The district office will provide Foursquare form AR-8c (Application for a Charter Church to Become a Covenant Church.) This form includes a request for copies of the documents listed below along with church council signatures attesting their agreement to transfer assets (real and personal) from the Charter church (ICFG subunit) to the Covenant church corporation. This transfer of assets does not include land or buildings which fall into the category of (legacy assets) which must remain on the balance sheet of ICFG. For more information about legacy assets, please consult the frequently asked questions document.
The district and central office will review the documents listed below (and itemized in section 2 of form AR-8c) as part of the application process:
Articles of incorporation
Articles of incorporation is a formal legal document filed with the state to document the creation of a corporation.
Note: If the leadership team of a church already composes the board of a separate nonprofit corporation used for a ministry purpose, and if the church wishes to use this corporation for the Covenant church, please contact your district office to discuss this option.
Bylaws
Nonprofit corporations have bylaws that govern the operations of the church. By signing the Covenant agreement, the Covenant church board voluntarily agrees to apply Foursquare bylaws in place of its own bylaws and to operate the church in accordance with all Foursquare policies and procedures. As a result, this nonprofit corporation will be recognized as a Foursquare church (as defined in the Foursquare bylaws) with respect to all ecclesiastical, polity and relational issues. For transactions concerning real property, Covenant churches are required to follow the process specifically outlined in the Foursquare bylaws, which identifies two unique provisions for Covenant churches. Specifically, ICFG board approval for property transactions is not required, and the title of property will be placed in the name of the Covenant church corporation and not that of ICFG.
Note: If the Covenant church plans to use an existing nonprofit corporation, the signed Covenant agreement will specify that Foursquare bylaws will, thereafter, supersede the local church corporation's existing bylaws.
Insurance policies
Every Foursquare (Charter or Covenant) church is required to maintain adequate insurance for church activities. This obligation is the joint responsibility of the pastor and members of the church board/council.
While the Foursquare Insurance Department is available to provide consulting to a Covenant church, that insurance program cannot legally be made available to Covenant churches once they form separate corporations and discontinue as subordinate units of ICFG. As a result, Covenant churches must obtain insurance from a separate carrier.
Copies of current insurance policies (including property, liability, worker's compensation, sexual misconduct and officer's/directors insurance) should be submitted with the application so the Foursquare Insurance Department can confirm that the new policies meet required minimum coverage limits. These minimum coverage limits can be found in the Insurance Service Policy Notebook on the Foursquare Insurance Department Webpage under the section titled, (Information for Securing Insurance with a Carrier other than through Foursquare Insurance Services.) If you need assistance or have questions, please contact the insurance department directly at (213) 989-4400.
Federal EIN
As part of the incorporation process, a new Covenant church will receive a federal tax identification number, also called an employer identification number (EIN). A copy of each of the EIN letter should be provided to the district office with the application packet.
List of Assets and Liabilities
A list of the depreciable assets held on the books of ICFG is available through the church property report in The Foursquare Hub. The church should also make a list of any outstanding contractual obligations (leases, loans, copier leases, vendor credit, credit cards, or other outstanding payables). A comprehensive list will help the district and central offices ensure these assets and liabilities are assigned to the new corporation before the Charter church tax identification number is discontinued. The district office will provide a document for the Covenant church board to sign in order to consummate this transfer.
Note: Transferring assets, liabilities, employees, etc. from one entity to another is a comprehensive process. Please see Step 10 for a detailed list of these responsibilities.
Certificate of good standing from state of incorporation
A certificate of good standing is a document that verifies the corporation is current with regard to statutory requirements and is authorized to do business in the state.
List of officers and directors
State laws require a corporation to have a board of directors and corporate officers. The church council will serve as the church board for purposes of maintaining the corporation, managing local church property and satisfying state requirements. As stated in the covenant agreement, the church board will be considered the church council for all other matters and will operate within the powers and responsibilities stated in the Foursquare bylaws. A complete application packet must include a list of the names and positions of the current corporate officers and board of directors for the Covenant church corporation.
Lease agreement for legacy assets
Legacy assets are assets, primarily real estate, with title held in the name of the ICFG corporation. If the Charter church has legacy property, the legacy property and if applicable, its mortgage, will continue to be held by ICFG. The district office will provide a leaseback agreement stating that ICFG is leasing back the property to the Covenant church. After the corporation is formed, this agreement should be signed by the church board. The leaseback agreement will be signed on behalf of the ICFG board simultaneous to signing the Covenant agreement. The signed copy will be returned to the Covenant church after board approval.
The Covenant church will continue to use, control, and be responsible for the property as it did when operating as a Charter church. This includes making mortgage payments (if any), maintaining the property and maintaining the appropriate property insurance.
Because ICFG still owns the legacy property, any property transactions involving the legacy property must follow the property transaction bylaws for Charter churches. The ultimate goal of the Reimagine process is to transfer title of legacy assets to Covenant churches; this plan is being formulated.
IRS 501(c)(3) determination letter if applicable
The corporate secretary's office will notify the IRS that the Covenant church is to be included under ICFG's 501(c)(3) group tax exemption; therefore, the Covenant church is not required to apply for a separate exemption. The corporate secretary's office will notify the church in writing of this submission and will provide a copy of the verification letter from the IRS indicating the corporation has been included under ICFG's group exemption. This letter should be kept on file as part of the Covenant church corporation's permanent records.
A Covenant church is at liberty to pursue a separate 501(c)(3) tax exemption, and will be included under ICFG's group exemption until the church obtains a separate determination. (IRS Form 1023, application to obtain 501(c)(3) tax-exempt status, is best completed by a trained professional to prevent unnecessary delays. A Covenant church can expect to receive a decision by the IRS approximately 2 to twelve months from the date of submission and payment of the application fee. For more information about obtaining IRS 501(c)(3) tax exempt status, please visit the IRS frequently asked questions web page. Legal assistance to obtain 501(c)(3) status is a service available from www.startchurch.com.
Note: If the church holds a separate corporation and IRS 501(c)(3) tax-exempt status, the corporation will keep its tax exempt status, and ICFG will not include the Covenant church in its group tax exemption. A copy of the IRS determination letter should be supplied to the district office as soon as it becomes available.