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Church Rentals Support Bottom Line, Promote Mission

July 1, 2013

Many Unitarian Universalist congregations rent space in their buildings. Doing so not only helps out the community but gives the congregation some added income. Rentals—whether for weddings, meetings, rehearsals, concerts, Tai Chi sessions, or conferences—also allow the community to get acquainted with Unitarian Universalism. More than one guest at a wedding has picked up a brochure and come back later.

But how you handle church rentals makes a difference. A clear and comprehensive rental policy helps ensure that rentals go smoothly. A policy lets both the congregation and the renter have a clear understanding of what is permitted, including whether renters can use the sound system, whether alcohol can be served, and what kind of cleanup is expected.

The First Unitarian Church of Philadelphia has a lot of experience with rentals. Located in the city’s urban core, part of its mission is to help out small nonprofits that need a place to have meetings or hold other events. Community residents also hold many birthday parties and wedding receptions there. Around 200 groups annually rent space in its three-story plus basement building. Around 2,200 non-church members pass through the building every week. Rental spaces include a large basement with an auditorium and classroom space, and a sanctuary and chapel on the first floor. The third floor has classrooms. The original part of the building dates to 1885.

Norman Fouhy is the business administrator at First Unitarian. He notes that the congregation has been renting space in its building since at least the 1960s, when the congregation was closely connected to the social activism of the time. Support of small nonprofits is still part of its mission, but the financial income from rentals has become another key reason for opening its doors.

Fouhy said that rentals bring in around $200,000 of the congregation’s $480,000 budget. He points out that the robust rental program is run like a professional business, with the benefit of helping to ease the financial burden on the congregation that maintaining a large historic property can create.

The rentals also pay for the time Fouhy devotes to rentals—about one-third—and for part of the costs of a building manager and a custodian who work with renters on event setup and cleanup, respectively. Successful rentals require a team effort, beginning with contract negotiations that Fouhy oversees, the building superintendent’s involvement in event logistics and preparations, and the custodian’s on-site participation at the time of the event, which ensures that the event itself is properly supported.

Fouhy said fees charged to renters are based partly on what they can pay. “We work with them to accommodate their budgets. We also try to keep it competitive with rental rates in this area for similar spaces. Staying aware of who our competition is and how much they are charging is an important part of our rental program.” Members are not charged for qualifying family functions such as weddings, baby dedications, and memorial services.

With all those renters, the church building opens at 6 a.m. or 7 a.m. and closes around midnight.

Fouhy added that renters have to fit within the church’s mission—that is, provide a community service of some kind, and agree to not discriminate. To that end, the following paragraph is included in every rental agreement:

The First Unitarian Church of Philadelphia (the "Owner") is a congregation strongly committed to promoting the inherent worth and dignity of all individuals. The Owner prohibits use of its property for any purpose which may reasonably be construed to promote oppression, discrimination, and/or violence in any form. Any lessee(s) who violates this clause will be considered in breach of contract, and this lease may be terminated immediately. The Owner reserves the right to refuse entering into future lease agreements and to pursue any appropriate legal actions at its discretion.

Fouhy said it’s not uncommon for people who first find the church through a rental event to later join the congregation. “One of the major benefits of a rental program such as ours is that it establishes the church as a well-known place in the community. It gives us great visibility.”

Congregations need to be aware that in some cases rental income may be taxable. If congregations rent their parking lots, for example, or have income from cell phone towers, that income may fall into the category of “unrelated business income” because it is not closely connected with the mission of the congregation. For the final word, refer to Publication 1828 of the IRS Tax Guide for Churches and Religious Organizations, available online.

The other discussion to have about rentals is whether such sharing of space will conflict with use of the building by the congregation. If there is to be a permanent tenant, such as a pre-school, is the congregation willing to give up or share that space for the long term? If the parking lot is rented by an adjacent business, how often will that interfere with parking for congregational functions?

And be sure to check with your building insurer to determine if specific rentals would affect your insurance rates.

For examples of rental policies of other congregations, Google “Unitarian rental policy.”

For more information contact interconnections@uua.org.

This work is made possible by the generosity of individual donors and congregations. Please consider making a donation today.

Last updated on Monday, December 16, 2013.

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