– It seems like a creative idea but I think I would be concerned about the perception of people watching. We’re bombarded with ads already and then to have more during online church service… I’m not sure people are ready for that. – Pastor
– I’m doubtful about doing it on the livestream, although we accept advertising on our podcast version of the message. – Church communication director
– I wouldn’t because allowing that is a quasi-endorsement and complaints about businesses will reflect on the church which would increase their liability. But most importantly, “Church” is a solely values-based entity different from secular organizations. Just as pastors shouldn’t go into business with their church members, so shouldn’t the church itself. Short answer: “No!” – Church leadership consultant
As a bonus, I asked attorney David Middlebrook, founder of “The Church Lawyers” about church advertising from the tax perspective. Here’s his response:
Churches and other nonprofits are certainly permitted to sell commercial time slots to other organizations. The question is ultimately whether: (i) the activity will be deemed nontaxable sponsorship income to the church; or (ii) taxable advertisement income (UBIT) to the church.
In the situation here, a church selling commercial slots to other organizations for the purpose of television commercials, the IRS would very likely deem the church’s actions as commercial activity because the IRS generally deems “the sale of separate spaces . . . [as] an unrelated trade or business.” IRS, Pub. No. 598, “Tax on Unrelated Business Income of Exempt Organizations,” at 6 (“Sales of Advertising Space”), available here (rev. Mar. 2021); see id. (concluding that the sale of separate advertising spaces by a nonprofit is an unrelated trade or business in the context of a national association of law enforcement officials publication that offers advertising spaces).
The church can always request a private letter ruling from the IRS about whether its “sale” of commercial airtime, under the church’s specific facts of the situation, is nontaxable income or UBIT. We could gladly assist in requesting a private letter ruling from the IRS. The technical requirements for a proper ruling request are here.
This article about church advertising originally appeared here, and is used by permission.
