If
you have lived long enough, you have witnessed mismanagement in churches, leadership
crises in churches, and church divisions, all these matrices can be linked to
governance crises. Church governance, sounds bizarre right? In Namibia legally-established
churches are incorporated as a company limited by guarantee within the
provision of section 21 of the Companies Act (Act 28/2004). Institutions irrespective
of their natures are to be governed properly by complying with regulations and
adopting best practices such as developing strategy, endorsing succession plan,
and monitoring performance, to this church institutions, are however not
excluded.
“This
article is aimed to shed more light on how corporate governance relates to an associations
established not for profit (Church)”
Church
leaders owe their organizations and each other a range of special obligations.
Some of these obligations are morally related, but some also have a legal
character. Surely high ethical conduct may be much expected from these
associations because of obvious reasons, but that may be unfair because ethics
is not spontaneous. It seems ethical values of our people are fading at an
alarming rate even in institutions where it is less expected. Religious
intuitions are by nature supposed to be a flamboyant and pool of Leaders who
may be headhunted to rescue corporate entities.
As
applicable to other organizational setups, one of the requirements for
maintaining a nonprofit association (church) status is to have an oversight
board. Among other responsibilities of boards is to ensure that the ministry is
financially viable and that it fulfills its core mission.
Often, a question of
profit and business in religious intuitions comes up. Nothing precludes
churches from selling products or making profits provided that making a profit
is not its primary objective and the proceeds are used to advance the religious
mission. Most religious institutions are by law companies with no shares; the
distribution of dividends is not applicable. From the governance corner, any
church that fails to gather funds for its religious activities is said to be
performing poorly which is contrary to outcomes
of good governance.
It
is absurd to expect an association as a church not to generate money while it helps the majority of people who need spiritual
guidance and ensures that good news reaches the needy. Youth are educated by churches the importance
of living a holy life.
Sunday school, and various youth groups, cells and Bible
studies are all creations of the church; new generations are taught not to
kill, steal, and fight. If these churches shut down probably due to lack of
funds, our societies will be prone to all these vices. By extension, non-profit
associations including churches have the powers of a juristic person to do
major investments in diverse portfolios.
Church
directors or councils as commonly denoted owe fiduciary duties to the organization.
A fiduciary duty is an obligation owed by a person in a leadership or
management role within an organization to the organization itself and its
members. A director or officer who breaches their fiduciary duties can face
personal liability to the organization and others for damages caused by the
breach. Although the term often comes up in the context of for-profit
businesses, it also applies in the nonprofit and religious sectors. Fiduciary
obligations arise regardless of whether an individual is paid for their work or
not.
Fiduciary
duties are vital in any model, including the duties of care, loyalty, and
obedience. A duty of care involves the engagement of the individual and the
functioning of members that is prudent and avoids negligence. Loyalty involves
serving with devotion to protecting the church rather than any conflicted or
personal interests. Obedience involves serving within the scope of
responsibilities outlined in church charters or governing documents, or both,
to be sure that the legal and operational precedents are faithfully followed,
this may mean the submission of returns, financial statements, and a notice of
change in directors is required.
Utmost
churches rely on the donations of its members to fund its mission, hence a need
for transparency and accountability in their dealings. Considering that, members
enjoy a tax deduction for these donations that are freely given to churches,
and this calls for proper records to be maintained as required by corporate
laws. A church can’t be well governed unless it carries its mission ethically.
Additionally a church has to be a responsible corporate citizen by extending a
helping hand community where it operates through social responsibility given
the nature of the entity. Most importantly a responsible institution will be
mindful of undue sound that may not be good for inhabits especially during school
assessments.
Churches
should be governed effectively to earn trust from their stakeholders, and in
doing so, it ensures institutional sustainability. It should maintain its financial
statement and fulfill all relevant laws.
Board of directors as the overseer of an institution should be independent
and perform their duties with due diligence, skill, and care.
By:
Onesmus K Joseph - MBA, ACIS, BAP, CFIP, PPL
MPHIL Candidate - KNUST (Kumasi; Ghana)
Governance Professional
josephonesmus@yahoo.com
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