There is considerable disagreement on how boards of directors should function.  For a religious nonprofit organization, the board of directors is (or should be) the critical body that determines the entity’s programs and investments and provides management guidance.  The role of the officers and employees is important, but the board of directors has the responsibility to frame the organization’s overall policy directions and objectives.  The governing board has the ultimate responsibility for the organization’s activities—and can be a prime target when matters of liability arise.

 

One of the main responsibilities of board members is to maintain financial accountability and effective oversight of the organization they serve.  Board members act as trustees of the organization’s assets and must exercise due diligence to see that the organization is well managed and that its financial situation remains sound.  Fiduciary duty requires board members to stay objective, unselfish, responsible, honest, trustworthy, and efficient.  Board members, as stewards of public trust, must always act for the good of the organization, rather than for their personal benefit.  They need to exercise reasonable care in all decision making, without placing the organization under unnecessary risk.

 

It is important to remember, however, that individual board members have responsibilities but not personal authority over the organization.  Since members have no individual authority to make organizational decisions, the board collectively is responsible for:

 

1) Developing and maintaining the organization’s mission;

2) Maintaining the organization’s tax-exempt status and (if applicable) its ability to attract charitable contributions;

3) Protecting the organization’s resources and approving the budget;

4) Hiring and evaluating the chief executive, and generally overseeing the organization’s management; and

5) Supporting any fundraising that the organization undertakes.

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One factor which can contribute to the long-term success of a nonprofit organization is the presence of an able board of directors who can complement the vision and resources of the organization.  However, unlike large for-profit corporations who elect their directors based on the individual’s business and legal savvy, most nonprofit organizations elect their board of directors based upon the individual’s loyalty and dedication to the organization.  As a result, many persons serving on their nonprofit organization’s board may not have a clear understanding of their rights, responsibilities and, most importantly, their potential personal liability.  In an effort to fill this gap, the Church Law Group is focusing this month on training for board members.  Our goal is to to set-out the basic rules which all directors should follow and to discuss a few ways in which nonprofit organizations can limit the potential exposure faced by its board members. 

Let’s start with the traditional duties of individual board members:

The duties of the board of directors of a nonprofit organization can be encapsulated in the three D’s: duty of care, duty of loyalty, and duty of obedience.  Defined by case law, these are legal standards against which all actions taken by directors are held.  They are collective duties adhering to the entire board and require the active participation of all board members.  Accountability can be demonstrated by showing the effective discharge of these duties.

1. Duty of Care.  The duty of care requires that directors of a nonprofit organization be reasonably informed about the organization’s activities, participate in decisions, and do so in good faith and with the care of an ordinarily prudent person in similar circumstances.  The duty of care could be carried out by attendance at meetings of the board and appropriate committees, advance preparation for board meetings, obtaining information before voting to make good decisions, use of independent judgment, periodic examination of the credentials and performance of those who serve the organization, and frequent review of the organization’s finances and financial policies.

2. Duty of Loyalty.  The duty of loyalty requires board members to exercise their power in the interest of the organization and not in their own interest or the interest of another entity, particularly one in which they have a formal relationship.  When acting on behalf of the organization, board members must put the interests of the organization before their personal and professional interests.  In practice, the duty of loyalty is carried out by disclosure of any conflicts of interest, adherence to the organization’s conflict-of-interest policy, avoidance of the use of corporate opportunities for the individual’s personal gain or benefit, and nondisclosure of confidential information about the organization

3. Duty of Obedience.  The duty of obedience requires that directors of a nonprofit organization comply with applicable federal, state, and local laws, adhere to the organization’s bylaws and existing policies, and remain the guardians of the mission.

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There is considerable confusion among church employees and leaders on how to avoid committing copyright infringement.  Churches and other religious organizations can avoid copyright infringement liability by implementing policies that ensure copyright compliance.

One of the simplest ways to avoid copyright infringement is for a church to obtain a “blanket license” for the use of copyrighted materials.  The church will pay an annual fee for a blanket license, and such license will allow a church to use copyrighted materials—such as lyrics, printed music, audio and videos—for the term of the license. 

For example, a church could obtain a licensing agreement from an organization such as Christian Copyright Licensing, Inc. (CCLI).  A church that obtains a Church Copyright License from CCLI enters into a contractual agreement with songwriters and publishers.  By paying CCLI an annual license fee, a church receives legal authorization to copy from over 200,000 songs for congregational use.  Churches can obtain similar blanket licenses from other organizations such as:

• American Society of Composers, Authors, and Publishers (ASCAP)
• Broadcast Music Inc. (BMI)
• Christian Video Licensing International (CVLI)
• Society of European Stage Authors and Composers (SESAC)

Once a license is obtained, churches must act in compliance with the terms of their contract with the licensing authority.  For instance, some licensing organizations require that the church include copyright information on all songs reproduced under the license.  This means that the church would responsible for including the song title, writer credit(s), copyright notice, and your church’s license number on the bulletin, song-sheet, or computer projection.  In order to avoid liability, always remember to abide by the terms of your contract!

Statutory damages in cases of infringement can range from $500 to $20,000 or more per violation–and the recording industry IS watching, as exemplified recently when a woman was charged $1.9 million dollars for illegally downloading music.  (See here for full article.)

The Church Law Group has released a Guide to Intellectual Property (with forms) that is now available for purchase.  Email churchlawgroup@amlawteam.com or call 972-444-8777 if you have any questions about intellectual property matters or are interested in the Church Law Group Guide to Intellectual Property.

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A screening program should be viewed as a preventative devise designed to filter and reveal valuable information, such as if a candidate has a criminal history for violent acts. Screening should take place BEFORE a person is employed or serving as a volunteer. There should be no exceptions to this rule—ALL workers at your church, paid or volunteer, must go through an appropriate screening process. The following are the core elements of an effective screening program:

1. Create written job descriptions

Detailed job descriptions should be prepared for each paid and volunteer position. Job descriptions should include:
• Job title
• Specific duties and responsibilities
• Necessary qualifications
• Time commitment required
• Skills and gifts needed
• Necessary training for position
• Whether position involves primary or secondary access to children

2. Create written applications

A properly drafted employment and volunteer application permits the church to gather important information about applicants, including prior work history, volunteer history, and personal references. It allows the church to verify information from detached, unbiased outside sources and gives the church authorization to conduct a criminal background check.

3. Classify volunteers

Church Volunteer Level 1 (V1)—workers with primary access to children, such as teachers, parent volunteers, teen volunteers, superintendants and children’s ministry directors

Church Volunteer Level 2 (V2)—workers with secondary access to children, such as secretaries, support staff, janitorial services, and so forth

4. Secure completed application

It is critical to make sure that each application is completely filled out with no missing information. ANY irregularities in an applicant’s information should be flagged immediately and addressed. Regardless of how insignificant the irregular information may seem, it should be noted and then investigated.

5. Conduct in-person interviews

In-person interviews help to fill in any missing information about the candidate and verifies, in person, all the given data. This interview is very important because it is your opportunity to carefully scrutinize the applicant.

6. Obtain reference checks

Asking for references means the church actually calls or writes the persons listed as references and records the information given. This permits you to contact his or her former pastors, employers, schools, and friends to verify that the information contained in the application is true and correct.

7. Complete criminal background and records check

The most preferable option for your church is to hire a professional background screening company that has the experience and capability to conduct searches on a local and nationwide basis.

By following these steps, the church is showing that it exercised due diligence in researching the applicant’s background. While, no screening program can insure 100% effectiveness, it can greatly reduce the risk of an occurrence of abuse or violence at your church.

All of these steps and more can be found in The Guardian System, a comprehensive program designed to prevent occurences of child abuse in churches. The Guardian System (2nd edition), written by David Middlebrook, can now be purchased for a discounted price of $29.99 hard copy or $19.99 PDF download by emailing the Church Law Group at churchlawgroup@amlawteam.com or calling 972-444-8777.

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There are countless instances of violence in or directed at the church.  Perhaps one of the earliest and most famous instances of violence in the church in Western culture was the assassination of Thomas Beckett, the Archbishop of Canterbury in 1170.  Four medieval knights, reportedly acting upon the unofficial request of King Henry II of England stormed into the church and hacked the bishop to death with their swords.  Evening prayer services were being conducted at the time.  Though the ultimate motivation for this murder was based upon a dispute between the government and the church over religious authority, many people were astonished at the time that the church was not a sanctuary from such violence.

So what can be done?  In all areas of secular life, security concerns are requiring heightened awareness and responses.  Should the church put metal detectors at its doors and armed guards in the pews?  Can it be an effective ministry, a place of grace and forgiveness, with such strident measures? 

As a general rule in most jurisdictions, a church is not legally responsible for the criminal acts of a third-party occurring on its property unless the crime is foreseeable, that is that the church should have known something like that would happen.  Whether or not a church is ultimately found legally responsible for not preventing an attack that it should have known was coming, it can still suffer from the costs of defending itself from such a claim, both financially and from a public relations standpoint. 

A congregation that does not feel safe and protected is going to have a hard time conducting meaningful worship.  Every church should consider a general disaster or threat policy to address potential threats to the safety of its employees, congregation, and visitors.  As with all contingency and risk planning, every church is faced with some well-intentioned leaders who resist addressing these types of issues because of the “that-would-never-happen-here” mentality.  They say things about not wanting to cause concern for a problem that does not exist, that the church doesn’t have that budgeted, “we’ll address that next year,” that they believe the security is adequate (even though it has not been studied or discussed), etc.  Sometimes that kind of thinking is the minority view and sometimes it is the prevailing view.  In speaking to church clients who have been victimized by violence, we can say that they are always surprised, and that is the point.  No one can predict when they will be victimized by violence and at some point in all of our lives we should expect tribulations.  If your church is unfortunate enough to suffer through such an episode, wouldn’t you want to be prepared, to stop the violence before it starts or reduce its duration from ten minutes to one minute, to save the lives of your congregation not to mention yourself?  You, as a church leader, as a good shepherd, need to make sure that security has been considered and reasonably dealt with at your church.  Do not let someone talk you out of addressing this issue (because someone will try).  As with all liability issues, we at the Church Law Group advocate that you hope for the best and plan for the worst.

If a violent attack occurred in your church, would you and your staff have a plan to follow?

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