Articles

LEGAL ISSUES – MARCH 23, 2007

Are you a member of the Board of Trustees, or the Finance Committee, or the Administrative Council of your local church? If so, then this time of year is a busy time for you.  The clergy persons in our annual conference call this time of year “the appointment-making season” because this is the time when the district superintendents and the Bishop and the local churches consult with each clergy person to determine whether the  clergy person will “move or stay”. 

When those appointment decisions are being made, your responsibilities are increased because you’re involved in the financial planning for the staffing of the church’s ministries.  There are a few basis principles that should guide your financial responsibilities and obligations in every season of the church year.

Have you (the members with these responsibilities) completed the annual audit of the church’s resources for the previous year?  Has the Finance committee and the Administrative had a chance to fully review the audit?   Do the budgets for staffing and program reflect a balance, or is one budget disproportionately large in comparison to the other budget?  Where have expenses increased in the most recent twelve months?  Has giving increased, or decreased, in the past four quarters?   Is the financial staff (volunteers and or paid employees) adequately trained and able to provide complete financial information to the committee members?  Is there adequate separation of duties among the financial staff members to minimize the risk of loss? 

The local church’s Finance Committee, Board of Trustees, Staff Parish Relations Committee, and the Administrative Council must be able to answer all of these questions positively in order to assure the sound financial condition of the congregation.  Guidance in these matters can be found in The Book of Discipline of the United Methodist Church. It is also prudent to seek assistance from outside authorities, such as accountants, lawyers, and your insurance company, whenever there is any question regarding appropriate financial policy or procedure.   It is far better stewardship of the church’s resources to seek qualified assistance than to muddle along without clear information and risk huge losses.  

Financial impropriety in the local church is quickly becoming a major source of conflict that leads to litigation.  Church members, whether or not they are on the Finance Committee or the Board of Trustees, generally have a legal right to review the financial records and policies of their church.  When members make such reviews and find problems, the result can be conflict that becomes a distraction from the church’s ministry until it is resolved.  Fortunately, this type of conflict can be easily avoided by following good and prudent financial planning and management policies throughout the year.