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Church Bylaws May Invite Court Review

From the July 2018 newsletter edition.
Category: Governance

Ordinarily, courts are reluctant to intervene in the governance of churches for First Amendment reasons. The First Amendment Establishment Clause of the United States Constitution warns the government off becoming entangled in the inner working of churches and other religious organizations. On the other hand, courts may scrutinize the governance of churches on issues that involve non-religious matters. Here is a recent North Carolina case that highlights this point. In 2013, former members of New…

Church Corporations Have Specific Powers

From the April 2018 newsletter edition.
Category: Compliance

Every so often, I get a phone call from a ministry leader asking about allowable activities for the church. In many instances, the question concerns an activity the church is considering undergoing and wants some guidance as to whether they can engage in an endeavor. This question is answered by taking a look at two authorities. First, we must consider what activities are permitted under North Carolina state law. Secondly, a church should look at…

Hospitality Contracts Can Be Distasteful

From the April 2018 newsletter edition.
Category: Contracts

We recently received a contract from a client asking us to review the terms for its reasonableness. Our client was seeking catering and hospitality services from a hotel. The organization was planning a social event that included a banquet and overnight lodging for its guests. This is not an unusual scenario for churches. Churches often host social events that include catering and overnight accommodations. Most of these arrangements call for hiring third parties to provide…

How to Avoid Affinity Investment Fraud

From the January 2018 newsletter edition.
Category: Risk Management

In some respect, a church operates like any other business. It must be concerned about the bottom-line. For this reason, a church should watch its revenue, monitor its expenses and keep an eye on its properties. To get the most from its assets, a church might look for ways to increase its revenue. One place a church might look for higher earnings is the investment of its idle cash. Some churches keep their extra cash…

Developing A Church Ethics Policy

From the January 2018 newsletter edition.
Category: Governance

News reports often mention the misbehavior of public figures. While bad conduct can happen in any organization, there are instances where a church can minimize inappropriate conduct. A Church Ethics Policy can help a ministry set the right expectations for their staff, officials and volunteers. A Church Ethics Policy should recognize the reputation and integrity of the church is one of its most valuable assets. Each employee or volunteer bears a special responsibility to conduct…

Succession Plan is a Governance Issue

From the October 2017 newsletter edition.
Category: Governance

Succession planning is a recognized necessity for most organizations. It becomes even more important where the positions in an organization are critical to its survival. In a church, the Pastor and key leaders are vital. Churches should have a carefully crafted succession plan for the inevitable transition in leadership. Often when we talk about succession planning, we talk about the key executive officer. In the case of a church, the key officer is the Pastor….

Arbitration Clauses In Contracts May Limit Church Options

From the October 2017 newsletter edition.
Category: Contracts

Churches enter contracts for all kinds of purposes. Some agreements are for equipment purchases, to acquire vendor services or miscellaneous commercial transactions. Occasionally, a church may find that a party did not perform as expected. When this happens, the church may look to a legal remedy to resolve the conflict. There are several ways to clear up a dispute with another party. In some instances, the parties negotiate a mutually- beneficial solution. This is usually…

Letters of Intent Can Become Binding

From the July 2017 newsletter edition.
Category: Contracts

Your church has started a negotiation with a potential party. The deal could involve a real estate transaction, new ministry or partnership with another organization. In many of these instances, one party may ask the other to sign a Letter of Intent. Churches should be cautious with this agreement. A letter of intent is a document where the parties agree to work on an endeavor. Because some deals can be time consuming and costly, parties…

Some Charitable Solicitations Require NC License

From the July 2017 newsletter edition.
Category: Compliance

Some churches have auxiliary nonprofit organizations as a part of their community service. These establishments may not be religious organizations per se. They could be foundations, community service groups or commercial ventures. Charitable donations may be solicited from the public to fund these organizations. North Carolina has laws that regulate activities associated with soliciting donations from the public. One of the requirements of the law is that nonreligious solicitors be licensed to operate in the…

Remedies For Returned Checks

From the April 2017 newsletter edition.
Category: Compliance

Churches receive donations from their members, visitors and the public. For donations made with checks, churches face the risk the checks may be dishonored by the financial institutions on which the checks are drawn. When this happens, churches may have remedies available to them if they follow the law in North Carolina. In North Carolina, if a person, firm or corporation gives a check to a church he/she is obligated for the funds represented by…

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