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Incorporation
Nonprofit incorporation creates a legal entity separate from the individual human beings who make up your sangha, protecting individuals from liability and providing some tax advantages. In an unincorporated organization, everyone is personally liable for the actions of any one member. In a corporation, the organization shields the individuals by becoming the liable entity itself. Because is legally recognized, it can also own property, open a bank account, and continue to exist after founders are gone. When you incorporate your center, the state recognizes it as an organization that conducts activities for non-profit purposes. That entitles the center and its donors to some tax advantages. For instance, the IRS exempts the center from paying taxes on its revenue, and allows it to receive tax-deductible gifts.
Of course, incorporating as a nonprofit has some obligations as well. The IRS will want to receive an annual report of your income and disbursements. You’ll also be required to put in place and maintain some organizational structures: a board with at least three officers, and an annual meeting at which minutes are taken. Your board will write and adopt Articles of Incorporation and a set of bylaws. In addition to legally establishing your corporation, these documents formalize the leadership structure and decisionmaking system of your dharma center. As a nonprofit, your center will not be allowed to do extensive lobbying on behalf of proposed legislation or take part in political campaigns.
Of course, incorporating as a nonprofit has some obligations as well. The IRS will want to receive an annual report of your income and disbursements. You’ll also be required to put in place and maintain some organizational structures: a board with at least three officers, and an annual meeting at which minutes are taken. Your board will write and adopt Articles of Incorporation and a set of bylaws. In addition to legally establishing your corporation, these documents formalize the leadership structure and decisionmaking system of your dharma center. As a nonprofit, your center will not be allowed to do extensive lobbying on behalf of proposed legislation or take part in political campaigns.
are you a church?
The IRS distinguishes between several kinds of non-profit corporations, one of which is a church. You may not be comfortable thinking of your Zen center as a church, but the IRS uses the term for any religious nonprofit that meets certain guidelines, regardless of faith or sect. Synagogues, mosques and temples are all “churches” in the eyes of the IRS. If your center “substantially” meets these fourteen criteria, it qualifies as a church; it need not have them all.
The government is not trying to tell you how to train or practice, or to require any particular program of activities. Because churches are entitled to certain tax privileges, the IRS uses these guidelines to determine whether a corporation registering as a church really is a functioning religious entity or simply a paper organization designed as a means of tax evasion. The terms may have been borrowed from Christianity and may not be the ones you’d use to describe your practice, but you may in fact have many of these elements in place, especially if yours is a more traditional Soto Zen sangha. If the mission of your center is to engage in a more secular program, if your spiritual leaders are laypeople, if your focus is religious but mainly academics or social justice, or if you don’t consider your center to be affiliated with any particular denomination, your organization may be a nonprofit corporation but not a “church.”
The IRS exempts churches not only from taxes on their revenue, but on their property as well. Further, churches do not pay unemployment tax, or Social Security and Medicare taxes on wages paid to ordained clergy for carrying out their religious duties. The clergy’s housing costs are exempt from income tax, whether he or she owns a home or your center provides a place to live or a housing allowance.
- A distinct legal existence.
- A recognized creed and form of worship.
- A definite and distinct ecclesiastical government.
- A formal code of doctrine and discipline.
- A distinct religious history.
- A membership not associated with any other church or denomination.
- A complete organization of ordained ministers ministering to their congregations.
- Ordained ministers selected after completing prescribed courses of study.
- A literature of its own.
- An established place of worship.
- Regular congregation.
- Regular religious services.
- Sunday School for the religious instruction of the young.
- School for the preparation of its ministers.
The government is not trying to tell you how to train or practice, or to require any particular program of activities. Because churches are entitled to certain tax privileges, the IRS uses these guidelines to determine whether a corporation registering as a church really is a functioning religious entity or simply a paper organization designed as a means of tax evasion. The terms may have been borrowed from Christianity and may not be the ones you’d use to describe your practice, but you may in fact have many of these elements in place, especially if yours is a more traditional Soto Zen sangha. If the mission of your center is to engage in a more secular program, if your spiritual leaders are laypeople, if your focus is religious but mainly academics or social justice, or if you don’t consider your center to be affiliated with any particular denomination, your organization may be a nonprofit corporation but not a “church.”
The IRS exempts churches not only from taxes on their revenue, but on their property as well. Further, churches do not pay unemployment tax, or Social Security and Medicare taxes on wages paid to ordained clergy for carrying out their religious duties. The clergy’s housing costs are exempt from income tax, whether he or she owns a home or your center provides a place to live or a housing allowance.
Registering your temple with Sotoshu
If your center is a traditional Soto temple, you have the opportunity to register it with Sotoshu, the denominational headquarters in Japan. Temples outside of Japan are considered tokubetsu (“special”) temples. Affiliation with the denomination allows for sending novices to train in Japan toward their own authorization as clergy, holding officially recognized angos and hossenshikis, and possibly receiving limited financial support for the center as available for the development of Sotoshu’s overseas mission. Tokubetsu temples receive regular communications and publications from Sotoshu and clergy have the opportunity to participate in international missions conferences and training sessions.
You’ll need to provide basic documentation about your center, like your articles and bylaws, as well as documentation of your clergy’s status as kokusai fukyoshi (“international propagator”). For complete information, contact the Soto Zen Buddhism North America office in Los Angeles.
You’ll need to provide basic documentation about your center, like your articles and bylaws, as well as documentation of your clergy’s status as kokusai fukyoshi (“international propagator”). For complete information, contact the Soto Zen Buddhism North America office in Los Angeles.
Temples as corporations in japan
Just as many American Zen centers are nonprofit corporations under the law, Japanese temples are considered “religious juridical persons” (shūkyō hōjin 宗教法人). The system gives temples the status of corporate entity so that they can qualify for tax and other benefits from the state and yet maintain their autonomy and administer themselves and their property without government interference in their religious practice. Prior to the implementation of the Religious Juridical Persons Law in 1951, the government had to give permission before an organization could legally incorporate as a religious entity. Now the organization need only meet basic standards in order to gain status as a religious juridical person.
Religious juridical persons are overseen by the Agency for Cultural Affairs, which is responsible for their incorporation, amendments to their rules of incorporation, mergers and voluntary dissolutions. It recognizes more than 77,000 Buddhist religious juridical persons, nearly 170 of which are denominations, sects or associations; the remainder are affiliated temples.
The Religious Juridical Persons Law established the position of sekinin yakuin 責任 役員, or responsible officer, within incorporated entities such as temples. A minimum of three such people is required (though there may be more), and these are often the head cleric, his wife, and his son (assumed to be his successor). Any additional officers are usually appointed by the head cleric. These often include a cleric from a related temple (hōrui), who can provide advice and support. The sekinin yakuin constitute the temple’s board of directors, which is responsible for all nonreligious functions including setting budgets, buying and selling property, planning construction, establishing and changing bylaws, entering into contracts, and carrying out general administration. Temple bylaws may require that the head cleric serve as chief responsible officer (board chair); if not, the position is elected by a majority vote of the rest of the board. (1)
The head cleric’s wife often takes responsibility for the daily operating tasks of the temple, managing the finances, welcoming danka members and taking care of cleaning and maintenance. In this way the temple functions something like a family business, with the son positioned to take over on the father’s retirement.
(1) Covell, S. (2005). Japanese Temple Buddhism: Worldliness in a Religion of Renunciation. Germany: University of Hawaii Press. p. 34, 150
Religious juridical persons are overseen by the Agency for Cultural Affairs, which is responsible for their incorporation, amendments to their rules of incorporation, mergers and voluntary dissolutions. It recognizes more than 77,000 Buddhist religious juridical persons, nearly 170 of which are denominations, sects or associations; the remainder are affiliated temples.
The Religious Juridical Persons Law established the position of sekinin yakuin 責任 役員, or responsible officer, within incorporated entities such as temples. A minimum of three such people is required (though there may be more), and these are often the head cleric, his wife, and his son (assumed to be his successor). Any additional officers are usually appointed by the head cleric. These often include a cleric from a related temple (hōrui), who can provide advice and support. The sekinin yakuin constitute the temple’s board of directors, which is responsible for all nonreligious functions including setting budgets, buying and selling property, planning construction, establishing and changing bylaws, entering into contracts, and carrying out general administration. Temple bylaws may require that the head cleric serve as chief responsible officer (board chair); if not, the position is elected by a majority vote of the rest of the board. (1)
The head cleric’s wife often takes responsibility for the daily operating tasks of the temple, managing the finances, welcoming danka members and taking care of cleaning and maintenance. In this way the temple functions something like a family business, with the son positioned to take over on the father’s retirement.
(1) Covell, S. (2005). Japanese Temple Buddhism: Worldliness in a Religion of Renunciation. Germany: University of Hawaii Press. p. 34, 150