Thursday, August 23, 2018

Hey Fletch … I found the XPastor page with the intellectual property policy of Christ Community Church of Chicago to be informative. I am a member of a church board, and our pastor is beginning to write books as part of his employment, so we plan on the copyrights being owned by the church. The books will be published by a third party, with royalties first flowing to the church. The board is considering sharing some of those royalties with the pastor, but want to be sure we do not cause any private inurement issues.

From the Christ Community Church policy, it looks like they take the licensee and church share first, then pay the rest to the author “as governed by legal requirements.” It sounds like we could pay some percentage of royalties to the author with a cap to ensure his total compensation is reasonable. Is that your understanding?  Some other websites make it sound like it could be private inurement to pay an employee any share of royalties on copyrights owned by the church.

DRF—There are many ways to handle books by pastors. Anything written “off-time” and “not on church equipment” can be considered as belonging to the pastor. The challenges arise when the pastor also speaks on the subject. For example, the pastor writes about “Lessons from Samuel” and then does a sermon series on the topic. This brings in issues of “work for hire.” Anything that he presents in the pulpit, and writes about, is a confusing issue.

One solution is to have the book owned by the church. You have outlined that well. If the board sets the compensation, you can handle possible inurement issues. Here is a good web article on inurement.

Since the church sets reasonable compensation, you can give him a bonus, which may be a percentage of the royalties that are earned. Most books don’t sell thousands of copies, so this may be a reasonable number. The challenge comes when the book becomes a best seller! It’s one thing to receive a $5,000 bonus and another when that number is tenfold higher.

You may want to do a compensation study to ensure that you have fair and equitable pay, and that any royalties don’t exceed those amounts. My third book is on Smart Money for Church Salaries and that may help you. I also do compensation audits for church, which provide all sorts of material and data for fair salaries.

Another solution is to draft an Intellectual Property agreement. These are detailed agreements that cover salary and IP. Since the church probably didn’t pay for the pastor’s seminary expenses, the pastor has invested quite a bit of their own money in developing their intellectual property. I don’t draft these. If you are interested, I can recommend a nationally-known attorney to help you. Get help from the best attorneys on this! I suggest an IP agreement for any pastor who publishes books, songs or other materials.

Whatever path you choose, get the agreements in print and upfront. Have the discussions now, as you are doing. Good work there! Churches should not wait until the material is published and a revenue stream begins. Feelings get hurt when real money, cash, is on the line.

Response—Thanks so much for your response. I appreciate the time you took to help with our situation. This information will be very helpful as our board considers how we approach intellectual property. The option to draft an IP agreement sounds promising, so I’ll discuss that with the rest of the board. I may be in touch if we want help finding a lawyer should we go that route.