If Your By-Laws Are not Legally Written, You May Be in Trouble

3/28/2017

He called the office, hardly able to speak. He was heart-broken, by the bombshell his Church had just dropped upon him. After years of faithful service to the Church he founded, he had been “stabbed in the back” by the Board of Trustees whom he thought were unanimously in favor of him. Pastor J. had recently decided to retire after more than 30 years.

He was turning the ministry over to a younger Pastor who attained 100 percent of congregational support. After the “passing the torch” ceremony, the senior Pastor received well-wishes from the head of the Trustee Board and an envelope. At dinner following the service the retiring Pastor opened the envelope to receive the shocking news that he was now barred from the property and that the Board of Trustees were demanding a complete audit of the books. We have been doing the Church’s books for years and they are spotless. His Church books are legally and ethically compliant.

What caused trouble for the Pastor was the Church By-Laws – the Pastor never thought he needed to adjust the By-Laws he had personally written many years prior to obtaining our services (even though we had encouraged him to do so). The By-Laws he had written were not structured with proper legal language that would support him in the event of situations of which he now faced. Now, after faithfully serving the Church he founded and Pastored for more than 30 years, he was “kicked to the curb,” without his promised retirement in the form of a monthly stipend that had been agreed upon by the Board and himself.

Operating with an Unsafe Style of Church Government

One problem this Pastor had against him was the Church Government system he had chosen to use. I advise Churches all across America to get rid of Board Ruled, Congregational Ruled Church Government.

There are four styles that are legal. They are:

- Democratic

This form of government is self-explanatory. It is Congregational Ruled, and every member gets to vote on everything. This is a dangerous form of Government that could result in innocent members being targeted by the IRS under the Responsible Party Provisions’ Act.

- Technocratic

Although acceptable, I only know of a handful of Churches that operate under a technocracy. It basically means that the Church is governed from a technology standpoint rather than one that is God-directed.

- Theocratic

Theocratic means that the Pastor should run the Church as he or she hears from God. The Pastor should operate with a trusted advisory board that will provide Godly wisdom for any decisions. This does not mean the Board overrides the Pastor, nor does the Board have a vote.

Some Theocratic Church Governments suffer when the Board is placed in control, rather than the Pastor. The Pastor is the “head” of the local Church under the direct leadership of Christ, who is the ultimate Head.

The only part of the body that has the ability to hear is the head. God does not talk to Board Members about Church vision.

- Autocratic

This form of government is most often employed by some denominations. The denominational authorities are in control of the local Church – not the Pastor, Board, or Congregation.

The good Pastor I am referring to in this blog had a form of Theocratic Government, but it was Board-ruled. As we sift through all of the Church correspondence between the Board and this Pastor, it is our hopes that he has documentation to support his claims of monthly stipends and free use of an office within the compound. If not, he is out in the proverbial cold because he did not COVER HIS ASSETS.

Legally Recognized By-Laws

Our Pastor’s problems would have never materialized if he would have had proper By-Laws in place. This Pastor personally wrote the By-Laws for his Church. Let me provide a word of caution to all Pastors, do not write your Church By-Laws or have a local attorney write them. A local attorney knows the basics to get state incorporation, but does not know the intricacies required for Church business.

No Church should use any By-Laws that have not been written by someone who knows Church Law and Church business, nor should they use By-Laws that have not withstood court scrutiny.

We Can Help

Chitwood and Chitwood has been the best friend of Churches for more than 77 years. Our Accounting and Legal Staff specialize in Church and non-profit law. Our Staff has designed the best legally recognized By-Laws for any of the four types of Church Government, though we recommend a Theocratic Government.

Do not be caught without Covering Your Assets! If your By-Laws are not able to withstand legal scrutiny, you may serve your Congregation for years only to discover you are out in the cold with no legal recourse.

We cover this in our Church Management and Tax Conference. I encourage every Pastor and Church Leader to visit us at www.cmtc.org or call us toll free at 800-344-0076 to register for a Church Management and Tax Conference near you. Do not serve in your Church another day without ensuring that you have legally COVERED YOUR ASSETS!