Governance Transparency

At its core, transparency in governance is about participation and communication. Too often, church leaders make decisions without receiving and considering input from the congregation, and the manner in which decisions are made is opaque. One of the consequences of this decision-making process is passive, disengaged congregants who believe that, when they are unhappy about something, their only recourse is to leave the church. Instead, we believe that churches should strive to include all churchgoers, an endeavor that evidence suggests will lead congregants to take more ownership of the church’s mission and be more generous with their resources.

To address these concerns, some level of structural reform is necessary within most churches.  Of course, the degree to which there is governance flexibility may be severely limited in some denominations. For churches in those denominations, church leaders should be mindful of the need to communicate regularly and clearly with the congregation and to seek input. For other churches, structural reform is possible.

Below are several principles of good nonprofit governance that are recommended by a wide variety of organizations, including the Evangelical Council for Financial Accountability, the Internal Revenue Service, Independent Sector’s Panel on the Nonprofit Sector, and two of the most influential state associations of nonprofits. (These organizations recommend the following principles in the context of all nonprofits.) We do not believe in a “one size fits all” approach to governance, but we do believe that the guidelines promulgated by these bodies are the product of careful and thoughtful deliberation regarding sound governance. For that reason, we present these as suggestions for those churches that would like to implement governance reform.

As noted above, the structure of some denominations may make many of these reforms difficult. At other churches, the framework for some of the structures discussed below may already be in place – e.g., at Presbyterian churches, the elders should provide similar governance functions, though in practice, elders have little power at some churches. For still other churches – e.g., nondenominational churches – it would be possible and advisable to implement all of the below reforms, especially because nondenominational churches often lack other means of accountability available to churches within a denomination.

In addition, we believe that the below suggestions offer a valuable contrast to the way some churches are currently governed and suggest ways that even churches within denominations may implement piecemeal reforms designed to give the laity a greater voice in church governance.

1.    Churches should be governed by an independent Governing Body consisting of at least five but no more than 15 members, each of whom is elected to a fixed term.

a. Members of the Governing Body should be independent – meaning that they receive no compensation from the church, are not on its staff, and are not related to or living with anyone who is. At other nonprofits, it is generally agreed that a majority of board members should be independent.  As a best practice, all should be, but in many nonprofits the chief executive serves on the board as its only non-independent member.

b. The size of the Governing Body should be large enough to permit deliberation including a range of perspectives, but it should not be so large that it becomes unwieldy.

c. Members of the Governing Body should be individuals who are committed to the church’s mission and willing and able to devote substantial time to overseeing its management.

d. They should serve for a fixed term that is long enough to allow them to become familiar with their role but not so long that they become burned out. For instance, a five-year term or a three-year term with the possibility for one reelection might be reasonable. The terms of different members of the Governing Body should be staggered so that the entire leadership is not up for election at the same time.

e. The Governing Body should have a chair, a treasurer, and a secretary, and no individual should occupy more than one office.  If the pastor is on the Governing Body, he or she should not hold an office.

f. The Governing Body should meet regularly – at least once per quarter.

Sources: BBB Wise Giving Alliance, Standards for Charity Accountability, Standards 1-4; ECFA Standard 2 – Governance; Internal Revenue Service, Governance and Related Topics – 501(c)(3) Organizations, Topic 3; Michigan Nonprofit Association, Principles & Practices Guide (Oct. 2009), page 13; Minnesota Council of Nonprofits, Principles & Practices for Nonprofit Excellence (May 2010), page 7; Panel on the Nonprofit Sector, Principles for Good Governance and Ethical Practice: A Guide for Charities and Foundations (Oct. 2007), Principles 8-12, 14, and 17.

2.    Members of the Governing Body should be accessible to church members, and the Governing Body should explain its decision-making process to the congregation.

a. The Governing Body should regularly present a summary of its meetings and decisions to the congregation.

b. The Governing Body should be involved in the life of the church and should have significant responsibility outside of the regular meetings.

Sources: Michigan Nonprofit Association, Principles & Practices Guide (Oct. 2009), page 19; Minnesota Council of Nonprofits, Principles & Practices for Nonprofit Excellence (May 2010), page 10.

3.    A church should have organizational documents that establish its governance and management structure, and those documents should be made available to the congregation.

a. Access to organizational documents is important for the congregation to understand how the church is governed and how decisions are made.

b. Such documents include articles of incorporation and bylaws.

c. In most cases, organizational documents are already required by state law.

d. Churches should actually abide by the governance and management structure outlined in their organizational documents.

Sources: Internal Revenue Service, Governance and Related Topics – 501(c)(3) Organizations, Topic 2.

4.    The Governing Body should bear the ultimate responsibility for hiring, overseeing, and evaluating senior church staff members, including the pastor.

a. The Governing Body should establish clear criteria for hiring and evaluation, and those criteria should regularly be explained to the staff and congregation.

b. If the Governing Body is unhappy with the performance of the pastor, that displeasure should be documented in its annual evaluation, which should explain the reasons therefor and provide concrete steps that can be taken to improve.

c. Although some might see evaluation as un-Christian or find it troubling that the Governing Body be tasked with evaluating the pastor, it is no secret that churches often become unhappy with and fire staff members or even pastors. Oftentimes, these decisions are ill-reasoned and come as a shock to the individuals fired. Implementing an annual evaluation process is fair to both the pastor and the congregation, and opens lines of communication about expectations and performance that contribute to a smoothly functioning organization. For instance, such a system should minimize the gossiping and intrigue that is prevalent at many churches. Indeed, we believe that honest, thoughtful, and prayerful evaluation and discernment have the capacity to make churches more effective ministers of God’s grace.

Sources: Michigan Nonprofit Association, Principles & Practices Guide (Oct. 2009), page 13; Panel on the Nonprofit Sector, Principles for Good Governance and Ethical Practice: A Guide for Charities and Foundations (Oct. 2007), Principle 13.

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