March 31, 1999
Prepare to protect against church lawsuits
___By Ken Camp
___Texas Baptist Communications
___WACO--The days when churches were off-limits to lawsuits is long gone, and congregations need to beware of legal snares, lawyers told participants at a church-state conference held on the Baylor University campus.
___Three attorneys from the Fort Worth firm of Bourland, Smith, Wall & Wenzel spoke on "Keep-ing Your Church Out of Court: Pitfalls to Avoid as Seen from the Pulpit" during a conference sponsored by Truett Seminary and the Baptist Joint Committee on Public Affairs.
___The attorneys identified several areas that commonly be-come legal pitfalls for churches:
___ Incorporation and operation. Neither the church that is incorporated nor the congregation that chooses not to incorporate is insulated from legal hassles, Shiela Korb said.
___Some churches do not realize that a church must have the consent of a majority of its total membership in order to incorporate. While that may not be difficult for a new congregation, it can be a major hurdle for a long-standing church that continues to carry many non-resident and inactive members on its rolls, she noted.
___Another problem is that unless churches review their articles of incorporation periodically, they may not realize their period of duration has expired.
___"The church's charter can be forfeited if this happens," she said. "It can be corrected by filing articles of amendment and making the period of duration perpetual."
___ Bylaws. Many churches do not understand that bylaws are required whether the congregation chooses to incorporate or remain unincorporated, Korb added.
___Bylaws must stipulate re-quirements for a quorum, voting rights of members, information about how business meetings are called, the percentage vote required to approve items and who has authority to conduct business on the church's behalf.
___Bylaws also should clarify procedures for calling and dismissing staff, for disciplining or withdrawing fellowship from disruptive members and for amending the bylaws.
___ Registered agent. Texas congregations also should file a 9.01 Report form with the secretary of state and keep current the church's registered agent and his or her mailing address.
___If a church incorporated on or after Jan. 1, 1994, and operates under a congregational system of governance, that must be stipulated in its articles or by-laws. If not, the state assumes the church has vested management to a board of directors.
___ Charitable immunity. A church may open its staff and volunteers to lawsuits if it fails to meet the requirements of the Charitable Immunity and Liability Act of 1987, Butch Korb told the conference.
___To qualify for the protection from litigation that the act offers to charitable entities, a church must meet organizational and operational tests, Korb said. The church's governing documents should stipulate the congregation's charitable purpose, he added.
___Volunteers--individuals who perform services without pay other than reimbursement for expenses--fall into two categories: direct service volunteers and officers, directors or trustees.
___Direct service volunteers, such as Sunday school teachers, have immunity if they are acting in good faith and within the course and scope of their volunteer duties. The "good faith" test does not apply to officers, directors and trustees. Both categories of volunteers are subject to limited liability for the operation of motor vehicles.
___Employees have limited liability while acting in the course and scope of their duties if the organization has liability insurance coverage that meets certain standards. Similarly, the organization has limited liability if it has adequate liability insurance.
___However, "there is no immunity or limitation for an act or omission which is intentional, willfully or wantonly negligent, or done with conscious indifference or reckless disregard," Korb said.
___ Child abuse. "Any person who has cause to believe abuse or neglect has occurred has a duty to report," Korb explained. Failure to report is a Class B misdemeanor in Texas, punishable by fine and imprisonment.
___That duty overrides all privileges, such as the normally privileged communication between a member of the clergy and a person seeking spiritual counsel, he added.
___Another pitfall is the failure to implement prudent policies concerning prevention of child abuse at church.
___ Taxes. The IRS "$250 substantiation rule" stipulates that a donor must receive a receipt from the church for all contributions of $250 or more. Receipts must be provided prior to the donor's filing of his or her return. Otherwise, the IRS will deny the charitable deduction if the donor is audited.
___The "$75 disclosure rule" says the church must provide a donor a receipt for a "quid pro quo" payment of more than $75. The receipt must state the amount of payment, the value of an item purchased, and stipulate that only the difference is deductible.
___For instance, a church may hold a golf tournament in which participants pay a set amount to participate with the understanding that proceeds go to a charitable cause. The church should provide participants a receipt noting the value of green fees, golf cart rentals and any souvenirs such as shirts or golf balls provided to those who play. The receipt should indicate that only the difference between the total entry fee and the total amount of the itemized list would be deductible.
___Additional information about legal pitfalls for churches is available in "Keeping Your Church Out of Court," a desk reference notebook developed by the Korbs and Bourland for the Texas Baptist Christian Life Commission.
___The $45 notebook may be ordered from Christian Life Commission, 333 N. Washington, Dallas 75246.
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