As I have shared before, the Presbytery recently learned that the incorporation of churches is legal in West Virginia. Per the Book of Order (G-4.0101), where permitted by state law, each congregation shall incorporate. Therefore, all churches in the Presbytery should begin the process of incorporation as soon as possible to comply with the Book of Order. To assist with this process, all pastoral leaders and Clerks of Session received a packet of information in late May. The packet included a template for Articles of Incorporation, a template for Bylaws, and a template for Board of Trustees Consent, and instructions for completing these documents. If your church’s session is beginning the conversation about incorporation, please read the newsletter articles in the June, July, August, September, and October newsletters before you move forward; for your convenience, they are posted below. 

Presbytery leaders and staff continue to learn more about this process; thank you for your questions and concerns. We are not lawyers, so we are unable to provide legal advice. The Presbytery can forward general questions whose answers will assist most churches for legal opinion. Specific situational advice requires a particular session or congregation to engage legal counsel. While the Presbytery does not recommend specific lawyers, the Stated Clerk can offer a list of Presbyterian lawyers that may be helpful to your session or congregation. If a church engages legal counsel, they are strongly advised to seek someone with expertise in corporate law and an understanding of Presbyterian polity.

One of our churches recently raised concerns regarding the relationship of the corporation to church employees. The Presbytery lawyers have shared the following clarification: All employees of the church will become employees of the Corporation. Generally, anyone who receives a W-2 from the Corporation will be considered an employee. Contractors, who receive a 1099 from the Corporation, are self-employed and are not considered employees of the Corporation. Volunteers generally do not count as employees.

In response to a question regarding the Board of Trustees now being those who hire and set wages, the clarification follows: The Bylaws give the Board of Trustees [BOT] the power and authority to hire employees, but do not require the BOT to do so or give them exclusive authority over hiring and personnel matters. Churches are free to set up a hiring committee or any hiring procedures they choose. As the constitutional officer of the Presbytery, I would add that the church continues to be the entity that calls (hires) all installed pastors. The session establishes all other hiring procedures that should be included in a church’s Manual of Administrative Operations as per the Book of Order, G-3.0106.

A church member who is lawyer and guiding his church through the process raised a number of important questions. Here is clarification regarding the Taxpayer Identification Number (TIN): The churches will need to get a new TIN, and an attorney or accountant can help them with this process, which is fairly quick and easy to complete… It is not necessary for a church to apply for and obtain recognition of tax-exempt status from the IRS. Churches are automatically considered tax exempt. The church can apply for tax-exempt recognition from the IRS if it wishes, but it is not necessary.

To the above, Financial Administrator/Treasurer Rocky Poole and I would add the following: The Presbyterian Church (U.S.A.) and its subordinate units are recognized by the IRS as exempt nonprofit religious organization under section 501(c)3 of the Internal Revenue Code. This includes the Presbytery of WV and all its churches.

Regarding the need to update banking information as well as endowments and bequests, our lawyers have offered the following advice in response to requiring new accounts: This is something each church will have to discuss with its respective bank. Each bank may handle this differently and have different processes for updating account information. A church that incorporates should communicate the change to its bank, and work with the bank to update its account information. It will also need to communicate the change to its insurance provider.

Similar to the bank account issue, churches will need to work with the trustees of any endowments or estate bequests to ensure the legal documentation aligns. Each endowment or estate may have a different requirement. Churches should work with legal counsel to guide them through this process on a case-by-case basis.

Finally, to respond to questions about real property implications: Churches will need to work with an attorney to prepare and record a quitclaim deed from the trustees to the new corporation…The Book of Order requires that the Corporation have the power to receive, hold, transfer, etc. real property, so the deeds will need to reflect that the Corporation is the owner of the property.

In conclusion, our lawyers’ share that the process will take time to complete. There is no one-size-fits-all response. Each church should work with an attorney and an accountant through the process to address specific questions that may come up in the process of incorporating and updating accounts and records.

PREVIOUSLY (June 2021)

At the May 20, 2021 Presbytery Meeting, Stated Clerk Maureen Wright shared a recommendation from the Moderator, General Presbyter, Financial Administrator/Treasurer, Leadership Team Chair, Trustees Chair, and Stated Clerk that each particular church in the Presbytery act to approve incorporation and complete the required steps to incorporate. All pastoral leaders and Clerks of Session received a packet of information last week that included the following explanation.

Late last year, conversation began between Presbytery staff, legal counsel, and Presbytery leaders about incorporation of churches. While the West Virginia constitution prohibits churches from incorporating (West Virginia Constitution, Article VI, section 47), the Stated Clerk had received several questions regarding churches incorporating. When the Presbytery’s legal counsel was asked for an opinion, the memorandum was clear that churches in West Virginia have been incorporating since 2003, when changes to the West Virginia Code allowed for the incorporation of churches. Indeed, a 2002 ruling by the U.S. District Court for the Western District of Virginia struck down a similar prohibition in the State of Virginia’s constitution. This ruling likely prompted the change to the West Virginia Code. However, at the time, there was no attempt to change the constitutional prohibition. Incidentally, and separate from this conversation, the West Virginia legislature acted in 2021 so that West Virginians will vote in November 2022 on a constitutional amendment allowing incorporation of churches.

This information, paired with the Book of Order’s clear statement in G-4.0101, “Where permitted by civil law, each presbytery, synod, and the General Assembly shall cause a corporation to be formed and maintained,” makes it clear that it is time for the churches of the Presbytery to incorporate.

As part of our discussions, a number of Presbytery leaders asked, what are the benefits of a church incorporating? Richard R. Hammer of Church Law & Tax Report states, “Members of an unincorporated association are individually liable for [wrongful] acts of agents or employees of the association if the [act] is committed within the scope of their authority.” Brotherhood Mutual adds, “This means all members of an unincorporated church can legally be found responsible for the negligent or criminal acts of one of their fellow members.” (Incorporating Your Church: Why and How?) The reason for a church to incorporate is to limit liability.

The Leadership Team supports churches incorporating and voted to reimburse the cost of the $25 filing fee for all churches that incorporate prior to the May 2022 Presbytery meeting. In addition, the Presbytery worked with legal counsel to develop the necessary templates for incorporation. Print copies of these templates were included in the packet sent to pastoral leaders and Clerks of Session, and to assist churches, the templates are available as Word documents for download on the Presbytery website. These files are on the Documents page; like the Presbytery Directory, they are password protected. The password for all protected documents is the same. Contact the office at office@wvpresbytery.org or 304-744-7634 for password information.

PREVIOUSLY (July 2021)

As you may know, the Presbytery recently learned that the incorporation of churches is legal in West Virginia. Per the Book of Order (G-4.0101), where permitted by state law, each congregation shall incorporate. Therefore, all churches in the Presbytery should begin the process of incorporation as soon as possible to comply with the Book of Order. To assist with this process, all pastoral leaders and Clerks of Session received a packet of information following the May 20 Presbytery meeting. The packet included template Articles of Incorporation, template Bylaws, a template Board of Trustees Consent, and instructions for completing these documents.

As churches begin the work of incorporation, we are learning new things and wish to provide some clarifications to assist the churches in the process. First, churches will submit two documents to the West Virginia Secretary of State: (1) the completed template Articles of Incorporation (with all blanks filled in and the instructions pages removed), and (2) the Customer Order Request Form, which is linked within the Instructions for West Virginia Articles of Incorporation. The Customer Order Request Form is a cover page for the submission of the Articles of Incorporation and tells the Secretary of State how to process the filing (e.g., 24 hour expedited processing or regular processing time), how to return the filing (e.g. via email, fax, or regular mail), and how the church will pay the filing fee (e.g. check, money order, cash, or credit card). The Customer Order Request Form is not a part of the church’s governing documents but is required by the Secretary of State to process the order.

Additionally, please note that the first two pages of the Articles of Incorporation template provided by the Presbytery are instructions and are not part of the Articles of Incorporation. These instructions pages should be deleted from the Articles of Incorporation before they are submitted to the Secretary of State.

To clarify questions about the Board of Trustees and the Incorporator(s), the Presbytery has been advised that there is no requirement for the Board of Trustees and the Incorporator(s) to be identical. To keep it simple, churches can list one individual as the incorporator. Note that the incorporator must sign the Articles of Incorporation, so churches need to make sure whoever is listed in Article 15 as an incorporator signs the document. If the church elects to have multiple incorporators, then everyone listed in Article 15 must sign.

The Consent need only be signed by the trustees, which do not need to be identical to the Incorporator(s). Note that all of the trustees must sign the Consent.

The Board of Trustees Consent and the Bylaws become official documents of the incorporated church and its record, but they are not submitted to the Secretary of State. Only the Articles of Incorporation are filed with the Secretary of State.

There has been some confusion regarding the membership of the corporation. Typically, the corporation is made up of the ruling elders on the session. Here is what G-4.0102 Members of the Corporation says, “Only persons eligible for membership in the congregation or council shall be eligible to be members of the corporation and to be elected to be trustees. The ruling elders on the session of a congregation, who are eligible under the civil law, shall be the trustees of the corporation, unless the corporation shall determine another method for electing its trustees.” Therefore, only elders on the session should be members and elected trustees of the incorporated church, unless a church specifically states otherwise in their Bylaws.

Some churches are choosing to work through the process and officially incorporate as officers begin terms of service. This is particularly true for sessions that need to evaluate the tasks and roles of current trustees. Churches should have only a single set of Trustees, those of the corporation. Some tasks and roles of current trustees may be assigned by the session to a committee or subcommittee of session or to the Trustees of the corporation. Churches that currently do not have separate trustees do not need to consider this as part of their process.

PREVIOUSLY (August 2021)

As you may know, the Presbytery recently learned that the incorporation of churches is legal in West Virginia. Per the Book of Order (G-4.0101), where permitted by state law, each congregation shall incorporate. Therefore, all churches in the Presbytery should begin the process of incorporation as soon as possible to comply with the Book of Order. To assist with this process, all pastoral leaders and Clerks of Session received a packet of information in late May. The packet included template Articles of Incorporation, template Bylaws, a template Board of Trustees Consent, and instructions for completing these documents. If your church’s session is beginning the conversation about incorporation, please read the newsletter articles in the June and July newsletters before you move forward.

Presbytery leaders and staff continue to learn more about this process; thank you for your questions and concerns. We are not lawyers, so we are unable to provide legal advice. The Presbytery can forward general questions whose answers will assist most churches for legal opinion. Specific situational advice requires a particular session or congregation to engage legal counsel. While the Presbytery does not recommend specific lawyers, the Stated Clerk can offer a list of Presbyterian lawyers that may be helpful to your session or congregation. If a church engages legal counsel, they are strongly advised to seek someone with expertise in corporate law and an understanding of Presbyterian polity.

A number of churches have asked about annual reports. Annual reports will be required for incorporated churches. The first annual report will be due by July 1 of the calendar year after the corporation is formed. Churches incorporated in the calendar year 2021 will file their first annual report July 1, 2022; churches that incorporate in 2022 will file their first annual report July 1, 2023.

Information on annual reports can be found here. The page includes a link that can be used to file the annual report online using the WV One Stop Business Portal. The Secretary of State no longer accepts paper copies of annual reports, so each church will need to set up an account through the portal. Once this is done, the email used in the annual report will receive reminder notices each year ahead of the July 1 deadline.

In the annual report, the church will need to provide the following information:

  • Confirm its address
  • Confirm its agent for service of process
  • Provide the names and addresses of the officers (current at the time the report is filed)
  • Provide the names and addresses of the trustees/directors (current at the time the report is filed)
  • Identify the number of employees

Churches, particularly smaller churches, have raised concerns about Article 6, Section 1. Churches are not required to have vice presidents, assistant secretaries, or assistant treasurers. These are optional.

Other concerns have been raised regarding the quorum. Our legal counsel has advised that the quorum for the corporation may be set lower than the template suggests. However, there are some matters for which the WV Code specifically requires a majority of members for quorum, such as dissolution. Churches should be aware that quorum for the trustees of the corporation is different. The WV Code states, “The articles of incorporation or bylaws may authorize a quorum of a board of directors to consist of no few than one third of the fixed…number of directors.” If a congregation wants to alter the quorum requirements, they are best served to do so after consultation with legal counsel.

In an earlier article, reference was made regarding members of the corporation. It wrongly stated that the corporation was made up of the ruling elders on the session. The correct statement is that the corporation is the membership of the church, and ordinarily, the trustees of the corporation are the ruling elders on the session. The Stated Clerk apologizes for any confusion this may have caused.

Some churches are choosing to work through the process and officially incorporate as officers begin terms of service. This is particularly true for sessions that need to evaluate the tasks and roles of current trustees. Churches should have only a single set of Trustees, those of the corporation. Some tasks and roles of current trustees may be assigned by the session to a committee or subcommittee of session or to the Trustees of the corporation. Churches that currently do not have separate trustees do not need to consider this as part of their process.

PREVIOUSLY (September 2021) 

As you may know, the Presbytery recently learned that the incorporation of churches is legal in West Virginia. Per the Book of Order (G-4.0101), where permitted by state law, each congregation shall incorporate. Therefore, all churches in the Presbytery should begin the process of incorporation as soon as possible to comply with the Book of Order. To assist with this process, all pastoral leaders and Clerks of Session received a packet of information in late May. The packet included template Articles of Incorporation, template Bylaws, a template Board of Trustees Consent, and instructions for completing these documents. If your church’s session is beginning the conversation about incorporation, please read the newsletter articles from June, July, and August (below) before you move forward.

Presbytery leaders and staff continue to learn more about this process; thank you for your questions and concerns. We are not lawyers, so we are unable to provide legal advice. The Presbytery can forward general questions whose answers will assist most churches for legal opinion. Specific situational advice requires a particular session or congregation to engage legal counsel. While the Presbytery does not recommend specific lawyers, the Stated Clerk can offer a list of Presbyterian lawyers that may be helpful to your session or congregation. If a church engages legal counsel, they are strongly advised to seek someone with expertise in corporate law and an understanding of Presbyterian polity.

Last month’s article addressed several issues regarding quorum. A number of questions were asked, prompting a request for clarification. The quorum for meetings of the corporation may be reduced, even to 10 percent; however, there are certain items of business that West Virginia law requires a higher quorum. This means that the language will need to be modified and include stipulations for certain business. The lawyers are currently working on a list of specific business that requires a higher quorum, and it will be made available as soon as possible. Regarding the quorum for meetings of the trustees of the corporation, the requirement is a majority.

Regarding annual meetings, the corporation must meet annually to elect trustees. The trustees must meet annually and may meet for called meetings to address items of business that arise.

Some churches are choosing to work through the process and officially incorporate as officers begin terms of service. This is particularly true for sessions that need to evaluate the tasks and roles of current trustees. Churches should have only a single set of Trustees, those of the corporation. Some tasks and roles of current trustees may be assigned by the session to a committee or subcommittee of session. Churches that currently do not have separate trustees do not need to consider this as part of their process.

PREVIOUSLY (October 2021) 

As I have shared before, the Presbytery recently learned that the incorporation of churches is legal in West Virginia. Per the Book of Order (G-4.0101), where permitted by state law, each congregation shall incorporate. Therefore, all churches in the Presbytery should begin the process of incorporation as soon as possible to comply with the Book of Order. To assist with this process, all pastoral leaders and Clerks of Session received a packet of information in late May. The packet included a template for Articles of Incorporation, a template for Bylaws, and a template for Board of Trustees Consent, and instructions for completing these documents. If your church’s session is beginning the conversation about incorporation, please read the newsletter articles in the June, July, August, and September newsletters (listed below in reverse order) before you move forward.

Presbytery leaders and staff continue to learn more about this process; thank you for your questions and concerns. We are not lawyers, so we are unable to provide legal advice. The Presbytery can forward general questions whose answers will assist most churches for legal opinion. Specific situational advice requires a particular session or congregation to engage legal counsel. While the Presbytery does not recommend specific lawyers, the Stated Clerk can offer a list of Presbyterian lawyers that may be helpful to your session or congregation. If a church engages legal counsel, they are strongly advised to seek someone with expertise in corporate law and an understanding of Presbyterian polity.

Due to our recent experiences with the pandemic and the need for electronic meetings, I have received several inquiries regarding electronic meetings of the corporation. Here is the clarification offered by the Presbytery’s legal counsel.

As far as West Virginia law, both meetings of the members and meetings of the board of trustees are permitted to be held by phone or electronically. The language from the West Virginia statutes is provided below:

For meetings of the board of trustees, trustees are permitted to participate in meetings through any means by which the trustees may “simultaneously hear each other during the meeting.” [The simultaneous aural communication of Robert’s Rules of Order, Newly Revised.] This includes phone and electronic meetings.

For meetings of the members, any member is permitted to participate “by means of remote communication,” but the board of trustees must authorize the use of remote communications at member meetings. The corporation is also required to implement measures to verify that each person participating remotely is a member and to provide such members a reasonable opportunity to participate and vote at the meeting.

The board of trustees can adopt a resolution at their meeting permitting remote communications at all member meetings… For the measures required for remote member meetings, a roll call and allowing members to speak at the remote meeting is sufficient. Because remote participation in meetings is permitted by the statutes, there is no need to add language to the Bylaws permitting remote participation.

In September, questions regarding quorum were discussed. Below is the list of actions that require a higher quorum.

As we discussed earlier, for most corporate actions by the members, the corporation is free to set the quorum requirements as low as it wants, including 10% of the members. For the board of trustees, a quorum cannot be less than 1/3 of the trustees. The corporation can set its quorum requirements for both members and trustees in the Bylaws.

For significant corporate actions, West Virginia law sets minimum quorum requirements that cannot be lowered by a corporation’s Bylaws. The corporate actions for which mandatory quorums apply are listed below, along with the required quorums.

    • Dissolution/revocation of dissolution: majority of the members.
    • Any sale, lease, exchange, or other disposition that transfers more than 75% of the assets required for the corporation to carry on its religious activities (i.e. the transaction will leave the corporation with less than 25% of the assets it needs to carry out its religious activities): majority of the members. Note that the Book of Order requires the approval of all members for transactions involving the purchase, sale, or mortgage of real property. (G-4.0101).
    • Approval of a merger with another corporation: 2/3 of the members.
    • Amending the Articles of Incorporation: 2/3 of the members.