How to open your own high-revenue church in South Africa – and stay on the right side of the law

Business Insider SA
  • Starting a church is easy. Starting a church and staying on the right side of tax and other laws is slightly more work.
  • Here's what you need to do to claim religious tax breaks, and be able to conduct legal marriages.
  • A franchise-type option is not entirely out of the question either.
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Megachurches, which bring together thousands of worshippers from all walks of life, are also known for generating significant income through tithes, donations, and merchandise.

Rhema Bible Church, led by multi-millionaire televangelist Ray McCauley, has long been among the most prominent megachurches in South Africa. In one of very few public statements about revenue, the church reported turning over more than R100 million per year in 2009.

Grace Bible Church, a spin-off of the Rhema movement, is also in positive financial standing. According to its 2016 financial report, the church possesses assets in excess of R200 million.

In the case of Grace Bible Church, the majority of this income came from tithes and offerings. In 2016, this generated more than R60 million for the church. Bookshop sales brought in another R1.5 million for the year.

Many of these churches operate like businesses, complete with a highly-paid CEO/pastor who lives a lavish lifestyle. If that sounds good, just keep in mind that given the substantial tax breaks churches enjoy in South Africa, the South African Revenue Service is starting to take note of those high-flyers.

It is surprisingly easy to open a church of your own, regardless of where you stand on the topic of either preaching prosperity as a gospel of living it as a lifestyle.

And if you’re unsure how to go it alone, there are some established churches in South Africa who will help you out - for a fee.

Here's what you need to know about starting up your own church in South Africa.

You have great freedom of religion – but claiming the tax breaks takes some paperwork and a couple of hundred bucks.

If your primary motivation is to conduct religious gatherings, formal or informal, South Africa’s Constitution offers you full protection.

South Africans have the right to start a simple church in a backyard, living room, or much larger space with little to no paperwork and administrative requirements.

However, large churches that wish to open bank accounts, benefit from tax exemptions, raise funds, sell merchandise, and officiate marriages, must first register.

Churches and other faith-based organisations in South Africa operate as non-profit companies or organisations. Like any civil society organisation, a new church must officially register as such in order to become a legal entity.

The Companies and Intellectual Property Commission (CIPC) manages the process of non-profit company registrations in South Africa, including churches. A non-profit company, registered without members, costs R475. A Memorandum of Incorporation for a standard non-profit company is R175.

There are several steps required in this process, depending on the exact nature of the organisation. Once submitted, the registration of the non-profit organisation should take 25 days. 

It’s also possible to register a faith-based organisation, such as a church, as a non-profit organisation.

Non-profit organisation registration is free, but it can take several months to complete.

How to pay less tax, and stay on the right side of the law. 

According to the Nonprofit Organisations Act, a non-profit company or organisation’s primary objective is to benefit the public.

A key aspect of the Act stipulates that the proceeds may only be distributed to founders and members in the form of “reasonable compensation” for specific services.

Furthermore, non-profit companies must use their income and assets to “advance its stated objectives”, as stipulated in a Memorandum of Incorporation.

It is these conditions that Sars is using to clamp down on religious institutions. If Sars believes the church is flouting the conditions that govern an NPO or NPC, it may remove that organisations status and issue harsh penalties – or even seek jail time.

According to Sars, “An organisation will only enjoy preferential tax treatment after it has applied for and been granted approval as a Public Benefit Organisation (PBO) by the Tax Exemption Unit.”

Sars provides great detail on who qualifies for such exemption, and how to apply.

Although churches may qualify as public benefit organisations, a status that comes with certain tax benefits, their employees are still required to pay tax. This should be deducted as Pay as You Earn tax and deducted from salaries.

SARS may also remove a PBOs tax exempt status if they pay employees excessive salaries, or if they believe the organisation is using the status to evade tax.

Officiating over marriages will take some more paperwork.

Marriages are an important service in many churches in South Africa – and a good potential source of revenue. In order for a church to conduct state-recognised marriages, they must register individuals as marriage officers first.

The Department of Home Affairs oversees the marriage officer registration process, and churches can submit registrations to the department on behalf of the appointed officers. Following this, marriage officers are free to declare people married. And to charge a fee for this service.

You can't buy a church franchise – not exactly.

Although there are no specific church franchises in South Africa, there are some ways to tap into networks that already exist.

ARC Southern Africa, for example, exists as “an association of relational churches working with church planters [people who create churches from scratch] and church leaders to provide support, guidance and resources”. 

In other words, for a regular financial contribution, interested parties can use ARC’s infrastructure to launch a church.

In exchange for a monthly contribution, usually taken as a percentage of income, ARC offers training, assistance in money-raising efforts, and access to church networks.

ARC does not stipulate a minimum financial contribution that the new church should contribute to the parent company. However, it suggests a starting contribution of 2% of all income per month. 

Other established churches offer similar packages. International megachurch Hillsong, estimated to be worth more than R1 trillion, for example, offers a Leadership Network to support new churches in their network.

This is a “network of local churches and ministries” that aims “to champion the cause of the local churches everywhere”.

The support network includes access to a network portal with church building resources, invitations to events, access to lounge and priority seating at conferences, and “network master classes” to help grow various aspects of the church. They do not disclose the fee required to join this network.

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