01.03: Models of relationship to our company

Our company may allow its workers to start and own a for-profit business, but workers must understand that 1) the business is distinct from their ministry assignment, and 2) our company will not participate in ownership or legal partnership with the business entity. Our company has presently decided that it will not own any new for-profit businesses for the following reasons:  

Security – In some locations where a Business for Transformation strategy is employed, ownership by our company would not be appreciated and could put the workers and the sustainability of the business at risk.

Best practices – Our company does not possess adequate resources to own and take responsibility for businesses. Businesses are more likely to succeed when a small group of private owners have the authority to make strategic and operational decisions and take active responsibility for the ongoing success of the business. 

Tax-exemption hurdles – Because our company is a tax-exempt organization, owning an interest in for-profit businesses can create significant U.S. tax consequences. To allow freedom for legal structures that minimize tax consequences for our company, and to avoid jeopardizing our company’s tax-exempt status, our company will not own Business for Transformation initiatives.

Liability – Owning and operating for-profit businesses could expose our company to significant liability, which could jeopardize its overall operations. Therefore, our company will not own any interest in Business for Transformation initiatives.

As a tax-exempt non-profit organization, our company faces certain restrictions on using its resources in for-profit, commercial endeavors. As such, any company employee that is considering engaging in for-profit business must do so with distinction from their company employment. The following models of relationship and guidelines represent acceptable ways to create distinction between the company ministry assignment and the business.

Model 1: Dual employment

When an individual works in a privately owned business (whether she/he or other individuals are the owners), the worker must be considered “dually employed” if he/she receives compensation and benefits from our company. Their employment with and responsibilities to our company must maintain clear distinction from their employment with and responsibilities to the business. Their company job description and responsibilities should be specific to our company’s ministry objectives (i.e., language and culture learning, evangelism, discipleship, church leadership development, and perhaps other charitable and educational goals). Their company job description should include nothing related to business operations or responsibilities. 

This separation is critical in the case of a privately owned business, because use of tax-exempt resources (which includes staff of nonprofits) must not privately benefit individuals. An exception to this dual employment policy could be if there was a role within the business that was exclusively dedicated to a charitable purpose and clearly did not further the private interests of the business – for example, a chaplain role within the business. 

The following guidelines are recommended to maintain this distinction in employment:

  1. Our company job descriptions should describe ministry responsibilities only, and should not describe any specific business responsibilities. A company worker involved with a privately owned business must be considered dually employed in order to maintain an arm’s length relationship. 

  2. The workers must be separately accountable for how our company’s ministry objectives are being furthered; therefore, it is suggested that periodic written reports be prepared by workers and submitted to their company supervisors. These reports should align with the responsibilities outlined in the workers' job descriptions and should avoid description of specific business responsibilities. These reports document that, separate from the workers’ business involvements, the workers have responsibilities to our company for its legal purposes.

  3. The worker should receive a reasonable wage from the business for their work in the business. Many countries have labor rules which impose minimum wages for different industries and job positions, sometimes referred to as a “prevailing wage.” From the business, the worker should receive the equivalent of the prevailing wage that applies to their position in the business. An exception to this could be allowed if local laws permit unpaid internships and apprenticeships. This exception would only apply if the worker does not currently possess the prerequisite skills or experience for the position they are taking; however, it would be expected that the apprenticeship should be for a limited time.

  4. Our company requests that workers inform their supervisors about wages received from the business. Income received from their work in the business will reduce the amount of compensation workers can draw from our company support funds. This is to address moral obligations to donors supporting ministry activities, maintain equity in support levels for workers on the company team, and align with our company’s cost-of-living support philosophy. Our company acknowledges that it cannot legally require workers to report earnings from their second employment to our company, but it makes this request of workers.

  5. Workers should obtain approval from their company supervisors concerning how they will divide their time between work for our company and work in the business. Workers should consider a number of factors as they determine how much time they work in the business, including: degree to which involvement in the business furthers our company’s ministry objectives, minimum number of working hours required to maintain visa status, and minimum hours necessary for the position held in the business. Because our company operates on a cost-of-living support philosophy, the level of support our company’s workers receive is not based on the number of hours worked on specific ministry tasks, ministry responsibilities, or the worker's merit. Rather, our company’s philosophy is based on providing adequate support to workers in order to engage the ministry assignment in a specific location. 

Our company’s philosophy of ministry recognizes that ministry is not a narrow set of tasks, because ministry occurs in the whole of our words, deeds, and being. Therefore, it would be incongruent to assert that time spent in the business is excludable from furthering our company’s ministry objectives. It is our company’s view that working in a business-for-transformation initiative can further ministry objectives. However, there must be evidence that our company’s ministry objectives are also furthered through activities that are distinctive from the business's commercial interests. This may include evangelism, discipleship, equipping leaders, prayer ministry, Bible study and worship leading, and other distinctive ministries.

Also see 04.02: Appendix: Communication guidelines and 04.03: Appendix: Further legal, ethical, and operational considerations of dual-employment relationships for further guidance.          

Model 2: Marketplace Worker 

Another possible model to maintain an arm’s length relationship is for the worker to be appointed by our company as a “Marketplace Worker.” Marketplace Workers do not receive any compensation or benefits that create an employment relationship with our company; therefore, the worker's employment has no potential conflict of interest with the Business for Transformation initiative. 

In the case of a married couple, one spouse could still receive support from our company while the other spouse is appointed as a Marketplace Worker; however, the spouse who receives support would be limited to the cost-of-living for a single adult sharing a household. If the married couple has children, the support for the children may be added to the spouse receiving support from our company. Guidelines for this model are as follows:

  1. The worker must go through the appointment process and will be appointed as a Marketplace Worker. If the worker is married, both spouses must be appointed; however, one spouse may be a Marketplace Worker, while the other spouse is appointed as a company employee.  

  2. In the case of a married couple, the spouse who is employed by our company must have specific ministry responsibilities for which she/he is accountable to her/his supervisor. Our company recommends that workers submit periodic written reports to their supervisors describing how their work furthers ministry objectives.

  3. When one spouse in a married couple receives support from our company, our company requests that the Marketplace Worker reports his/her earnings to his/her company supervisor. If field earnings of the Marketplace Worker, plus the support received by the company-employed spouse, exceed the allowance for married couples under our company’s cost-of-living support, our company will deduct the excess from funds that the company-employed spouse may withdraw from support funds. This is to address moral obligations to donors supporting ministry activities, maintain equity in support levels for workers on the company team, and align with our company’s cost-of-living support philosophy. Our company cannot legally require Marketplace Workers to report earnings, but it makes this request of Marketplace Workers. 

Model 3: Ownership interest in Business for Transformation is assigned to a nonprofit

Most models of Business for Transformation have charitable aspects, such as economic development in economically disadvantaged areas, job creation for a disadvantaged class of people, providing a product or service that meets a social need (such as access to clean water or education), and church planting. However, furthering charitable purposes is only one part of the equation concerning use of tax-exempt resources. The other part is that tax-exempt resources must not privately benefit individuals, except for reasonable compensation. 

If a privately owned Business for Transformation initiative intends to and actually does significantly further a charitable purpose, AND all of the owners of the business have agreed to assign their ownership rights over to a nonprofit organization or irrevocable charitable trust, then our company employees may be seconded to the Business for Transformation entity. 

Important: Seek legal counsel to draft documents that assign ownership rights to a nonprofit organization or irrevocable charitable trust. This is a highly complex solution and very uncommon; however, with proper legal counsel, it is feasible. Structuring a company like this requires expert counsel, as multiple legal facets must be considered in order to execute this solution properly. Enforceability of the agreement is an important factor. 

Guidelines for this model are as follows:

Business earnings must not be distributed or distributable in any way to individuals. Reasonable compensation is allowed, but profit-sharing plans or anything that directly connects individuals' compensation to the business's earnings would not be allowed.

Our company and the business entity must develop a memorandum of understanding that describes the relationship and seconding of workers. In this model, the company worker’s job description may include responsibilities related to the business (again, only if the business significantly furthers charitable purposes and there is no private inurement).

Model 4: Nonprofit owns the Business for Transformation

All of the above models assume private ownership in the business. However, if the business is legally owned by a nonprofit organization, our company workers may work in the Business for Transformation initiative as a part of their company assignment – if the business meets the two-part test of (a) charitable purpose and (b) no private inurement. A memorandum of understanding should always be developed to articulate the relationship. 

Our company will only consider accommodating the above relationships when the business that the company employee intends to work for or start is in the same location as their company assignment. Incarnational presence is a significant factor in determining our company's accommodation of these models of relationship. Our company may also consider other factors in approving dual-employment relationships, but the worker must demonstrate how being dually-employed will enhance, rather than distract from, their company assignment. The worker's articulation of how secondary employment enhances a company assignment must be distinguishable from the business's commercial interests (for example, through visas, ministry contacts, ministry opportunities, etc.).