COMMON PITFALLS WITH SOCIALIZING GOVERNING DOCUMENTS
By Justin R. Coleman, Esq.
(SS Quarterly 2017 – 4th Quarter)
Whenever an entity organizes or amends its governing documents, the voting members of the entity must vote to legally adopt these documents. In order to intelligently cast their vote, those members must have an opportunity to actually see and review the proposed documents prior to the vote. While this premise is easy to state, many churches have run into issues which could have been easily avoided with socializing its proposed governing documents. This article will cover some of the most common issues churches have run into when socializing new governing documents and suggestions on how your church can avoid them if you are considering incorporation or revising your current governing documents.
When a church or non-profit incorporates, all state laws require the entity to hold an organizational meeting. The organizational meeting is essentially “Day One” of the new corporation, where the governing documents are adopted or ratified by the voting members, the corporate officers are elected, and other necessary resolutions are passed in order for the corporation to legally begin operating.
SOCIALIZATION WITHOUT AN EXPLANATION
In order to hold an organizational meeting, the Board often must first provide its voting members copies of (or “socialize”) the proposed governing documents in order for them to review them. For most congregational churches, this means that its leadership (i.e. the Elders, the Deacons, a Council, etc.) must socialize the document with its active voting members.
While socialization is not only a preferred avenue for success it sometimes becomes a necessity since one of issues we have repeatedly observed is that either the leadership does not socialize the documents or if it does, its members are not given a sufficient explanation (or any explanation at all) as to the proposed changes to the documents or time to review.
For example, often when a church transitions from an unincorporated association to an incorporated church, new titles are added or changed in the governing documents. New policies and procedures are also added for compliance with state and federal laws, to provide internal best practices, and to better clarify the duties and responsibilities of representative groups within the church. Because the church leadership may have spent several weeks to months reviewing the proposed documents, it may sometimes forget that the members will be looking at these documents for the first time and without the context the leadership received in the drafting process. As a result, members may potentially push back on or disagree with the entire incorporation process because they do not understand the reasons behind the proposed changes.
To avoid this potential conflict, we typically recommend a cover letter outlining 1) why the changes were begin made; and 2) what changes were actually made to the governing documents. By providing the members this written summary, the members are provided the necessary context before they begin reviewing the proposed governing documents. This allows them to focus on the substantive changes to the document and not on the changes themselves.
NOT PROVIDING SUFFICIENT TIME FOR MEMBER REVIEW
Once the members have received the proposed governing documents and explanatory cover letter, the church’s leadership must allow the members time to review the proposed documents prior to the organizational meeting.
While there is a legal necessity for the members to review the proposed documents, giving the members adequate time to review the documents also has a practical benefit. Particularly with congregationally-led churches, members sometimes become concerned when a representative body (i.e. the Elders, the Deacons, etc.) is identified as a Board of Directors and given general governing and oversight authority of the church. Thus, providing them adequate time to review the proposed documents and an avenue to address their questions, comments, and concerns will help calm concerns and demonstrate transparency by the leadership.
If the leadership does not provide the members reasonable notice that the documents are available and a reasonable amount of time to review the documents before the organizational meeting, the membership may either 1) not attend the organizational meeting, resulting in an inability to obtain a quorum to vote on the document; or 2) they vote against adopting the new documents because they do not know what is contained in them and/or distrust the leadership because of the perceived rush to get them approved.
The amount of time necessary for the members to review the proposed documents is not a legal question but a practical one. Not only is each church unique in regards to its governance structure, but also in terms of size, location, and sophistication of its members. The church’s leadership, being the most knowledgeable about its members, is in the best position to determine how much time is adequate for the members to obtain and review the proposed documents. In our experience, the typical review period for most medium-sized churches is four to six (4-6) weeks from the date that the proposed documents are made available and the date of the organizational meeting.
NOT HAVING OPPORTUNITIES FOR MEMBERS TO ASK QUESTIONS
As mentioned in the above section, in addition to providing the members sufficient time to read and review the proposed documents, the church’s leadership must also provide the members the opportunity to ask questions, comment, and provide other input on the proposed documents.
In short, the reason for having membership input and entertaining their questions on the documents is both a legal and practical one. By making themselves available to receive questions and comments from the church members, the leadership provides transparency in regards to its decisions in the governing documents and openness to consider reasonable comments and suggestions on the proposed documents prior to the organizational meeting wherein the members will be asked to vote to accept the proposed documents.
However, for “all things to be done decently and in order” (I Cor. 14:40), it is recommended that the leadership establish a clear procedure for members to submit their questions and comments to the leadership. By outlining the procedure as to how members will have their questions answered prior to the organizational meeting, it reduces the likelihood of a member or members “hi-jacking” the organizational meeting by raising questions at the vote to adopt the proposed documents.
The most common procedure is a scheduled “question and answer” session wherein the members present their questions and comments to and receive answers from the church’s leadership in a group setting. Often members may have the same or similar questions on the documents; thus by offering these open sessions, the leadership can often answer those questions in a single response as opposed to repeating the same response to several members individually. Depending on the size of your membership, more than one of these question and answer sessions could be scheduled to allow the members the opportunity to present their questions.
Another common procedure is for the leadership to establish or designate an email address for members to submit their questions and comments. This procedure allows members to present their questions and comments in a written format as opposed to orally asking questions in a group setting. While this procedure may appear more convenient for leadership than scheduling organized question and answer sessions, there are some common problems that can arise.
The most obvious is the impact that the use of emails may have on the review period. If the members provide numerous emails and/or responses to the leadership’s answers, the organizational meeting may be have to be delayed in order for the leadership to reasonably respond to all their questions and comments.
To alleviate this problem, the leadership should set a specific deadline for email submissions. A set date allows leadership time to review and respond to the submitted questions; which in turn, reduces the likelihood of members becoming angry when they submit questions and comments at the last minute and do not receive a response. Second, the leadership should establish a plan on who will be responsible for collecting and responding to those emails. One method may be to equally divide the responsibility of reviewing the emails among the members of the leadership. By dividing the emails among smaller sub-groups, the individuals within that group will more easily be able to identify similar questions by members.
The above procedures can be used either individually or in concert with each other, depending again on the size and sophistication of the church’s members.
NOT RESPONDING TO MEMBER QUESTIONS
Another common pitfall is the leadership failing to respond or adequately respond to the members’ questions.
More often than not, an individual will respond positively to a decision if his or her question is responded to, regardless of the actual response. Therefore, the leadership also needs to develop an appropriate plan on how it will timely respond to the members’ questions and comments. If the leadership fails to respond to the member’s questions and comments on the documents, the member may feel that leadership does not really care about his or her opinions. This may result in the member 1) voting against the proposed documents; and/or, 2) terminating his or her membership.
If during a question and answer session, the leadership cannot answer a member’s question, the best response is to inform the member that they “do not know” but will find out and respond to that member’s question. For the leadership to guess or appear unsure in answering the question will only raise concerns or suspicions with the members. However, once the leadership tells the member it will get back to them, it actually needs to get back to them. If the question is legal in nature, the first resource would be to contact knowledgeable counsel for an answer or explanation. If feasible, having the church’s attorney present at the session may be a wise expenditure in order to provide direct answers to such questions. Once the answer is provided to the leadership, it should respond to the member in person and/or through common communication methods.
If using email, the leadership will need to assure that all answers are being responded to in a timely fashion. As mentioned above, this will require the leadership to develop a strategy for dividing the emails among its members. Once these sub-groups have reviewed all the questions, the leadership can then identify similar questions and develop a single consistent answer, with advice from legal counsel on substantive matters. Once the answers have been finalized, the leadership can respond to the individual member’s emails.
Again, these procedures can be used in concert with each other but if so, the leadership will need to develop how it will navigate through them prior to publishing the proposed documents with the members.
An organizational meeting of the voting members of a corporation is a legal necessity to fully incorporate the entity. As a result, the need for the entity’s leadership, particularly for churches, to socialize its proposed governing documents is a legal necessity. However, there are a number of procedural steps that the leadership should take into account and prepare for prior to socializing the proposed documents with its members.
- First: how much time will reasonably be needed for the members to review the proposed documents;
- Second: the methods for members to submit their questions and comments; and
- Third: the methods for the leadership to respond to those questions and comments in a timely and complete way.
Leadership will need to look at your church structure and member in order to answer the above questions as each church is unique and comes with its own unique set of circumstances. Whatever methods are chosen, the leadership will need to assure that all of its members are on-board and actively engaged in the process and that you are responding to your members in a timely manner and in a consistent, unified voice. Otherwise the incorporation or revision to the governing process can become a train wreck at worst, or a serious issue which will fester at best.
Disclaimer: This memorandum is provided for general information purposes only and is not a substitute for legal advice particular to your situation. No recipients of this memo should act or refrain from acting solely on the basis of this memorandum without seeking professional legal counsel. Simms Showers, LLP expressly disclaims all liability relating to actions taken or not taken based solely on the content of this memorandum. Please contact H. Robert Showers, Esq. at firstname.lastname@example.org or Justin R. Coleman, Esq. at email@example.com for legal advice that will meet your specific needs.
 Depending on governance structure, “voting member” may mean the organization’s Board of Directors or membership. For purposes of this article, we will be referring to congregation members as “voting members.”