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Protect Your Ministry From Unnecessary Risk

July 23, 2015

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Your ministry does important work. But is it affected by unnecessary risks? Checking your corporate documents and your management structure can weed out risk before it affects your ministry.

Review Your Corporate Documents

Your corporate documents are your ministry’s framework. They include:

  • Bylaws and Constitution
  • Articles of Incorporation
  • Minutes and Corporate Resolution

Since some of these documents have to be filed with the State, they present unique risks. Let’s review each one.

  1. Bylaws and Constitution

Your ministry’s bylaws and constitution define the structure of the ministry and how it’s run. Some also include expected results and a staff conduct code.

Has your ministry made decisions that go against its bylaws and constitution? If so, the ministry could be at risk. For example, it could be risky if a congregant disagrees with a decision the board makes. Sometimes this kind of risk happens because policies are old and out of date.

You can prevent this risk by reviewing your policy regularly. Consult your bylaws before making big decisions. Follow the bylaws’ requirements for holding meetings and voting. Review and amend the policies as needed. That way, your ministry will have up-to-date policies to protect it.

  1. Articles of Incorporation

Does your ministry have articles of incorporation? These might include quorum and voting requirements. Be sure to compare these articles to your bylaws. If you find contradictions, consult your attorney on how to proceed. Keep a record of the original filing of the articles, as well as the filing of any amended versions.

  1. Minutes and Corporate Resolution

Minutes of meetings and corporate resolutions are important records to keep. They prove that your ministry is following its bylaws. Minutes also record big decisions. Keep minutes and resolutions filed in a safe place. Keep a duplicate copy of your most important records in a separate location in case of fire or other disaster. Records that need backup copies are big decisions such as:

  • Bylaw changes
  • Hiring or firing of key staff
  • Buying land or borrowing money to grow the ministry

Review Your Management Structure

Management structure is the policy that says how your ministry is run. Do you have a board of directors? Elders? Deacons? Or some other managing body? This should be part of your written policy. If your management structure isn’t written down in your policies, your ministry could be at risk. And if your ministry isn’t following what’s written down, it could be at risk.

  1. When Things Look Wrong

Sometimes, the appearance of wrongdoing is just as bad as actual wrongdoing. A good management structure will help your ministry avoid this risk. If your leaders aren’t following management structure, your credibility and influence can suffer.

Your ministry needs financial controls that are transparent and that hold individuals accountable. For example, finances should never be in the control of just one person. And ministries should avoid having people related by blood or by marriage control the finances. And if possible, your ministry board should have at least five people on it. Of those five, three should be unrelated by blood or by marriage.

  1. Is Your Ministry Efficient?

Depending on the economy, you might have to reduce your staff. This can save money and also make the ministry more efficient. Since your ministry takes in donations, you have a duty of stewardship. If your ministry seems to be wasting money, donations may dry up.

A good management structure can help avoid this problem. Your management structure should do the following:

  • Clearly state the ministry’s mission
  • Clearly define ministry roles
  • Encourage use of volunteers to limit paid staff
  • Encourage communication between leaders and staff
  • Handle ministry and personnel matters consistently
  1. Litigation

Ministries and non-profits get sued too. It’s not common, but it does happen. So your board and executive staff need to do all they can to help reduce the risk of lawsuits.

First, all levels of leadership should be accountable to someone.

Second, avoid conflicts of interest between board and staff. For example, you shouldn’t have someone related to a staff member on the board. If you absolutely can’t avoid that, then that board member shouldn’t vote on staff-related matters.

Third, keep ministry funds separate from personal funds. Don’t use personal accounts to hold ministry funds. And don’t use ministry funds for personal use. Of course, the money all belongs to God, but it’s wise to avoid suspicion.

Why Manage Your Ministry’s Risk?

Unfortunately, talking about risk means talking about what can go wrong. Here’s what can go wrong if you ignore your ministry’s management risks:

  • Your ministry’s reputation could be negatively affected
  • Your staff and resources could be used inefficiently
  • Your staff’s morale and effectiveness could suffer
  • Your ministry and its board could face legal risks

This list might seem discouraging, but keeping track of these things means better financial health and less risk for your ministry. Seek advice from professionals where it’s needed and from other ministry leaders whose work you admire. With the right planning and policies, your ministry can limit its risk and work more efficiently for God’s Kingdom!

Disclaimer: Christian Community Credit Union is a state chartered financial institution. While we offer a full line of banking products and services, legal advice is not one of them. The information presented in this white paper is intended to bring awareness to areas where your ministry may be taking unnecessary risk. Our recommendation is that you or your executive team consult with professionals; only then can you be fully informed of your ministry’s options and how best to protect yourself and your ministry from loss.

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