Can a member of a church run a for profit business using space at the church or does that jeopardize the church’s non-profit status?

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Can a member of a church run a for profit business using space at the church or does that jeopardize the church’s non-profit status?

A member has approached the leadership about using the church building for children music education. For them, it will be a source of income. Their hope is that it will also, as a by-product, expose new families to the church as a potential outreach. Is this arrangement permissible or does it violate our 503(c) non-profit status? Does charging a rental fee make any difference?

Asked on July 27, 2012 under Business Law, Ohio

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

It is a misconception that having a 503(c) corporation status means that you can not make a profit.  To the contrary, you are supposed to make as much money as you can.  It is the use of the money that counts.  Employ an accountant and attorney (for the contract) to make sure that everything is on the up and up and rent the place out.   Good luck.

 


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