressed to find any reliable guide to help me understand income taxes, FICA/SECA, minister’s housing allowance, and the like.

So I’ve compiled one for you. Below is a short briefing on tax-related issues which you can also download in PDF form. Also, at the end of this post you’ll find the audio recording of a short unscripted conversation about ministerial taxes between myself, Trent Senske (my assistant) and Carley Hunzeker (Coram Deo’s financial administrator and a former auditor at Deloitte).

This is pretty basic stuff – but I’ve found that for most church planters, a solid understanding of the basics is exactly what they need. Once you “get it,” you can find someone to help you with more complex investing or tax planning decisions.

I should make clear: these resources are informational in nature and are not intended to provide official legal or financial advice. You are responsible for your own tax planning. Please consult an attorney or tax professional before making decisions that affect your tax withholding.
 

CHURCH PLANTER’S BRIEFING: TAXES

What are the categories of taxation that affect ministers?

There are two categories of personal taxes: (1) Income Tax (federal and state) and (2) Payroll Tax, also called FICA/SECA. The acronym FICA stands for Federal Insurance Contributions Act (FICA) and SECA stands for Self-Employment Contribution Act. As of this publication, the payroll tax rate is 15.3%, allocating 12.4% to Social Security and 2.9% to Medicare.

What is a Minister’s Housing Allowance (MHA)?

The MHA is an income tax deduction available to any “licensed or ordained minister.” An MHA allows a minister to deduct housing expenses (mortgage, rent, utilities, furniture, improvements, etc.) from taxable income. For some ministers, the MHA reduces their income tax liability to zero.

 Where did the Minister’s Housing Allowance (MHA) come from?

The basis for tax-free housing allowance dates back to at least 1921, according to one history account in the federal government’s court records. Congress decided that “ministers of the gospel” – as taxpayers who have little choice about personal living space, must reside where their employer requires, and often use their residence for business purposes – could receive tax benefit.[1] Therefore, this tax deduction for ministers derives out of the “convenience of employer” doctrine already available to seamen and hospital workers at that time.[2] The enactment of the Internal Revenue Code in 1954 expanded this tax law to include cash housing allowances. The rationale behind this change was that small churches and church plants should not be penalized if they cannot afford to provide housing or parsonages to ministers.

Will the Minister’s Housing Allowance (MHA) ever change?

Recently, the Minister’s Housing Allowance has come under fire as an unfair tax advantage given to clergy. There is always a chance that this allowance could go away, but it is a longstanding practice that government leaders have been resolute in supporting.

What is a minister’s tax status?

Ministers have a dual tax status. They are considered employees for federal income tax purposes (they get a W-2), but they are considered self-employed for payroll tax purposes.

How does payroll tax (FICA/SECA) work for ministers?

For an ordinary employee (for example, at Home Depot), the employer will pay 7.65% (or half of the required 15.3%) of FICA and then deduct the other 7.65% from the employee’s wages. But ministers, who are classified as “self-employed” by the IRS, are required to pay SECA (self-employment tax), which means they are on the hook for the entire 15.3% (since a self-employed person is both employer and employee). At Coram Deo Church, we made the decision to functionally treat our employees like Home Depot would. Therefore, we increase our gross compensation for ministers to take into account the effect of SECA taxes. To say it another way: we give ministers a “7.65% raise” before deducting 15.3% from their payroll for FICA/SECA. Therefore, the net impact to the employee “feels like” 7.65%.

For self-employed ministers, how often does SECA have to be paid?

SECA taxes must be paid either as a monthly payroll deduction or in a quarterly estimated tax installments. If you expect to owe tax of $1,000 or more when you file your return, you must pay monthly or quarterly in order to not be subject to underpayment penalties.

Can a minister “opt out” of FICA/SECA?

Yes. Ministers can request an exemption from self-employment taxes if they are “conscientiously opposed to public insurance because of [their] individual religious considerations.” In order to opt out, a minister must a) be “duly ordained, commissioned, or licensed by a religious body,”[3] and b) file Form 4361 with the IRS by the date their income tax return is due for the second year in which they have at least $400 of net earnings from services performed as a minister. If the IRS approves the exemption request, they will return an approved copy of Form 4361. File this form with your permanent records in a safe and secure place. Also be aware that once the exemption is approved, it is irrevocable.

If someone opts out of FICA/SECA, what should they do with the additional money earned?

Considering that Social Security and Medicare are means of income after Americans retire, a minister who has opted out of FICA/SECA should save or invest those funds. Good financial planners will encourage you to set aside every dime that would be going to FICA/SECA into a retirement account.

What is the theological basis for an objection of conscience to FICA/SECA?

A few passages in the New Testament to study are 1 Timothy 5, Romans 13, and Acts 6. The key question is: Who should be responsible to provide for Christian families at retirement age? Do I believe that is the federal government’s responsibility? Or do I believe that is the responsibility of the individual Christian or church? The IRS specifies that exemptions must be based on a personal conviction of conscience, not on financial pragmatism.

Additional Resources:

[1] http://www.forbes.com/sites/peterjreilly/2012/09/06/in-defense-of-special-tax-treatment-for-clergy/

[2] http://host.madison.com/news/local/with-court-ruling-clergy-housing-allowances-come-in-for-intense/article_aa394ca8-336d-57ab-8724-bd8d83361f74.html

[3] IRS Publication 517, http://www.irs.gov/pub/irs-prior/p517–2013.pdf

 

PDF: Click here to download a PDF of this Briefing

AUDIO: Listen to a short (22 min) audio briefing here:

[audio:http://randomfiles.s3.amazonaws.com/taxes_mixdown_July2014.mp3|titles=Ministerial Tax Briefing|artists=Bob Thune]

Or click here to download the audio and listen later.

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Coram Deo Church has joined neighbors from the Fairacres, Memorial Park, and Dundee neighborhoods in voicing opposition to a proposed redevelopment of the former Temple Israel property at 7023 Cass Street. I thought it would be helpful to state clearly and simply why we oppose this redevelopment plan.

First, I want to make abundantly clear that our opposition is NOT to Bluestone Development or its owners and investors. Bluestone is a respected and reputable development company. We are thankful for the fine work they do to make Omaha a better place. We desire to see them thrive and prosper, and we’re thankful for the ways they’ve contributed to the flourishing of our city. Our opposition is not to Bluestone, but merely to this specific project.

Here are five reasons for our opposition.

1. We are opposed to this project because it would destroy one of Omaha’s historic buildings. The Temple Israel synagogue building has stood stalwartly at 7023 Cass Street since 1950. It’s a beautiful symbol of mid-century architecture and an important component of Omaha’s built environment. This is a building worthy of protection, preservation, and re-purposing. There may be other buildings in our city that deserve to be razed to the ground and replaced with modern apartments… but Temple Israel is not one of them.Temple_Israel_Aerial

2. We are opposed to this project because it is not in the best interests of the neighborhood or the city. Stronger neighborhoods are built as people move from renting toward owning, increasing the number of people who have a vested interest in the good of the neighborhood. Adding 400-500 new apartment-renters works against this sense of commitment and ownership, and is therefore a step backward for the neighborhood, not a step forward. Additionally, the flourishing of a healthy city depends on the presence of institutions – like churches, synagogues, and nonprofit agencies – that promote the spiritual, ethical, and cultural well-being of the city and its residents. The Temple Israel facility has housed such an institution for decades. Replacing this sort of institution with high-density apartments is not in the city’s best interest.

3. We are opposed to this project because it contradicts the city’s own Master Plan. Omaha By Design, the city’s comprehensive urban design plan, directs the city to “pursue policies that will make it easier for older buildings to continue to be functional.” This guiding document states that “older buildings… are part of Omaha’s cultural heritage and contribute to the City’s sense of place… [they] should be recognized as a potential resource to be preserved as heritage, as useful parts of the City’s built environment, or to reinforce a community’s sense of place.” The City Planning Board acknowledged that the Cass Place development was in conflict with this provision of the Master Plan, yet recommended the rezoning of the property with the observation that “the Master Plan is merely a guideline.” In the city’s own future land use map, the Temple Israel property is designated as “civic” space within a broader mixed-use boundary. And in the city’s own artistic rendering of what the 72nd and Dodge St. area will look like after full redevelopment, notice that the Temple Israel building still stands (lower right quadrant – image taken from the Omaha By Design document, p. 28). It’s clear that tearing down this historic building contradicts the city’s own vision for its future. 72nd_Dodge_Redevelopment

4. We are opposed to this project because it sends the wrong message to the city’s residents. Actions speak louder than words. Bulldozing a historic place of worship and replacing it with an apartment complex communicates something very negative about the value of religious communities in our city. It implicitly says that Omaha esteems economic growth over spiritual growth; that we value housing diversity more than spiritual diversity; that we value gaining new residents over providing for the spiritual needs of all residents.

5. We are opposed because of our own self-interest. We might as well be honest: our opposition to this development has a high degree of self-interest. This is a building our church wants. We’d like to own it. We’d like to inhabit it. We’d like to serve our city and its residents from it. We’re trying to be up-front about that. We’ve negotiated in good faith over the past year to purchase this property. We’re continuing to negotiate, even now, to increase our financial stake in the property and show the seriousness of our intentions. We think the current situation can be a win-win for everyone involved. We think the Bluestone apartments deserve to be built – but not at 7023 Cass. We’d love to see the Temple Israel property become the new home of Coram Deo Church, and we’d love to see Bluestone take the concept they’ve designed and execute it on a different parcel of ground. We believe the goals of preservation and development, of spiritual growth and economic growth, can complement one another in exciting ways and lead to the flourishing of a vibrant city.

[See also A History of Coram Deo’s Pursuit of the Temple Israel Property]

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Temple_Israel_CassStIn March of 2013 a mutual friend connected me with John Waldbaum, a real estate broker and Temple Israel congregation member who was representing the Temple in their bid to sell their property at 7023 Cass Street. John walked me through the building, which was listed at $3,245,000, and discussed the congregation’s plans to move west. At the time we talked, the building was under contract to a developer (Campus Crest) who planned to demolish the building and build a college student housing project on the land. That plan had met fierce opposition from both the influential neighbors in the Fairacres neighborhood and from some of the members of Temple Israel who didn’t want to see the building razed.

Coram Deo’s leaders had toured the Temple Israel building once before, in 2012, and at that time it seemed beyond our needs and means. But by early 2013, we were beginning to think more strategically about our future, and the building merited a second look. In late March we hosted a member’s meeting in the Temple facility, and the members of Coram Deo voted overwhelmingly in favor of pursuing the property.

The campus housing development fell through. So we contacted our real estate broker and made our first written offer on March 29, 2013. In hindsight, though the offer was genuine, it was regrettably low. It was rejected. We made a second offer in May. That offer was closer to the mark, but still not competitive enough. Temple’s broker made clear that they were looking for an offer above $3 million and weren’t interested in deviating far from that number.

In September, we contracted a different broker and made a third offer of $2.7 million. We believed we were close to a final deal, and were eagerly awaiting a counter-offer from the seller. But rather than countering, they informed us that they had taken a competing offer from a developer (Bluestone) who planned to raze the building. We were utterly surprised and honestly a little upset at the lack of a counter-offer, which essentially cut us out of the negotiations.

Believing the door was closing on this opportunity, we turned our attention elsewhere. But as the word got out that Bluestone was planning a dense apartment complex on the site, neighbors began to contact us to discern whether we still had interest in the building. The answer, of course, is yes. As I told one of the neighborhood organizers last week, “We want this building, and we’re ready to spend what it takes to get it.” Our financial position as a church is stronger than it was last year, leaving us free to make the financial offer on the building that we perhaps should have made last year.

Of course, none of this changes the fact that the building isn’t available to us. Bluestone has the property under contract, and they’re asking the city to re-zone it. We’re seeking to make the case to both the development community and to the city that the highest and best use of this property is to preserve it as a place of worship. We’re convinced that this historic building shouldn’t be destroyed when a church like Coram Deo is willing to purchase it, occupy it, and preserve it.

Coram Deo is willing and able to compete financially with the developer’s offer on the property. We realize we missed our chance to do so last year – but then again, we believe the negotiation process ended before it should have. So we’re praying for another chance to meet the seller’s financial demands and save this property from demolition. Maybe God will give us that chance. Maybe he won’t. But we want the whole city to know that we’re here, waiting.

[See also Why We Are Opposed to the Proposed Bluestone Redevelopment of 7023 Cass Street]

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ash wedFor Coram Deo Church’s Ash Wednesday Prayer Service, March 5, 2014, 7 PM

Our Father: we enter tonight into a season of deliberate repentance. We know that repentance is not a seasonal thing; we ought to always be repenting of our sins. And yet we confess that in the press and the push of life, our repentance can become routine and shallow. Our awareness of our sin is not as acute as it should be. And so we pray as a church… Lord, have mercy.

We ask you, Lord, to make us mindful of our sins. Heighten our moral sensitivity. Strengthen our consciences. Deepen our self-awareness. Let your hand be heavy upon us – not to push us down into despair, but to bring us low, into rightful humility before you. Humility is not natural for us. And so we pray as a church… Lord, have mercy.

Our Lord and God, we ask you also to make us more aware of our mortality. We are but a vapor that appears for a little while and then vanishes. Yet how prideful we are! Rather than pondering the brevity of life, we live as though tomorrow is guaranteed. We avoid talk of death and dying, and we fail to grieve with those who suffer. Awaken us to our mortality. Help us see the shortness of life on earth. Let the ashes we receive tonight remind us that we are dust, and to dust we shall return. And so we pray as a church… Lord, have mercy.

Father, we acknowledge our pursuit of comfort. Most of us don’t know what it means to go without. Give us grace in this season to willfully deny ourselves – to forego the comforts we take for granted for the greater comfort of knowing you more deeply. We’ll need your help in this, Lord – we are not disciplined in the art of fasting and prayer. And so we pray as a church… Lord, have mercy.

God of all Comfort, we remember before you this night our brothers and sisters in Christ around the world. Many of them suffer. Some are persecuted by oppressive governments. Others are harmed by unjust social structures. Still others lack the freedom to worship you openly. For all your people who suffer tonight, we pray as a church… Lord, have mercy.

And finally, our Father, we ask for the merciful gift of your Holy Spirit. We enter this Lenten season in dependent faith. There is nothing magical about Lent. In fact, if we merely “observe days and months and seasons and years” (Galatians 4:10), we may miss you entirely. And so we ask, in this season, that you would draw near to us by your Spirit. Quiet us with your presence. Make us know more deeply the joys and delights of intimacy with you. And so we pray as a church… Lord, have mercy.

And now deliver us, Lord, from meaningless ritual. We receive ashes on our foreheads tonight not as a bare religious symbol, but as a sign of true spiritual humility before you. May the state of our hearts be commensurate with this mark on our bodies, so that You might be glorified in the contrition of your people. Amen.