Separation of Church and State Law

Home » Articles by Pastors and Other Believers » Pastor Jason Cooley » THE INFLUENCE OF TAX EXEMPT STATUS ON THE LOCAL CHURCH’S FINANCIAL STRUCTURE


Pastor Jason Cooley
Copyright © July 8, 2011
Left click the following links to go directly to the websites held
in trust by Jason Cooley, Pastor/Trustee of Old Paths Baptist church:
Pastor Cooley preaches the whole counsel of God, but the following will link
you to four great sermons he has preached relevant to church and state issues:
“Do We Believe in the All-sufficiency of Scripture?”
“Whose House Is It Anyway”
“Are You Heavenly Minded or Earthly”
“The Method Matters to God”
These sermons are also on the “Sermons” page at the top of this website

Many believers say that incorporating with the government has had no effect on their churches. They would even dismiss the notion of any impact incorporating has on their local church. IFB churches will state that incorporation is no big deal and does not change anything. They do not recognize the effects of incorporation on the internal workings of the church. This article will deal with some implications of incorporating a local New Testament church and seeking tax exempt status and how it has changed or altered the simplicity of the local churches financial dealings.

Incorporated churches will look to outside sources to produce revenue for their corporation (church). Yes, they treat the local church more like a business than a spiritual body or called out assembly of Jesus Christ. Many incorporated churches will look for fundraisers and other revenue generating schemes to fund their corporation. They use their government granted tax exempt status for a public fundraiser. They go to the world and in essence beg the world for money to fund God’s church. Imagine how this must grieve the Lord to see members of his body or bride go to the world for the financial needs of the church instead of going to God in Heaven to meet all their needs

This is a clear promise from God’s Word that he will supply all of our needs:  “But my God shall supply all your need according to his riches in glory by Christ Jesus” (Philippians 4:19). Picture this if you were married and your wife was standing on the street corner asking others for money to care for her because her husband could not provide for her. You would come to your wife and say “Why have you done this ? Have I not always cared for you and met your needs? You have never been without . Why would you shame me so?” I believe the Lord is saying the same thing from Heaven, knowing the answer because he is God but posing the question to us so that we search our hearts to see that we have strayed from simple bible faith in trusting God to meet the needs of HIS CHURCH.

Here is an example of a corporate church fund raising scheme: “Eat at the Wendy’s (by Menards) next Wednesday, July 13, from 5:30 PM (before church service) to 9:30 PM (right after the service). They will donate 15% of their sales during those hours to our Bus Ministry, so please patronize them at this time especially! Please remember to tell the cashiers (inside or at the drive-thru window) that you are from _______Baptist Church (the church that runs the SS Buses), and give them one of our tracts. Please also complete the phone survey on the back of the receipt. (And then get a $2 discount coupon on your next visit by entering a code on the receipt.)”

This church by the way is a soul winning church, where no doubt the pastor preaches the Word of God and his people have a zeal for the Lord and are not aware of their entanglement with the world’s model of fundraising. They are blinded to the effects of the 501c3 or tax exempt status. They are partnering with a worldly organization to fund  God’s holy church. It is in essence a partnership with the world. We are warned in scripture not to be a friend to the world system:

James 4:4: “Ye adulterers and adulteresses, know ye not that the friendship of the world is enmity with God? whosoever therefore will be a friend of the world is the enemy of God.”
James 4:5: “Do ye think that the scripture saith in vain, The spirit that dwelleth in us lusteth to envy?”

Scripture clearly shows that we are lusting when we are friendly to this world system. Many corporate churches are building empires and not simple Bible preaching churches. So, in other words, many churches are going to the world to meet their financial obligations. The problem is that churches have built kingdoms and are weighed down with such debt like a corporation that they have to generate revenue to compensate for that. The problem really lies in leaving the simplicity that is in Christ Jesus and his plan of giving for the local church. God’s Plan to provide for the local church is as follows:

1 Corinthians 16:2: “Upon the first [day] of the week let every one of you lay by him in store, as [God] hath prospered him, that there be no gatherings when I come.” Many churches will adhere to tithing and or giving whatever the Lord lays on their hearts which would mean give it all if God wants it. 2 Corinthians 9:7: Every man according as he purposeth in his heart, [so let him give]; not grudgingly, or of necessity: for God loveth a cheerful giver.” Members are instructed by God to give because of love not because they forced too upon some kind of guilt trip. I put it simply to my people if you Love God you will give to his work and you will give what GOD tells you to give. This is direct obedience to God. This is Gods pattern for the local church and the 501c3 corporate model and tax exempt model has changed all that in many churches today. We look to the world’s model instead of God’s model.


The second great effect the corporate model has had on many churches is the lust for buildings and property. As we have seen, many corporate churches today have used their tax exempt partnership with the federal government to hold fundraisers. We see many churches today that have left the simple process of a meeting house and went to a huge almost cathedral like monstrosity of a building. The churches are strapped with debt and the pastor has a constant concern of how he will keep the corporation afloat. The Lord’s church should not be bogged down with debt.

As a sidenote, there are many churches out there today that have millions of dollars in property. That would not be possible if was not for their state property tax exempt status. The taxes alone on the properties that are worth millions of dollars would be enough to cripple the tax exempt church if the government every would withdraw their tax exempt status. State property tax exemption is not related to the federal 501c3 status, but, as does 501c3 status, the property tax exemption goes to motivation for acting contrary to God’s principles as laid down in his word.

State churches are therefore beholden to the civil government. To prove that, one needs only look at the paper work for tax exempt status. The devil is in the details and when you look at the paperwork you will see that there are rules for the state church to follow or risk the heavy hand of the IRS to come in and take away their exempt status. To tax or to exempt from taxation is to show that sovereignty and authority over the taxed entity. For instance, the states are not allowed or do not have the authority to tax the  land used for the federal government even though it lies in their territory. Now the federal government does not have to file paperwork with the state because the state recognizes that they are not taxable.But when churches sign up for the tax exempt status they are agreeing with the state that they have the right to tax them but the state has granted them tax exempt status.  One need only look at history and see that Kings like Solomon and others would tax those territories that they took over and the people accepted the tax because they recognized his sovereignty over them. All of this information below can be found at this link:

What is traded in for this tax exempt status? What do churches have to do? Here is the first rule that sticks out: They must not devote a substantial part of their  activities to attempting to influence legislation. This legislative rule was added after Lyndon B Johnson-when in Congress in 1954-pulled a fast one while most of Congress were leaving for break he introduced this legislation to quiet the preacher. Well this would blow the famous Baptist preacher John Leland from the famed Leland–Madison battle for the first amendment, right out of the water. Baptists in American history have always been involved in influencing legislation. SO this is used as hush money to keep preachers in line.

Another red flag to have state granted tax exempt status removed is this: The organization’s purposes and activities may not be illegal or violate fundamental public policy. A local church will preach against public policy and will reprove the wicked candidates that are running for public office and will preach against wicked public policy if they are obedient to God.

Another possible revocation of tax exempt status is required should a 501c3 organization not give equal time to opposing candidates. So if a state church had a Ron Paul speak, that church would have to give equal time to a Barrack Obama or face losing her 501c3 status.

Regardless of whether you would put any politician on your pulpit which I would not, why is a local church following government rules when Baptists historically believed in the All sufficiency of scripture as their rule of faith and practice? The answer is because they have accepted a granted tax exempt status and it has impacted their financial dealings and silenced their pulpits.

The reason they have allowed this is so they can receive donations from wealthy people who wish to have tax write offs. So they give them cars and money and other items of value to write them off. It is an unholy alliance with the state. But when you talk to the average fundamental Baptist pastor they have no intention of dropping the corporate tax exempt model because it has allowed them to build and empire. Then that same pastor will tell his rich men of the church not to tell him how to run the church because they know how to run their businesses but this is the HOUSE OF GOD. When in actuality the pastor is the president of the corporation and he is really being hypocritical in saying that. Those wealthy men understand how to run a business and make wise business decisions.

The local new testament church is a spiritual entity and is not to be ran like a business entity. But many Big name preachers will not give up their ability of write off and possibly lose big givers to the religious organization. Instead, they choose to organize or remain organized in a way that dishonors God as the sovereign head of the church. By the way, there is a Biblical and legal way for a church to utilize property for the benefit of the Lord Jesus Christ with the pastor as the man entrusted to oversee the local church which remains a spiritual, as opposed to a legal, entity.

In  following the tax exempt corporate model, Pastors of corporate 501c3 churches have changed the motives for giving. Now many people give for the write off they will receive not in obedience and love for the Lord as found in  2 Corinthians 9:7: “Every man according as he purposeth in his heart, [so let him give]; not grudgingly, or of necessity: for God loveth a cheerful giver.” But remember the motives of our heart will be judged at the Judgment Seat of Christ. 1 Corinthians 4:5: “Therefore judge nothing before the time, until the Lord come, who both will bring to light the hidden things of darkness, and will make manifest the counsels of the hearts: and then shall every man have praise of God.” These pastors will answer to God for their clear disobedience to his Word and allowing the government authority in the local church. Let Jesus Christ be sovereign in his church and let churches in America get back to the simple model of giving.

For more information on organizing a church in a way that honors God contact Born Again believer and licensed attorney Brother Jerald Finney.


  1. Bob says:

    You stereotype every 501c3 church as doing all of these things when you don’t even know who does and who don’t. It is apparent that you are against having a 501c3, but I would submit to you Romans 14:4. I can stand before God with a good conscience over this issue and I nor our church is guilty of anything you accuse. Now I know that probably bugs you, but I am thankful the God is my judge and not you sir. Tell you what, you keep condemning churches like ours and I will keep trying to win the lost to Christ and glorifying Him.

    May you grow in the grace and knowledge of our Lord Jesus Christ

    • Dear Sir,

      You cannot bug me because I love God first and my neighbor (which includes you). Your letter gives me a chance to challenge you to look at the Word of God, history, and law and support what you say from those sources, not from your “conscience.” If your conscience does not condemn you for prostituting God’s bride, then your conscience may have been seared, at least as to this matter. ” Now the Spirit speaketh expressly, that in the latter times some shall depart from the faith, giving heed to seducing spirits, and doctrines of devils; Speaking lies in hypocrisy; having their conscience seared with a hot iron” (1 Timothy 4:1-2).

      One should try to win souls to Christ without leaving other biblical duties undone (without dishonoring one’s love relationship with Christ). The church I am a member of emphasizes soul winning and support of missionaries. I spend approximately 2 1/2 to 3 hours a week devoted directly to one on one soul winning (door to door evangelism) as well as taking every other opportunity to present the Gospel of salvation to those with whom I come into contact. I pledge monthly support which results in the salvation of souls worldwide. The same can be said of my pastor (who is even more devoted to this cause than I) and other members of the church. By operating according to the principles of Satan in other matters, most “Bible-believing” churches are contributing to the loss of untold numbers of souls, since, by proceeding according to human reasoning rather than Bible principle, they lose the power of God to one degree or another. Honoring God’s principles is much more important than reasoning based upon what one does while discounting or ignoring what one does not do but should be doing.

      I do not condemn you-a true understanding of Word of God, history, and law condemn you. I have stereotyped no church. I have explained in detail the biblical principles violated by church incorporation and 501c3. Just operating under those satanic devices violates biblical principle, prostitutes the bride of Christ, and grieves our Lord. You do not address any of my biblical, historical, and/or legal teachings. “Study to shew thyself approved unto God, a workman that needeth not to be ashamed, rightly dividing the word of truth” (2 Timothy 2.15).

      God’s people in America are being destroyed for lack of knowledge (among other things such as love for our Lord) (See, e.g., 1 Peter 1 and Hosea 4). Baptists have no common Christian heritage with Protestants and Catholics. Catholicism, led by Constantine and justified by perverted biblical interpretations of Augustine, began in the fourth century to viciously torture and murder all those who refused to bow down to the unified church-state alliance. As many as 50,000,000 people deemed to be “heretics” were killed by that wicked alliance. The Protestant churches which came out of Catholocism adopted the Catholic union of church and state theology, and continued to persecute any who refused to submit to their wicked religion. For example, Martin Luther in Germany, although he at first espoused separation of church and state, succumbed to pressure, changed his theology, and began to persecute Jews and believers who would not bow down to the teachings of the official state church, the Lutheran church. The persecution of Baptists and other dissenters by Protestants continued in the American colonies. In fact, a great spiritual warfare between the dissenters, mainly Baptists, and the Protestants (mainly the Congregationalists in Massachusetts, Connecticut, and New Hampshire and the Anglicans in the southern colonies) resulted in implementation of soul liberty (religious freedom) in the First Amendment to the Constitution. Those who were by belief Baptist have always been persecuted by the arm of the civil magistrate at the behest of state churches when those churches were united with a civil government.

      Sadly, informed secularists know these facts. The common Christian heritage they love to refer to includes the murder of millions when “union of church and state” was practiced, wars (like the Crusades) initiated by the state church, etc. The false revised teachings being disseminated in the “Christian” community in America, in deciding to promote a false “common Christian heritage” in their arguments which allege that America is a “Christian” nation have unknowingly worked with Satan in bringing the downfall of America and the one world government and religion prophesied in Scripture.

      Since true believers have decided to revise history, or follow Christian revisionist history, they have become a laughing stock among secular scholars and, due to the trickle-down effect, to the uninformed secularist masses. We see the result of the “Christian” endeavors to bring America back to God, since those endeavors have not been according to knowledge. Individual, family, church, and state morality and depravity have regressed at an accelerating rate. America, American individuals and families (in general), and American churches (in general) are now moral cesspools.

      Should you wish to contribute intelligently to a resolution of your disagreements with me, please contact me. Read my writings and/or listen to my audio teachings and tell me where you believe I am wrong. I will calmly and sincerely consider what you have to say. I doubt that you can convince me that I am wrong, but if you can, I will publicly repent of any error.

      For His Glory,
      Jerald Finney

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