Monthly Archive for January, 2012

111. What a Church Board Chair needs to Care About When a Building Program is on the Agenda.

Published by Dr. Larry Perkins on January 28, 2012 in Board, Board Chair, Board Governance, Board Member and Senior Pastor. 0 Comments Tags: .

The congregation on whose board I serve as chairperson recently completed a $4.7 million dollar building project. The congregation has grown over thirteen years and the vision for a building has taken ten of those years to achieve fruition – at least stage one! I have served as chair of this board for the past four years, the time when the congregation decided to go for it. We have enjoyed the new facility for six months.

When a church board decides to lead their congregation in a significant building program, it has implications for the life and work of the church board chair. Risks of various kinds escalate – many of them new. Sustaining and strengthening congregational unity through the process generates significant challenges. Discerning and accumulating the resources necessary to complete the project are daunting. Enabling the board and the staff to keep the congregation’s focus on ministry and not the facility requires deep spiritual trust and determination. Finding the right expertise within the congregation to provide leadership in facility planning, oversight of the project, fund-raising, and various legal and financial matters becomes a matter of serious prayer.  Perhaps the greatest concern in this is the significant impact that such a project accrues to the lead pastor. Many pastoral leaders will not survive a church building project. Although the board chair usually works at an arm’s length relationship in most of these matters, he or she nevertheless carries significant responsibility to enable the church board to keep the pace and the peace over several years and see things through to a successful conclusion.

Let me offer the following reflections based upon my recent personal experience.

  1. Discerning and appointing the right people to lead the building committee and the building finance committee are critical elements. I think the success of the entire project will depend largely upon the spiritual maturity and overall competence of these leaders. These are people who must be willing to make three to four year commitments that will require many meetings and constant oversight of many details. If it is necessary to change the leadership of either committee mid-course, this will create difficulty.
  2. Ensure that the lead pastor is committed to the project’s completion and will stay in the role for at least six months after the facility’s occupancy. Pastoral change mid-course will probably bring the project to a halt until a new lead pastor is appointed and confirms support of the project. The lead pastor must expect and be willing to give additional hours of work to ensure the project’s completion. However, it is also important to protect the lead pastor’s time by not involving him in the day to day work of the building committee. Many decisions did not require the lead pastor’s input in the early stages.  As construction accelerates it will be necessary for key staff to give input and become more involve.
  3. Build complete consensus on the church board for a positive decision. If the church board is not united in its vision for the project, then wait. You can expect some variance within the congregation (perhaps up to 10% is manageable), but I would strongly urge you to secure unanimous endorsement and support from the board to proceed.
  4. Construct a financial model and resourcing plan that works. It is irresponsible to propose and recommend to the congregation a building project which is not supported by a workable financing model and plan – one that the congregation can accomplish with reasonable expectations. What amounts need to be raised? What mortgage can be sustained? What congregational growth can be anticipated in order to provide additional financial support? What is the long term impact on the annual budget to operate the facility? How will this be financed? What previous history of giving provides comfort that the congregation has the resources to support the project? What is a responsible faith gap? How will the congregation fund costs for future replacement of items in the facility? In the event of a financial crisis, what contingency funding would be available to sustain the mortgage for three or four months? Thinks these matters through very carefully and require the board to take the time to get it right. If the congregation senses that the financial model is not trustworthy, then the entire project will be vulnerable. Our approach was to ensure that the operational costs of the building plus financing not limit ministry. The advice we received was to cap this at approx 35% of total budget. And the operational costs are significant!
  5. Delegate the proper authority to the building and building finance committees. It would wise to establish the building committee as an adhoc subcommittee of the board and the building finance committee as a subcommittee of the building committee. This keeps lines of accountability with the church board clear. If at all possible the church board should appoint one of its members as chair of the building committee, or least to be a member of the committee.  The board should define carefully the limits of the authority that the building committee has and should monitor compliance. Building committee reports should come regularly to the church board with recommendations for specific actions. Authorization to borrow funds or expend funds should be vested with the board and not the building committee. However, once the building project budget and financing are approved, then the building committee should be authorized to proceed within those established limits. Any significant variations should be approved by the board. One way to manage this is for the board and the building committee to agree on the major decision points in the course of the project. Before the building committee can move to the next phase, require the board to give its approval. This keeps everyone fully and appropriately involved.
  6. Keep faith with your local civic officials so that the building plans receive official approval in ways that develop good relationships with community leaders as much as possible. Similarly, seek financing through a local bank or credit union, if possible, to support community relations. Be fair with the contractors and on time with your financial obligations. Be honest in all dealings and conform to legal requirements. This project is an opportunity for the congregation to express its Christian values in the community by the way it manages these affairs.
  7. Although it will be a challenge, encourage the board to keep the vision for ministry at the centre of the congregation’s life. Remember that the facility, as wonderful as it will be, is only a means to an end, i.e. enhanced ministry! The congregation exists to pursue the Great Commission, not to build a great facility complex.
  8. Keep good and full communications open between the board, the building committee, the pastoral staff, and the congregation. This is important to sustain harmony, to encourage giving, and to keep the vision in front of the people. Plan for more communication, rather than less. Let the congregation know what decisions they will be asked to make and how they will have input into the process and then keep your promises. Make sure that in these processes you follow the bylaws carefully and consistently. Listen carefully in all congregational meetings, take suggestions seriously, and respond to concerns in a timely and responsible fashion. The board is asking the congregation to take a strong step of faith and you will need their full participation throughout the process.
  9. Remember that the building project for the congregation and the board is a walk of faith, an opportunity to trust God. It should be supported by specific prayer days; there should be testimonials to God’s special provisions; when challenges arise, bring them to the congregation for prayer; let the congregation know when the answers come! Celebrate every significant step with thanksgiving to God. At the end of the day, be generous in your thanks to all who contributed.

As chairperson you will need to determine whether you are willing to provide leadership to the board over a two to four year period, depending upon the size of the building project. If you are not prepared to offer that leadership, be frank with the board and work with them to discern the leadership that will help them to achieve this vision. Perhaps stepping aside will be your greatest contribution to the success of the project!

Conversely, if you believe God desires you to remain chairperson through this project, this period of your Christian life and service can be a most wonderful, spiritual experience as you see the evidence of God’s remarkable provisions.

Finally, let me encourage you to dialogue with your local denominational leadership as you begin this process. They will have some wisdom to share.

110. Case Study #5: Whose in Charge? Negotiating the Sudden Inspiration.

Published by Dr. Larry Perkins on January 16, 2012 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 you thought the church board meeting was going quite well. The basic items on the agenda were discussed with good interaction and reasonable decisions agreed. There were two items left. One was a discussion about the agenda for the Annual General Meeting that was scheduled in four weeks. The other was an item that Tom, the board vice chair had asked to be added to the agenda at the beginning of the meeting. He had called it “new ministry opportunity.” You were curious as to what Tom had in mind, but you had worked together for a number of years on the board and so you did not really give it a second thought.

So after the board had settled matters related to the AGM’s agenda, you turned to Tom and gave him “the floor.” About two minutes into his presentation you realized that Tom was about to present to the board for immediate decision a major issue. Tom was friends with the owner of a Christian pre-school which offered it services in rented quarters two blocks from the church. However, the owner of that facility wanted to evict the Christian pre-school. The operator had contacted Tom and pressed him to bring to the church board a plan for the Christian pre-school to rent part of the church facility. Time was of the essence because the pre-school operation had to vacate in less than ten days by the time the church board met. Tom urged the board members to approve his motion to rent part of the church facility to the pre-school operation.

One of Tom’s more persuasive arguments was that the income from the Christian pre-school would provide much needed funding for upgrades to the building facility. They needed to replace the roof and this would cost almost $75,000. The congregation already was 15% behind in its giving towards the budget and had no reserves. Tom stated that “this was God’s provision” for their need. It would be a good ministry and help the congregation connect with the community. According to Tom very little change to the facility would be needed to allow this to go forward and he was willing to donate time to get the changes done.

You raised several questions about liability, whether or not this ministry was in alignment with the mission and vision, and what implications this would have for other ministry uses of the facility. However, Tom seemed to have an answer to every objection and when he called for the question, the board supported his motion 6 to 3. Throughout most of the discussion the lead pastor said very little, but in the end did vote to support the motion. The board authorized Tom to confirm the arrangements with the Christian pre-school.

As the meeting drew to a close the various board members gathered around Tom and thanked him for his proactive proposal and seemed to be encouraged that the congregation might finally receive some financial help towards the facility repairs. You were not so sure.

Two days later Tom emailed you a note that he had finalized the arrangements with the Christian pre-school supervisor and had a signed, written understanding.

That Saturday you were browsing through the local paper when your eye caught the words “pre-school being sued….” As you read through the first paragraph you realized that the article was about the Christian pre-school that now had a written agreement to use your church facilities. Two of its teachers were being accused of child abuse.

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What options did this chairperson have in handling this situation?

1. One issue this case study raises concerns the addition of items to the agenda. On the one hand, it is important for board members to know they have the privilege of shaping the agenda. On the other hand, board members also need to add items in a responsible manner. Just because a board member wants to add an item to the agenda should not determine how the board decides to handle the item. These are two separate items. The board members should feel no obligation to act upon an item just because another board member has asked that it be added to the agenda. Similarly the chair should exercise  appropriate leadership on behalf of the board and ensure that normal operational procedures are followed. In this case the chairperson would appropriately recommend to the board that it ensure it has all of the necessary information in hand before it arrives at a decision, lest it incur unwise risk.

2. A second issue relates to policy that guides the manner in which the church board will enter into a formal, legal relationship with another agency. Such a policy, for example, might stipulate that all such agreements receive a legal review, be limited in term, and define the basis upon which the agreement becomes void. It probably should also require the church treasurer to evaluate the proposal and assure the board that the projected financial projections do indeed represent reality. The agreement should also stipulate what position within the church is responsible to give oversight to this arrangement. Will this responsibility fall under the lead pastor’s position description, or the facility manager’s or the board chair? As churches grow the potential for these types of inter-agency relationships will become more frequent. This a matter of risk management that the board has to exercise judiciously.

3. Tom seemed to make some general arguments that establishing this relationship would contribute in some ways to the advancement of the congregation’s mission. However, did he make the case that this was a strategic move? Church boards receive many different proposals for ministries and many different opportunities to engage in various enterprises, but in every case the board members must determine whether any of these truly are strategic for mission advancement.  Often these proposals are good, but not strategic, i.e. are not the two or three key things that the church leadership must embrace and drive for the mission is to advance intentionally and consistently.

4. As chair you should never allow someone in the congregation, not even the lead pastor or another board member, to sign an agreement on behalf of the board without the board first seeing, reviewing it and officially approving it. The board’s liability in such matters cannot be shifted to the person who signed. The board is responsible for all legal agreements made by the agency it is leading.

5.  What can you do as board chair to limit the potential damage to the church that might arise because of these impending legal issues with the pre-school? I think one of the first things I would do is talk to the pre-school CEO and determine as clearly as possible what the situation is. Then I would call an emergency board meeting to inform the board members and seek their counsel. One of the things I would recommend is that legal advice be sought regarding the suspension or annulment of the agreement. If the press hear that this pre-school is about to occupy your facility, undoubtedly an enterprising reporter will be seeking comment. Ensure that the board members, staff members and church members are advised not to talk to the media, but to refer the matter to the board chair or the lead pastor. Limit the number of voices speaking to the media about this.

109. The Chairperson’s Ability/Responsibility to Discern and Avoid “Bad Strategy.”

Published by Dr. Larry Perkins on January 9, 2012 in Board, Board Chair, Board Governance, Board Member and Senior Pastor. 0 Comments Tags: , .

In a recent article published in McKinsey Quarterly (June 2011) Richard Rumelt argues that “bad strategy abounds” in the corporate world. I would suspect that the same can be said about the world of non-profits and particularly about local churches. Church leadership is often long on passion and generalities, but short on clear, consistently applied strategy. The result is that many congregations have good statements of mission, vision and values, but their ability to bring these dreams into reality is frustrated by “bad strategy.” According to Rumelt good strategy “honestly acknowledges the challenges we face and provides an approach to overcoming them.”

“Bad strategy” occurs when leaders fail to define the challenge and therefore cannot “assess the quality of the strategy.” A second classic feature of bad strategy is “mistaking goals for strategy.” And third, bad strategy thrives when we embrace “fuzzy strategic objectives.” A long “to do” list is not a strategy. And finally Rumelt states that “a final hallmark of…bad strategy is superficial abstraction–a flurry of fluff–designed to mask the absence of thought.”

Rumelt also offers some analysis as to why bad strategy seems to be abound. A key issue here is the “inability to choose” from among many different goals the two or three key things that will advance the mission. Sometimes as well leaders borrow a template from someone else and try to apply it, but do so mistakenly.

This leads Rumelt to discern the essence of “good strategy.” The basic structure of a good strategy must include “a diagnosis: an explanation of the nature of the challenge;” “a guiding policy: an overall approach chosen to…overcome the obstacles;” and “coherent actions: steps that are coordinated with one another to support the accomplishment of the guiding policy.” He concludes by stating that “the core of the strategist’s work is always the same: discover the crucial factors in a situation and design a way to coordinate and focus actions to deal with them.”

Chairpersons in church boards are always dealing with issues of ministry strategy. Board agendas frequently have items such as “new ministry program proposal” or “review of annual ministry plan” or “discussion about enabling congregational growth.” When a chair knows such items are on the board’s agenda usually there is some angst as to just what is expected and whether the board has the capacity and understanding to make the right decision. For example, without a “good strategy” how will the board know whether a new ministry program proposal will be “strategic” to advancing the mission? Or, when the board seeks to discern how to stimulate congregational growth, is the board really willing to ask the hard questions and operate with a commitment to honesty, or is there a culture of denial as to the real causes for the lack of growth and thus a failure of will to address them?

Consider this scenario. A church board adopts as part of the congregational vision a goal to make 100 new disciples in five years. However, it spends little time considering what are the one or two critical challenges that must be addressed to make this goal a reality. In other words they have established a commendable goal but still have to discern a good strategy to achieve that goal. Many boards, once they have articulated two or three key goals seem to expect that it will just happen. The hard work of defining a good strategy to achieve the goal is either delegated implicitly to the ministry staff or just ignored. And if it is delegated to the ministry staff, little accountability is required. Often what emerges is a “to do list,” but without a coherent and consistent strategy that is identifying these activities as the critical ones.

What can a church board chair do to help the board “discover the crucial factors in a situation and design a way to coordinate and focus actions to deal with them?” First, the chairperson must be convinced personally that advancing the congregation’s mission requires clear definition of a limited number of key, specific goals. And then for each goal a particular strategy needs to be discerned and implemented to overcome critical challenges and enable the congregation to achieve that goal. If as chair you do not see the importance of these matters, then you will not give time and effort to facilitating the board’s work in this area. Practically speaking, agendas will not deal with such matters. Second, the chairperson must have some competence in the area of strategic planning, so that as interaction with the lead pastor about these matters occurs significant questions are asked and good planning emerges. If neither the chair nor the lead pastor have any competence in these matters, then the board will be severely hampered in its ability to offer the strategic leadership it is mandated to provide to the congregation. Third, the chairperson would be advised to encourage the board to engage in some education and professional development so that it knows what “good strategy” looks like and has some coaching in developing good strategy. One way to do this is to discern a local congregation whose board and key ministry leaders have some wisdom about this and are being somewhat successful in its implementation. Then ask that board chair and lead pastor to visit with your board and share how they are doing it and what the benefits have been. Many board members are intimidated by the term ‘strategy’ and do not understand why it is important or how strategic planning is done well.

Perhaps as a way to get started you as chair might schedule in  the next board agenda a discussion about one of the key goals the congregation has adopted. The discussion paper you prepare for that conversation would outline the major goals the board/congregation have adopted and then in regards to the particular goal you have selected, ask a series of questions. How does the board know whether progress towards achieving that goal has been made during the past 12 months? What evidence is there for this advancement? Can the board identify the critical challenges that hinder achievement and what specific strategies are being adopted to deal with those critical challenges? If there is no specific strategy, what should the board do develop one? Is the goal still significant or does it need to be reworked.  By posing such questions you begin to help board members think about some of the basic concepts inherent in good strategy and whether the board is at this point addressing its responsibility to develop and implement good strategy.

I am not sure what is worse — pursuing bad strategy or having no strategy. However, in reality every church board has adopted or permitted some kind of strategy explicitly or implicitly. So the key question is whether the strategy is good or bad, using Rumelt’s definitions.

108. Bylaw Review — Tedious But Essential.

Published by Dr. Larry Perkins on January 2, 2012 in Board, Board Chair, Board Governance, Board Member and Senior Pastor. 0 Comments Tags: .

When was the last time you led your church board in a review of the congregational bylaws? Was it two years ago, or four or ten? Perhaps you have just been through the process and they are all up-to-date and appropriately registered with the legal authorities as may be required in your particular jurisdiction. One of the functions of a board chair is to keep the board on track, following a regular cycle of policy and bylaw reviews.

Minimally a church board should review bylaws in a five year cycle. People change, circumstances change, congregation’s change, pastoral leaders change, government regulations change — all of which can trigger bylaw changes. As the congregation grows, it will require some new bylaws to be drafted, discussed and approved. Congregational size does change things, whether the change is up or down.

Most board members would rather watch paint dry than deal with bylaw revisions! It’s just the way it is. But as chair you might be fortunate to have among the board members someone who “purrs” when the word “bylaw” is mentioned because for them this is a world of challenge and opportunity. If you have such a person, then organize an adhoc bylaw review subcommittee of the board, with that person as chair. Mandate the committee to do two things. First, have them review the current bylaws and note aspects that need to be updated because of congregational or legal changes, or because certain situations have given the board new insight into better ways to guide the congregation. Second, have them recommend new bylaws that would be helpful for the gaps they have observed. Ensure that the subcommittee understands that they report to the board, not the congregation, lest they think that every suggestion they make will become part of the bylaws. Put a time line on the process so that it does not drag on interminably.

As chair you will want to keep close watch on the following items as the bylaw revisions proceed. First, the bylaws cannot contradict the constitution. Second, bylaws have to be compliant with any legal requirements related to non-profit charities. In Canada the Canadian Council of Christian Charities can provide you with careful guidance in this respect. Your denominational office will also normally be a good resource. Third, you may want to advise the board to have legal council review the proposed revised bylaws to make sure they are in good order and worded appropriately. Fourth, try to keep the bylaws as simple as possible. It is not wise to include “policies” as part of the bylaws. Rather the bylaws should stipulate that policy be created for specific aspects of congregational life and what policies the congregation has to approve. As well,  the process for revising bylaws should be defined clearly .

Another aspect of bylaw development that a chairperson needs to evaluate are the percentages required for quorums and approval of specific recommendations, with respect to church board and congregational meetings.  Be careful to establish achievable and realistic quorums. Conversely, you want to guard against the possibility of  a small, active minority taking control of the congregation and its assets. Remember that bylaws exist to sustain congregational life and help the congregation deal with difficult situations. They should provide the mechanisms needed for the congregation to survive “black swan” events, as well as internal squabbles. Particularly, the chair should evaluate carefully whether the bylaws as currently defined or proposed give the board clarity in its mandate and authority to lead and protect the congregation.

Leadership transitions, whether pastoral or board, often receive attention in bylaws. Again, your role as chair will involve you in these matters so you need clarity in the bylaws on these matters. Do the bylaws state clearly who has authority to appoint and dismiss the lead pastor and the appropriate processes that must be followed? Are the bylaws clear regarding the appointment of board members (whether elders or deacons or others), number of board members, board member qualifications, terms of service, resignation processes, chair appointment, etc.? In the case of a lead pastor transition, who appoints the search committee — the board or the congregation or the denomination? What is the composition of such a committee? Does the search committee bring the recommendation directly to the congregation or the board? What percentage of members voting at a duly called congregational meeting must be in support of the recommendation for it to be approved?

Financial matters are also normally part of bylaws. In particular what mandate does the board have to borrow money on behalf of the congregation? Under what conditions does the board have to seek the approval of the congregation? Do the bylaws require an annual financial review? They should. Is there a clause which defines what happens to the assets of the congregation if it is dissolved as a charity?

Bylaw revision is a matter of a board chair “taking care of business.” Remember that the mandate the church board has to do its work arises from those bylaws. If the bylaws become dated, it may put the board into a very difficult situation, unable to provide the strategic leadership that the congregation needs in a very important time. It is very difficult to revise bylaws when a congregation is in the middle to an emergency.