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In our day, we are often confused by the linguistic twists and spin applied to words and terms. Methods of manipulating ideas, often unintentionally, such as equivocation can result in the same term meaning different things to different people. Therefore, your question may have more than one answer depending on perspective. In my experience however, when it is said of a church that it "preaches grace," it typically refers to the church's particular theological position on the doctrine of election. Doctrine in this category may also be referred to as "doctrines of grace," "sovereignty of God," "predestination," "reformed theology," "Calvinism," etc. Such a church will usually shun legalism (adherence to the law as a means of earning God's favor) and emphasize the gospel or "good news" of the mercy and kindness of God in election. This doctrinal position is commonly aligned with the theology of the great reformers of the 16th century such as Luther and Calvin and has come to be known as "Calvinism," although John Calvin was only one of many who espoused its precepts. Long before the Reformation these doctrines were clearly and strongly taught by the great fathers of the faith such as Augustine and Aquinas. It is often said of the reformers that they "stood on the shoulders of St. Augustine" as they rediscovered the truth of the gospel. The New Testament clearly differentiates between the Old Covenant (the law of God) and the New Covenant (covenant of grace). The doctrines of grace preached in these churches usually emphasize that salvation is by grace alone through faith in the finished work of Jesus Christ (Ephesians 2:8) and not by any works of man. "Calvinism" rejects the notion that man plays a part in his own regeneration. God the Father sovereignly foreknows, predestines, calls, justifies and glorifies (Romans 8:28-30); God the Son provides the legal basis for justification; and God the Holy Spirit applies the results of the finished work of Christ through regeneration (or birth from above - John 3:1-8). This is referred to as the "ordo salutis" or order of salvation. Other doctrinal systems such as Arminianism (or Semi-Pelagianism) preach that man must act first by "making a decision" for Christ, "placing their faith" in Christ, "accepting Christ" as their savior, etc. Calvinists argue that making a decision, placing our faith in, and accepting Christ will inevitably happen, but only "after" regeneration (new birth) which is a sovereign act of God's grace alone. Arminianism, according to Calvinists, makes salvation the result not of the grace of God alone, but of grace plus the works of man (Jonah 2:9) giving man at least some of the credit (glory) for his own salvation. The debate runs much deeper than what is expressed here and it is unlikely that the issue will be fully settled this side of eternity. That may be one reason that God, in His perfect wisdom, has allowed divisions in His church. If you lean toward the view that salvation is a sovereign act of grace from Almighty God and that man's participation in that salvation begins "after" the new birth (John 3:3), you have the option to attend a church that "preaches grace."
In my experience, in a nutshell, when someone talks about a church that preaches grace, they're talking about a church that teaches that Christ lives His life through us rather than that we try to 'live for Him'. There are a lot of churches that you can attend that will teach with an emphasis on what we do for God and the sermons will sound like a call to try harder, to do better, probably even to do more for God. A 'grace' church will spend more time teaching that we can do nothing apart from Christ - that if He isn't the one living in us and through us, there will be no real freedom and power. 'Grace' churches will teach that "God’s law was given so that all people could see how sinful they were', (Romans 5:20 NLT) rather than as a standard and code to live by to be considered righteous. They will teach that God's grace is for daily living or sanctification every bit as much as it was for salvation. They will teach that the Christian's main focus in life is not be on producing fruit, but rather on the Vine (John 15) who then produces fruit through us. They will acknowledge that we can do nothing apart from Christ who is the only one capable of actually living the Christian life. They will teach that, in Christ, our lives can be characterized by an easy yoke, a light burden, and rest for our souls. (Matthew 11:28) These churches are sometimes seen as teaching that how we live doesn't matter because God's grace covers everything. In reality, the fact that there is 'no condemnation for those that are in Christ' (Romans 8:1), is what 'grace' churches would say frees us to live in Christ the way He intended - keeping His commands, but by His strength in us because we have surrendered our daily lives to Him. In short, I would say 'grace' churches teach dependence on God to be the power to live a life that we simply can't live on our own despite our best intentions and efforts.
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