How to Look at Corporate Governance in a Religious Setting

Faith-based groups need to perform corporate governance audits to stay within the law, make sure people are held accountable, and develop a stable foundation for their work. A full examination checks to see if the church's laws, regulations, and governance structures are in line with the law and the church's mission.

This article talks about how to undertake a good review of corporate governance in faith-based settings. We'll discuss the unique difficulties that churches face and give board members, pastors, and leadership teams helpful advice on how to uncover problems and fix them.

Why Churches Should Pay Attention to Reviews of Corporate Governance

Churches have to follow a multitude of different rules, like those for nonprofits, those for employees, and those for their own religious groups. A review of governance is helpful:

• Make sure you follow the regulations and legislation that change.
• Make the board more accountable and useful.
• Find risks and take steps to decrease your responsibilities.
• Make sure that the church's rules and procedures are in keeping with its spiritual mission and ideals.

Churches that don't complete governance evaluations could have problems with the law, money, and their leaders.

Key Steps for Conducting a Governance Review in a Religious Group

1. Get Ready and Create Arrangements
• Set the review's goals and restrictions.
• Get board members, pastors, and other key staff to help out.
• Put together the necessary documents, such as bylaws, policies, minutes, and financial statements.
2. Look at How the Board is Made Up and How It Works
• Look at the board members' abilities, qualifications, and diversity.
• Look at the board's structure, the committees, how often they meet, and who shows up.
• Check out the board's culture and how they make decisions.
3. Read Over the Governance Documents
• Make sure that the rules, bylaws, and procedures are clear and follow the law.
• Make sure there are regulations against leaking and conflicts of interest.
• Make sure there is proof of decisions and meetings.
4. Look Over Compliance and Risk Management
• Verify the internal audits, the financial controls, and the insurance coverage.
• Read the rules for keeping kids safe, completing background checks, and working with volunteers.
• Make sure you are following the regulations for jobs and taxes.
5. Let Them Know What You Found and How They Might Improve Things
• Write a full report that includes the pros, cons, and risks.
• Give proposals that can be acted on, with due dates and levels of importance.
• Show the board the results so they can discuss them and accept them.

Things to Keep in Mind While Undertaking Reviews of Faith-Based Governance

• Finding a balance between following the law and following your faith: Governance structures must protect the church's legal interests without damaging its faith-based nature.
• Respecting denominational requirements: Some churches have hierarchical or doctrinal governance structures that need to be looked at in a specific way.
• Roles for pastors and volunteers: Faith groups usually rely on volunteers and pastoral leadership, which means they need risk management that is tailored to their needs.
• Getting people involved in the church: Being honest with members about changes in leadership creates trust and support.

In the End

Faith-based groups should regularly check their corporate governance to make sure they are respecting the law, conducting their business honestly, and staying faithful to their objective. By undertaking a full and rigorous evaluation, churches may build up their leadership base, minimize risks, and make their ministries work better.

Links Inside

• Learn more about what a church governance lawyer can do for you.
• Check out our church's report on legal audits and compliance.
• Learn about church risk management and waivers of liability.

Links to Other Websites

• ECFA Governance Best Practices
• Christianity Today – Church Governance
• BoardSource – Nonprofit Governance Resources

Please note that this blog post is not legal advice; it is only for information. If you need support with a governance review that is specific to your requirements, talk to a lawyer who knows church law.