Administrative Assistance

Because Board Members have failed to act in integrity by “Blessing” themselves, friends or family members, they have unwittingly opened the door to the IRS to establish harsh rules regarding “Intermediate Sanctions.”[ See the article on Maintaining The 501(c)(3) ] This article is intended to provide some general guidelines regarding the roles and fiduciary responsibilities of Trustees and Board Members. And hopefully avoid some of the many snares and traps.

Trustee / Director

A Trustee or Director is a “Fiduciary,” entrusted with assets to be managed for the benefit of those individuals relational to the local church on whose Board he serves, whether or not the membership has voting rights. It is the duty of the Trustee/Director to carry out the “Specific Purposes” clause of the church’s Articles of Incorporation. The trustee has a range of duties, including investment and management of assets, and general administrative duties.The trustee must manage and invest the entity’s assets.This requires careful oversight of the property.

Investments and expenditures of fiduciary assets and funds, must be prudent; and in accordance with the “Specific Purposes” Clause in the Articles of Incorporation.They should not be speculative. A fiduciary should communicate with those [Church members] who have a beneficial interest in the fiduciary assets.

Administration of the entity [the church] involves careful record keeping, including identifying all receipts expenditures, payroll, and listing all investments and assets.And when required, the preparation and filing of appropriate tax returns.

Fiduciary Responsibility

In the handling of money and when one acts as a corporate trustee, there is a fiduciary responsibility owed to the church and it’s membership. It is defined as a relationship imposed by law where someone has voluntarily agreed to act in the capacity of a "caretaker" of another's rights, assets and/or well being. The fiduciary owes an obligation to carry out the responsibilities with the utmost degree of "good faith, honesty, integrity, loyalty and undivided service” of the churches interests.

Good faith has been interpreted to impose an obligation to act reasonably in order to avoid negligent handling of the entity’s interests, as well the duty not to favor anyone else's interest (including the trustees own interest) over that of the church.Further, if the Trustee should find him/herself in a position of conflicting interests, he/she must disclose the dual agency (acting for two parties at the same time) or risk being accused of constructive fraud in regards to both or either principals.

Anyone who accepts the role of trustee, should be fully aware of the legal responsibilities of this role.By acting as a fiduciary, a person is assuming responsibility for assets that belong to others, and is required to carry out his duties with the utmost care. The fiduciary must always act in the best interests of the church.Failure to fulfill these duties may result in civil or criminal penalties for the fiduciary, and a person should only accept the role of fiduciary after a careful consideration of the serious responsibilities.