Picture a local business owner who wants to help. He has tools to give, or cash, and he believes in getting working families back on the road. But he gets uneasy when he hears the donation would go to a church. He’s not hostile. He just doesn’t give to churches.
That scenario is a big part of why The Garage at Living Faith became a separate nonprofit. When church leaders ask me about setting up a church ministry 501c3, they usually expect a conversation about taxes. For us, it was never mainly about taxes. It was about partnership.
A quick word before going further: I’m a pastor, not a lawyer or an accountant. Nothing here is legal or tax advice. What I can tell you is why we did it, what changed, and what didn’t.
The problem we were trying to solve
The Garage started as a ministry of Living Faith Church, a small rural congregation in Fombell, Pennsylvania. Over time it grew well past what the church could carry. At its peak, ten times more people were coming through the garage than sat in our Sunday service.
A small church can’t fund, staff, or administer a ministry that size by itself. We needed other people to own the mission with us. So we expanded ownership through partnership, and the 501©(3) was the vehicle.
A partnership strategy
In Turn the Key I put it this way: “This was not primarily a tax strategy. It was a partnership strategy.”
The nonprofit structure let us work with businesses, foundations, government entities, and other nonprofits that shared our practical mission, helping at-risk people with transportation, but didn’t share our faith foundation. A company willing to donate tools to a charitable car repair ministry might not be willing to donate to a church. The structure opened doors that would otherwise have stayed closed.
It let us say to potential partners: here’s what we do, here’s the practical good it produces, here’s how you can be part of it. Some partners came because they believed in the mission and in Jesus. Others came because they believed in the mission. We were grateful for both.
That broader ownership is a big reason our funding is diversified today. Only 5 to 10 percent of our operating budget comes from the church. The rest comes from customer contributions, individual donors, in-kind business partnerships, and community fundraising.
What it did not change
This is the part I most want church leaders to hear. Setting up a nonprofit does not separate the ministry from the church.
The faith foundation stayed the same. The Gospel was still the point. What changed was the legal structure that allowed broader partnership. The church is still the core; the nonprofit is the vehicle for community engagement.
We protect that on purpose. When a partnership or opportunity would require us to compromise the Gospel side of our work, we decline it, even when it would help us financially. A nonprofit makes it easier to take in resources. It doesn’t make it acceptable to trade away why you exist.
It also marked a leadership handoff
There was a quieter reason founding the nonprofit mattered. It became the formal turning point in our leadership.
Michael founded The Garage. I came alongside later as the organizer, bringing systems, funding structures, and partnerships. When we established the 501©(3), I became the de facto director, and Michael and Doug became part of the steering committee. By then our relationship had long been defined by mutual respect and clear lanes, but the paperwork made official what was already true.
If your ministry is moving from founder energy toward organizational stability, the nonprofit conversation can be a natural moment to name roles clearly.
Is it time for yours?
The book is plain that this isn’t always necessary, and it isn’t a first-year decision. Start small, do the work, and build a track record first.
It becomes worth the administrative overhead when two things are true:
- You have donors who want a tax receipt that isn’t a church donation.
- You want to partner with organizations that can’t fund churches directly.
If neither is true yet, you probably don’t need it yet.
If both are true, the book’s practical counsel is to consult a nonprofit attorney before filing. The paperwork itself isn’t complicated, but the governance requirements are real. You’ll need a board, bylaws, annual filings, and basic financial controls. Build those from the beginning, because they’re much harder to retrofit later.
Questions for your leadership team
Before you call an attorney, talk through these together:
- Who is already interested in helping us but hesitant because we’re a church?
- What partnerships would we pursue if that barrier weren’t there?
- What in our mission is non-negotiable, and how will we protect it once outside partners are involved?
- Who will serve on the board, and do they share the founding vision?
- Do we have the track record yet, or are we trying to structure our way to growth?
That last question matters most. A 501©(3) doesn’t create momentum. It gives momentum you already have a wider set of doors.
The chapters on expansion and funding in Turn the Key tell more of how our partnerships formed, including our work with Grove City College and its Center for Rural Ministry. The leader guide includes the book’s discussion question for this stage: what would the 501©(3) question look like for your ministry, and is it time to ask it?