This second aspect of the duty of obedience requires board members to ensure that the ministry complies with all applicable federal, state and local laws. There are a multitude of laws but there are a key handful that can really cause you grief. I’m going to give you four of them.
Are our payroll reports filed and are all of our payroll taxes paid?
Are all of our compensation arrangements properly reviewed for reasonableness?
Is our child abuse prevention policy operating effectively?
Are we up to date with our state incorporation renewals?
This is by no means exhaustive, but I covered four big ones that a common failures that can have significant adverse impacts.
We have a list that we provide to boards as a kind of self-assessment tool to determine if they’re being effective in matters of fiduciary responsibility. If you’d like to receive that tool, please contact me at firstname.lastname@example.org
The duty of obedience requires board members to be faithful to the ministry’s mission. The basis for this rule lies in the public’s trust that the ministry will manage donated funds to fulfill the ministry’s mission.
Sometimes tensions may arise, such as when a visionary leader wants the ministry to embark on a new project. Maybe there’s another ministry that should take on the project instead. Or, maybe our purpose statement needs to be reevaluated.
If your ministry board is led to believe that you need to embark in a new direction you should revise your mission statement to fit your new activity.
This episode will give you the guard rails to keep your mission on track, and the road map you need when it's time to change course.
StopNonprofitFraud.com is a series of concise training videos for board members to help prevent fraud in your ministry. CPA and Certified Fraud Examiner Tiffany Couch takes you through some of the hard lessons learned by her clients,.
Use the code “CROSS20” to save $20 on your course.
The duty of loyalty requires directors to act in the interest of the ministry or church rather than in their personal interest.
And, when duty of loyalty is present and operating, the board will have an effective conflict of interest policy in place. The board will discuss apparent conflicts of interest as they arise, and decide how to handle them.
So, what does a conflict of interest look like, how does a board member disclose a conflict of interest, and how does a board respond to apparent conflicts? Churches and ministries that fail to properly manage conflicts of interest may be subject to significant penalties against the board director, the ministry, or both.
Keep duty of loyalty as a guiding value – put the ministry first; be alert to apparent conflicts of interest, pay your own way as a director, and make sure you’re giving back to the ministry you love. Go the extra mile so that no one can say that you had an advantage.
Stop Nonprofit Fraud , a course offered by CPA and Certified Fraud Examiner Tiffany Couch.
In a series of concise training videos, Tiffany takes you through some of the hard lessons learned by her clients, she teaches you how to read financial statements, how to read bank statements, and much more. The link is stopnonprofitfraud.com
Use the code “CROSS20” to save $20 on your course.
Resources for Conflict of Interest Policies:
Three Dimensions of Nonprofit Conflict of Interest
Sample Conflict of Interest Policy
State Specific Policies
As a board member, you can be exposed to personal liability, so it is important to be aware of the legal responsibilities that your service entails. The main source of personal liability stems from a failure to exercise the trust that you are called to keep. The first of 3 main duties is "Duty of Care."
The duty of care requires directors to act in good faith and with the care an ordinarily prudent person would exercise in comparable circumstances.
Exercising your duty of care means being able to say that you were prudent, that you acted in good faith, based on the best information available at the time. You want to be able to say that you conducted the board’s business with the same care and attention that you give to your personal affairs.
Glenn Daman's Board Training Resources:
Tiffany Couch's Fraud Course: Use this link to to get $20 off your course.
Association of North American Missions
In a season of judgement and discipline for the institutional church, small churches and ministries may escape notice, seemingly unaffected by scandals embroiling our big brothers. We just duck down and operate under the radar because we can mostly – we can escape notice and just do our thing in our corner of the Kingdom
Even though small churches are largely out of the headlines, we know that “the only church in town” has an outsized impact on the community it serves. That is why the small church and the small ministry must lead on issues of accountability and transparency and be the visible example of a Savior who does all things well.
Association of North American Missions:
Association of Certified Fraud Examiners bi-annual Report to the Nations: