During the past few years, much has been written about how "the church" should be governed. Thousands of hours have been spent writing and reviewing constitutions and bylaws of the many "church of God" organizations. Many papers have been written from both Biblical and legal perspectives.
I have undertaken my own studies in this area. In the past, I have said little about our own organizations in Servants' News—including it with receipt letters instead. Many friends have advised us to seek tax-exempt incorporation and many advised against it. I have now made some decisions about our form of operation that will affect us and our contributors for years to come. I believe these decisions please our Father in heaven.
If the Eternal is willing, I will continue publishing Servants' News and other literature as well as help organize local congregations and Feasts. Except for the non-profit incorporation assistance (part of point 4 on page 4), the stated goals in our April 1995 issue are all still intact. However, I have now withdrawn our request for IRS tax exempt status and will be dissolving the Friends of the Brethren Corporation.
Why change direction now? In the past year, I have learned a number of things about Biblical government as well as United States law. Also, I hope I have grown in faith—trusting more in our Father and less in systems of men. I hope to use this article to show how Friends of the Brethren began, and why the corporation is not really necessary. I have tried to include enough background material to show the reasons behind these decisions—please bear with me.
I had worked for the Worldwide Church of God and its affiliated corporations from 1975 until the end of 1992. During the last several years there, I felt many of the doctrinal and administrative changes were wrong, but I did not know what to do. I began to study my Bible as never before. Gradually, I realized the problem was not simply "the wrong man in charge," but that people had come to utterly rely on headquarters for truth, not on their own understanding of the Bible.
I worked for the Global Church of God from its beginning in 1993 until 1994. (I served in technical capacities, on the Board of Directors, on the doctrinal committee and as a writer and editor.) While this organization does a good job of preserving much truth taught in the WCG, I feel it still left people reliant on headquarters for truth. Bible study resulting in any conclusions different from official doctrine was discouraged.
During 1993 and 1994, I realized that tens of thousands of Sabbath-keepers were departing from the WCG and not attending any major Sabbath-keeping organization. I personally knew people that were doing this. Some were so disillusioned that they had completely given up on God and the Bible. Others seemed to be strong in faith, but felt that the Eternal was not working through these WCG look-alike organizations.
It was nearly impossible for me to openly discuss these issues while being an employee of the Global Church of God—I was expected to represent the official line. I gave notice of my intent to leave in the summer of 1994 and moved to Arkansas to be closer to my parents in late November that year. I spent much time in Bible study about government, the church and the responsibilities of converted individuals. I exchanged ideas with many friends.
Our basic conclusions were that people were better off attending with an organization than in giving up altogether, but many organizations were not learning the lessons that desperately needed to be learned from the break-up of the WCG. We hoped that we could encourage scattered individuals to fellowship with other believers wherever they were welcome, and we hoped we could encourage organizations to build rather than boss their members.
Who are Friends of the Brethren?
Friends of the Brethren never was a formalized group of people. There never was a membership "sign-up list." Some people helped us in our studies, some helped us financially, some helped us with names and addresses and some helped us write and edit articles. In February of 1995, we mailed a 6-page letter to many people that we believed to be Sabbath-keepers. The letter encouraged people to continue keeping the laws of the Bible and fellowshipping with brethren in whatever way possible.
About 200 people responded to that letter. Most encouraged us to keep up our work. My wife and I sold more of our investment property and began to publish Servants' News and other articles as we had time. Marleen and I do all of the telephone answering and mail processing. I used to lay out the newsletter until that responsibility was assumed by Norman Brumm in the fall of 1995. He also coordinates the non-aligned feast sites. Many people help write articles, edit and proof-read. As of this writing, the circulation is about 1250 and about 400 people have contributed financially.
Friends of the Brethren was incorporated in the State of Delaware on April 28, 1995, though there was no business activity until June. A company specializing in forming Delaware corporations did the paper-work. Our two stated purposes for incorporating were (1) to obtain non-profit mailing rates and (2) to obtain "assured" tax deductions for those that desired them. (I did not find out until later that incorporation is not really necessary to obtain either goal.) Although I did not write it as a goal, I will have to confess that I felt creating a tax-exempt corporation would make me appear "more legitimate" in the eyes of others. While that is probably true for some people, I had lost my focus on simply serving the Eternal and His people. Tax exempt corporations have been formed by atheists, Satanists, Buddhists and nudists. Being approved by the state means little; being approved by the Eternal is what is important.
Nevertheless, in June Friends of the Brethren applied to open a bank account and for IRS tax exemption. I did not put any long-term assets (printing equipment, computers, etc.) in the corporation as I remembered how the State of California took control of the assets of the Worldwide Church of God in 1979. Also, I realized that when corporations begin to have a lot of assets, people like to become a part of them so they can take part in the wealth, not the work.
Before we continue, we should explain corporations and IRS tax exemption. It is possible to have one, the other, both or neither.
What is a Corporation?
A corporation is not a big office building or factory, but an artificial "person" created by the state. All 50 states have unique laws regarding the creation and dissolution of corporations. These corporations can do most of the things that a natural person can do: own property, enter into contracts, earn money, pay taxes and even commit crimes. One important difference between corporations and people is people have certain inalienable rights recognized by the Constitution, where corporations only have those rights which are given to them by their charter and applicable law. Notice this definition from Bouvier's Law Dictionary:
Corporation—Not a Person. A corporation is not deemed a person within the clause of the Constitution of the United States protecting the privileges and immunities of citizens of the United States from being abridged or impaired by the law of a State, and the liberty guaranteed by the Fourteenth Amendment against deprivation without due process of law is that of natural, not artificial, persons [204 U.S. 359].
While this may seem like just "legal talk" it has very real consequences. Corporations are required to follow their charters and the bylaws that they may pass. When the State of California placed the Worldwide Church of God in receivership in 1979, it was not based on criminal charges or a nonsense interpretation of the law. It was based on paragraph 9505 of the California Corporation Code at that time:
Supervision of Attorney General Where Property Held in Trust.—A nonprofit corporation which holds property subject to any public or charitable trust is subject at all times to examination by the Attorney General, on behalf of the State, to ascertain the condition of its affairs and to what extent, if at all, it may fail to comply with trusts which it has assumed or may depart from the general purposes for which it is formed. In case of any such failure or departure the Attorney General shall institute, in the name of the State, the proceedings necessary to correct the noncompliance or departure.
The California Attorney General was seeking an accounting of funds and a possible replacement of the board of directors of the corporation if they proved to be violating the corporation's charter and bylaws. In order to prevent the "pilfering of assets" by the directors (a mostly "trumped up" charge), the Attorney General asked for a receiver to be given control of all church assets. The receiver even had the ability to sue other persons in the name of the WCG!
Were the Attorney General's activities ever found illegal or unconstitutional? No! The Worldwide Church of God was a corporation and the state had the right to investigate and control such corporations. The receivership was physically stopped by asking members to contribute to an Arizona address. From there, critical church bills could be paid, but the receiver's bills were not paid. As it happened, due to the extra legal fees and due to a general drop in revenue because of people not contributing during the receivership, the corporation barely remained solvent. Had the State of Arizona or Federal law enforcement chosen to intervene in the temporary WCG Arizona office, the WCG would have gone bankrupt. Is the state responsible for damages if a corporation it is investigating goes bankrupt? No! Again, see the definition of "Corporation not a Person" at left.
In the end, the Attorney General's proceedings against the WCG were dropped, not by court order, but because the California legislature passed a bill specifically limiting the Attorney General in church corporate investigations. Could other lawfully authorized government agencies still investigate church corporations? Yes!
Where is our national constitutional protection of freedom of religion in all of this? That protection is for people, not for corporations which are creations of the state and therefore governed by the state. While most states leave religious corporations alone, they legally do have a large amount of control over them. As governments at all levels attempt to exert more and more control over nearly every aspect of life in our country, it seems prudent to not voluntarily submit to government control if we do not have to. The scripture is clear that true servants of our Father will be persecuted at some time (John 15:20).
The claimed "advantages" for corporations may well be disadvantages for churches: limited liability, respectability, and perpetuity. Limited liability means that a corporate director's personal fortune cannot be taken away if someone sues his corporation. A church leader can legally pay himself a high salary, give himself lots of benefits and let the corporation go bankrupt—he is not responsible to pay anything back personally. We have already discussed respectability—the ability to incorporate has absolutely nothing to do with truth or honesty. Perpetuity (the ability of a corporation to exist forever) initially sounds like a good thing. If leaders die, they can be replaced by others and the same work can go on. But how does one know that the stated mission of a corporation will continue—future directors can usually change the articles and bylaws. "Then I hated all my labor in which I had toiled under the sun, because I must leave it to the man who will come after me. And who knows whether he will be wise or a fool?" (Eccl 2:18-19.) If the WCG headquarters is sold, the proceeds may be used to fund the preaching of doctrines nearly opposite of the doctrines held by the people that contributed to purchase that campus many years ago.
I am not saying that no church or business should ever incorporate. I do not know everyone's situation. I am saying the price of incorporation appear to outweigh the good for our operation.
What is Tax-Exempt Status?
Corporations, associations, churches, community chests, funds, trusts, and foundations may fill out IRS Form 1023 and apply for tax exempt status. (Individuals and partnerships may not.) Since the regulations describing this process are in Internal Revenue Code section 501(C)(3), such organizations are often called 501C3 organizations.
Receiving tax exempt status from the IRS eliminates the need to pay Federal Income Tax, and makes most contributions by individuals tax deductible. Many other governmental agencies recognize the IRS status and grant exemption to other taxes and fees: The US Post Office provides non-profit mailing rates, state governments waive income taxes, some state and local governments will waive sales taxes, etc. If saving money is a primary goal, the above reasons make exempt status worthwhile. Tax savings can easily make up the $465 cost of applying.
However, these economic benefits are not obtained without price. In exchange for tax exemption, the organization must pledge that its purpose, all activities and assets must be used in accordance with current and future IRS regulations. In the process of applying for tax exempt status, we received IRS Form 503-4-351 which requires the following statements to be placed in the foundational documents (such as articles of incorporation) of an organization:
A. The purposes for which the organization is organized are exclusively religious, charitable, scientific, literary, and educational within the meaning of section 501(c)(3) of the Internal Revenue Code of 1986 or the corresponding provision of any future United States Internal Revenue law.
B. Notwithstanding any other provision of these articles, this organization shall not carry on any activities not permitted to be carried on by an organization exempt from Federal income tax under section 501(c)(3) of the Internal Revenue Code of 1986 or the corresponding provision of any future United States Internal Revenue law.
C. Upon the dissolution of the corporation, assets shall be distributed for one or more exempt purposes within the meaning of section 501(c)(3) of the Internal Revenue Code, or corresponding section of any future federal tax code, or shall be distributed to the federal government, or to a state or local government, for public purpose. Any such assets not so disposed of shall be disposed of by the Court of Common Pleas...
Points "A" and "B" above give the IRS complete control over the purpose and operations of any organization that has applied to them for tax exemption. When an organization applies for tax exemption, the IRS reserves the right to decide what is a church and what is not. A church organization that does not meet the IRS definition has to change or forgo tax exemption.
To the IRS, What Is a Church?
During the application process for Friends of the Brethren, it became obvious that we would either have to change what we do or we would not qualify as a "church." The basic points of determination the IRS uses came from a federal court case American Guidance Foundation, Inc., v. United States, 490 F. Supp. 304 (D.D.C. 1980). We will reproduce the points below with a comment on whether or not we would qualify.
(1) A distinct legal existence. Yes—though extra book-keeping would be required.
(2) A recognized creed and form of worship. Probably No. The Edwards, Brumms and others have occasionally met together for services, but most of the time we attend with other groups. These groups use a variety of forms of worship which we do not control.
(3) A definite and distinct ecclesiastical government. No. The IRS will not accept someone with the primary goal of serving rather than governing others. The leadership of the Messiah is not distinct to them.
(4) A formal code of doctrine and discipline. Maybe. They will not simply accept "the Bible" as a doctrinal statement—it is not "formal" enough. When an organization produces a detailed "statement of belief," there is a great tendency for people not to study subjects in that statement, because if they concluded anything different, they would essentially be removing themselves from the beliefs of their organization. The IRS did not seem happy with our existing statement of beliefs that essentially states the above principle and then quotes what we believe are foundational scriptures.
(5) A distinct religious history. Probably No. We serve people seeking to "live by every word of God." We do not want to label ourselves "former group xxx."
(6) A membership not associated with any other church of denomination. No. This is another IRS-mandated point of division! If we treat those in other church organizations as equal to those that attend with us, we will not satisfy this IRS requirement.
(7) An organization of ordained ministers. No. Even though the Bible does not contain one example of a man being "ordained" to become a "minister," the IRS still wants us to have this doctrine.
(8) Ordained ministers selected after completing prescribed studies. No. When choosing leaders, the Bible puts more emphasis on how a person lives and if they are full of the holy spirit. (1Tim 3, Titus 1, Acts 6:3). The IRS wants a humanly devised program of study.
(9) A literature of its own. Yes. Publishing Servants' News and other literature satisfies this requirement.
(10) Established Places of Worship. No. Since we meet with a variety of congregations, some of which meet in a variety of locations, we do not qualify here. (It is interesting to note that the early apostles sometimes relied completely on the holy spirit for where they would go next—Acts 8:26; 11:13; 13:2; 16:6,9).
(11) Regular Congregations. No. Our meeting with and speaking to a variety of different groups disqualifies us here.
(12) Regular Services. Probably No. Our meeting somewhere every week was looked upon favorably by the IRS, but the variety of locations may have caused us to lose this point.
(13) Sunday schools for religious instruction of the Young. Maybe. The IRS would accept a Sabbath-school, and we had one some times. Some other congregations we attended had one and some did not. The IRS does not recognize Biblical responsibility of parents to teach their children (Gen 18:19, Deut 6:7, Eph 6:4).
(14) Schools for the preparation of its ministers. No. We find no New Testament example of a "ministerial school."
The IRS does not require compliance with all 14 points but requires a church to be largely in compliance to receive tax exemption. Friends of the Brethren easily complied with only 2 requirements, and may have complied with 5 others. While the final decision is left completely up to the IRS, we believe we had little chance of acceptance as a church. We would like to point out that a single local Sabbath-keeping congregation would probably have much less trouble qualifying for points 2, 6, 10, 11, and 12. With a properly worded statement, a single congregation might also qualify under points 3, 7, 8. (Indeed, many Sabbath-keeping congregations do receive tax-exempt status from the IRS.)
The IRS recognizes tax exempt religious organizations other than "churches"—for which Friends of the Brethren could qualify. However, these types of organizations are required to regularly report to the IRS and have many more restrictions and regulations put upon them compared to church organizations.
It is interesting to note that the first century ministries of our Savior and the apostles would probably not qualify as churches under these rules. In preparation for this article, I spoke with Carl Franklin, a man that has spent hundreds of hours researching many aspects of early church history. His research indicates that the Roman empire did have "incorporation" (state-created organizations), but the first century church did not use it. We find none of the related legal terms in the Bible or church history documents. Roman "incorporation" would have given them legal protection from persecution at the expense of being partly controlled by the Roman state.
Abiding by All Future IRS Laws
Because of the American concept of "religious freedom," the IRS seldom interferes with churches, but they do reserve powers of investigation to ensure that churches (and other organizations) are complying with applicable regulations. Looking back at points A, B and C on the previous page, you will see that all tax exempt organizations are bound to any future IRSlaws that might be enacted. Could tax exempt churches be required to do objectionable things by the IRSin the future?
On April 6, 1995, Gerald Solomon (R-NY) proposed HR 1453, a bill to remove tax-exemption "if any portion of the activities of such organization consists of promoting the legalization of any controlled substance." In simple languages, the bill proposes to take away tax exempt status of any organization that advocates the legalization of drugs. Actually, I have read credible studies that indicate drug usage would probably go down if drugs were legalized because (1) nearly all people that want to buy illegal drugs know where they can get them, (2) organized crime often gives away or even forces drugs on young people so they can charge high prices when the people become addicted, (3) addicts that want to get off of drugs are slow to seek help because they do not want a criminal record and (4) the amount of death, injury, and destruction resulting from the crime associated with obtaining money for drugs is greater than the actual damage caused by drugs.
I do not claim to know the validity of such studies, but if HR 1453 passed, a tax exempt organization could lose exempt status for including the above paragraph in a newsletter. Worse yet, Rep. Solomon stated in the congressional record that "They [organizations advocating drug legalization] need to be investigated and their contributors should be required to pay taxes on past contributions." People could be asked for tax and interest on what were supposed to have been "assured" deductions. While it is unlikely that such a bill would pass, Rep. Solomon is chairman of the House Rules Committee and he has threatened to attach this provision to another important bill. If it did become law, all tax exempt organizations have already agreed to abide by it.
Some religious organizations (including a few churches) have lost or been threatened with the loss of their tax exempt status for speaking against abortion, homosexuality, and government officials. The assertion was that these are political issues outside the purpose of religious organizations.
If the Eternal raises up a powerful, miracle-working, righteousness-teaching, corruption-condemning work in our nation, it will certainly incur the wrath of our civil governments—just like the first century believers did. Passing a few specifically targeted tax laws would be a simple way for the government to stop any tax-exempt organization doing such a work. Could the organization simply drop its tax exempt status and keep working? Point C on the previous page requires that the organization give all of its assets to another tax-exempt organization. Assets include all buildings, equipment, money and the copyrights on literature that it has written. At best, they will have to start over.
Past Contributions Deductible?
I am not sure how the IRS will view contributions made to Friends of the Brethren during 1995. Because of the guarantees of our constitution, the IRS cannot require churches to apply to be tax-exempt. From IRS Publication 557 (Jan 1995, p 23):
Although a church, its integrated auxiliaries, or a convention or association of churches is not required to file Form 1023 to be exempt from federal income tax or to receive tax deductible contributions, such an organization may find it advantageous to obtain recognition of exemption.
How the IRS views contributions to an organization that has applied for exemption and then withdraws is not clear to us. One professional told us he would take the deduction without including a copy of the receipt, but would be ready to pay the tax if the IRS disallows it. I am not qualified to give advice in these matters, so please consult qualified professionals for advice.
Our Future Operations
I have already withdrawn our application for tax exempt status, and I will dissolve the Friends of the Brethren corporation as soon as possible in April 1996. I will open a separate bank account as Norman S. Edwards doing business as Servants' News and Friends of the Brethren. Friends of the Brethren checks received after March 31 will go into the new account. I will probably remove the name Friends of the Brethren after a few months because it does not serve any real purpose and may be confused with the defunct corporation. In the New Testament, we find the names of men that preached the Gospel, not the Friends of Jerusalem or the Greater Gentile Ministries.
I will simply accept whatever funds the Eternal sends, pay the expenses of publishing, telephone bills, contract laborers, etc. I will feed and house our family from what is left. If, at some time in the future, we need more income to live on, I will work as the apostle Paul did. I will continue to provide receipts and a statement of income and expenses to anyone who contributes or asks for a statement. Anyone wishing to examine our books in detail should make an appointment.
People wanting to help us can make checks payable to Servants' News or Norman S. Edwards. Including the word "ministry" or "minister" (meaning "service" or "servant") on checks made out to Norman S. Edwards might be helpful in demonstrating that you consider us an unregistered church. If you would like to contribute to what we do, but want a "guaranteed" tax deduction, we can furnish you with information about tax exempt organizations that work together with us in some areas.
I realize that the decisions to drop incorporation and tax exemption creates some difficulty for some people that have helped us. On the other hand, I believe that the freedom to speak out against all evils and corruption in our society and government is more important than the financial factors. Since our primary function is a newsletter, we need to be free to print the truth as we see it.
This article is not a condemnation of organizations that are incorporated or tax-exempt. It is an effort to explain why I believe our course of action is correct for us now. Secondly, it is an effort to show that incorporation and tax exemption are not necessary and to encourage other groups to consider the merits of various alternatives.
Finally, someone might ask, why I do not have a board of directors or a committee of elders to make policies and give direction. In a very real way, the "board" consists of the people that write letters and contribute. I include articles as the holy spirit leads me and leads through the council of others. If I go astray, I hope that others will see it and tell me—if I do not listen, I hope they will stop contributing. We do not control other people or congregations. We do not disfellowship people or try to separate them from their friends. Anyone is free to read or not read our publication—or to start their own publication. Servants' News and other publications are a service that we provide as the Eternal guides us. May He bless all of us, grant us understanding and peace, and help us be ready for the difficult days ahead!
-Norman S. Edwards