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 isn’t hostile about it, 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, and nothing here is legal or tax advice. I can tell you why we did it, and 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 anything 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 or 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 how we did it.
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 got us through doors that would have stayed shut otherwise.
It let us go to potential partners and tell them what we do and the practical good it produces and how they could 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 kinds.
That broader ownership is a big reason our funding is spread out the way it is 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
If church leaders hear one thing from me on this, I want it to be that setting up a nonprofit does not separate the ministry from the church.
The faith foundation stayed the same, and the Gospel was still the point. The legal structure changed so we could partner more broadly. 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, but it doesn’t give you permission to trade away the reason you exist.
It also marked a leadership handoff
There was another, less obvious reason founding the nonprofit mattered. It turned out to be 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. The paperwork just made official what was already true.
Is your ministry moving from founder energy toward organizational stability? Then 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 and 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. The governance requirements are real, though. 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) won’t create momentum for you, though it can give the 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?
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