The Boring Month That Saves Your Church: Governance Before You Grow

Let me tell you about two churches that looked almost identical on a Sunday morning. Great preaching. Genuine community. People who loved Jesus and loved each other. Both of them hit their first real conflict at around 80 people. One of them folded within a year. The other is now over 200 and planting churches of its own.

Same passion. Same size. Opposite outcomes. The only real difference? One of them did the boring stuff first.

I know why you skipped this. You got into ministry to preach and shepherd people, not to file paperwork with the Secretary of State. Nobody feels called to bylaws. But here is the hard truth: the churches that skip their legal and structural foundation almost always pay for it later, whether in financial chaos, legal exposure, or a governance fight that splits the body. Think of governance as building walls around the ministry. Not glamorous, but deeply protective.

The tale of two churches

Church A launched with everything you would want except a foundation. It never incorporated. It ran offerings through the pastor's personal account. No bylaws, no board. When a founding family left offended at 80 people, they took a third of the congregation, claimed the church "owed" them for donated equipment, and with no structure and no documentation, the conflict became a lawsuit. The church was gone within a year.

Church B spent its first month on the unglamorous work. It incorporated, filed for 501(c)(3), drafted simple bylaws, opened a real church bank account, and set basic financial controls. When it hit conflict at the same size, the bylaws provided a clear process, the corporate structure shielded leaders from personal liability, and the records showed integrity. It kept growing.

In an increasingly litigious world, a church trying to break 100 cannot afford to be Church A.

Five moves to make before or at launch

These are the cheapest insurance you will ever buy on your way to 25.

Incorporate as a nonprofit or religious corporation in your state. This makes the church a legal entity separate from you personally, so liability generally stays with the organization and not your house, car, or savings. Filing fees run roughly $25 to $300 and take one to four weeks. Many states offer fill-in templates.

Get an EIN. It is free, online, and takes about fifteen minutes. You need it to open a bank account.

Open a dedicated church bank account in the church's legal name. Never run church money through a personal account. Commingling can "pierce the corporate veil" and erase the liability protection you just set up.

Get general liability insurance in place at minimum. For a small church, premiums run about $1,000 to $3,000 a year, with typical limits of $1M per occurrence and $2M aggregate. Insurers like Brotherhood Mutual, Church Mutual, and GuideOne specialize in churches.

Adopt simple bylaws. Start from a vetted template, customize it, and have your initial board adopt it. Good bylaws prevent both extremes: a faction grabbing power you never gave them, and a pastor with unchecked authority making unaccountable decisions.

Get the letter, even though you do not have to

Here is a nuance many pastors miss. Under IRS rules, churches are automatically tax exempt without applying. So why bother filing? Because a determination letter removes all ambiguity, reassures major donors and banks, and unlocks many grants.

Most church plants qualify for the simpler Form 1023-EZ (gross receipts of $50,000 or less and assets of $250,000 or less). That filing costs $275 and comes back in about two to four weeks. The full 1023 costs $600 and can take three to six months or more.

And if you plan to use the Google Ad Grant to reach your community, pay attention: tax exempt status alone is not enough. You need your own IRS determination letter, or documented coverage under your denomination's group exemption, validated through Goodstack. That determination letter is your key to a lot of doors.

Financial controls are governance, not bookkeeping

This is not about your budget. It is about the control structure that protects the church from both theft and false accusation. In your first six months, set up:

Dual signatures on checks over a set threshold

Board approval for large expenses

Two-person offering counting by two unrelated people, with a signed count sheet and deposit within one or two days

Monthly statement review by someone other than the bookkeeper

These simple habits are what let Church B show integrity when it was accused. Records matter.

Governance gets smaller as you grow

Here is a principle worth memorizing: the larger an organization becomes, the smaller its governance needs to become. A 45-person church can invite everyone into a voters' meeting and get the whole system in the room. An 800-plus church cannot, so it elects a single board of 5 to 12 trustees.

For you under 100, that means start with a small board of 3 to 5 people. Keep congregational votes limited to the truly major decisions: calling or removing the senior pastor, property purchases, the annual budget, and bylaw amendments. Then build in a clear path to add elders and leaders as you scale. Choose your governance model (elder-led, congregational, deacon-led, or episcopal) and codify it in your bylaws.

As you add risk, add coverage: property and contents, directors and officers insurance, workers' comp once you pay anyone, and abuse liability, which insurers typically grant only when child protection policies are already in place.

One honest caveat: this is general guidance, not legal advice. Verify the specifics with a local attorney, your state Secretary of State, and your insurer.

What to do next

Do not try to fix everything this month. Work the sequence: incorporate, EIN, bank account, insurance, bylaws, then 501(c)(3). If you are pushing toward 50, filing for that determination letter is the move that unlocks the Google Ad Grant and foundation gifts. Take the free assessment at /assessment to see which foundation stones are missing, and use the checklists at /tools to work them one at a time.

Your challenge this week

Check one thing: is every dollar of church money flowing through a bank account in the church's legal name, or is any of it touching a personal account? If it is not fully separated yet, open a dedicated church account this week (you will need your EIN first). It is the single fastest way to protect both your ministry and your family.