Mark Driscoll and Mars Hill Church Research Guide – Part 2A – Five Types of Organizational Forms at “Mars Hill” (UPDATED)

PART 2. RESEARCH GUIDE TO MARS HILL CHURCH ORGANIZATIONAL/INSTITUTIONAL ISSUES

Part 1. Research Guide to Mark Driscoll’s Personal Issues

Part 2. Mars Hill Church Organizational/Institutional Issues

  • Part 2A. Five types of organizational forms found in “Mars Hill.” Official source links and summary profiles.
  • Part 2B. General background on top legal problems for non-profits.
  • Part 2C. Five potential legal/ethical problems: inurement; misappropriation of funds solicited with a specified designation; spoliation of evidence; constitution, bylaws, and board structure; and conflicts of interest.

Mark Driscoll and Mars Hill Church Research Guide – Part 2D – Putting It All Together

Mark Driscoll and Mars Hill Church Research Guide – Part 2E – Research Guide Table of Contents

Synthesizing the “Mars Hill Research Guide” and “Responsibility for Spiritual Abuse” Series – Introducing the Capstone Articles and Case Study

Capstone Article 1 – A Critique of the Three Official Options for Dissolution of Mars Hill Church

Capstone Article 2 – Some Words for Discernment for Those from Mars Hill

Capstone Article 3 – Answering the Original FAQ List About Mark Driscoll and Mars Hill

Purposes and Sources for Part 2

The purposes of Part 2 in this series are to:

  • Give concise definitions and a few links for five different kinds of organizational entities involved in the multi-faceted business of “Mars Hill.”
  • Lay out the landscape of the greater Mars Hill horizon – “as best I can” because it’s complicated. There are at least eight active entities in four different organizational forms with separate governing regulations for each form. In addition, there are at least two active entities in one other organizational form, and at least four inactive LLCs, and an unknown number of other active/inactive related entities.
  • Lay out the background for five specific legal/ethical problems that I believe Mars Hill Church and related entities could be facing – some of which could potentially lead to the loss of Mars Hill Church’s tax-exempt status. These are:
    1. Inurement.
    2. Misappropriation of funds solicited with a specified designation.
    3. Spoliation of evidence.
    4. Constitution, bylaws, and board structure.
    5. Conflicts of interest.
  • Explore some of the crucial questions about these five problem areas that arise from issues of practices at Mars Hill.

In Part 2, I’ll be using a different focus for source material from what was prominent in Part 1, in examining Mark Driscoll’s personal issues. I won’t be looking very much at the primary sources of first-hand accounts from Mars Hill people with concerns about some of the organizational issues there. Their narratives on these issues truly are important, but they should make much more sense when we can understand the very complicated bigger picture first.

So, instead of personal accounts, I’ll be using some government agencies, their partners, and other sources of legal and business information instead to provide descriptions about various organizational forms – and required regulations. (After all, regardless of what we think a church or ministry should be from our take on biblical theology/ecclesiology and how God’s rules apply to us as saints, the moment we choose to become a business or a non-profit in the community, we sign on to follow THEIR rules as citizens under their jurisdiction. And that saint-and-citizen paradox may be one of the most problematic we face in “doing” church – at least, if one of our goals is to maintain tax-exempt status.)

Also, I’ll reference the important investigative and analysis work of several Christian bloggers whom I consider trustworthy reporters and critical thinkers: James Duncan [Pajama Pages], Becky Garrison, [especially at Praise the Lord & Pass the Ammunition], Warren Throckmorton, Dee Parsons and Deb Martin at The Wartburg Watch, and WenatcheeTheHatchet. Some have done a few posts about Mars Hill topics, some have done many. Some of their work focuses on the deep detailing of specific organizational aspects and issues related to Mars Hill. Sometimes their material rounds up various findings from others, integrates them with their own research, and helps us see the bigger picture. Forest and trees: These really do complement each other, and we need both to navigate the convoluted structure that “Mars Hill” turns out to be.

Other Notes

In the following sections, federal non-profit and state official business filings are all considered part of the public record.

When I know there is a question about the status or history of an organization related to Mars Hill, I’ll note what is the issue is and try to lay out problem with conflicting information available.

All comments on this blog are moderated, and I block uncivil and off-topic comments. For more details, read my Comment Policies.

I’ve done my best to be current and correct in this information. Please help me out with facts and links if I’ve gotten something wrong – thanks.

1. Five Types of Organizational Forms Found in “Mars Hill”

Orienting to Relevant Organization Types at “Mars Hill”

When it comes to Mars Hill Church as an organizational entity, the deeper I’ve researched, the more confusion and questions arise. A lot of that is because what people think of as “Mars Hill” might be one of almost half a dozen very different integration points for what they’re talking about, depending on when and how they got involved.

For some, they likely think about their community group and for them, Mars Hill is relational – it’s all about the people. Others may be more tuned in to the leadership or staff service, and so are thinking more about the strategies and structures of Mars Hill Church – the non-profit. Old-timer insiders may be remembering it when it was Mars Hill Fellowship, and also how things were different before Mars Hill developed an extensive multi-campus system. Virtual attenders listeners via podcast and print may think of what’s recently been termed “Mars Hill Global.”

But now these other issues and organizations have been coming up, especially in the last 12 months or so, about other Mars Hill-ish entities and acronyms and how they relate. For instance:

  • There’s one Mars Hill Church non-profit corporation for the whole system of campuses, right?
  • What’s On Mission LLC?
  • And how does a CRUT connect with all of this?
  • Are there more add-ons and spin-offs than are known publicly?
  • Who owns Mars Hill? [This is a very legitimate question being asked by Becky Garrison in her analysis post, Holy Hipster Mark Driscoll Continues to Fall ]

And that leads to a series of questions about how these entities interrelate, and whether one or more activities therein could put Mars Hill Church at risk of losing its tax-exempt status or lead to other problems with transparency, accountability, and taking responsibility. (See Part 2B.) Meanwhile, here are the four kinds of organizations that are definitely intertwined in the organization known as “Mars Hill.”

  • Type #1 – Tax-Exempt Organization (EO) ~ 501(c)(3) Non-Profit
  • Type #2 – Limited Liability Company (LLC)
  • Type #3 – Charitable Remainder UniTrust (CRUT)
  • Type #4 – Revocable Living Trust
  • Type #5 – For-Profit Corporation

Type #1 – Tax-Exempt Organization (EO) ~ 501(c)(3) Non-Profit

According to the International Revenue Service (IRS), an EO (Exempt Organization) must function “in the public interest” and not run it for the benefit of any private individuals or other organizations. The Compliance Guide for 501(c)(3) Public Charities is the best overview resource I found to address the basics of constituting a non-profit, ongoing requirements, record-keeping, governance procedures and practices, and required disclosures and documentation. It’s concise and clearly written, and if you’re involved with an EO, you should read it to make sure you don’t put its tax-exempt status in jeopardy.

What we typically think of in America as a “church” is constituted as a non-profit religious organization that is exempt from federal income tax. Yes, in reality a church is its people – the organic, local congregation – but to stay tax-exempt you have to abide by the rules and regs for the organizational, virtual corporation! And although there are many requirements in terms of forms to file and records to keep, the IRS print materials and websites consistently emphasize three main restrictions for maintaining tax-exempt status. To quote the Compliance Guide:

1. Private Benefit and Inurement. A public charity is prohibited from allowing more than an insubstantial accrual of private benefit to individuals or organizations. This restriction is to ensure that a tax-exempt organization serves a public interest, not a private one. …

No part of an organization’s net earnings may inure to the benefit of an insider. An insider is a person who has a personal or private interest in the activities of the organization such as an officer, director, or a key employee. …

If a public charity provides an economic benefit to any person who is in a position to exercise substantial influence over its affairs (that exceeds the value of any goods or services provided in consideration), the organization has engaged in an excess benefit transaction. [Page 4, emphasis added.]

2. Political Campaign Intervention. Public charities are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) a candidate for public office. [Page 5.]

3. Legislative Activities. A public charity is not permitted to engage in substantial legislative activity (commonly referred to as lobbying). [Page 8.]

A key potential organizational integrity problem for Mars Hill Church (nonprofit) revolves around that first restriction, on private benefit, inurement, and excess benefit. (More about this later, in Part 2B.)

Type #2 – Limited Liability Company (LLC)

Here is how the U.S. Small Business Administration (SBA) describes a Limited Liability Company (LLC):

A limited liability company is a hybrid type of legal structure that provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership.

The “owners” of an LLC are referred to as “members.” Depending on the state, the members can consist of a single individual (one owner), two or more individuals, corporations or other LLCs.

Unlike shareholders in a corporation, LLCs are not taxed as a separate business entity. Instead, all profits and losses are “passed through” the business to each member of the LLC. LLC members report profits and losses on their personal federal tax returns, just like the owners of a partnership would. (Emphasis added.)

As best I can interpret and summarize this, it seems like an LLC is a business entity that serves as a conduit for earnings from its specified activities to go back to the owners. The owners are then responsible for including those proceeds in their personal or corporate income tax filings.

There are at least four active LLCs related to Mars Hill directly or indirectly.

  • On Mission LLC (which holds the copyright to the Real Marriage book by Mark and Grace Driscoll. The governing “persons” are OMCRU Investments LLC and Lasting Legacy LLC. OMCRU Investments LLC has On Mission Charitable Remainder Unitrust (see the section on Type #3 directly below) as its governing person, and Lasting Legacy LLC has Mark and Grace Driscoll as its governing persons.
  • Mars Hill Church Investment Fund LLC does not list who the governing persons are on the Washington Secretary of State page, but the Department of Revenue Washington State search page from searching for this LLC’s Unified Business Identifier (#603353130) shows that it operates from the same address as Mars Hill Church.
  • There MAY now be or once have been an active Mars Hill LLC. Some articles online have referred to the church being started as an LLC business and not incorporating until later to apply for tax-exempt non-profit status. I am still trying to sort this out and find official documentation. I mention it because it may show up in history or analysis materials about Mars Hill, so you need to be aware that it is a point of confusion.

There are also at least four inactive LLCs, all related to Mars Hill Properties – 49th, 50th, Lynnwood, and Ocean Shores.

Type #3 – Charitable Remainder UniTrust (CRUT)

Wikipedia has a helpful short explanation of a Charitable Remainder Unitrust:

A charitable remainder unitrust is an irrevocable trust created under the authority of Internal Revenue Code § 664[1] (“Code”). This special, irrevocable trust (known as a “CRUT”) has two primary characteristics: (1) Once established, the CRUT distributes a fixed percentage of the value of its assets (on an annual or more frequent basis) to a non-charitable beneficiary (which is considered the settlor of the trust); and (2) At the expiration of a specified time (usually the death of the settlor), the remaining balance of the CRUTs assets are distributed to charity. The trustee determines the fair market value of the CRUT’s assets at the time of contribution, and thereafter on the applicable valuation date. The fixed annuity percentage must be at least 5% and no more than 50% of the fair market value of the assets in the corpus. The remainder (the amount expected to go to charity) must be at least 10% of the fair market value of the assets contributed to the CRUT. Code Section 664(d)(1) sets the federal income tax requirements for a charitable remainder unitrust. [Retrieved August 2014.]

Wikipedia links to the posting at the Cornell University Law School site of Section 664 from the Internal Revenue Code. Note the tabs for the US Code and for Notes. The Notes section allows tracking specific changes to the Code over time.

The On Mission CRUT is apparently one way that Mark and Grace Driscoll are donating back to Mars Hill Church (the non-profit). Since the CRUT is based on the Driscolls’ financial assets put into the trust, it therefore is connected to proceeds from their book, Real Marriage.

Type #4 – Revocable Living Trust

I may expand the information section on this at a later date, with information about Living Trusts. For now, I will note that WenatcheeTheHatchet and others have been investigating another whole layer of Mars Hill activities involving Living Trusts, and how they relate with the ownership of different residential properties where the Driscoll family has lived.

The labyrinthine interconnections among these have not been clarified yet. However, the Revocable Living Trusts do deserve mention as they could well turn out to relate to financial dealings in one or more LLCs and the On Mission CRUT. At this point, there are at least two living trusts involved:

  • Future Hope Revocable Living Trust
  • Downs Family Revocable Living Trust (aka Melanie J. Thompson)

Type #5 – For-Profit Corporation

Details to be added.

Concluding Thoughts and an Example for Homework

Hopefully this lay-of-the-land grand tour helps understand why it has been complicated to find information on some entities, or conduct comprehensive analysis on relevant issues about Mars Hill. As an example of one of the most complicated problems, consider the following. (And attempts to track this, plus where more specific questions of legal/ethical issues arise, will be in Part 2B.)

Mark and Grace Driscoll wrote the book Real Marriage.

But On Mission LLC owns the copyright and therefore received the royalties from it.

On Mission LLC is in turn governed by (distributes funds to) OMCRU Investments LLC, which is in turn governed by/distributes funds to (1) On Mission CRUT (of which a/the beneficiary is the Mars Hill Church non-profit) and to (2) Lasting Legacy LLC (which according to some research apparently was involved in the purchase of the current home that the Driscoll family lives in).

However, funds from tax-exempt donations to Mars Hill Church non-profit were apparently used to pay a contract with outside agency ResultSource Inc., which basically was used to ensure enough copies of Real Marriage were purchased to get it on the New York Times Bestseller List.

HOMEWORK – If you want to start sorting through what might raise legal/ethical issues in this situation, read this article on The Top 10 Legal Risks Facing Nonprofit Boards, and the Compliance Guide for 501(c)(3) Public Charities. Suggestion – Maybe the key thing is just to think through how many individuals or groups could be directly affected by this situation, how many Mars Hill organizational entities, and how many different governing boards and/or regulation codes could potentially be involved?

2. Mars Hill – Official Source Links and Summary Profiles

Washington State Agencies – Sources for Official Records

Here are three key Washington State agency websites where you can find such official documentation on the public record as for: type of entity, date of creation/registration, whether it is active or inactive, “governing persons” (individuals, LLCs, corporations, combination), reseller permits, business licenses, business locations, registered trade names, etc.

Reference List ~ Active Entities Related to Mars Hill Church and Mark Driscoll

Mars Hill Church (nonprofit)

Mars Hill Foundation for Planting Churches

On Mission LLC

OMCRU Investments LLC

Lasting Legacy LLC

Mars Hill Church Investment Fund LLC

On Mission CRUT. On Mission Charitable Remainder Unitrust. No link at this time.

Future Hope Revocable Living Trust. No link at this time.

Downs Family Revocable Living Trust (aka Melanie J. Thompson). No link at this time.

Resurgence Publishing, Inc.

Reference List ~ Inactive Entities Related to Mars Hill Church and Mark Driscoll

Mars Hill Properties – 49th LLC [inactive as of July 1, 2009]

Mars Hill Properties – 50th LLC [inactive as of March 14, 2012]

Mars Hill Properties – Lynnwood LLC [inactive as of July 2, 2007]

Mars Hill Properties – Ocean Shores LLC [inactive as of October 1, 2008]

Type #1 – Non-Profit Corporations and 501(c)(3)

Mars Hill Church.

WASHINGTON STATE INFORMATION

  • Registered in Washington state, December 22, 1995, UBI #601677819.*
  • Governing Board = President, Mark Driscoll. Secretary and Treasurer, John Sutton Turner. Vice President, Dave Bruskas.

* Registration of an organization (nonprofit, LLC, etc.) in Washington state uses a “UBI number.” According to the State of Washington Business Licensing Service, a Unified Business Identifier, or UBI, “is a 9-digit number that registers you with several state agencies and allows you to do business in Washington State. A UBI number is sometimes called a tax registration number, a business registration number, or a business license number. Use the Business License Application to apply for a UBI number.”

FEDERAL / IRS INFORMATION

  • Federal Tax-exempt 501(c)(3) Public Charity
  • EIN (Employer Identification Number) #91-1733689.
  • NTEE (National Taxonomy of Exempt Entities) Code = X20 – Christianity.
  • IRS Ruling Date = March 1999.

ONLINE PROFILES FOR MARS HILL CHURCH

IRS DOCUMENTS FROM MARS HILL CHURCH

Mars Hill Foundation for Planting Churches.

WASHINGTON STATE INFORMATION

  • Registered in Washington state, October 30, 2013, UBI #603349072.
  • Governing Persons = Directors Mark A. Driscoll, Dave Bruskas, and John Sutton Turner.

Although Mars Hill Foundation for Planting Church is registered in Washington as a non-profit corporation, I find no records (yet) of it being tax-exempt or in the process of applying for 501(c)(3) status.

Type #2 – Limited Liability Companies ~ LLCs

Some of the relevant LLCs were created in Colorado, which references them by an ID number. Registration of an LLC in Washington state uses a “UBI number.” (See directly above under Type #1 for details on UBI.)

On Mission LLC.

  • Created in Colorado. Articles of Organization filed January 28, 2011, ID #20111058965.
  • Later, it was registered in Washington state, December 12, 2012, UBI #603258287.
  • Governing Persons = OMCRU Investments LLC and Lasting Legacy LLC.

OMCRU Investments LLC.

  • Created in Colorado. Articles of Organization filed September 30, 2011, ID #20111552249.
  • Later, it was registered in Washington state, December 6, 2012, UBI #603258278.
  • Governing Persons = On Mission Charitable Remainder Unitrust.

Lasting Legacy LLC.

  • Registered in Washington state, April 17, 2012, UBI #603199549.
  • Governing Persons = Mark Driscoll (Member, Manager) and Grace Driscoll (Member.)

Mars Hill Church Investment Fund LLC.

  • Registered in Washington state, April 17, 2012, UBI #603353130.
  • Governing Persons = not listed on the Washington Secretary of State page. However, the Department of Revenue Washington State search page from searching for this LLC’s Unified Business Identifier (#603353130) shows that it operates from the same address as Mars Hill Church.

Type #3 – Charitable Remainder UniTrust (CRUT)

On Mission Charitable Remainder Unitrust.

  • No additional information available at this time.

Type #4 – Revocable Living Trusts

Future Hope Revocable Living Trust

  • No additional information available at this time.

Downs Family Revocable Living Trust (aka Melanie J. Thompson)

  • No additional information available at this time.

Entities Still Under Study

Mars Hill LLC. Existence not confirmed. (See Part 2A, Section 1 for details.)

Resurgence Publishing, Inc. (For-profit Corporation).

  • Registered in Washington state, May 17, 2012.UBI #603207560.
  • Governing person = John Sutton Turner.

Inactive Entities

Mars Hill Properties – 49th LLC [inactive as of July 1, 2009]

  • Registered in Washington state, March 24, 2005, UBI #602486142.
  • Governing person = Mars Hill Fellowship.

Mars Hill Properties – 50th LLC [inactive as of March 14, 2012]

  • Registered in Washington state, March 24, 2005, UBI #602486138.
  • Governing person = Mars Hill Fellowship.

Mars Hill Properties – Lynnwood LLC [inactive as of July 2, 2007]

  • Registered in Washington state, March 16, 2006, UBI #602594462.
  • Governing person = Mars Hill Fellowship.

Mars Hill Properties – Ocean Shores LLC [inactive as of October 1, 2008]

  • Registered in Washington state, June 25, 2007, UBI #602738658.
  • Governing person = Mars Hill Fellowship, WSOS.

3. Mars Hill Church Compilation Reports and IRS Forms 990

Mars Hill Church Compilation Reports

Please note that despite the same title on the following two documents, the contents are different. The first one is about Tax Year 2011 (running from July 1, 2011, through June 30, 2012), and the second is about Tax year 2012 (running from July 1, 2012, through June 30, 2013).

2013 Public Disclosure Package (36 pages). It includes:

  • Consolidated Financial Statements for tax year 2011 ending June 30, 2012, with comparisons to totals from June 30, 2011.
  • Forms 990-T for years 2011, 2010, and 2009.

2013 Public Disclosure Package (42 pages). It includes:

  • Consolidated Financial Statements for tax year 2011 ending June 30, 2013, with comparisons to totals from June 30, 2012.
  • Forms 990-T for years 2012, 2011, and 2010.

Mars Hill Church IRS Forms 990

Probably the best single source for researching key aspects of non-profits is CitizenAudit.Org. Members of the public can access a total of 40 page views per year for free. Additional views after that are by paid subscription, which various fee plans available (such as one month, one year, etc.).

The Mars Hill Church EIN (Employer Identification Number) is 91-1733689. Go to the CitizenAudit site and plug the EIN into the search bar. Currently (September 2014), the CitizenAudit page for Mars Hill Church has downloadable PDFs for Form 990s from Tax Years 2007 through 2012.

Note that Mars Hill Church’s fiscal year runs from July 1 through June 30. So an example of a typical tax cycle would start on July 1, 2012, go through June 30, 2013, and the Form 990 would be submitted in 2014.

4. Other Research Sources on Mars Hill Organizations and Issues

Links that follow are to materials that typically present some combination of primary sources plus analysis and interpretation. Most of these are by bloggers and professional freelancers, and I’ve selected them for providing crucial documentation and/or demonstrating critical thinking. Additional blog posts that research various Mars Hill organizational entities may be added later. Once there are more, I will likely index them, as some posts deal with multiple entities. But for now, categories.

Mars Hill Church / Mars Hill Fellowship ~ Nonprofit

Here is an important post at WenatcheeTheHatchet on the history of Mars Hill and its three co-founders.

This post from Becky Garrison on Holy Hipster Mark Driscoll Continues to Fall surveys major people and points in the history of Mars Hill, as well as gives a big-picture perspective on key current issues.

On Mission LLC

According to this WenatcheeTheHatchet post, On Mission LLC is the actual copyright holder for Real Marriage. That is confirmed on the book’s copyright page, which is on public view at Amazon’s “Look Inside” for Real Marriage.

 

UPDATES. There will be periodic additions of resources to Section 3, and minor corrections as needed. Any other major updates will be listed below.

08/28/2014 – Data added for Lasting Legacy LLC and Mars Hill Church Investment Fund LLC (both active), and Mars Hill Properties – 49th LLC (inactive). Dates for registration and inactivation on LLCs corrected to full date. A few sentences and links added, including definition of UBI/Unified Business Identifier used for organizations registered in the state of Washington.

08/31/2014 – Data added for Mars Hill Foundation for Planting Churches (non-profit corporation) and Resurgence Publishing, Inc. (for-profit corporation). Overviews and other material updated to reflect there are at least five kinds of organizational types connected with Mars Hill Church, not four.

09/06/2014 – Additional secondary source blog links added to introductory section. Addition of new section on Mars Hill Church IRS Forms 990, and renumbering of old section #3 to new #4.

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