Monthly Archive for November, 2011

103. Case Study #2: Fixing Leaks: The Significance of Confidentiality for an Effective Church Board

Published by Dr. Larry Perkins on November 28, 2011 in Board, Board Chair, Board Governance, Board Member and Senior Pastor. 0 Comments Tags: , .

[In all case studies the names and incidents are fictional and have no connection with any specific persons, board or congregation.]

As chair person you facilitated a difficult church board meeting last month. The board’s discussion about a proposal from the pastor to hire a new staff person ended in a split vote. Last Sunday after the service you were having coffee in the church lounge area and chatting with several friends. None of them were church board members.

Just as things were wrapping up, one of them asked a seemingly innocent question about the split vote at the recent church board meeting. This caught you totally by surprise and you were stunned for a few moments as you scrambled to form a coherent answer, but not reveal your concern. At the same time your mind was going in circles trying to figure out how the board’s commitment to confidentiality for some reason had been compromised so quickly and so completely. You wondered how many other people knew about the board’s dilemma and the impact that this information might have upon the congregation. How would it affect their confidence in the board’s ability to provide strategic leadership? But even more significantly, you became quite concerned about what this meant for the board as a ministry team. What board member or members had done this and for what reason?

The next church board meeting was two weeks away. You figured that other board members and the lead pastor would soon discover this breach. You had never encountered such a situation as church board chair before and you struggled to discern what your response as board chair should be? You did not know who had compromised the confidentiality — although you had your suspicions. But even if you knew, what should you do? Information like this would spread quickly through the congregation. You were not sure how various board members would respond when they discovered this breach and what action they would want to take against the board member(s) who were responsible. What if it was the lead pastor who was guilty? Would the church board survive this challenge?

But then you took a deep breath and asked yourself whether the board had ever discussed the matter of confidentiality in any extended way?  While you as board chair may operate with certain expectations, did all the board members share your understanding of the need for and the extent to which confidentiality should be practiced? Were all things discussed at a board meeting “confidential” or just certain ones? Who arbitrated this? Should the board itself at the close of each meeting affirm what matters were confidential and what were not? And if some were not, what were board members authorized to say about them? Did this event provide you with an opportunity as board chair to raise the issue, do some educating with the board, and review policy or even develop new policy before any significant harm might be done? Was this a wake-up call?

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How would you advise this chair person to respond to the various issues this breach of confidentiality would generate?

1. As chair you might review board operational policies (in whatever form they exist) and discern what exactly the board has said about this matter. Perhaps no violation has in fact occurred, because the board has not spoken about this matter. You are just operating on the basis of some personal assumptions or the awareness of some undefined tradition. So now might be the best time to raise the issue with the board. This could be done in the form of a discussion brief in which you define what the board has said about the issue and raise questions as to whether or not it is adequate. This enables a good discussion to be held without pointing fingers and getting all the board members on the same page.

2. If your church board already has developed clear policy on the issue of board confidentiality and all members were aware of it, then the problem may be one of clarifying exactly what matters discussed in a board meeting are confidential. Some board members may be parsing this matter differently. If you do not have a blanket statement that essentially regards everything that transpires in a board meeting to be confidential, unless the board members determine otherwise, then the chance for confusion among the board members will exist. So here again the review of policy and some discussion among the board members may be necessary. It is easier to have a uniform statement that everything is confidential, unless otherwise exempted by board decision, then to try and define in advance what should or should not be regarded as confidential. At the end of the day whatever is placed in minutes approved by the board should be consider public information, apart from minutes of in camera board sessions.

3. If your board policy on confidentiality is clear and communicating this information about the vote is a violation of that policy, then as chair you have a responsibility to raise the issue with the board members. Again, how you do this will be as important as the fact that you do it. So you will need to share with the board what occurred and remind the board of the policy regarding confidentiality. If the breach is considered significant, then the board should warn the offending member(s) and note that if it is repeated, their resignation from the board may be required. Perhaps also some apologies may be necessary. This is a serious matter. Once the matter is dealt with, however, you should as chair seek to move forward, expecting that all board members will work in compliance with the policy.

 

 

102. Church Board Chairs and Church Finances

Published by Dr. Larry Perkins on November 19, 2011 in Board, Board Chair, Board Governance, Board Member and Senior Pastor. 0 Comments Tags: .

Scarcely a church board meeting can proceed it seems without some discussion, however minor, about some financial matter. The chairperson has to keep in mind various factors in order to ensure that the board deals with financial matters effectively, ethically, legally, and spiritually, all the while securing the congregation against inappropriate financial risk. A board chair unfamiliar with the mysteries of accounting or lacking experience in financial management may feel intimidated by money matters, particularly when a chair is required to facilitate effective board leadership in such issues.

Effective leadership usually occurs when the gifts, competency and experience of the entire team becomes engaged in decision-making. Usually among the board members there are one or two who have some experience in managing finances or accountancy, whose expertise you as chair can rely upon. If there is no one among the board members with this competence, then it is probably wise to develop a relationship with someone in the congregation whom you might use as a financial consultant until such time as this kind of expertise is represented at the board table. In such cases the appointment of someone with financial competence to the board should be a priority.

Three important areas in financial oversight deserve a chair’s close attention. The first is the question of operational funds, i.e. caring for the day-to-day expenses, salaries, and annual expenditures (e.g. insurance). This also includes the secure reception of financial gifts and their appropriate accounting and depositing in the church’s bank account. The people receiving the funds should be different from those responsible for expending them. There should be clarity about the employees who may authorize budgeted expenditures without reference to the board. Any cheques need to be authorized by the appropriate fund manager and have two different signatures from signing officers approved by the board. The church treasurer should be providing to the board a monthly statement of accounts so that the board can track income and expenses regularly. This report should include information about the percentage of the annual budget spent to date and comparison of rate of expenditures with prior year. The treasurer should also be providing a summary set of comments as to whether the congregation is facing financial risk or whether the budget is being met. In all of this the board needs to be careful not to micromanage the budget, but to make sure delegated authority is clearly and appropriately defined and monitored.

The second area is the end-of-fiscal year review and report. The board should decide how it will proceed with an annual audit or financial review and whom it will appoint to accomplish this work. Often in smaller churches this work is done by a volunteer. If that is the case, then make sure that the person has adequate financial credentials, has access to all of the information, is not the treasurer, has no family ties with the staff, and is willing to tell the board the truth regarding the financial situation. Establish a date by which the board needs to have the report so that it can review it prior to the annual general meeting. Also, make sure the reviewer knows that the board expects recommendations to be made if the book-keeping or other accounting processes have to be improved. In the case of congregations whose annual budgets exceed $500,000, it would be very wise to contract this work with an accounting firm and have a formal financial review or audit done annually.

A third area is the development of the annual budget. In many cases the board finance committee will work with the lead or executive pastor and the treasurer to develop a budget recommendation. Usually a church board will review a draft budget and recommend it to the congregation at the annual general meeting for its approval. Once a budget is approved by the congregation, then the board should have in place specific guidelines as to how much flexibility the lead pastor has in deviating from the categories and at what points the lead pastor has to seek approval for expenditures (e.g. anything over $3,000?). The board may expect the lead pastor to manage to the bottomline.

Usually an effective board will manage these financial responsibilities through a ‘finance and audit committee.’ This committee will work with the church treasurer (who often will be a member of this committee) and the lead pastor, particularly in the preparation of the annual budget. A personnel committee also is a good thing for a board to appoint, particularly for making recommendations regarding salary and benefits increases. To this end a salary grid should be used so that such recommendations are not done in an arbitrary manner.

When you as chair review the monthly statements, watch several indicators. First, is the income keeping pace generally with expenses? Second, is there any area of the budget that is exceeding its limits? This may occur because of the way some expenditures flow through the fiscal year or may indicate that unexpected expenses are being incurred. It becomes something to monitor. The monthly financial report should provide two measurements. First, what proportion of the budgeted amount in each category should be spent by this point in the budget. Second, how does the expense (and income) projection compare with the prior year? Where you discern significant difference, that is where you may what to ask some questions.

A church board chair needs to keep an eye on these indicators because when financial emergencies occur, it diverts energy and attention from the congregation’s mission. Being proactive to address emerging difficulties gives opportunity to prevent disaster and set in place strategies for recovery and improved health. Often the remedies take considerable time and discipline to implement, but in the end will create a much more positive spirit within a congregation.

101. Case Study #1: Decision Time

Published by Dr. Larry Perkins on November 14, 2011 in Board, Board Chair, Board Governance, Board Member and Senior Pastor. Closed Tags: , .

[In all case studies the names and incidents are fictional and have no connection with any specific persons, board or congregation.]

Frank was in his third year of serving as church board chair for Community Bible Church. During this time the congregation had grown steadily under the consistent guidance of the lead pastor and Sunday attendance was pushing 300. Finances were reasonably healthy and they had just completed a project to replace the roof on their twenty year old facility. Pastor Bob was in his fourth year as lead pastor and well-respected in the congregation. Frank was enjoying the ministry of being a board member and chairperson, even though it had its challenging moments.

At the previous board meeting Pastor Bob had proposed the creation of a new ministry staff position. Bob had undoubtedly been thinking about this staffing issue for a while, but had not communicated his concerns or his intent to Frank, the board chair, or any of the other board members. So when he brought forward his proposal at the last board meeting, it caught everyone by surprise. Without question Pastor Bob’s workload had increased because the church was growing. Yet, when the budget for this new fiscal year was passed three months ago at the annual general meeting, he had not raised this issue at all. And in the modest  strategic plan the board was developing, no new staff additions were contemplated for at least a year. To add further complication, the Sunday offerings were starting to reflect the influence of the recent economic downturn because five key congregational members had become unemployed in the past month.

As chair Frank had done his best to facilitate a fair, but thorough discussion of Pastor Bob’s proposal. Even though Pastor Bob had overlooked some key issues in his proposal, e.g. how it would be funded, where and how the required office space and equipment would be secured, and a clear statement of this new staff member’s responsibilities, the board members wanted to be supportive because they respected Pastor Bob and wanted to encourage him.

A year ago Frank had worked with the board to initiate a procedure that major decision items would be introduced for discussion and prayer at one meeting, but then voted on at the next scheduled meeting. Accordingly he had put Pastor Bob’s proposal at the top of the board’s agenda for this meeting. He did not know how the board finally would respond to the proposal. Because Frank had been away on a business trip, he had had no time to discuss the proposal further with Pastor Bob.

When the board engaged in their second discussion, the interaction was robust to say the least. Several wanted to forge ahead and trust God for the finances. Others felt that the financial situation of the church just could not sustain a new salary at this point. And two others were quite unsure, now speaking for it and then a few moments later apparently opposing it. After an hour of discussion Frank decided to call things to a close because no new points were being raised and there were several other items on the agenda that needed attention. One board member put forward a motion to approve Pastor Bob’s proposal and immediately it received support. Taking a deep breath and making a silent prayer, Frank called for the vote. As he feared four voted in favour, including Pastor Bob, three voted against, and two abstained. Technically the proposal was approved, but over half the board had in fact registered lack of support.

As chair of the board, what was he going to advise the board to do in the light of this decision? If Frank had called you the next day for advice, what would you say to him?

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1. Observations:

a. Church boards generally should not permit significant proposals to be inserted into their agendas without prior notice. If a board person wants to bring forward a proposal for which prior notice has not been given, then the board member should bring it forward as an item of concern, noted and then deferred to the next meeting. Rarely is any matter so urgent that it must be attended to immediately. If this board had employed this procedural principle, then it would have given some time for the chair or some other board person to guide Pastor Bob in the development of his proposal.

b.It is good that this board had in place the principle that in major decisions they had discussion at one meeting and then made the decision at the next meeting, allowing time for prayer, further interaction, and reflection. Normally this procedure would give time for Frank to work with Pastor Bob to address some of the deficiencies in the proposal. When Frank knew this could not happen because of his business travel, he could have asked the vice-chair of the board to work with Pastor Bob to address some of the key questions raised in the board discussion before it came to decision at that following board meeting.

c. Although Pastor Bob obviously felt strongly about this matter, he did not exercise good leadership in forcing this issue in this way. He probably lost some of his credibility as a leader by bringing the proposal to the board like this.

2. Options:

a. If the chair had a clear indication from the discussion that the board members had not received consensus, he could have advised them to table the motion before the vote was taken and then asked two board members to work with Pastor Bob to address serious concerns. A revised proposal could then be submitted at the next meeting.

b. Just because the board has voted, it can still defer action on the motion. At this point Frank needs to discern whether retaining unity within the board is more important than enabling Pastor Bob to proceed. Pastor Bob also should be sensitive to this issue of unity. A divided board ultimately will be unhealthy for the congregation. If board unity is a priority, then the chair could advise the board to defer action until it has better information or a more adequate proposal around which to develop stronger consensus.

c. If finances are the issue, then it may be advisable to build this proposed staff position into the strategic plan, but defer implementation until the board senses the congregation is able to support it financially. In this way the board supports Pastor Bob, signals its concern about the issue, but exercises good risk management regarding the financial stability of the congregation.

d. Pastor Bob’s action may signal that he does not feel the board is aware of the situation the ministry staff is facing and is ignoring the pressures that are building because of recent growth. If this is the case, then perhaps the board needs to develop a personnel committee and take greater responsibility to ensure that the needs of the staff are being cared for.

 

100. Sacrifice as a Spiritual Discipline for Boards

Published by Dr. Larry Perkins on November 7, 2011 in Board, Board Chair, Board Governance, Board Member and Senior Pastor. Closed Tags: , .

The notion of ‘sacrifice’ is deeply ingrained in Christian understanding. The sacrificial rituals defined in the Old Testament were integral to Judaism, sustaining covenantal relationship with Yahweh and providing means of restoration and renewal. The incarnate Messiah presents himself as the unique, atoning sacrifice for human sin, as he is executed at Calvary and rises the third day. Followers of Jesus, in response to the grace of salvation, give themselves to God as “living sacrifices” (Romans 12:1). Their entire lives become a constant offering of self in service to God (cf. 1 Peter 2:4-5). Spiritual life and service are defined by the category “sacrifice,” something modelled by Jesus himself (cf. Mark 10:45). We are defining a spiritual discipline as “attention paid to the instructions of Jesus such that we follow him obediently and take seriously our relationship with him.” If Jesus sacrificed himself and expected his followers to “take up their cross daily and follow him,” then sacrifice is a constant spiritual discipline for every believer.

Spiritually speaking, the service of a chair person, facilitating a church board in advancing the congregation’s mission, fits within this larger frame of being a “living sacrifice.” Your leadership constitutes a continual series of sacrificial acts offered in worship to God (1 Peter 2:4-5). Ancient sacrifices were costly and regularly resulted  in the death of the victim. Board members are called upon to “present themselves as holy, well-pleasing sacrifices” expressing their worshipful service to God (paraphrasing Romans 12:1), willing to bear the cost and pain of such strategic, spiritual leadership.

But how does this spiritual discipline of sacrifice apply to board chairs and board members particularly? Probably the most significant aspect is the willingness to surrender our preferences in order to advance the mission. Or to put it more positively, to support what is good for the whole body, even though my personal preferences may not be accepted. After a rigorous discussion about eating meat that has been offered to idols, Paul concluded that “everything is permissible, but not everything is beneficial. Everything is permissible, but not everything is constructive. Nobody should seek his own good, but the good of others” (1 Corinthians 10:23-24). These are radical concepts — ones we all struggle to embrace and apply consistently. Yet, these are the principles that the spiritual discipline of sacrifice requires — from church board chairs and church board members.

This spiritual discipline is not counseling compromise, but rather the prayerful discernment of what is good for the body of Christ, given the mission, values and vision that it has embraced. Paul noted that the Christian attitude of ‘agape-love’ is “not self-seeking” (1 Corinthians 13:5). Sometimes our pursuit of this discipline may cause us to be the dissenting voice among the board members because we sincerely believe that the direction proposed ultimately will harm the body of Christ. We sacrifice our pride, our desire for unity, our longing to be accepted by others, because humbly we believe that our perspective has merit. Yet at some point we will have to come to terms with the fact that the other board members see things differently and so we have to be prepared to yield and trust God. As Earl Creps noted (Off-Road Disciplines, 163) “grace elicits more sacrificial service than Law ever can.”

As board chair the spiritual discipline of sacrifice hits us with respect to the time required to prepare well — we might prefer to spend that time doing other things. It hits us with the burden of congregational unity that we carry, struggling with our best wisdom and spiritual understanding to guide the board well. It hits us with the constant need to be gracious when people in the congregation get upset at decisions made by the board or do not understand the process that the board has followed. It hits us when we have to be courageous and present good, prudent board decisions to the congregation which desires to follow a different, potentially unwise path filled with significant risk and dangerous threat. It hits us when we are called upon to provide extraordinary financial support to advance the mission.

The spiritual discipline of sacrifice gets embodied in conflict of interest declarations. When people serve on a church board, they do so with the expectation that will not profit personally from decisions taken. If personal profit or benefit may derive from such a decision, then the board member has to excuse himself or herself from the discussion and perhaps even from the meeting.

Creps articulates this spiritual discipline of sacrifice as the “the ability to mold [one's] life into a missional shape…to fit a purpose larger than [oneself]” (166). For Paul to follow Jesus meant beatings, whippings, ship-wreck, and physical hardship. Church board chairs in North America probably will not have to embrace this kind of sacrifice in pursuing God’s call to the spiritual service of chairing the board. However, they will have to embrace other kinds of sacrifice — identifying with people, loving people, pursuing the church’s mission with passion, working with organizational structures even when they seem cumbersome.