Before saying yes, be sure you understand the duties — and how to abide by them. If not, you and your ministry could pay a high price.
By Michael J. Bemi
People of faith are frequently mission-driven and ministerially oriented. For many of these, volunteering is often considered more privilege than obligation.
When such folks have managerial or leadership experience, or when they possess special expertise or have received professional education and training, it is not uncommon that they volunteer to serve the Church via board membership and activity.
It is critically important to recognize, however, that even highly educated, skilled and experienced people do not necessarily understand what board service entails and requires of them. The consequences of such ignorance can be very costly to the ministries of the Church, and also to the individual directors themselves.
This is because statutes and legal precedents in all jurisdictions impose several legal duties upon directors of boards. These duties are: 1) the duty of care (sometimes referred to as the duty of due diligence); 2) the duty of loyalty; and 3) the duty of fidelity (also known as the duty of obedience). Let’s examine each in turn.
The duty of care
This duty demands that directors always act in good faith, in a manner that the director reasonably believes to be in the best interests of the Church (or specific ministry of the Church). This requires that directors attend all board meetings and all committee meetings that they might be involved with; that they read and review board materials and are prepared to participate in meeting deliberations via their questions, comments and vote; and that they seek and pursue further education on complex matters before the board.
The duty of loyalty
This duty demands that directors serve with undivided loyalty and attention to the interests of the Church and the stakeholders of the specific ministry; that they scrupulously avoid conflicts of interest; and that they never disclose confidential information regarding undertakings of the board.
The duty of fidelity
This duty demands that directors always function in a manner that remains faithful to the mission of the Church and the board’s specific ministry, and also that is consistent with and obedient to the Articles of Incorporation, Bylaws and other legal documents associated with the board.
It is paramount to understand that even when the Church agrees to indemnify directors of boards to the maximum extent allowed by law, directors remain personally liable for their actions that breach board duties. This is primarily why Directors’ & Officers’ insurance coverage exists. An example of an actual breach should help drive the point home.
The misdirected bequest
An international mission society board was ecstatic when informed of a very large, high-six-figure bequest left by a gentleman who had always admired the Christian outreach and service provided to impoverished and disadvantaged people served by the society’s African missions. However, the society’s board noted that the African missions were currently well-funded and resourced, so the decision was made to divert the funds to the Asian missions, ignoring the fact that the legal bequest was earmarked solely and specifically for African ministry use.
Sometime thereafter, the deceased gentleman’s children — who were not people of great faith and religious devotion — asked for evidence of how the funds had been put to use. When they learned that the funds had been directed in conscious violation of the legal bequest, they demanded that the money be returned to African ministry use. Sadly, the money had already been spent. The children then sued. After negotiating a partial recovery with the insurance carrier (which could have denied the claim as an intentional breach) and including legal defense costs, the society ended up with an actual net expense roughly half the amount of the original bequest.
The cautionary moral is: If you intend to serve on a board, fully understand what your duties are, and then faithfully and diligently abide by them. Otherwise, your ministry — and you — might pay a high price!
Michael J. Bemi is president & CEO of The National Catholic Risk Retention Group, Inc. (Lisle, IL) — a recognized leader in risk management. To learn more about available coverage — and to get valuable tools, facts and statistics — visit tncrrg.org.