A nonprofit organization is an entity with a mission other than earning money, of which none of the profits are distributed among its members, directors, or officers. When choosing a ministry path one question to consider is whether you should pursue church or parachurch ministry.
What is the Difference Between a Church and Ministry?
Both churches and ministries qualify as tax-exempt organizations under section 501(c)(3) of the Internal Revenue Code. So, what’s the difference? And does it matter?
Organizations classified as 501(c)(3) nonprofits can be either churches or ministries. The difference between the two is important, as it affects the government requirements for each type of organization. In addition, you can refer to the IRS’s 14-point test to determine which classification your organization falls under. This test determines if an organization meets the criteria for church classification. If your organization does not fit into these points or descriptions, it may be classified as a ministry instead.
Ministries and churches have different requirements for filing taxes and other paperwork with the government. For example, churches are exempt from filing Form 990, while ministries must file this form annually. Additionally, churches are not required to register with their state’s charity office, while ministries must do so to remain compliant with state laws. Therefore, it is important to correctly classify your organization to ensure that all necessary paperwork is filed properly and on time.
What are the 3 Types of Nonprofits
Organizations can be classified into one of three primary categories: public charities, private foundations, and operating foundations.
Some examples of statutory public charities are churches, universities, schools, nonprofit hospitals, and medical research institutions.
Private foundations and public charities are mainly distinguished by how much involvement the public has in their activities. Public charities typically get more financial donations from the crowd and government and have more public engagement.
An operating foundation is a type of private foundation that spends at least 85% of its income or minimum investment return on carrying out its exempt activities (the income test).
Which is the Best Fit for Me?
While the above information gives you the technical differences for tax purposes, the reality is that a lot more goes into the choice to work within a church vs. a parachurch ministry. Here are a few questions to help you determine the best fit:
- Do I align theologically with the church or organization?
- Do I believe in the overall mission?
- Will my gifts and talents be fully utilized?
- Does the ministry opportunity align with the people I’m called to serve?
- Will the time requirements work with my family’s needs?
- Do I believe the people I would choose to work with want to partner with me?
- Will I have the financial backing to be an effective ministry leader?
Don’t Rule Out Vocational Ministry
Ultimately, your choice should be one that allows you to partner with God as you use your gifts, talents, and passions to glorify him. This may mean working in a secular industry and leading a Bible study or mentoring a co-worker.
Interested in discussing the differences in minstry options with someone whose been there? I’ve worked on staff with both YoungLife and a church. Additionally, I serve clients with various experiences within different nonprofits. Schedule a call and let’s talk about how to best thrive in the fullness of your calling.