Legal

Wise stewardship of a ministry starts with setting the good example of an organization that meets its legal duties. Below are some important legal topics to consider for your ministry.

Corporate Obligations

Are we fulfilling our corporate duty by holding required meetings?

Churches should operate and hold meetings as specified in their bylaws. While the legal requirements to have meetings varies based on your state, province and organization type, it is generally considered best practice to hold at least one annual meeting per year. At the meeting the church has the opportunity to conduct business such as presenting and approving pastors, elders, and other officers. It is also a time to present the budget for the following year, approve the prior year’s financials, and take care of any other business that must be approved by either the congregation or elder board.

Here are some of the Best Practices for scheduling Annual Meetings:

  • Inform the congregation well in advance—your Bylaws will usually specify how far in advance they must be notified;
  • Create an agenda;
  • Have handouts;
  • Prepare minutes after the meeting and make them available for the congregation to confirm the business conducted at the meeting.

What are the duties of Board Members and Officers?

Board Members and officers have many duties, and a few to consider are listed below:

Fiduciary Obligation: Board Members and Officers have an obligation to operate in the interest of the organization they are employed by and may have to legally prove they operated in the interest of the organization if a lawsuit or investigation were to ever occur.

Duty of Care: Board Members must prove that sufficient due diligence is performed when making corporate decisions. Due diligence may consist of getting multiple bids for projects and making sure decisions are discussed and a consensus is reached before moving forward with a decision. Making sure all decisions are documented in board minutes is important in case a certain decision ever comes into question.

Duty of Loyalty: Decisions must be made that place the interests of the ministry first.

Duty of Obedience: Board members must ensure that the organization is fulfilling its purpose and mission.

Record Retention

What are record retention regulations?

As an organization you have legal requirements for keeping sufficient documentation. The types of documents that need to be kept range from legal entity documents to payroll documents and accounting records. It is important to have a federal, state, and provincially-compliant record retention schedule and to follow it.

What kind of Corporate Documentation should we keep?

Most Legal Entity Documentation should be kept permanently in a safe location that is easy to access, preferably in both paper and electronic form. A few examples of “Legal Entity Documentation” include:

  • Articles of Incorporation
  • Bylaws/Articles of Association
  • EIN/BIN Paperwork
  • IRS/CRA and State Non-Profit acceptance forms
  • Organizational Mission and Value Statements
  • Board Meeting Minutes

If you are unsure of what legal documentation you must keep on file speaking with a qualified attorney is encouraged.

What kind of Human Resources Documentation should we keep?

Examples of Human Resources documents include:

  • Resumes
  • Employment offers and termination letters
  • Federal, State, and Provincial Payroll Documentation
  • Payroll Records
  • Insurance and other benefit documentation
  • Employee/Employer Correspondence
  • Pay Rate Records
  • Records of employee complaints, or injuries.

Human Resources documentation has varying retention periods that depend on the type of document. Some can range for the time that someone is employed, some can range from 3-7 years after termination, and some are required to be kept permanently. It is important to keep updated with Federal, State, and Provincial regulations for these requirements.

What kind of Accounting Documentation should we keep?

Examples of Accounting Documentation include:

  • Bank Statements, Credit Card Statements, Mortgage Statements, and Investment Account Statements for all organizational accounts.
  • Receipts that are correctly classified and noted as to their related business purpose, organized by order of occurrence. They should tie into the bank statements.
  • Proof of reconciled bank accounts.
  • Regularly prepared financial statements that consist of Profit and Loss, Balance Sheet, and Cash Flow Statements
  • Itemized Records of donations that should tie out to amount of donation receipts issued.

Accounting Documentation record retention requirements can range from 1 year to permanent. This paperwork is important to have in good order as any audits by state or federal organizations will most likely require you to furnish your records.

What other types of documents are important to keep?

Listed above are the most common types of documents. However, there may be other important documentation that is not listed above and should be retained. It is important to work with your board to set the standards for record retention and to make sure they are followed. Examples of general documentation that may be important:

  • Joint Venture Agreements
  • Long term leases
  • Strategic planning decisions
  • Organizational policies and procedures manuals.

The contents of the Church Resource Center are for general information and educational purposes only. The reader should not rely upon the material or information on the website as a basis for making any business, legal or any other decisions, and should not make any decision without first obtaining professional legal and accounting advice specific to your circumstance. Church Investors Fund will not be held accountable for any legal actions the reader may take. 2021 Church Investors Fund. Terms of Use. Privacy Policy. Disclaimer.

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