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How Do Churches Make Money In 2022? (Quick Answer!)

Jamey Muller
Updated: June 15, 2022
6 min read

Churches need funds to operate and require more than their members’ weekly contributions to accomplish their work.

Read on to find out how churches around the world make money.

Here’s How Churches Make Money:

Churches of all denominations mainly rely on their member’s tithes and donations for most of their revenue. They rely on contributions through offerings, gifts, and pledges, but these are not enough to cover all the expenses. They still need to look for additional sources of income. 

For most churches, the most common way to make money is through tithes and offerings of their congregations. 

Since ancient times, parishes have relied on tithes and offerings to raise funds and pursue their cause as religious organizations.

Tithing bestows 10% of your income to the church, as stated in the Bible. While tithes are voluntarily given, most members see them as a duty.

They view offerings as a means to get blessed and speedily receive answers to their prayers.

While tithes remain the central means of making money for churches, they are not enough to cover all the expenditures of operating one.

Parishes continue to look for ways to fill their coffers. 

One way is by renting out their property. Most churches can pay entire monthly mortgages due to leasing alone. 

They rent out their halls to members and non-members for shows and events. 

Most parishes have huge facilities that are not fully occupied. These can be converted to office spaces, cafes, or retail stores.

With rental easily providing around $8,000 per month, they have become a major source of income for many churches worldwide.

Another means of raising funds for parishes is live streaming. Due to the pandemic, most churches saw the need to go digital to reach out to their members and community.

Services are streamed live via the Internet, allowing worshippers to give offerings online the same way they would during the usual service.

Many parishes have set up online donations that mobile phone members can easily do.

They also invest in online donation software for religious organizations to facilitate offerings.

These can be utilized for collecting weekly tithes or one-time donations from generous patrons. 

These tools helped churches boost their regular contributions even if many members could not attend physical services due to the pandemic.

Churches also offer products and services to make money. 

There are a variety of products that a parish can sell. Starting a small bookstore is an excellent option, even for small congregations.

Revenues of religious publishers can easily reach millions, depending on the size of the churchgoers. Of course, the sales should exceed the operating costs to gain profits.

Other churches sell artworks. Setting up a store to sell coffee and baked goods is also common. The possibilities are endless, as long as the members are willing to pay for the product.

For services, most churches offer Sunday school and Bible studies, even counseling and childcare provisions. 

A church bulletin is another surefire way for churches to raise funds. Most parishes use their newsletters to encourage members to pay their tithes.

The bulletins may include links to online donation forms or a QR code with instructions on how to donate their offerings online.

Church bulletins can also be excellent fundraising tools. 

Finally, crowdfunding has been proven to be an effective way for churches to accumulate a huge inflow of money.

This method is usually utilized if funds are needed for construction, renovations, mission trips, and special events organized by the parish.

Donations of any size can have a huge impact once pooled together.

How Much Does a Church in an Average-Sized U.S. Town Make?

The average annual income of a church in the United States is around $200,000. Bigger congregations have larger revenues per year.

While the pandemic affected how much money churches make, statistics show that most remained stable. Most of the funds come from tithes and charities.

An average worshipper gives around $17 weekly. If a church has thousands of members, this can translate to millions of dollars per year.

As virtual churches become popular, money comes pouring in from online donations. In total, churches in the United States receive more than $2.2 billion annually.

Do Churches Receive Federal Funding in the U.S.?

No. The United States federal government does not have separate funding for faith-based organizations. Instead of federal subsidies, they can apply for grants like other similar non-governmental organizations.

Grant funding is an excellent source of money for churches. A parish must be registered as a non-profit organization with the Internal Revenue Service (IRS) to be eligible for grants.

Support programs that offer grants to parishes focus their funding on community-based schemes. These may be early reading programs, after-school programs for at-risk students, or any other targeted programs that involve the community.

While the United States government does not favor specific groups, some grants awarded to churches may be dedicated to certain ethnic or geographic grounds.

The key to receiving funding is identifying a specific area or program focus that will be appropriately general to qualify for the grant.

For instance, while grants are not generally available for new construction of parish facilities, funding is offered for building replacement, particularly those damaged due to natural disasters.

While most government grants have restrictions on supporting religious activities, private foundations are more than willing to finance churches for their events.

Churches can utilize online tools to help in the search for grants. These will help sort the results obtained by issue area, amount, and other criteria.

Can a Church Make Profit?

Yes. Churches can make a profit if the funds they raise are sufficient to cover all expenditures while retaining enough for savings.

However, it is a fact that donations to parishes have declined in recent years. The lack of titles and offerings was already apparent even before the pandemic struck the United States.

The data shows that fewer worshippers are partaking in giving tithes, resulting in a huge drop in the shares received by churches in the United States.

This is why many churches need to find other means to raise funds besides their members’ titles and offerings.

Tithes will always be inconsistent. Churches know never to rely entirely on offerings to finance their activities. Such is the nature of non-profit organizations.

When a ministry has diversified sources of income, it creates more stability when securing the budget.

Having sponsors to finance church activities aids with managing the finances. Fundraising events for specific causes also helps.

Most churches organize events to generate revenue. These can be anything from festivals to a simple barbeque affair. 

Once they become a popular attraction in the community, annual events could be a reliable source of income for a church.

Does the Church Have to Pay Taxes?

No, churches are exempt from tax. However, if a parish receives income from an unrelated business, that enterprise must be subjected to taxation.

To American tax law, churches are considered public charities. As such, they are relieved from federal income and property taxes. The same applies to state and local duties.

The clause in the First Amendment to the Constitution on freedom of religion also ensures that the IRS follows a hands-off approach to controlling churches.

Parishes do not need to pay for unearned income, specifically gifts, donations, and investment income.

However, if they regularly engage in business activities unrelated to their missions as religious institutions, they may have to pay a special tax for their profits. This is called the unrelated business income tax (UBIT).

Moreover, if an organization qualifies as a church, it does not need to file for tax exemption. The process is already automatic for the IRS.

Are There Any “For-Profit” Churches?

The majority of churches in the United States are non-profit. This allows them to enjoy exemptions from civil rights laws.

Certainly, many parishes engage in unrelated businesses to generate income they can use for their programs. Due to this, they have to pay taxes for the income they receive.

One way to increase a church’s revenue without directly paying taxes is by creating a for-profit enterprise.

A for-profit corporation will carry out any taxable activity undertaken. It will function as a separate legal entity while fully owned by the parish.

The church will be issued shares in this enterprise, allowing them to receive dividends and other distributions.

The church should not encounter legal problems as long as the for-profit company pays its fair share of taxes.

A church may also form a separate non-profit organization to funnel the government grant obtained. This will make for easy tracking of funds received and spent. 

Monitoring of funding utilization by the government will also be less complicated as there is no need to impose into the group’s internal affairs in case an audit is conducted.

Sources:

Web Tribunal

US DOJ Archive

US Government Grant

Written by
Jamey Muller
I'm the head-writer @ Knowledge Eager (or, in plain English, I'm the guy writing the majority of the content here). Addicted to the stock market, football, sushi and tacos.
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Jamey Muller
I'm the head-writer @ Knowledge Eager (or, in plain English, I'm the guy writing the majority of the content here). Addicted to the stock market, football, sushi and tacos.