Prospective fish plant buyer relies almost solely on donations

The church ChangePoint has an affiliated nonprofit, Grace Alaska, that has partnered with Wisconsin-based Alliance Development Corp. to buy the defunct plant from the Alaska Industrial Development and Export Authority for $24.5 million.

The plan is to turn the building into a place for ChangePoint to hold its religious services, offer classrooms or conference rooms to the public, as well as to allow Sysco Corp. to use the cold-storage units already in the facility. The buyers also propose to build a domed indoor sports complex on the property, allowing for wintertime soccer and other sports events.

ChangePoint, an evangelical Christian church with facilities in south Anchorage, along with its nonprofit, Grace Alaska, propose to own the majority of the building, so it will likely have to come up with the bulk of the $4 million down payment.

That shouldn’t be a problem, thanks to the generosity of its congregation, say officials at ChangePoint. Tax exemptions and other laws - or lack of them - resulting from the separation of church and state will also play a big factor in garnering the money.

ChangePoint’s fiscal year 2004 budget is about $4.4 million, said Rick Steele, the church pastor of stewardship, which is the equivalent of a company treasurer or chief financial officer.

About 3,500 people call ChangePoint "my church," but attendance averages about 2,300 a week, Steele said. The church doesn’t apply for grants or other sources of funding.

To maintain its budget, the congregation needs to give about $90,000 a week.

"Virtually the sole source of income is from the giving from people in the church body," he said.

ChangePoint, formerly known as Grace Community Church, collects offerings at its services each week. Parishioners also offer tithing; historically people have offered 10 percent of their incomes for tithing. Parishioners can authorize the church to electronically withdraw their tithe from bank accounts.

"A lot of people prefer to do it that way," Steele said. "They want to be consistent in their giving. (Offerings are) difficult to project on a given week, but not any one person or a few people massively influence it. It’s just a sheer number of people and families. It adds up faster than you might think."

Still, things may be a little tight for the church if the sale goes through. ChangePoint’s offerings for its fiscal year - which began Sept. 1 - are below projections, to about $75,000 a week, Steele said. The church has had to make some budget cuts.

If the sale goes through, part of the down payment may come from the sale of the church’s current facility in south Anchorage.

The church currently owns a 17-acre facility in south Anchorage, much of which is undeveloped. The roughly 30,000-square-foot building has been on the market for some time, and ChangePoint hopes to sell it for about $5.5 million, Steele said.

Additional funds for the down payment could also come from the sale of other land holdings in Anchorage.

Churches not seen as normal nonprofits

Donations are the prime source of funding for most nonprofit organizations. But in many regards, that’s where the similarities to other charitable nonprofits end, due in large part to historical rulings based on the separation of church and state.

Nonprofit organizations face near-constant scrutiny from government officials to ensure that they hold to their original charters. Most all the dealings of religious organizations are exempt from such government oversight.

"The government is trusting the churches’ integrity," said Key Getty, a certified public accountant with Mikunda, Cottrell and Co.

Churches and other religious organizations are automatically considered 501c3 nonprofit organizations, a status that allows them to apply for tax exemptions and collect donations that donors can deduct from their taxes. Some churches, including ChangePoint, do go through the lengthy processes of getting the official certification from the Internal Revenue Service.

"Part of the application process for the 501c3 is outlining what we expect the operations to involve," Steele said. "When they grant that status to nonprofits, they closely scrutinize that the purpose is truly nonprofit. But the church is treated differently, always has been, by the IRS."

Churches are not required to purchase a business licenses or to file any documentation with the state or municipality, so it’s unclear how many operate in Alaska.

Only 134 religious organizations currently have a business license, according to the state licensing department. But a quick look through one of Anchorage’s yellow page listings tallies up 97 listings under "churches" alone. There are a full 36 pages of churches under various denominations.

Churches are also not required to file tax returns unless they conduct business that is not church related. Most only do business that is related to the ministry in some way, such as selling Christian books or operating a school. Since the work is related to the ministry, it’s not taxable, Getty said.

Public charities generally have to file Form 990 with the IRS, which discloses revenues and expenses, as well as assets and liabilities.

ChangePoint hasn’t yet filed a Form 990, Steele said. But that may change if the seafood plant sale goes through, he said. "If we rent significant space to others, like for conference space, that’s something we’ve talked about."

Officials at ChangePoint currently are working with tax attorneys and accountants to determine any future tax filings. The addition of conference room rentals and the tax implications likely won’t change the church’s operating budget, Steele said.

ChangePoint and other religious organizations are exempt from paying municipal property tax on the land used for the ministry, which would include the office and seminary space as well as the parking area. But they do pay property taxes on land not related to the church, such as undeveloped land. ChangePoint, for example, pays property tax on the undeveloped land in south Anchorage.

A request into the amount religious organizations pay to the municipality of Anchorage went unanswered.

Churches are not completely unobserved, however. Religious organizations are subject to being audited by the IRS for payroll procedures. Church employees pay federal withholding taxes just as any Alaska business.

"If there are questions to the way we administer payroll or Social Security tax, then I believe they (the IRS) would have jurisdiction to require us to provide payroll records." Steele said. "I know the church has some special protections so I don’t know how far-reaching that would be."

Church pastors generally are treated much like contract workers who are given a housing allowance. They have the option to opt out of paying federal withholding taxes. Steele says he advises his pastor against that, saying the pastor would then give up his right to collect Social Security in the future.

And though it’s not required by the government, ChangePoint does have a CPA go through their books.

"It’s helpful when you’re talking to banks or bond companies," Steele said. "We do it more for the sake of wanting to demonstrate our integrity in that area. We believe it’s part of the check and balance of the system."