Georgia Non-Profit and Religious Organizations

2012 Charitable Mileage Rates


Charles R. Bridgers : January 29, 2012 10:57 am

Beginning on Jan. 1, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 55.5 cents per mile for business miles driven
  • 23 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations

The Official Publication is here:

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Delegation of Directors’ Authority in a Religious Context


Charles R. Bridgers : January 23, 2012 9:49 am

In Harris v. The Southern Christian Leadership Conference, Inc., (“SCLC”)(A11A1149)(11/22/11), the Georgia Court of Appeals held that a corporation’s bylaws “may authorize a person or persons to exercise some or all of the powers which would otherwise be exercised by a board.” O.C.G.A. Sect. 14-3-801(d).

In my experience, this is a major difference in the governance structure between a non-religious based non-profit and a religious community’s non-profit. Both types of non-profits commonly delegate some authority to either an executive committee or to a member of a paid (or unpaid) staff. Non-religious based non-profits typically reserve final approval and ratification to their Board of Directors (“BOD”). Religious based non-profits often delegate final authority on governance matters to the leader of their community such as a pastor, the head monk, etc. This delegation is normally the result of religious or cultural traditions. Neither approach is legally wrong.

However, if your community intends to delegate authority from the BOD to a specific person or group, it should formalize what authority is delegated and any limitations the BOD intends to place on that authority. Delegation should be considered carefully. Delegation of certain day-to-day matters can be efficient and liberating. However, communities often delegate broad authority without thinking through the issues.  When conflicts or problems arise, they discover that the governing documents are unclear or, worse, inconsistent with the community’s practices or intentions.

A theme in my representation of both business and non-profits is that these governance issues must be addressed prior to trouble or conflict. When a problem occurs, change in organization’s governing documents is practically impossible because any change is perceived to benefit one side or the other. Many conflicts arise because people, in good faith, have legitimately different understandings of their role in an organization. From a proactive perspective, if your governing documents are clear and well thought out, you may avoid the conflict in the first place.

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Tax Treatment of Free Housing for Employees who Live on the Premises


Charles R. Bridgers : January 22, 2012 10:55 am

The tax code allows employers to exclude the value of lodging furnished to an employee from the employee’s wages if it meets the following three tests: (1) it is furnished on the employer’s premises; (2) it is furnished for the convenience of the employer; and (3) the employee must accept it as a condition of employment.

A caretaker or live-in facilities coordinator may qualify. These tests are strict and it would be difficult to qualify if the staff person split their time in another residence.

IRS Publication 517 may be helpful to you. As with most tax matters, you should consult an accountant familiar with issues facing the clergy an religious organizations.

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The Board of Directors in a Religious Context


Charles R. Bridgers : January 18, 2012 9:48 am

In a recent case, Harris v. The Southern Christian Leadership Conference, Inc., (“SCLC”)(A11A1149)(11/22/11), discussed recently, the Georgia Court of Appeals summarized the role of the Board of Directors (BOD) in both for-profit and non-profit governance: “[A]ll corporate powers are to be exercised by or under the authority of, and the business and affairs of the corporation managed under the direction of, its board.” The role of a non-profit Board of Directors is sometimes confusing in a religious community. The names can vary: the Directors, the elders, the Board of Deacons, the Church Council, the Parish Council, etc. The name used is not important; the role they fill is. If your religious community is organized as a non-profit corporation (not all are), the highest governing body of your community is, legally, the corporate Board of Directors. Practically, this subjects members of these governing bodies to certain aspects of the Georgia non-profit corporation code. This governing body also legally binds the religious community in banking or real estate matters. Your governing documents should document this relationship to smooth real estate closings, sales and other financial issues. For example, your Constitution could say that “The [fill in the blank for your governing authority] shall be the Board of Directors of the [Fill in the name of your corporate entity].

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Who is a “Minister” for Purposes of a Clergy Housing Allowance?


Charles R. Bridgers : January 17, 2012 10:54 am

As discussed earlier, a “Minister’s” housing allowance can be a big financial benefit. The next logical question: Who is a “Minister.” Would an intern, a musician, or a part-time youth leader qualify?

The IRS defines ministers as "individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination [and] given the authority to conduct religious worship, perform sacerdotal functions, and administer ordinances or sacraments according to the prescribed tenets and practices of that church or denomination."

In most traditions, non-clergy persons assist and even perform subsets of the duties performed by clergy. You should ask yourself, however, if that person could perform a marriage, could serve communion in a hospital, would officiate at a funeral, or preside over the most important rites in your own community. The IRS test normally excludes all but the traditional clergy within a tradition.

IRS Publication 517 (Review the Ministerial Services Section) may be helpful to you. As with most tax matters, you should consult an accountant familiar with issues facing the clergy.

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Clergy Housing Allowance Must Be Renewed Each Year


Charles R. Bridgers : January 15, 2012 9:54 am

“Ministers” have an (almost) unique tax benefit: The Housing Allowance

From the IRS:

A minister who is furnished a parsonage may exclude from income the fair rental value of the parsonage, including utilities. However, the amount excluded cannot be more than the reasonable pay for the minister’s services.

If you own your home, you may still claim deductions for mortgage interest and real property taxes. If your housing allowance exceeds the lesser of your reasonable salary, the fair rental value of the home, or your actual expenses, you must include the amount of the excess as other income.

A minister who receives a housing allowance may exclude the allowance from gross income to the extent it is used to pay expenses in providing a home. Generally, those expenses include rent, mortgage interest, utilities, repairs, and other expenses directly relating to providing a home. The amount excluded cannot be more than the reasonable pay for the minister’s services.

This benefit is well known but  less well known is the formal requirement that the housing allowance must be updated and approved each year by the “governing body” of the organization. 

Housing Allowance can be excluded only if it is officially designated through minutes, resolutions or other formality before the payment is made: i.e., by December 31, 2011 for 2012 compensation.

One form of this might be:

In order to permit          [Name of Minister]          to benefit from the provisions of Section 107 of the Internal Revenue Code of 1954, the [governing body] specifies that the total compensation paid to her/him during the fiscal year ended       (Subsequent Year)        includes a housing allowance. [Name of Minister]  estimates that she/he will spend $               during the year for housing expenses.  Since such approval by the [governing body]  would permit her/him to deduct dollars actually spent up to the  maximum allowed by this action, provided the expenditure is within fair rental value, it is resolved that  That the total compensation of $   (Amount)    paid to     [Name of Minister]      include a housing allowance of $                 .

A copy should be retained and given to the clergy person for his or her own records. IRS Publication 517 may be helpful to you. As with most tax matters, you should consult an accountant familiar with issues facing the clergy.

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Individual Liability of Directors


Charles R. Bridgers : January 15, 2012 9:46 am

Continuing the discussion of Harris v. The Southern Christian Leadership Conference, Inc., (“SCLC”)(A11A1149)(11/22/11), several of the directors were found to have breached their fiduciary duty by using corporate assets to fund a lawsuit not properly approved by the BOD. Three individuals were found jointly and severally liable for $12,240 of the organization’s funds they gave to an attorney to fund a lawsuit. In Georgia law, members of a non-profit BOD have many different legal protections. Rarely are they held liable individually. The trial court here may have been moved by the fact that these individuals were pursuing their own agenda to take control of the SCLC using the organization’s own money. Attorneys and other professionals can be hired using an organization’s fund to protect itself. It is important though, that this action be taken with all required formalities, approved by the appropriate group within the non-profit (normally the BOD) and documented in meeting minutes to protect all concerned.

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Governing Documents are Key in Times of Conflict


Charles R. Bridgers : January 10, 2012 9:46 am

The Georgia Court of Appeals recently reiterated that a non-profit corporation must follow its governing documents.

In Harris v. The Southern Christian Leadership Conference, Inc., (“SCLC”)(A11A1149)(11/22/11), the Court affirmed a permanent injunction entered against six current or former members of the Board of Directors (BOD) of the SCLC who were holding themselves out as members of the SLCS’s BOD. 

After a split within the BOD relating to charges of sexual harassment and financial impropriety against two officers, two factions of the BOD met at different times.

The accused officers and their faction held their own meetings of the purported “BOD’s”. The trial court found that these meetings of the BOD held by the accused officers were “void” because a quorum was not present and proper notice was not given. The Court also rejected the attempt of this faction to reconstitute a BOD because they lacked this authority. This faction organized a spring meeting of the BOD out of state in Eutaw, Alabama. The trial court found that all actions taken at Eutaw were also void because that meeting was not properly authorized. The faction opposing the accused officers (the Plaintiffs in this case), also failed to maintain a quorum or provide proper notice for several of their purported meetings of the BOD’s.  Actions taken at these flawed meetings were also declared to be void.

Eventually the trial court found that the at least some of the Plaintiff’s BOD meetings were “in conformity with the SCLS’s constitution and bylaws” and supported actions taken at those meetings to remove the accused officer. 

There are two lessons here. First, organizations in conflict, especially when that conflict may end up in court, must follow their own governing documents.  Actions taken may be rejected unless the “technicalities” of quorum and notice are followed. Second, take the time to review your organization’s bylaws and constitution. The time to streamline them or to change them to be in conformance with your organization’s practices is before a conflict begins.

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New Blog for 2012


Charles R. Bridgers : January 2, 2012 10:45 am

Non-profits, Exempt Organizations and Religious Communities require at least the same sophisticated, business-oriented legal services as any for-profit entity.  In many ways, non-profits and other exempt organizations demand a higher level of diligence and care because of the money and time entrusted to them by their members. I plan to make notes of various developments affecting Georgia non-profit law in 2012. I believe it will be useful for you.

Charles Bridgers

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