Case Study: Transporting business into ministry

Again I tell you, it is easier for a camel to go through the eye of a needle than for a rich person to enter the kingdom of God.

Alan Barnhart was 24 years old and just starting out in his family’s business when he first read these words from Matthew 19:24. This was one of hundreds of Bible verses he would study over a two-year period that would lead him to an important realization that would change the course of his life: he did not want his business success to equal spiritual failure.

So in 1986, when Alan and his brother, Eric, started the process of transitioning from employees of the family business to co-owners of Barnhart Crane and Rigging, they decided to establish safeguards against too much worldly success in their lives. This led them to an unusual promise – they committed to each other to keep their lifestyle simple and modest and to use any additional money they made to fund ministry.

Alan explains, “If God chose to prosper our business beyond what it would take to generate our middle-class salaries, we promised that we would not increase our lifestyle.”

In their first year in business, Alan and Eric didn’t know if their new venture would even survive. They began with a small group of about 10 employees and equipment from the original family company and the corporate offices (which were two bedrooms of the home they grew up in). But what happened next was amazing.

Alan says, “The company started to grow, and the first year we made some extra money. We were able to give away $50,000 – which was more than my salary. I thought that was awesome!” They discerned that God wanted their giving to have an international focus because they saw such a disproportionate need there.

The next year they were able to give $150,000 and the next year it was more, and this continued. The company grew about 25 percent a year over the next several decades. Barnhart Crane and Rigging went from a very small company to an established business with offices around the country.

One year, in the early 2000s, they were able to give away $1 million. Then, one of their salesmen came up with an audacious goal: to give away a million dollars a month. They achieved this goal in 2005, and every year since then, they have continued to give away an average of $1 million a month.

As the years passed, annual corporate earnings grew to more than $60 million, and the value of their business was also significant. Alan says, “We believe God owns everything, not just our income. So eventually, we decided to give the whole company away as well.” They met with a number of advisors to come up with a strategy. But they couldn’t find anyone who knew exactly how to handle their unusual gift.. With the help of the National Christian Foundation (NCF), they were able to accomplish their goals by giving their business to charity now.

Here’s how it worked:

1. In 2007, the Barnharts contributed 99 percent of their business ownership interests into one of NCF’s irrevocable charitable trusts (all non-voting shares). This gave them a large tax deduction immediately and eliminated future estate taxes. It also enabled them to maintain the ongoing management oversight of the business.
2. Income earned by the company is taxable to NCF’s trust, but effectively at rates below those previously experienced by the Barnharts. This allows for even more value to benefit charity.
3. To allow this arrangement to continue long term, the one percent of the voting interest was placed in a special trust (also benefitting charity) that allows the Barnharts to continue to manage the company. This arrangement was specifically approved by the IRS and completed a 100 percent gift of a business valued at several hundred million dollars that generated earnings of almost $60 million per year.