Should I Start A For-Profit Or Non-Profit Ministry?
Have you ever wondered why people are starting for-profit vs. non-profit ministries?
In this post, I will share the difference between a for-profit and a nonprofit ministry and what I believe is the right way vs. the popular way to set up the business side of your ministry.
Over the last couple of weeks, I have been reflecting and researching the difference between these two ministry models and what it means for a Christian who wants to start a ministry outside the four walls of the church.
For those of you who may be asking yourself, How should I register my ministry? Should I register it as a nonprofit or for-profit business structure? And is setting up my ministry as a for-profit business model better than a nonprofit? If that's you, here are three things you need to consider:
Who are you called to serve, and how are you called to serve them?
Is setting up a ministry as a nonprofit about taxes and governmental benefits, or do you want to offer a social aspect as your ministry model?
Is there a ministry model you are trying to imitate, and if so, why?
Depending on how you answer these questions. You will be able to get a clear idea of WHY you want to set up as a nonprofit vs. for-profit ministry.
What is a nonprofit?
A nonprofit is a tax exemption status that governments give people who want to set up a charitable organisation. Some nonprofits' primary source, is their income from donations and grants. They can also use membership fees and sponsorship’s to fund their programs online or in person. But they solely rely on donations or fundraising events to generate income.
Are there limitations on how you can build your ministry as a nonprofit? Yes, the nonprofit status has limits on how you can earn and declare the way you use the money you make from your ministry. Whereas a for-profit ministry model doesn’t limit you and can offer the same benefits as a nonprofit (this can be a social enterprise ministry).
Many people set up ministries to offer a charitable program or social benefits to a community of people, they feel called to serve in person.
What is a for-profit?
A for-profit is a business. Its primary goal is to make an income from the products or services you sell online or in person (it can also be used if someone wants to go self-employed). If you live in the UK, there is more than one legal structure you can choose from. And depending on how you’re called to serve the people in your ministry, a for-profit ministry model can have a charitable aspect on the side (a social enterprise) or connect with a nonprofit organisation you believe would benefit from your charitable contribution.
If you are considering this type of legal structure, note that yours will look different from someone else’s if you’re both setting up a ministry online.
Structuring Your Ministry As A Business
The main for-profit legal structures you can choose from include:
Sole Trader
Sole trader is easy to set up. All you have to do is decide where and how the profits of your ministry/business are distributed, there are no costs to setting it up in the UK, and you are personally responsible for any losses your ministry/business makes and you are solely responsible for managing the business.
Limited Company
It is responsible for its own finances, you are not liable for any debt incurred, you can make it private or public, the process of setting up is complicated, there are costs associated with setting it up; and any decisions you make must be made as a group rather than just you if you have shareholders.
Business Partnership
It is created by two or more people, you need to create a contract, you share the responsibility, the workload and the profit, you have to make decisions together; and there is no protection from liability if the business incurs debt.
Social Enterprise
This is a business model that invests its profits into a social issue—this can be a social impact with the Christian community or the world around you (locally or globally, in person or online). It is especially for people who want to establish a for-profit ministry with a social cause or for people who want to offer a product or service to a group of people for free.
The legal structure in the UK is a CIC (Community Interest Company). This is a type of limited company that exists to benefit a community of people locally or globally as a social missionary project, not as a charity or a nonprofit.
If this is a ministry model you want to use, consider these three things:
What type of impact do you want to make (locally or globally)?
What problem or social issue do you want to contribute towards (a need your ministry can meet or challenges you can help within a faith-based or non-faith-based community)?
Who do you want to offer this program, product, or service to, how, and where (online or in person)? You can do this to assess what you can offer as an online ministry to a group of people within your sphere of influence/community or look for people or nonprofit organisations you would like to partner with or collaborate with to fulfil this mission that aligns with your ministry and is a good fit for the social impact you want your ministry to have.
Whether it is just you or you have a team or a partner, choosing the right ministry model is key. This comes from knowing what legal requirements and responsibilities you and your ministry will meet.
Having a for-profit ministry does not mean that you are not glorifying God.
How do I choose the right model for me and my ministry?
Choosing whether to set up a nonprofit over a for-profit ministry comes with its pros and cons. For example, setting up the business side of your ministry as a nonprofit can be beneficial if you are seeking governmental support, but if you are doing it because of somebody else’s recommendation vs seeking the guidance of the holy spirit, you will lead yourself and the ministry down the wrong path.
With that said, before you make any decision like this, you need to do these three things:
Asked God in Prayer. (Remember, His voice matters the most.)
Do Your Research. (See for yourself from trusted sources what each ministry model will require and how it will fit your needs.)
Seek Godly Counsel. (They can guide your decision with God's help.)
When you have done those three things, ask yourself: if using a for-profit ministry model vs a nonprofit ministry model determines the way my ministry is meant to function, what ministry model would I choose? If you can answer that question, then you have the answer you need to take action.
To conclude, a ministry is not determined by whether it is a nonprofit or for-profit, but by how it supports and serves the people you’re called to.
