Pastors Can No Longer Itemize Deductions for Business Expenses

What you should know in light of recent tax reform.

The following insights are drawn from an analysis by Richard Hammar and interviews with Frank Sommerville, an attorney, CPA, and editorial advisor, and Ted Batson, an attorney and CPA with the accounting firm CapinCrouse. Read the full analysis in “Integrating Tax Reform for 2018—and Beyond.”

Prior to The Tax Cuts and Jobs Act of 2017, certain business expenses were deductible if, in aggregate, they exceeded 2 percent of the taxpayer’s adjusted gross income (AGI), Hammar said.

Some expenses subject to the 2 percent AGI floor included:

  • overnight out-of-town travel;
  • local transportation;
  • meals (subject to a 50 percent AGI floor);
  • entertainment (subject to a 50 percent AGI floor);
  • home office expenses;
  • business gifts;
  • dues to professional societies;
  • work-related education;
  • work clothes and uniforms if required and not suitable for everyday use;
  • malpractice insurance;
  • subscriptions to professional journals and trade magazines related to the taxpayer’s work; and
  • equipment and supplies used in the taxpayer’s work.

The new law, however, “suspends all miscellaneous itemized deductions that are subject to the 2 percent floor,” Hammar said.

The inability to itemize and deduct business expenses “will hit some clergy hard,” Hammar said. He suggested this possible workaround: “Churches could reimburse employees’ business expenses under an accountable expense reimbursement arrangement.”

To be considered accountable, a church’s reimbursement arrangement must comply with the following four rules:

  1. Expenses must have a business connection—that is, the reimbursed expenses must represent expenses incurred by an employee while performing services for the employer.
  2. Employees are only reimbursed for expenses for which they provide an adequate accounting within a reasonable period of time (not more than 60 days after an expense is incurred).
  3. Employees must return any excess reimbursement or allowance within a reasonable period of time (not more than 120 days after an excess reimbursement is paid).
  4. The income tax regulations caution that in order for an employer’s reimbursement arrangement to be accountable, it must meet a “reimbursement requirement” in addition to the three requirements summarized above. The reimbursement requirement means that an employer’s reimbursements of an employee’s business expenses come out of the employer’s funds and not by reducing the employee’s salary.
  5. “I have advocated for years that churches need to get on board with an accountable expense reimbursement plan,” said Sommerville. He then added, “Frankly, I applaud the elimination of the deduction for the unreimbursed employee business expenses,” explaining that far too many churches simply do not properly review and report taxable employee business expense reimbursements. “I’m handling an IRS exam right now on a pastor who didn’t do it right,” he said. “Pastors just don’t do it right. It’s a complicated process.”
  6. Batson, however, is not convinced that an accountable expense reimbursement plan is practical or affordable for many smaller churches.
  7. Churches would need to carefully consider whether or not they can afford reimbursing a pastor’s business expenses, Batson explained, because it would mean more out-of-pocket expenses for the church. Prior to the new law, he said, pastors could claim a “tax benefit,” but now that is no longer the case.
  8. Paying for a pastor’s business expenses could be very difficult for a small church on a tight budget. To emphasize his point, Batson gave this scenario:
  9. A pastor of a rural church makes weekly and multiple visits to homebound parishioners and to hospitalized members. Because the congregation is spread across many miles of countryside, the pastor puts in an average of 10,000 miles per year. At a mileage rate of 54.5 cents a mile, the pastor would incur an expense of $5,450.
  10. Reimbursing a travel expense like that, Batson said, would greatly stretch or even break the budget of a small church and also create a system that’s difficult for a smaller church to manage. Unlike larger churches, smaller churches often lack the staff size and well-defined financial systems that allow them to make use of such a plan. “This will create a quandary for small churches: they will either need to find a way to accommodate an accountable expense plan, perhaps with a cap, or the pastor will suffer the brunt of the tax law change,” Batson explained.
  11. Sommerville feels setting a cap could make such an accountable plan work for smaller churches. They would just need to establish and adhere to certain stipulations on spending, which includes setting a reasonable and affordable cap. “You let the pastor know that you are going to reimburse his or her expenses up to $4,000, $5,000, or whatever the church can afford.”
  12. Along with that, Sommerville said that the church treasurer or financial manager must commit to reviewing and approving the expense for which the pastor is seeking reimbursement. And that can sometimes create a problem. Nobody wants to get on the pastor’s bad side, he said. Even so, it’s a financial manager’s job to hold a pastor and all church staff accountable for the use of the church’s funds—and an accountable reimbursement plan would help a church financial manager do just that.

Q&A: Who Is a Minister for Federal Tax Reporting Purposes?

The IRS provides five factors for determining whether someone is a minister for federal tax purposes.

Q: We have someone on staff we call our pastor of education, but some members on our board aren’t sure she qualifies as a minister when reporting income taxes. How can we know for sure?


In deciding if a person is a minister for federal income tax reporting, the following five factors must be considered:

  1. ordained, commissioned, or licensed status (required);
  2. administration of sacraments;
  3. conduct of religious worship;
  4. management responsibilities in the local church or a parent denomination; and
  5. whether the person is considered a religious leader by the church or parent denomination.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Guiding Bivocational Ministers Through the Tax Maze

Special considerations for ministers who also work outside the church.

Vince Stover left a full-time pastor’s job in 2014 and moved 250 miles with his wife, Katie, to a city where the couple didn’t know a soul. He found a job in insurance sales and planted Bible Pathway Baptist Church in Lexington, Kentucky. The couple started a family, welcoming sons Brett and Camden.

Yet it was the prospect of filing his annual tax return—for the first time as a bivocational pastor—that kept him awake some nights.

“I was scared to death,” said Stover, who still pastors Bible Pathway but now sells advertising and programming time for a local radio station. “I had been a pastor before, and we did our taxes ourselves. But I knew there was a lot more involved now.” So, he and his wife, Katie, sought help from a qualified accountant.

As a bivocational minister, Stover is far from alone.

Around one-third of all pastors have a job outside of their church work, according to a survey conducted by the National Association of Evangelicals and Grey Matter Research. “Bivocational ministry is how a large and growing number of the world’s churches are pastored,” blogged small-church pastor Karl Vaters. “Even in the United States, their number is increasing at a rapid rate as the size of existing churches continues to decline and new church plants pop up.”

Like Stover, many bivocational pastors have felt overwhelmed by tax issues related to bivocational ministry. Along with that, many church financial managers don’t have the tools needed to help their bivocational pastors with these issues.

“You have all these additional problems created especially in smaller churches where the treasurer may have no formal training to do all these things and may not fully understand their role,” said Frank Sommerville, a CPA, nonprofit tax attorney, and senior editorial advisor for Church Law & Tax.

With this in mind, Church Law & Tax asked Sommerville and two other senior editorial advisors to help untangle some of the more difficult areas encountered by bivocational pastors.

A daunting, complex task

For those in ministry who also work full or part time outside the church, navigating the legal and accounting complexities of tax law compliance can be daunting. And because individual situations can vary so widely, generalized tips and information can range from unhelpful to confusing to even contradictory.

Sommerville said there’s no “one size fits all” guide book when it comes to the respective roles church treasurers and bivocational ministers play in the process.

“It’s a two-pronged approach,” he said. “The church has to be sophisticated or get enough training … to meet its responsibilities, like housing allowance and expense reimbursements plans, and the minister must properly report their income and housing allowance on the tax return. Problems are created when these roles aren’t understood or fully carried out. And you can’t make generalizations when tackling this topic. It can go from very simple to very complex really quickly.”

Seek expert guidance

While it is possible for bivocational pastors to complete their own tax return, Sommerville said most turn to a professional for some level of assistance. And that’s the smart thing to do. However, he added, the smartest thing to do may be to seek professional assistance from a tax professional in establishing the compensation package for the bivocational minister.

“Ministers have a self-motivation and an integrity to try and do it right,” Sommerville said. “Rarely do I find that the ministers intentionally create a problem. Many times they listen to other ministers who were given incorrect information, and that’s where they get off base.”

When it comes to seeking professional tax assistance, CPA and senior editorial advisor Elaine Sommerville offered this advice:

Ask [potential tax preparers] how many ministers’ tax returns they do every year. Then ask what they do to stay current with that specific subject. Don’t be afraid to walk away if they reply, “Oh yeah, I do a couple of ministers’ tax returns.” That’s not good enough. This is a very specialized area of the law, which is not familiar to a lot of tax preparers, and finding someone with solid experience and understanding in this area is very important.

It’s also important to find out what they know about the housing allowance benefit, added CPA Vonna Laue, also a senior editorial advisor. “Start off asking about the housing allowance. Not every tax preparer is going to understand the uniqueness of ministerial tax reporting issues,” explained Laue. “They’re professionals, but they may not have the expertise for this because it is such a complicated area. If they get that deer in the headlights look, or if they say, ‘housing what?’ you probably can safely assume that they have not helped many ministers along the way.”

Keeping careful records

For the Stovers, keeping detailed records took on a life of its own. The first year after the couple moved from Indiana to Kentucky, Vince Stover kept some mileage logs, but wasn’t disciplined or consistent about tracking where he drove, for what reason, or for which job. Early the next year, as Katie Stover began assembling the file the couple would take to meet their new tax professional, her husband realized his mistake.

Although he painstakingly tried to recreate as much as possible from his calendar, Vince Stover knew that not every trip he made to see a visitor from church or a member in the hospital had been noted. And while he said the accountant they work with was “blown away” with their initial attempts at record-keeping, they lost valuable data that could have lowered their tax liability that year.

“He was in shock over how organized [Katie] was,” Vince Stover said. “But even so, the first year we definitely missed some things. We could have gotten more of a refund had we recorded things better.”

Record-keeping is something Elaine Sommerville stresses with every client. “Almost any potential tax pitfall can be avoided with communication and consistent documentation,” she said, which is critical for a bivocational minister who often must switch between secular and church work several times on any given day.

“Mileage, or auto expense, is probably one of the biggest expenses incurred by a minister,” she said. “There’s no other method for determining what the deduction is unless a minister keeps track of his mileage. Whether a minister keeps track using a phone app, notebook, or another method, what matters most is that it’s done all the time, every time, and that it is done at the time the mileage is driven.”

Tax estimates and savings

Another critical component is knowing your individual tax estimate, Elaine Sommerville said.

She explained:

You can’t use income tax withholding tables to get there, because they don’t consider all the sources of income in your family. The incremental tax brackets, where they break, and whether the minister is subject to self-employment tax as well as other factors all affect the tax estimate. It’s always good for a bivocational pastor to realize that any additional taxable income from the church is going to come in at the highest tax bracket that he’s in. You cannot guess its tax effect; you need to know the tax cost and you need to plan.

Perhaps the most misunderstood tax savings for pastors who aren’t experienced in tax preparation is the ministerial housing allowance, Elaine Sommerville said.

“Up to 100 percent of a minister’s salary can be allocated to a housing allowance and it represents the biggest tax advantage for most ministers, even though it still is subject to self-employment taxes,” she explained.

Laue said the ministerial housing allowance is a benefit that bivocational ministers should use to its full advantage—especially given their circumstances.

The housing allowance “is certainly a benefit that the church can offer ministers that the other organization for which they work likely cannot, unless it also is a church or ministry-related entity,” Laue said.

Taxable income vs. tax deductions

Laue said bivocational ministers can help their tax liability by understanding the difference between taxable income and tax deductions when it comes to allowances. The housing allowance is a familiar term to many, but other allowances—like automobile and book allowances—are different in that they represent taxable income. Foregoing the taxable allowance and enacting an accountable expense reimbursement plan is a smart move, she added.

Laue explained:

The problem is that [set amounts from automobile allowances and book allowances] each month create fully taxable income for income tax purposes. Whereas, if the church reimburses for miles driven for doing visits or [other work-related activities] at the IRS mileage rate or lower, that’s completely tax-free under an accountable reimbursement plan. It requires a little more record-keeping, but you don’t have to pay tax on that, so it’s one area where some tweaking could potentially be of real help. To maximize the benefit for bivocational ministers, churches should categorize and treat these funds differently.

Elaine Sommerville offered these additional insights:

Plans should qualify as accountable expense reimbursement plans to secure tax-free reimbursements for the ministers, This is now a critical step in the process since recent tax legislation eliminates the deduction for out-of-pocket employee business expenses by any employee, including ministers. For bivocational ministers, a strong accountable expense reimbursement plan covering all the minister’s business expenses provides the best use of the church’s funds in the most advantageous manner for the minister.

Learning from experience

Vince Stover hopes he won’t always need to be a bivocational pastor. Like many others, to support his family now, he said he needs to have a job in the secular workplace in addition to his ministry work. Reflecting on this, he says one benefit of his current situation is he has learned a lot from the experience, including the discipline and organization needed to meet his tax responsibilities.

“If I could do all this over again, I wouldn’t change a thing about our accountant or really much at all about how we’ve done things since that first year,” he said. “He communicates with us and tells us what’s going on, even when it’s something we don’t necessarily want to hear.”

A few more tips for bivocational pastors

CPAs Vonna Laue and Elaine Sommerville answered a few other questions to help guide bivocational pastors.

When it comes to taxes, what is one big mistake bivocational pastors make?

Sommerville: Churches aren’t required to withhold, so many churches won’t and don’t even offer to do that, especially smaller churches. That’s where some ministers get into trouble, and there’s tax due.

What about benefits if a bivocational pastor is receiving a very minimal compensation?

Sommerville: Most benefits cannot be offered unless you’re an employee. Proving you’re an employee requires some level of compensation. Now it’s common, and possible, to pay a minister only housing allowance. Housing allowance is not subject to federal income tax but is still subject to self-employment tax.

Also, consider an Individual Retirement Plan (IRA). The IRA is a deduction for federal income tax purposes, but not for self-employment tax purposes. So even if bivocational pastors use all of their salary from the ministry job to fund an IRA, they’ll still owe self-employment tax on that entire amount. You can still owe money in this situation, so that’s something to keep in mind.

One of the things to also remember is that an employer can’t, in essence, look at the worker and say, “We’ll just pay you in daycare.” Compensation can be in cash or noncash items such as free daycare. Specifically, it’s difficult to only negotiate a compensation package just for a selected noncash benefit without tax consequences.

What if pastors aren’t sure about being bivocational? How should I guide them?

Laue: Take a long-term approach. What are their long-term goals, and what are the church’s? Will they continue to do this part-time or do they expect that within a certain period of time their position will transition into full-time church work? Encourage them to budget, plan, and put away reserves for that if that’s the case. If they’re, say, an IT specialist and they don’t feel called to full-time ministry but enjoy doing some ministry work, that’s great. Make sure everyone is on the same page.

Should a Church Own or Rent Vehicles?

Two church leaders weigh in on this question.

First Evangelical Free Church of Fullerton, California—known as EvFree Fullerton—has wrestled a lot with the question of whether to buy or own.

Right now, EvFree, which averages a combined 2,500 people at its three Sunday services, has made the decision to own a variety of vans and buses.

“We don’t really drive our big bus a ton—maybe 10 times a year,” said John Schaefer, assistant executive pastor for discipleship and care. “So when finances are [tight], saying I’m going to spend $20,000 on tires for that bus is tough. But if you’re going to have them, you need to maintain them.”

It’s no surprise, then, that concerns about owning vehicles come up fairly often at EvFree.

“A part of the conversation that we have with our staff, probably every six months, is, ‘Do we really want to be in the vehicle business? Or is it more cost effective to rent a bus?’” said Schaefer.

One possibility would be to charter a bus with professional drivers, he added. But one reason the church decides to avoid that route is the lack of flexibility. For example, the church couldn’t decide at the last minute to take a ministry trip.

If the church suddenly didn’t own its vehicles, explained Schaefer, “it would really change how we do certain ministries.”

John Trotter, elder and administrator for the Edmond Church of Christ in Edmond, Oklahoma, said the 1,200-member congregation rents from a reputable dealer with a high standard of vehicle maintenance.

“When a van gets to about 50,000 miles, they put it up for auction and get a new one,” Trotter said. “For short-term trips, I would highly recommend renting as opposed to owning because of maintenance.”

If a church is going to use a vehicle infrequently, it might make more sense to rent rather than buy, Trotter added. He explained that doing so allows the church to rely on the rental company to provide proper maintenance, and often it will mean the use of newer vehicles.

To explore risk-management issues related to both rental and church-owned vehicles see “6 Questions to Assess Vehicle Insurance.”

When Volunteers Drive for Your Church

Tips for handling this critical area of risk-management.

To help churches better understand some of the issues involved with volunteer drivers, we talked with Frank Sommerville. He is an attorney and editorial advisor for ChurchLawAndTax.com.

What should you know before allowing volunteers to drive on behalf of the church?

You should ask for their driver’s license number and check their driving record, and then you need to ask for confirmation of insurance. The higher the limits, the better is my philosophy. But you want to make sure that they have at least the minimum coverage the state requires.

In your experience, are churches generally aware of the need to protect themselves when someone is driving a personal vehicle on the church’s behalf?

Many churches assume that if it’s not a church-owned vehicle, then the church has no responsibility. And that’s just a falsehood. Anytime somebody is driving on church business, even as a volunteer, the church has some responsibility. That’s what they don’t realize.

Are their special vehicle licenses volunteers and staff need in order to drive the church van or bus?

No, unless it’s a vehicle larger than a 15-passenger van. Buses require a commercial license. The 15-passenger van is so popular because it’s the largest vehicle that can be driven without a special license. But I would caution against using 15-passenger vans. There are too many risks. They are just too unstable on the road. It’s worth mentioning that federal law prohibits school districts from using them.

What other advice would you give churches when it comes to volunteers who drive for the church?

It’s a good idea to have a transportation policy that covers expectations when it comes to your drivers—both staff and volunteers. Further, if you have volunteers who are going to be driving, say, on a church mission trip, they have to be cleared through the church office beforehand. Again, you’ll run the driver’s license, check on their driving record, and verify their insurance.

What about rented vehicles? Are churches covered through their own insurance plan or through the rental company’s plan?

Some insurance companies have a rider—or add-on provision—that covers driving a rental on church business. But that needs to be verified with your insurance company. Generally, it’s a whole lot more expensive to purchase insurance through the rental agency. So, I don’t recommend doing so, just because I’m not sure that it’s a good financial decision. Again, a church must verify that it is fully covered by its insurance company.

To help make informed decisions about your church’s vehicle insurance needs, see “6 Questions to Assess Vehicle Insurance.” To gain a better understanding of church insurance in general, see the downloadable resource Understanding Church Insurance.

What Churches Need to Know About the New FEMA Disaster Aid Process

A breakdown of the options churches now have access to for disaster protection and relief.

In January, FEMA announced a shift in policy that would allow houses of worship access to federal funds to rebuild after disasters. The recently passed Bipartisan Budget Act of 2018 assured funding for this new policy. After a string of hurricanes devastated communities across the United States last year, causing $306 billion in damage, churches damaged by such natural disasters can now access federal funding as they look to repair and rebuild.

Because access to these FEMA resources is new for most churches, we’re laying out what churches need to know in order to use this new benefit.

National Flood Insurance Program

The foundation of disaster aid is insurance. Most homeowner and commercial insurance policies exclude flood coverage, but houses of worship can purchase commercial policies through the National Flood Insurance Program (NFIP) if they are part of a participating community. This is not a new benefit for houses of worship, but it’s important that churches understand the importance of this first line of defense. Started in 1958, the NFIP is the largest federal insurance program, covering 5 million properties. It has 22,308 participating communities and has paid out over $9 billion in claims to date. These policies are available in both high- and low-risk areas, even if you’ve had prior flood damage. The NFIP website lists all participating communities, and the policies can be purchased through local insurance agents. It’s important to note that an NFIP policy has to be purchased at least 30 days before an event in order to be able to make a claim after.

Access to these funds does not require a presidential declaration of disaster—only two or more acres or properties that have experienced flood damage. Coverage limits depend on the policy, but they can go up to $250,000 toward building repair and $100,000 toward building contents.

SBA Disaster Loans

After disaster damage has occurred, churches now have the option to turn to the Small Business Administration (SBA) Disaster Assistance program for federal aid. This program is the primary form of federal assistance for privately owned property damage, providing loans to churches and faith-based non-profits. These funds are only available following a presidential declaration of disaster.

While 80 percent of these loans go to individuals for primary residence repairs, churches, non-profits, and religiously affiliated schools can apply for Business Physical Disaster Loans. These loans offer up to $2 million for real estate repairs, and can also be used to repair and replace furniture, fixtures, etc. The interest rate offered to nonprofits is fixed at 2.5 percent, and collateral is required for loans over $25,000. The SBA will not decline a loan for lack of collateral, but it will ask for whatever collateral is available.

Because of the policy change, SBA is accepting disaster loan applications for physical damage past the filing deadline from houses of worship for disasters declared from August 23, 2017 through January 1, 2018. Applications can be submitted online here.

Public Assistance Program

Houses of worship and private, faith-based nonprofits are now also eligible for FEMA’s Public Assistance (PA) Program if their facilities are damaged in a storm that receives a presidential declaration of disaster. This program provides supplemental federal disaster grant assistance for debris removal, life-saving emergency protective measures, and the repair, replacement, or restoration of disaster-damaged facilities of private, non-profit organizations.

Applying for this type of assistance requires submitting an application to the state through the new Grants Manager portal within 30 days of the presidential declaration of disaster. This application package includes a Request for Public Assistance form, evidence of federal tax-exempt status, pre-disaster evidence of incorporation/charter/bylaws, and a Data Universal Number Systems number established with the government, in addition to supporting documentation establishing ownership of the building, proof of use, and proof of insurance.

What’s essential to note, however, is that unless they are providing critical services (emergency, medical, utility, irrigation/water supply, custodial care, or educational), most non-profits and houses of worship will need to first go through the SBA Disaster Loan application process before they are eligible for the PA program. FEMA will not consider applications until the SBA decision is rendered.

If eligibility is granted, churches will need to submit a list of sites damaged, “before and after” pictures, and any information about historic structures. FEMA and the state will then coordinate a Recovery Scoping Meeting to determine reimbursable damages.

What to Do Now

Familiarizing yourself with your options now can help alleviate stress and confusion when you actually need those options. To make that process smother after disaster hits, churches can also prepare in other ways: taking and recording all inventory, storing all policy information in a safe place, and keeping copies of policy numbers and contact information in locations that are easy to find and access.

I reached out to Marcus Coleman, acting director of the Department of Homeland Security Center for Faith-based and Neighborhood Partnerships, for his take on how churches can best prepare now. He offered these four essential pieces of advice for building a culture of preparedness:

1. Get connected with your local first responders and emergency management agency. Local emergency managers can share information about potential risks for your area, including whether your church is in a flood zone. First responders can be helpful in helping you think through creating an emergency operations plan. You can also visit www.fema.gov/faith-resources to get started.

2. Document and insure your property. Not all insurance policies are the same. Coverage amounts, deductibles, and payment caps can vary significantly. Consult with your insurance professional to be sure your policy is right for you. We encourage everyone to document and insure your property. In this webinar recording, FEMA and the SBA discuss potential sources on financial assistance for non-profits and houses of worship, including an update on the recent FEMA policy change.

3. Get trained. Use free resources designed for faith leaders to prepare for natural and man-made emergencies—including active shooter incidents. Training includes “You Are The Help Until Help Arrives” and Community Emergency Response Team training.

4. Get organized. FEMA andDHS have developed a suite of resources to help your organization get organized for man-mad and natural disasters. Visit www.fema.gov/faith-resources to learn more.

For more on how churches can work together with FEMA, see our interview with former FEMA administrator W. Craig Fugate.

Dr. Jamie D. Aten is a disaster psychologist and the founder and executive director of the Humanitarian Disaster Institute at Wheaton College in Illinois. HDI recently launched a new MA in Humanitarian & Disaster Leadership at Wheaton College Graduate School.

Child Abuse Reporting Laws: 22 Facts Church Leaders Should Know

How state laws define who must report actual or suspected abuse, when a report must be made, and how.

Overview

Ministers and other church leaders can learn that a minor is being abused in a number of ways, including an allegation brought forward by a victim, a confession by the perpetrator, or a disclosure by a friend or relative of the victim or perpetrator.

Dennis Watkins, the Legal Counsel for the Church of God denomination based in Cleveland, Tennessee, gets about three calls per month regarding allegations. Pastors, youth pastors, and children’s ministry directors describe how they became aware of an abuse and ask for help on what to do next. In all but one instance over the years, his recommendation has been the same: report it to the state.

That’s because every state has a child abuse reporting law, and often, ministers and other church leaders are legally considered “mandatory reporters” by their state. Failing to report can trigger serious consequences.

“It’s just such a precarious environment anymore to decide not to report that I’ve taken the position we need to find a way to report [all suspected abuse],” said Watkins, whose denomination consists of 6,000 churches and 1 million congregational members in the United States and Canada.

Often, church leaders desire to resolve such matters internally through counseling with the victim or the alleged offender—without contacting civil authorities. And often it’s because the parties involved all may be a part of the same congregation. “Pastors can find themselves in highly pressurized situations,” Watkins said.

But such a response can have serious ramifications, including the following legally based ones:

  • ministers and other church leaders who are mandatory reporters under state law face possible criminal prosecution for failing to comply with their state’s child abuse reporting law;
  • some state legislatures have enacted laws permitting child abuse victims to sue mandatory reporters who failed to report child abuse.

“In years past, I might have said that keeping a situation internal might make sense because there may be ecclesiastical avenues to resolve things,” Watkins said. “But unfortunately, the legal landscape over time has changed and that no longer is a tenable position.”

As a result, it is imperative for church leaders to know their state’s child abuse reporting laws, how they apply to churches, clergy, and other church leaders, and why every church should review their state’s law (as well as the practices and policies their church has in place) to ensure actual or reasonably suspected cases of abuse involving minors are immediately addressed.

Below are 22 facts that ministers and other church leaders should know about child abuse reporting.

1. Every state has a child abuse reporting law

Many leaders are surprised to learn their state has a child abuse reporting law, but the fact is, the vast majority of these laws have been around for decades. A national movement to address child abuse started in the early 1960s, which prompted every state to adopt a mandatory child abuse reporting law soon after.

These laws are subject to changes every year when state legislatures are in session. Minor amendments are regularly made, often to update terminology or address a specific area of the law, but occasionally, amendments can create far-reaching effects. For instance, between 2019 and 2021 alone, three states added “clergy” to their lists of professions mandated to report known or suspected abuse, while two states extensively stiffened their criminal penalties for individuals who fail to fulfill their reporting duties.

Given these continually evolving legal changes, ministers and other church leaders are highly encouraged to regularly consult with qualified local attorneys regarding the current version of their state’s statute.

2. Each state’s law defines abuse, and those definitions can be broad

The definition of child abuse varies widely from state to state. Child abuse is defined by most statutes to include physical abuse, emotional abuse, neglect, and sexual molestation. A child is ordinarily defined as any person under the age of 18 years. Some states specifically limit the definition of child abuse to abuse that is inflicted by a parent, caretaker, or custodian. Other states define abuse without regard to the status of the perpetrator.

Church leaders often associate the triggers for reporting to incidents occurring on church property or during church-sanctioned activities, or an allegation involving a minister, staff member, or volunteer. But clergy and other leaders also must be mindful of other potential triggers to report. For instance, they may become aware of actual or reasonably suspected abuse occurring outside the church through conversations with minors or other adults. They may become aware through observations. Leaders must remain mindful of their potential responsibilities to report whenever any of these types of situations arise.

3. Each state’s law includes a section defining a “mandatory” reporter

A mandatory reporter is an individual who is under a legal duty to report abuse to designated civil authorities. States differ on the definition of a mandatory reporter. Some states, including Arizona, Delaware, and Florida, define mandatory reporters to include any person having a reasonable belief that child abuse has occurred. Obviously, clergy, church staff members, and adult volunteers will be mandatory reporters under these statutes.

The remaining states define mandatory reporters by referring to a list of occupations. In some instances, clergy are specifically identified in these lists. In recent years, more states—such as Hawaii, Illinois, and Virginia—have explicitly added the profession to their lists. In other instances, clergy who work in church-run schools, daycares, and camps will fall under another listed classification, such as “principal,” “teacher,” or “counselor.”

Other relevant professions frequently listed in state statutes include the aforementioned principals, teachers, or counselors of schools; administrative staff of schools; childcare providers; administrators and employees of licensed childcare facilities; daycare center workers; and mental health professionals.

In many states, mandatory reporters are required to report child abuse only if they learn of it in the course of performing their professional duties.

4. What about children’s ministry directors and church volunteers?

Ministers and other church leaders wonder whether children’s ministry director positions and adult volunteers serving in children’s and youth ministries are still mandatory reporters. States differ with respect to how volunteers are—or aren’t—compelled to report, so it’s critical to review each state’s statute closely.

Watkins from the Church of God denomination said he has addressed this ambiguity by urging his churches to simply “find a way to report a case and find a way to document it. It’s not worth the risk, in my mind, to leave your people out there in a precarious position of not reporting.”

And in those select states that define mandatory reporter as “any person,” Watkins said the ambiguity has lessened. “That makes things a lot easier,” he said.

5. What about permissive reporters?

Church leaders who are not mandatory reporters under their state’s law generally are considered permissive reporters, meaning that they are encouraged to report cases of abuse to designated civil authorities but are not legally required to do so.

6. Clergy shouldn’t assume the clergy-penitent privilege exempts them from making a report

Ministers who are mandatory reporters of child abuse under state law are under a profound ethical dilemma when they receive information about child abuse in the course of a confidential counseling session that is subject to the clergy-penitent privilege. They must choose between either fulfilling their legal obligation to report or honoring their ecclesiastical duty to maintain the confidentiality of privileged communications.

A number of states have attempted to resolve this dilemma by specifically exempting ministers from the duty to report child abuse if the abuse is disclosed to them in the course of a communication protected by the clergy-penitent privilege. Other states, while not specifically excluding ministers from the duty to report, provide that information protected by the clergy-penitent privilege is not admissible in any legal proceeding regarding the alleged abuse. Some statutes do not list the clergy-penitent privilege among those privileges that are abolished in the context of child abuse proceedings. The intent of such statutes may be to excuse ministers from testifying in such cases regarding information they learned in the course of a privileged communication.

Even if the clergy-penitent privilege applies in the context of child abuse reporting, it is by no means clear that the privilege will be a defense to a failure to report, since

(1) the information causing a minister to suspect that abuse has occurred may not have been privileged (that is, it was not obtained in confidence, or it was not obtained during spiritual counseling); and (2) a privilege ordinarily applies only to courtroom testimony or depositions, and not to a statutory requirement to report to a state agency.

7. When an actual or suspected case of abuse becomes known, the clock starts ticking

Most states require the report to be made “immediately.” Some states define that term to mean within 24 hours or 48 hours. In one instance—Connecticut—the deadline is 12 hours. All states encourage instantaneous reporting by dialing 911 when a situation is deemed to be an emergency.

It’s important for ministers and other church leaders to know how seriously states take these deadlines. In 2015, a high school counselor in Arkansas was sentenced to one year of probation and assessed a $2,500 fine for reporting a sexual relationship between the school’s volleyball coach and a player 14 days after first learning about it. That state’s law requires reports to be made “immediately.”

Given the sense of urgency these laws purport, individuals typically won’t have much time to figure out what to do when a suspected case arises. That is why having a specific plan in place ahead of time, such as the one provided in the Reducing the Risk training program, is so crucial. Planning will help ease anxiety and reduce the possibilities for errors that can occur during high-stress situations.

The time limits “scare me the most,” Watkins said. “It’s an emotional issue when a case potentially arises” and that creates anxiety and pressure for ministers and other church leaders. For those who serve in denominationally affiliated churches, Watkins emphasized the value of contacting the legal counsel serving in those denominations.

Many denominations, including his, have attorneys who serve in regional offices and can help navigate a situation. “Leaders need to know there are resources to help,” he stressed. “They are not acting alone.”

8. Reporting requires following a specific process

Every state sets requirements regarding how to report an actual or suspected case of child abuse and which agencies or individuals to contact to make it. In all states, a report must be made either orally or in writing, but in some instances, both methods may be required. Be sure to read those details carefully.

Persons who are legally required to report child abuse generally make their report by notifying a designated state agency by telephone and confirming the telephone call with a written report within a prescribed period of time. The reporter generally is required to (1) identify the child, the child’s parents or guardians, and the alleged abuser by name, and provide their addresses; (2) give the child’s age; and (3) describe the nature of the abuse.

9. A failure to report may have far-reaching consequences

When a mandatory reporter fails to report a known or reasonably suspected case of abuse, the most significant concern is the potential for continued harm to the minor—not to mention other minors the alleged perpetrator may come into contact with.

Other significant consequences exist for mandatory reporters who fail to report. They include criminal misdemeanor or felony charges that can carry punishments ranging from small fines to brief jail sentences—or both.

In some states, such as Delaware, Maryland, and Massachusetts, punishable fines can extend into the tens of thousands of dollars, depending on the nature of the mandatory reporter’s inaction. In one instance—Louisiana—a mandatory reporter failing to report can face up to five years in jail. In recent years, states like Tennessee and Montana have amended their laws to stiffen the criminal penalties that violators can face.

A case from 2015 further illustrates the potentially serious criminal consequences a mandatory reporter can face for failing to report abuse. The Pennsylvania Supreme Court affirmed the felony conviction of a priest who knew about ongoing child sexual abuse committed by another priest, but never reported it and failed to take steps to protect victims and potential victims.

10. Mandatory reporters in some states also face civil liability for failing to report

In eight states (Arkansas, Colorado, Iowa, Michigan, Montana, New York, Ohio, and Rhode Island), laws allow victims of child abuse to file lawsuits seeking monetary damages from adults who are mandatory reporters and allegedly failed to report the abuse, contributing to the injuries the victims suffered. In each state, the statute only permits victims of child abuse to sue mandatory reporters who failed to report. No liability is created for persons who are not mandatory reporters as defined by state law.

These lawsuits may be brought in some states many years after the failure to report. It is possible that other state legislatures will enact laws giving victims the legal right to sue mandatory reporters who failed to comply with their reporting obligations. It is also possible that the courts in some states will allow victims to sue mandatory reporters (and perhaps those who are not mandatory reporters) for failing to report child abuse even if no state law grants them the specific right to do so. These potential risks must be considered when evaluating whether or not to report known or suspected incidents of child abuse.

Whether such a civil lawsuit will prevail depends upon the victim’s ability to convince a jury, based on the preponderance of the evidence (a legal standard used in most civil cases that means the injury more likely than not occurred because the mandatory reporter knew of the actual or suspected abuse and failed to report it—and that this failure contributed to the victim’s injuries). The outcome of such litigation is far from certain, but the mere fact it can occur presents several potential problems for mandatory reporters, including:

  • the high costs of defending against a civil lawsuit;
  • a potentially costly award from a jury to the victim;
  • the stress and distractions of a legal dispute, including meetings, hearings, depositions, and other time-consuming and resource-depleting tasks; and
  • negative media coverage.

11. Civil liability for churches whose mandatory reporters failed to report

A few churches have been sued by child abuse victims as a result of a clergy member’s failure to report. This basis of liability has generally been rejected by the courts.

12. Negligence per se

Some courts, including in Pennsylvania, have ruled that the legal doctrine of negligence per se applies to child abuse reporting statutes. This doctrine creates a presumption of negligence for violations of a statutory duty. As a result, mandatory reporters who fail to comply with their state’s child abuse reporting statute are presumed to have been negligent without any further proof. And, this is so even if the child abuse reporting statute does not explicitly state that mandatory reporters who fail to report abuse are subject to civil liability.

13. Hotlines and online reporting forms

Nearly every state provides a 24-hour, toll-free hotline for reporting. Some also provide the ability to submit a report through their websites. However, it’s not entirely clear whether hotlines or online submissions will meet a state’s mandatory reporting requirements.

Some states reference hotlines or online reports in their statutes, but many do not. Church leaders should consult further about this with qualified local legal counsel, as well as appropriate state officials, to determine whether the hotlines and/or online report submissions adequately fulfill mandatory reporting requirements.

To further aid you and your church’s leaders, this resource contains each state’s toll-free phone numbers and/or website links regarding the filing of a report. This information was last updated in June of 2021.

14. Following chains of command

In some states, a mandatory reporter must also notify a representative or leader within their organization regarding the actual or suspected case of abuse. For instance, in New York, mandatory reporters must make a report in the manner outlined by the statute and also must notify the person in charge of their institution, facility, or agency (or an agent designated by the person in charge).

However, in states where this is required, mandatory reporters still must make a formal report—simply notifying the person in charge (or their designated agent) isn’t considered a sufficient way of fulfilling mandated reporting requirements.

A few states, including Missouri, allow mandatory reporters to report to a designated person in the church, such as the lead pastor, who then has the sole responsibility to report.

15. Attempting to stop a report from being made

Many states include language prohibiting individuals or institutions from attempting to block or dissuade another individual from making a report. Churches, as employers, as well as clergy and staff in supervisory roles, should be especially aware of this type of language in their state’s statute.

16. Retaliation provisions

Many states include language in their laws prohibiting employers from retaliating against employees who make reports. Churches, as employers, as well as clergy and staff in supervisory roles, should be especially aware of any such provisions.

17. Limited legal immunity to individuals who make good-faith reports.

Many church leaders express concerns about whether they might face civil—or even criminal—sanctions if a report they make ultimately cannot be substantiated. Every state grants limited legal immunity to reporters of child abuse. This means that a reporter cannot be sued simply for reporting child abuse. However, several states require that the report be based on a “reasonable cause to believe” that abuse has occurred. Persons who maliciously transmit false reports are subject to civil liability in most states and criminal liability in some.

18. Confidentiality of a mandatory reporter’s identity

Many ministers and other church leaders worry about whether their identities will be disclosed after making a report. Most state child abuse reporting laws prohibit the disclosure of a reporter’s identity to the alleged perpetrator. Some states permit the disclosure of the reporter’s identity to other state agencies, or a prosecuting attorney. In addition, most states do not require reporters to divulge their identity. A few states require mandatory reporters to identify themselves when they report child abuse, but in most of these states, the reporting law prohibits the disclosure of the reporter’s identity to the alleged molester.

19. When an adult reveals they were abused as a minor

Many church leaders aren’t sure what to do about reporting when a person who already has surpassed the age of majority (the age of 18) reveals they were abused when they were a minor. Some states—including California, Texas, and Washington—directly address this issue through their statutes, but many states do not. In California, for instance, the law says a report must be made by a clergy member “even if the victim of the known or suspected abuse has reached the age of majority by the time the required report is made.” CA PENAL § [11165.1-11165.6]. A few states relieve mandatory reporters of the duty to report incidents that occurred more than a specified number of years in the past.

20. Spiritual means, faith healing, and definitions of abuse

Several states provide that no child who is being treated solely by spiritual means through prayer in accordance with the tenets and practices of a recognized church shall, for that reason alone, be considered to be an “abused” child.

21. Employer responsibilities with respect to training and informing mandatory reporters

At least one state—Oregon—requires mandatory reporters to go through training regarding their responsibilities, while many others encourage it. Many states provide free training through their websites.

Employers also may have responsibilities to mandatory reporters they employ. In New York, for instance, any entity employing mandatory reporters must provide them with written information about reporting requirements set by the state. California’s statute states:

Employers are strongly encouraged to provide their employees who are mandated reporters with training in the duties imposed by this article. This training shall include training in child abuse and neglect identification and training in child abuse and neglect reporting. Whether or not employers provide their employees with training in child abuse and neglect identification and reporting, the employers shall provide their employees who are mandated reporters with the statement required pursuant to [mandatory reporter requirements]. CA PENAL § 11165.7(c).

22. Church leaders should research their state’s statute of limitation for abuse claims

Every state has statutes involving deadlines for people to file civil lawsuits. Once such a deadline passes, the person generally is not allowed to bring a legal claim in the civil courts regarding the matter. These statutes of limitation vary by the state and by the type of claim involved. When the claim involves child abuse, leaders must be aware of several key issues that arise. First, as we note in Church Law & Tax’s Legal Library, the “statute of limitations does not begin to ‘run’ in the case of injuries to a minor until the minor’s eighteenth birthday.” Second, several states extend the statute of limitations for cases of child molestation under the “discovery rule,” meaning the statute of limitations does not begin to run until a person discovers the past abuse he or she experienced. And third, some states—through court decisions in their respective jurisdictions—have suspended the statute of limitations in child molestation cases when certain facts are present (a legal concept known as “tolling”).

Furthermore, increasing public outrage regarding cases of abuse that have transpired in recent years and in various settings, including youth sports organizations, schools, and religious institutions, have prompted some states to take additional actions related to the statute of limitations for abuse claims. Some, like California, New York, and New Jersey, have adopted temporary lookback windows allowing victims to bring otherwise time-limited claims forward, while one state—Vermont—permanently removed statute-of-limitation restrictions.

Statutes of limitation for abuse claims remain a rapidly evolving area of law. It’s critical for church leaders to research their state’s law and to seek legal counsel regarding any questions or confusion that arise, especially if the church becomes aware of actual or suspected abuse that occurred in the distant past. Furthermore, leaders must recognize the possibility that an abuse claim involving their church from many years ago still can arise. That’s why it’s so critical for churches to permanently retain their insurance coverage policies, as well as applications and background checks for all individuals who serve in their children’s and youth ministries.

States provide a lot of information through their websites regarding abuse, abuse prevention, abuse reporting requirements, and ways to get more information and questions answered.

As Dennis Watkins pointed out, the legal counsel for denominations often can also provide information, resources, and guidance.

Richard R. Hammar, J.D., LL.M., CPA, is senior editor of ChurchLawAndTax.com. Matthew J. C. Branaugh, J.D., is an attorney and content editor of ChurchLawAndTax.com.

Are Criminal Background Checks Legally Required for Youth Ministry Workers?

A 2017 case shows why criminal background checks for youth ministry workers are advisable.

Last Reviewed: September 14, 2024

A California case decided in 2017 and involving a youth soccer organization is immensely important to church leaders—both now and going forward—because of the conclusions reached by an appellate court in that state.

In Doe v. United States Youth Soccer Association, the court ruled that an organization had a legal duty to perform criminal background checks on employees and volunteers, and could be liable for the sexual molestation of minors by unscreened workers. 

The historic ruling represented the first reported case in the country in which a court unequivocally reached this conclusion.

The court’s decision, as well as the reasoning behind it, operates as precedent in the California courts only. But it also may prove persuasive to courts in other states. All youth-serving organizations, including churches, must take note.      

Facts

A 12-year-old girl (the “plaintiff”) was sexually abused by her soccer coach. 

She sued national, state, and local youth soccer associations (the “defendants”), claiming that they were responsible for her injuries on the basis of negligence and willful misconduct. She claimed that the defendants had a duty to protect her from her coach’s criminal conduct, and that the defendants breached their duties to her by failing to conduct criminal background checks and by failing to warn or educate her or her parents about the risk of sexual abuse.

A trial court granted the defendant’s motion to dismiss the lawsuit on the ground that they had no duty to protect the plaintiff from criminal conduct by a third party. The plaintiff appealed. A state appeals court reversed the trial court’s dismissal of the case, finding that the defendants had a duty to conduct criminal background checks of all adults who would have contact with children involved in their programs.

The KidSafe Program

In 1994, the national soccer association acknowledged that pedophiles were drawn to its youth soccer program to gain access to children, and its program presented an unacceptable risk of harm to children unless appropriate preventative measures were taken. 

US Youth developed the KidSafe Program, which was designed to educate adult volunteers, coaches, employees, parents, and players participating in its soccer programs regarding the prevention and detection of sexual abuse. 

The KidSafe Program states that its ultimate objective is “to exclude from participation … all persons who have been convicted of felonies, crimes of violence or crimes against a person.”

Sometime in the mid-1990s, the national soccer association distributed hundreds of copies of its KidSafe Program pamphlets to each state association. Thereafter, it sent copies of these educational pamphlets on request. Many of these pamphlets, which could be accessed through links on defendants’ websites, emphasized the importance of teaching parents and other adults about the warning signs of sexual abuse in youth sports and how to detect predators. The pamphlets also listed safety guidelines, which set forth appropriate conduct for adults and outlined “red flags” or warning signs of abuse. In addition, the national soccer association presented KidSafe Program materials at annual and regional meetings.

However, neither the national nor state defendants required that the local soccer association’s coaches, volunteers, trainers, and administrators receive or be trained in the KidSafe Program. The local soccer association never conducted any meetings for parents to discuss the KidSafe Program. 

Neither it nor the state association emailed links to the KidSafe Program pamphlets to parents of children participating in youth soccer programs.

The coach’s conduct

In the spring of 2011, the plaintiff joined a local soccer club. Her coach violated several of the national soccer association’s safety guidelines:

  • he held practices for which he was the only coach present in June 2011 and Hat the weeklong soccer camp in August 2011;
  • he made excessive and disproportionate physical contact with the plaintiff; 
  • he drove the plaintiff to and from practices and games alone; 
  • he helped her put away equipment after practices as the other players were leaving or had left and they could not be seen from the field; 
  • he singled out the plaintiff for training sessions involving one or two players; 
  • he acted “impulsively, immaturely, and in an egocentric manner” by abruptly leaving the field during practices; 
  • he used inappropriate and excessive physical discipline as well as foul and offensive language; 
  • he spent extensive time alone with the plaintiff on June 11 and 12, 2011; 
  • he drove her alone to and from a tournament in another town, even though her parents attended 30 minutes of the final game; 
  • during the tournament, he took the plaintiff alone for two walks; 
  • he engaged in grooming behavior of the plaintiff and her family when he became friendly with them, visited them at their home, was helpful to them, and offered to drive the plaintiff to games and practices and to pick her up from such events when her parents were unable to do so.

After parents complained about the coach’s harsh discipline of the girls, the local soccer club reassigned him to a boys’ soccer team. 

Since the boys’ team practiced at the same time as the girls’ team, the coach continued to select the plaintiff and sometimes another girl to practice with the boys. 

In November 2011, the club suspended the coach. 

Though it became more difficult for the coach to have contact with the plaintiff, he continued to do so. 

Since the soccer club did not inform the plaintiff’s parents that the coach had been suspended due to inappropriate touching of the plaintiff and one-on-one contact with her, the club withheld information that would have put the plaintiff’s parents on notice that they needed to be “extra vigilant” in keeping the coach away from their daughter.

Criminal records checks

The national youth soccer’s bylaws require that its state associations and each affiliate league collect and screen criminal conviction information on its coaches, trainers, volunteers, and administrators who will be in contact with youth members.

The national youth soccer organization negotiated a discounted rate with an online vendor to permit state associations, leagues, or teams to obtain nationwide criminal background checks on an applicant for $2.50 per search. National youth soccer kept records regarding which state associations did and did not conduct these background checks and distributed monthly reports indicating which individuals had been disqualified from participation in soccer programs due to prior convictions.

In 2009, the founder of the local soccer club and a member of the state soccer association’s Hall of Fame was charged with multiple felony child molestation offenses arising from incidents with two 11-year-old boys. The perpetrator had been a coach, volunteer, and referee for local soccer activities until at least 1998. 

The local club was unaware of his prior convictions for child sexual abuse from the mid-1990s, because it did not conduct criminal background checks.

When the defendant applied for a coaching position with the local club in 2010, he was required to fill out a form that asked whether he had been convicted of a felony, a crime of violence, or a crime against a person. The disclosure form stated that the national soccer association might deny certification to any person who has been convicted of these types of offenses.

 Though the coach had been convicted in 2007 of battery against his spouse, he answered “no” to each of these categories and authorized the state and local associations to confirm this information. Neither conducted a criminal background check.

Though the national soccer association knew that voluntary disclosure by an applicant of his or her criminal convictions was ineffective, it did not require its affiliates to conduct criminal background checks. The risk management committee of the national association recommended that mandatory criminal background checks be required. A memorandum to the association stated: 

From a risk management standpoint it certainly makes good sense to conduct criminal background checks of all volunteer and paid adults that have contact with minor players. But, from a negligence standpoint, regularly conducting criminal background checks of volunteers and paid adults creates a self-imposed duty to do the same for all that serve in a similar capacity. The failure to conduct such a check would be considered as a breach of duty, which, in turn could mean liability.

The local club also knew that a criminal background check would identify applicants who lied about their background on the self-disclosure form, but it failed to conduct criminal background checks. The local club also chose not to interview the plaintiff and her parents, because it did not want a scandal or lawsuit.

The court’s ruling

The plaintiff’s negligence claim against the defendants rested on their failure to require or conduct criminal background checks and to warn or educate her about the risks of sexual abuse. The court noted that “as a general matter, there is no duty to act to protect others from the conduct of third parties.” However, “a defendant may owe an affirmative duty to protect another from the conduct of third parties if he or she has a special relationship with the other person.” 

A special relationship exists when “the plaintiff is particularly vulnerable and dependent upon the defendant who, correspondingly, has some control over the plaintiff’s welfare.” The court continued: 

Generally, a greater degree of care is owed to children because of their lack of capacity to appreciate risks and avoid danger. Consequently, California courts have frequently recognized special relationships between children and their adult caregivers that give rise to a duty to prevent harms caused by the intentional or criminal conduct of third parties. Recognized special relationships include an operator of a preschool or day care center to the children in attendance; a school district to a mother whose child was sexually molested by another student because the school stood in loco parentis while the child was in attendance; and the wife of a sexual offender to children she invited to play in her home because being of tender years they were particularly vulnerable to this sort of misconduct and not fully able to protect themselves against it.

The court referred to an earlier ruling by the California Supreme Court finding a special relationship between scout leaders and scouts “based on the vulnerability of children and the insidious methods of sexual offenders.” Juarez v. Boy Scouts of America, 81 Cal. App.4th 377 (Cal. App. 2000).

The court concluded that there was a special relationship between the defendants and the plaintiff: 

The plaintiff was a member of national youth soccer and played on a local team that was the local affiliate of national and state youth soccer associations. In addition, the local club was required to comply with the policies and rules of the national association. And, since the national association established the standards under which coaches were hired, it determined which individuals, including the defendant coach, had custody and supervision of children involved in its programs.

The court clarified, however, that “a duty to take affirmative action to control the wrongful acts of a third party will be imposed only where such conduct can be reasonably anticipated.” That is, was “the degree of foreseeability … high enough to charge the defendant with the duty to act on it”? The defendants had no knowledge that the defendant coach had previously sexually abused anyone or had a propensity to do so. But, it added: 

National youth soccer was “aware of incidents of physical and sexual abuse of its members by its coaches at a steady yearly rate of between 2 and 5 per year. More importantly, in recognition of the risks of sexual abuse to its players, it had developed the KidSafe Program, which included a pamphlet that stated: “One out of every 4 girls and one out of every 6 boys will be sexually abused before the age of 18. Fact: Pedophiles are drawn to places where there are children. All youth sports, including youth soccer, are such places.” Though these statements did not establish the rate of sexual abuse in youth soccer programs, they were an acknowledgement by the national youth soccer association that children playing soccer were at risk for sexual abuse. As to the state and local defendants, there is no indication of the frequency of sexual abuse incidents affecting players in their leagues. However, both adopted the KidSafe Program, which acknowledged that their soccer programs attracted those who might sexually abuse their players and that there had been incidents of sexual abuse. Moreover, the year before the defendant coach submitted his application, both the state and local defendants were aware of multiple sexual abuse incidents involving [a former prominent coach]. It is not clear whether these incidents occurred as a result of his participation as a coach, volunteer, or referee for youth soccer activities, but these incidents demonstrated that pedophiles were drawn to activities involving children. Thus … we conclude that it was reasonably foreseeable to defendants that a child participating in their soccer program would be sexually abused by a coach.

The national, state, and local defendants argued that it would impose a “tremendous burden” to mandate criminal background checks for employees and volunteers in their programs, because the availability of criminal background checks varies among the states. The defendants also claimed that volunteers working with children in the majority of states are not required to undergo criminal background checks and private entities are not allowed to obtain national criminal background checks on volunteers in many states.

The court rejected this argument, noting that “nearly all of the state associations have been conducting criminal background checks on all volunteers, coaches, and trainers since 2010, thus showing that it would not have been overly burdensome” for the state and local defendants to do so.

The national soccer defendant also argued that the cost of mandating criminal background checks would be substantial: 

US Youth registers over 900,000 administrators, coaches and volunteers annually and … if criminal background checks cost $2.50 per check, this would amount to $2.25 million.” If members of a team or the applicant had paid for the criminal background check, defendants would not have born the cost. More importantly, there was and continues to be no cost for criminal background checks in California pursuant to a statute providing that no fee shall be charged to nonprofit organizations for criminal background checks.

In finding the defendants guilty of negligence for not mandating criminal records checks of volunteers and others who work with minors in youth soccer, the court observed: 

If defendants had conducted a criminal background check of the defendant coach, his prior conviction for domestic violence would have been discovered and it would have been highly unlikely that he would have been hired. Thus, he would have had far fewer, if any, opportunities to sexually abuse plaintiff. As to the policy of preventing future harm, our society recognizes that the protection of children from sexual abuse is a paramount goal. Imposition of a duty to conduct criminal background checks on defendants would assist in the achievement of this goal… . Here, balancing the degree of foreseeability of harm to children in defendants’ soccer programs against their minimal burden, we conclude that defendants had a duty to require and conduct criminal background checks of defendants’ employees and volunteers who had contact with children in their programs. . . . [P]reventing harm to children is a paramount goal of our society. Since we have found that defendants had a duty to plaintiff, the [plaintiff’s] complaint states sufficient facts to constitute a cause of action for negligence.

Relevance to church leaders

There are some aspects to the California appellate court’s decision that are instructive for all churches, even though the decision is only binding in California.

1. Negligence

The court acknowledged that generally there is no duty to protect others from the criminal activity of third persons. One court stated the general rule as follows: “One human being, seeing a fellow man in dire peril, is under no legal obligation to aid him, but may sit on the dock, smoke his cigar, and watch the other fellow drown. Such decisions have been condemned by legal writers as revolting to any moral sense, but thus far they remain the law.” Mackey v. U.S., 2007 WL 2228663 (6th Cir. 2007). 

But there are exceptions to this rule, and one of them was at issue in the California case. The court concluded that a duty to intervene to protect another from harm may arise if the victim (1) has a “special relationship” with another, and (2) harm to the victim is reasonably foreseeable. The court concluded that a special relationship exists between a minor child and a youth-serving organization (such as a soccer club or church). It also concluded that “it was reasonably foreseeable to defendants that a child participating in their soccer program would be sexually abused by a coach.” 

In support of its finding of foreseeability, the court noted: 

[National youth soccer] was aware of incidents of physical and sexual abuse of its members by its coaches at a steady yearly rate of between 2 and 5 per year. More importantly, in recognition of the risks of sexual abuse to its players, it had developed the KidSafe Program, which included a pamphlet that stated: “One out of every 4 girls and one out of every 6 boys will be sexually abused before the age of 18. Fact: Pedophiles are drawn to places where there are children. All youth sports, including youth soccer, are such places.” Though these statements did not establish the rate of sexual abuse in youth soccer programs, they were an acknowledgement by the national youth soccer . . . . association that children playing soccer were at risk for sexual abuse. . . . We conclude that it was reasonably foreseeable to defendants that a child participating in their soccer program would be sexually abused by a coach. 

The court concluded that the soccer defendants were liable for the plaintiff’s injuries based on their negligence in failing to perform a criminal background check. It noted that “defendants had a duty to require and conduct criminal background checks of defendants’ employees and volunteers who had contact with children in their programs . . . . Since we have found that defendants had a duty to plaintiff, the [plaintiff’s] complaint states sufficient facts to constitute a cause of action for negligence.”

2. The risk of pedophilia

This case demonstrates the risk pedophiles represent in any program or activity involving minors. The defendant coach saw coaching as a way to recruit, groom, and molest potential victims. Church leaders must be aware of this risk and take steps to reduce or eliminate it. The term pedophile is widely used but poorly understood. Often, it is used synonymously with child molester

The DSM-IV is the standard classification of mental disorders used by mental health professionals in the United States and contains a listing of diagnostic criteria for every psychiatric disorder recognized by the U.S. healthcare system. The current edition, DSM-IV-TR, is used by professionals in a wide array of contexts, including psychiatrists and other physicians, psychologists, social workers, nurses, occupational and rehabilitation therapists, and counselors.

The DSM-5 contains the following definition of ”pedophilic disorder”:

  1. Over a period of at least 6 months, recurrent, intense sexually arousing fantasies, sexual urges, or behaviors involving sexual activity with a prepubescent child or children (generally age 13 years or younger).
  2. The individual has acted on these sexual urges, or the sexual urges or fantasies cause marked distress or interpersonal difficulty.
  1. The person is at least age 16 years and at least 5 years older than the child or children in Criterion A.

Note: Do not include an individual in late adolescence involved in an ongoing sexual relationship with a 12- or 13-year-old.

This definition is important particularly because it includes the following four characteristics:

  • promiscuity.
  • predatory behavior. 
  • incurability; and
  • high recidivism rates.

These characteristics were noted in Child Molesters: A Behavioral Analysis, by former FBI agent Kenneth Lanning.

He notes: 

Although a variety of individuals sexually abuse children, preferential-type sex offenders, and especially pedophiles, are the primary acquaintance sexual exploiters of children. A preferential-acquaintance child molester might molest 10, 50, hundreds, or even thousands of children in a lifetime, depending on the offender and how broadly or narrowly child molestation is defined. Although pedophiles vary greatly, their sexual behavior is repetitive and highly predictable. . . . Those with a definite preference for children (i.e., pedophiles) have sexual fantasies and erotic imagery that focus on children. They have sex with children not because of some situational stress or insecurity but because they are sexually attracted to and prefer children. They have the potential to molest large numbers of child victims. For many of them their problem is not only the nature of the sex drive (attraction to children), but also the quantity (need for frequent and repeated sex with children). They usually have age and gender preferences for their victims.

The Association for the Treatment of Sexual Abusers website states: 

Offenders who seek out children to victimize by placing themselves in positions of trust, authority, and easy access to youngsters can have hundreds of victims over the course of their lifetimes. One study found that the average number of victims for non-incestuous pedophiles who molest girls is 20; for pedophiles who prefer boys, over 100. Church leaders also should be aware that pedophilia generally is considered to be incurable, and very difficult to control. In addition, pedophiles have a high recidivism rate, meaning that those who are convicted and sentenced to prison are likely to revert to such behavior upon their release. 

The Association for the Treatment of Sexual Abusers website states that “predatory pedophiles, especially those who molest boys, are the sex offenders who have the highest recidivism rates. Over long follow-up periods, more than half of convicted pedophiles are rearrested for a new offense.” As this case illustrates, youth-serving charities are a magnet for pedophiles, and as a result these charities must exercise constant vigilance in selecting and screening workers. 

In summary, it is important for church leaders to understand the definition of pedophilia, since this condition is associated with several characteristics including promiscuity predatory behavior incurability, and high recidivism rates.

Key point. According to the FBI and other knowledgeable sources, pedophiles are characterized by the following four characteristics: (1) predatory behavior; (2) promiscuity; (3) incurability; and (4) high recidivism rate.

3. Risk management

The California case addressed in this article is the first reported case in which a court ruled that youth-serving charities have a legal duty to perform criminal background checks on employees and volunteers who work with minors. It is likely that this conclusion will be followed by some, perhaps many, courts in other jurisdictions. Church leaders should view criminal background checks on all persons, both employees and volunteers, who work with minors, as a best practice. This is so for two reasons.

First, many youth-serving national charities have been mandating criminal background checks for years, and the same is true for public schools. This makes it increasingly difficult for churches to explain why they fail to require such checks. By failing to follow the practice of public schools (a state agency) and an increasing number of youth-serving charities, a church is exposing itself to a greater risk of being found liable on the basis of negligence for the sexual abuse of children because of its failure to follow the “community standard.”

Second, it is likely that an increasing number of courts in multiple jurisdictions will follow the California court’s lead and impose a legal duty on youth-serving charities to conduct criminal background checks.

4. Criminal background checks are one component of a risk management strategy

Church leaders should not view criminal background checks as the only risk management technique to be used. Instead, risk management should be viewed as a basket of precautionary measures that include many or all of the following:

1. Interview. Interview all applicants for youth and children’s ministry positions. This applies to both paid employee and unpaid volunteer positions. Interviews provide the church with an opportunity to inquire into each applicant’s background and evaluate each person’s suitability for the position under consideration.

2. A written application. Every applicant for youth or children’s ministry (volunteer or compensated) should complete an application. At a minimum, the application should ask for the applicant’s name and address, the names of other youth-serving organizations in which the applicant has worked as an employee or volunteer, a full explanation of any prior criminal convictions, and the names of two or more personal references. 

3.“Institutional references.” The best reference is an institutional reference. This is a reference from another institution or organization in which the applicant has worked with minors either as a paid employee or an unpaid volunteer. The key question to ask is whether the institution is aware of any information indicating that the applicant poses a risk of harm to minors or is in any other respect not suitable for youth or children’s ministry. Obviously, obtaining a positive reference from one or more other institutions that have observed the applicant interact with minors is the gold standard in screening prospective youth and children’s workers. Some applicants have not worked with other youth-serving institutions in the past, and so no institutional reference is available. In such cases, a church’s only option is to obtain personal references. However, risk can be reduced by limiting personal references to members of the church.

For nonminister employees and volunteers, the best references will be from other churches or charities in which the applicant has worked with minors. Examples include Boy/Girl Scouts, Big Brothers/Sisters, Boys/Girls Clubs, YMCA, Little League, Catholic Charities, public or private schools, youth sports, or other churches or religious organizations. Seek a reference from every such organization in which the applicant has served. Your application form should ask applicants to list all such organizations, including contact information.

For persons seeking a position as a youth or children’s pastor, institutional references include other churches in which the applicant has worked in youth or children’s ministry, and the church or denomination with which the person is ordained, licensed, or commissioned. 

Often, a church will not receive a response to a written reference request. In such a case, contact the reference by phone and prepare a written memorandum noting the questions asked and the reference’s responses. Show the date and method of the contact, the person making the contact, the reference’s identity, and a summary of the reference’s remarks. Such forms, when completed, should be kept with an applicant’s original application. They should be kept permanently.

Caution. Be sure you are aware of any additional legal requirements that apply in your state. For example, a number of states have passed laws requiring church-operated child-care facilities to check with the state before hiring any applicant for employment to ensure that each applicant does not have a criminal record involving certain types of crimes. You will need to check with an attorney for guidance. 

4. A six-month rule. Churches can reduce the risk of sexual molestation of minors by adopting a policy restricting eligibility for any volunteer position involving the custody or supervision of minors to those persons who have been members in good standing of the church for a minimum period of time, such as six months. Such a policy gives the church an additional opportunity to evaluate applicants, and will help repel persons seeking immediate access to potential victims.

5. Benchmarking. “Benchmark” church policies by comparing them with the policies of other charities and the public schools. Check with other churches and youth-serving charities (i.e., YMCA, Boy/Girl Scouts, Big Brothers/Sisters) to see how your procedures compare. Most importantly, check with your public school district. Public schools are agencies of the state, and therefore by aligning your procedures to those of public schools you are going a long way in demonstrating that your procedures are reasonable and not negligent.

6. Periodic review of your policies by legal counsel. Having an attorney periodically review your worker selection procedures will help to establish the exercise of reasonable care which will reduce the risk of both harm and a finding of negligence. 

7. Adopt a “two-adult” policy. Adopt a two-adult policy prohibiting a child from being alone with an unrelated adult during any church activity. This rule reduces the risk of child molestation, and reduces the risk of false accusations of molestation.

8. Criminal records checks. Conduct criminal records checks on employees and volunteers who will interact with minors as part of their duties. Criminal records checks include a nationwide search of sex offender registries, and a national criminal file search. Criminal records checks are inexpensive and convenient, and they are an essential component of risk management. Preferential pricing often is available from your insurance company. Never hire anyone in a youth or children’s ministry position, as either an employee or volunteer, who was or is on a sex offender registry in any state. 

Other crimes are disqualifying as well if they suggest that a person poses a risk of harm to minors. If in doubt about the relevance of a particular crime, a good practice is to bar persons from youth or children’s ministry who would not be eligible to work as a public school employee. Your local public school district offices should be able to provide you with a list of disqualifying crimes.

9. Prompt reporting of child abuse. It is imperative for church leaders to comply with their state’s child abuse reporting law. Promptly report all known and reasonably suspected cases of child sexual abuse to the designated state agency. In some states a report must be filed within 24 hours. Know the reporting requirement in your state. Be sure to make a telephone memorandum of your call, and ideally have a second person listening in on the conversation who can sign the memorandum as a witness. Resolve any and all doubts in favor or reporting. Prompt reporting has several advantages:

  • It is required by law (for mandatory reporters).
  • You avoid misdemeanor liability for failure to report.
  • You avoid civil liability in many states for not reporting.
  • Reporters are given immunity from liability in every state (except for malicious behavior).
  • You protect the current victim from further harm.
  • You are placing the abuser’s identity in the criminal justice system, making it more likely that this information will be flagged to other churches and youth-serving charities seeking a reference.
  • You minimize the risk of public outrage that can be unleashed if your church failed to report the abuse to the state and the offender molests other minors.

10. Promptly address and halt high-risk behaviors. Often, those who molest minors in churches or during church activities have openly engaged in high-risk behaviors, including:

  • Minors spending the night in a leader’s home.
  • An adult leader drives a vehicle with one or more unrelated minors on board, and no other adults.
  • An adult goes on day trips with an unrelated minor.
  • An adult goes on overnight trips with an unrelated minor.
  • A leader spends the night in a hotel with one or more unrelated minors.
  • A leader meets one or more minors in malls or other places where minors congregate.
  • An adult leader sleeps in a tent with an unrelated minor during a campout.
  • A person frequently takes pictures of one or more unrelated  minors (viewed by some as the best indicator of pedophilia).

These, and similar, “grooming” behaviors are associated with many incidents of sexual abuse involving youth and children’s ministry leaders in churches. It is imperative that they be promptly confronted and stopped.

11. Social media. As a “best practice,” churches should prohibit any direct or private messaging on any social media platform by a youth or children’s pastor or lay volunteer with unrelated minors. For support, contact your local public school district and find out what if any restrictions they place on communications between teachers and students. 

12.Training. Churches should conduct periodic training of employees and volunteers on recognizing and reporting child abuse, the identification of abused minors, and the importance of familiarity with the 13 recommendations summarized in this document. 

13. Negligent supervision. Churches can use reasonable care in selecting workers, but still be liable for injuries sustained during church activities on the basis of negligent supervision. The term negligence means carelessness or a failure to exercise reasonable care. Negligent supervision, then, refers to a failure to exercise reasonable care in the supervision of church workers and church activities. Churches have been sued on the basis of negligent supervision in a variety of contexts, but most often in child abuse cases. Adequate supervision involves a number of safeguards, including:

  • Lock rooms and hallways that are not being used;
  • Use video technology;
  • Have an adequate number of adults present during youth and children’s activities to monitor workers and activities;
  • Enforce a two-adult policy prohibiting one adult worker from being alone with one minor;
  • No “early releases” of minors;
  • Only release minors to the parent or other adult who brought them;
  • Be especially vigilant with off-site activities such as field trips and camping since they present potential opportunities for sexual abuse due to the difficulty of adequate supervision.
  • Exclude known or registered sex offenders from any youth or children’s activity;
  • In formulating polices, “benchmark” by examining the policies of other charities and the public schools.

14. Video technology. The installation of video cameras in strategic locations can serve as a powerful deterrent to child molesters, and can reduce a church’s risk of negligent supervision. Video technology has become affordable for most churches, and should be considered by all churches as both a powerful deterrent and as a means of proving or disproving alleged misconduct. Consider the following uses:

  • Video cameras are especially helpful in a church’s nursery since infants and very young children are present who are incapable of explaining symptoms of abuse. In such cases, innocent nursery workers may be suspected who lack the ability to conclusively prove their innocence. Video cameras can be helpful in documenting how symptoms of abuse may have occurred, and in proving the innocence or guilt of nursery workers.
  • Church restrooms present a unique risk of molestation for both infants and older children. After all, they are frequented by children, they are easily accessible, and they often are in remote locations or are not adequately supervised. A video camera installed in a hallway outside a restroom frequented by minors can be a powerful deterrent to child molesters. It also will provide church leaders and local authorities with evidence in the event that a minor is molested in a church restroom.

Key point. Look at these 14 steps as ways to protect minors rather than as a risk management tool. If your goal is risk reduction, compliance is likely to suffer. Compliance is higher and of longer duration when leaders are motivated primarily by a desire to protect minors. 

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Responding to Gun Violence Concerns at Churches

Church shootings remain rare, but policies and planning are still necessities.

Update. On Sunday, May 15, 2022, a shooting took place at a Taiwanese church in Southern California. Find details about the shooting on Christianity Today. This article offers four possible ways for churches to reduce the risk of such incidents taking place in their own congregations.

The 2017 shootings at First Baptist Church in Sutherland Springs, Texas, which left 26 dead and several others injured, have once again focused attention on church safety, with many church leaders asking what steps they should implement to protect their congregations.

Most churches in America are safe places. While incidents of shootings on church property are shocking, they are rare. But “open access” policies of most churches make them susceptible to violent acts. While such acts cannot be completely prevented, there are steps church leaders can take to reduce the risk. Let’s review some of them.

Four possible options

Here are four possible response options that leaders of churches of all sizes and settings should consider.

Off-duty officers

The optimal response to the threat of an armed assailant on church property is to have two or more uniformed off-duty law enforcement officers on site during services, with a police car parked in a highly visible location outside the church. Such persons should be thoroughly screened by their police department before being hired, receive extensive training in dealing with volatile situations and the use of firearms, and receive continuing training in the use of firearms and job-related skills.

They will serve as a deterrent to crime because of their uniform and vehicle. Further, according to some courts, these individuals become on-duty police officers, even while otherwise acting as private security guards, when responding to criminal activity, which can reduce a church’s liability based on negligence for their actions.

Churches considering the use of uniformed off-duty police officers should check with the local police department regarding the recruitment of such persons as security guards, and the number that are needed. There is a cost involved with using police officers to provide security, but those costs are diminished by the fact that you will not be using them for more than a few hours per week.

Private security

Churches also may consider hiring uniformed private security guards. This is a far-less effective response than using uniformed law enforcement officers, since private security guards typically have less training in both firearms and crisis response. Further, unlike law enforcement personnel, they do not become “on duty” when responding to a crime, and so the church faces a higher risk of being liable for their negligent response. And, the cost of hiring private security guards often will be comparable to using police officers.

Tap church members

A third option is to use church members who are legally authorized to carry a concealed weapon. They would not wear uniforms, but would instead blend in with the congregation as plain-clothed security guards. The problem here is the wide range of competency among permit holders in handling firearms. Some permit holders have a very minimal ability in the use of firearms, resulting in a significant risk of collateral damage. Others have extensive training and ability.

As a result, church leaders should not treat all permit holders equally. Churches can help to bolster the competency of such persons in the protection of church members by taking the following actions:

  • place a reasonable limit on the number of concealed weapons permit holders that the church will use as part of its response to armed shooters;
  • perform a thorough background check on each person, including references;
  • use a written application that includes a description of the applicant’s weapons training; periodically confirm that the individual’s permit is active;
  • only use concealed weapons permit holders who have passed the same firearms training course that is prescribed for local law enforcement personnel in your community; and
  • only use these persons as auxiliaries who at all times are under the control and direction of law enforcement personnel.

Implement technology

The use of technology is another viable option. In evaluating the feasibility of various technologies to prevent or reduce the risk of shootings in public schools, the United States Department of Justice noted that the effectiveness, affordability, and acceptability of each technology must be considered. Devices that often are employed by churches and commercial businesses to prevent or reduce the risk of criminal acts include surveillance cameras, entry control devices, and metal detectors (see “Facts About Metal Detectors” at the end of this article). Church leaders should consider how each device will work, how much it will cost, and how well their congregations will accept the use of them.

Observations to consider prior to taking action

First, let me repeat that church shootings, and other violent crimes on church premises, are rare.

Second, the law imposes upon any place of public accommodation, including a church, a duty to protect occupants against foreseeable criminal acts. The level of protection is directly proportional to the degree of foreseeability. Many courts assess foreseeability on the basis of the following factors:

  • whether any criminal conduct previously occurred on or near the property;
  • how recently and how often similar crimes occurred; how similar the previous crimes were to the conduct in question; and
  • what publicity was given the previous crimes to indicate that the church knew or should have known about them.

If shootings or other violent crimes on church property are highly foreseeable based on these factors, then a church has a heightened duty to implement measures to protect occupants from such acts.

Third, many church leaders and congregations, guided and informed by their theological and ethical values, feel compelled to take steps to protect human life from acts of violence whether or not they have a legal duty to do so.

Fourth, in making decisions regarding which protective measures to implement, church leaders should consult with local law enforcement professionals, the church insurance agent, and legal counsel. These same persons should also review the church’s emergency response plan.

Fifth, contact other churches and other places of public accommodation in your community to see what measures they have enacted to protect occupants against shootings and other violent crimes. Examples include schools, malls, libraries, restaurants, stores, sports facilities, theatres, and concert halls. This research will help church leaders ascertain the “community standard,” which is an important consideration in deciding if a property owner was negligent.

Sixth, note that even the most stringent protective measures would have prevented few if any shooting incidents on church property. In fact, in some of these cases, the church had implemented what seemed to be reasonable precautionary measures. However, no measures will foil an armed and dedicated assailant, especially if that person plans on taking his or her own life.

Seventh, while it is not possible for churches to prevent acts of violence on their premises, it is possible to deter such acts in some cases, and to contain the damage and destruction when an incident occurs.

Government recommendations

The United States Department of Justice has prepared the following recommendations for schools to help reduce the risk of violent crime (the word “church” is substituted for “school”):

  • Every church needs a well-thought-out, annually updated crisis response plan, with regular training for all those who are involved.
  • The crisis plan needs to make assignments of who is in charge during different types of emergencies; who is the alternate in charge; who is called first, by whom, from where, and using what; whether persons are relocated and how; what type of statement is made to the press and by whom; and who is in charge when emergency responders arrive on the scene.
  • Ideally, a preselected team immediately will be mobilized upon the occurrence of a serious threat. Team members will know who to look to for decisions and then proceed automatically in their roles under the church’s crisis response plan.
  • Crisis team members should wear distinctive clothing, and be located in places of high visibility, so they can be contacted in the event of a crisis.
  • Crisis team members should immediately contact local law enforcement when a crisis is reported, either on a cell phone or two-way radio. All crisis team members should have one or both of these devices with them at all times while on church premises.
  • Consider the use of “duress alarms” that anyone can activate to report a crisis. These can activate an audible alarm, or an inaudible alarm that is detected only by crisis team members and first responders.
  • Have your crisis plan reviewed by local law enforcement professionals, your insurance agent, and an attorney.

Facts About Metal Detectors

  • Metal detectors are considered a mature technology and can accurately detect the presence of most types of firearms and knives.
  • However, metal detectors work very poorly if the church is not aware of their limitations before beginning a weapon detection program and is not prepared for the amount of trained and motivated manpower required to operate these devices successfully.
  • Metal detectors are usually not effective when used on purses, bookbags, briefcases, or suitcases. There is usually a large number of different objects or materials located in, or as part of, the composition of these carried items that would cause an alarm.
  • The difficulty in interpreting the results of metal detector scans will require many persons to be pulled aside, as at an airport, for more thorough screening, including pat downs. The end result will be clogged lines of parishioners, shoes in hand, impatiently waiting to enter their church. One can easily imagine the uproar this would elicit.
  • Walk-through metal detectors are expensive. An additional cost would be the use of trained operators.
  • Metal detectors would not stop a dedicated and armed assailant, who could overpower the screeners.
  • Handheld scanners are available, but generally are used as a supplement to portal metal detectors.
  • Most church leaders would consider metal detectors at church entrances offensive to congregational members and visitors and fundamentally incompatible with the nature of the church as a sanctuary.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Why Every Church Needs a Sexual Harassment Policy

The growing numbers of allegations highlight the need for appropriate responses.

The attention of the nation has been riveted in recent months to salacious allegations of sexual harassment by politicians, entertainment industry executives, and network news anchors, with some saying the worst is yet to come. Churches are not immune from incidents of sexual harassment, but few church leaders know what it is or how to reduce the risk.

What is sexual harassment?

Sexual harassment is a form of “sex discrimination” prohibited by Title VII of the Civil Rights Act of 1964. Equal Employment Opportunity Commission (EEOC) regulations define sexual harassment as follows:

(a) Harassment on the basis of sex is a violation of Sec. 703 of Title VII. Unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature constitute sexual harassment when (1) submission to such conduct is made either explicitly or implicitly a term or condition of an individual’s employment, (2) submission to or rejection of such conduct by an individual is used as the basis for employment decisions affecting such individual, or (3) such conduct has the purpose or effect of unreasonably interfering with an individual’s work performance or creating an intimidating, hostile, or offensive working environment. 29 CFR 1604.11(a).

This definition demonstrates that sexual harassment includes at least two types of conduct:

(1) “Quid pro quo” harassment, which refers to conditioning employment opportunities on submission to a sexual or social relationship; and

(2) “Hostile environment” harassment, which refers to the creation of an intimidating, hostile, or offensive working environment through unwelcome verbal or physical conduct of a sexual nature. The United States Supreme Court has cautioned that Title VII’s ban on sexual harassment is not “a general civility code.” Title VII does not prohibit teasing, offhand comments, or isolated incidents that are not “extremely serious.” Rather, the conduct must be “so objectively offensive as to alter the conditions of the victim’s employment.” Faragher v, City of Boca Raton, 118 S.Ct. 2275 (1998).

Note that the terms “quid pro quo” and “hostile work environment” do not appear in Title VII or the regulations. Instead, they arose in academic literature, were adopted by the courts, and have since “acquired their own significance.” The Supreme Court has warned that they “are helpful, perhaps, in making a rough demarcation between cases in which threats are carried out and those where they are not or are absent altogether, but beyond this are of limited utility.” Burlington Industries v. Ellerth, 118 S.Ct. 2257 (1998).

Sexual harassment addresses unwelcome sexual contact, whether or not that contact is voluntary. Further, a woman’s “consent” is not a defense to an allegation of sexual harassment. The Supreme Court has observed:

The fact that sex-related conduct was voluntary in the sense that the complainant was not forced to participate against her will, is not a defense to a sexual harassment suit …. The gravamen of any sexual harassment claim is that the alleged sexual advances were unwelcome…. The correct inquiry is whether [the victim] by her conduct indicated that the alleged sexual advances were unwelcome, not whether her actual participation in sexual intercourse was voluntary.

In other words, a female employee may engage in voluntary sexual contact with a supervisor because of her belief that her job (or advancement) depends on it. While such contact would be voluntary, it is not necessarily welcome. Sexual harassment addresses unwelcome sexual contact, whether or not that contact is voluntary.

The Supreme Court has also observed:

A sexually objectionable environment must be both objectively and subjectively offensive, one that a reasonable person would find hostile and abusive, and one that the victim in fact did perceive to be so… . Simple teasing, offhand comments and isolated incidents (unless extremely serious) will not amount to discriminatory changes in the terms and conditions of employment. Faragher v. City of Boca Raton, 524 U.S. 775 (1998).

How common is it?

Several surveys have attempted to shed light on the prevalence of sexual harassment in the workplace. Consider:

  • Some surveys suggest as many as 50 to 60 percent of women claim to have experienced workplace harassment.
  • These surveys have focused on secular employers. It is unclear if harassment is less common among religious employers.
  • Women victims typically feel angry, humiliated, or ashamed by such incidents.
  • As many as a fifth of victims never report workplace sexual harassment, due in part to the widespread perception that male perpetrators go unpunished and so nothing changes. Another factor is fear of being terminated for disclosing the harassment, especially if the perpetrator is a supervisor.
  • Only half of respondents say their employers—whether religious or secular—have adopted a sexual harassment policy.
  • In one survey, 34 percent of respondents were not sure what to do if they experienced harassment.

There were 6,758 charges of sexual harassment filed with the Equal Employment Opportunity Commission (EEOC) in fiscal year 2016, a number that some are predicting will increase significantly due to the widespread publicity being given to the issue. The EEOC dismissed 54 percent of these cases on the ground that no reasonable cause existed that harassment had occurred. The EEOC notes that 16 percent of all charges were by male employees.

Employer liability for sexual harassment committed by employees and nonemployees

When is an employer liable for sexual harassment? Consider the following rules:

Rule #1: quid pro quo harassment by supervisory employees

If a supervisor conditions employment opportunities on an employee’s submission to a sexual or social relationship, and the employee’s “compensation, terms, conditions or privileges of employment” are adversely affected because of a refusal to submit, this constitutes quid pro quo sexual harassment for which the employer will be legally responsible. This is true whether or not the employer was aware of the harassment.

Rule #2: harassment committed by nonsupervisory employees

EEOC regulations address employer liability for the sexual harassment of nonsupervisory employees as follows:

With respect to conduct between fellow employees, an employer is responsible for acts of sexual harassment in the workplace where the employer (or its agents or supervisory employees) knows or should have known of the conduct, unless it can show that it took immediate and appropriate corrective action. 29 CFR 1604.11(d).

Example Assume that a church is covered by Title VII. A female bookkeeper claims that a male custodian has been sexually harassing her by creating a “hostile environment.” She does not discuss the custodian’s behavior with the senior pastor or church board. She later threatens to file a complaint with the EEOC, charging the church with responsibility for the custodian’s behavior. If the pastor and church board were not aware of the custodian’s offensive behavior, then, according to this regulation, the church will not be legally responsible for it.

Example Same facts as the previous example, except that the bookkeeper complained on two occasions to the senior pastor about the custodian’s behavior. The pastor delayed acting because he did not believe the matter was serious. According to the EEOC regulations quoted in rule #2, it is likely that the church is liable for the custodian’s behavior since the pastor was aware of the offensive behavior but failed to take “immediate and appropriate corrective action.”

Example Same facts as the previous example, except that the pastor immediately informed the church board. The board conducted an investigation, determined the charges to be true on the basis of the testimony of other employees, and warned the custodian that one more complaint of harassing behavior would result in his dismissal. This action was based on the bookkeeper’s own recommendation. It is doubtful that the church will be liable for sexual harassment under these circumstances, since it took “immediate and appropriate corrective action.”

Rule #3: harassment committed by nonemployees

EEOC regulations address employer liability for the sexual harassment of nonemployees as follows:

An employer may also be responsible for the acts of non-employees, with respect to sexual harassment of employees in the workplace, where the employer (or its agents or supervisory employees) knows or should have known of the conduct and fails to take immediate and appropriate corrective action. In reviewing these cases the Commission will consider the extent of the employer’s control and any other legal responsibility which the employer may have with respect to the conduct of such non-employees. 29 CFR 1604.11(e).

Example A church is subject to Title VII. A female secretary claims that she was harassed by a man who frequently was on church premises maintaining duplicating equipment.

Rule #4: hostile environment harassment by a supervisor, with a tangible employment decision

If a supervisor creates an intimidating, hostile, or offensive working environment through unwelcome verbal or physical conduct of a sexual nature, this is hostile environment sexual harassment for which the employer will be legally responsible if the supervisor takes any “tangible employment action” against the employee.

A tangible employment action includes “a significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits.”

The Supreme Court has ruled that the employer is liable under such circumstances whether or not it was aware of the harassment. Burlington Industries, Inc. v. Ellerth, 118 S. Ct. 2257 (1998); Faragher v. City of Boca Raton, 118 S. Ct. 2275 (1998).

Rule #5: hostile environment harassment by a supervisor, with no tangible employment decision

If a supervisor creates an intimidating, hostile, or offensive working environment through unwelcome verbal or physical conduct of a sexual nature, this is hostile environment sexual harassment for which the employer will be legally responsible, even if the supervisor takes no “tangible employment action” against the employee.

Rule #6: the employer’s “affirmative defense” to liability for a supervisor’s hostile environment sexual harassment not accompanied by a tangible employment decision

If a supervisor engages in hostile environment sexual harassment but takes no “tangible employment decision” against a victim, the employer may assert an “affirmative defense” to liability. This defense consists of two prongs:

(i) The employer “exercised reasonable care to prevent and correct promptly any sexually harassing behavior.” This generally means that the employer adopted a written sexual harassment policy that was communicated to employees, and that contains a complaint procedure.

(ii) The victim “unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.” This generally means that the victim failed to follow the complaint procedure described in the employer’s sexual harassment policy.

The first prong of the affirmative defense requires a showing by the employer that it undertook reasonable care to prevent and promptly correct harassment. As noted below, such reasonable care generally requires an employer to establish, disseminate, and enforce an anti-harassment policy and complaint procedure and to take other reasonable steps to prevent and correct harassment.

The EEOC has noted that the second prong of the affirmative defense “arises from the general theory that a victim has a duty to use such means as are reasonable under the circumstances to avoid or minimize the damages that result from violations of the statute. Thus an employer who exercised reasonable care … is not liable for unlawful harassment if the aggrieved employee could have avoided all of the actionable harm. If some but not all of the harm could have been avoided, then an award of damages will be mitigated accordingly.” The EEOC has further noted:

A complaint by an employee does not automatically defeat the employer’s affirmative defense. If, for example, the employee provided no information to support his or her allegation, gave untruthful information, or otherwise failed to cooperate in the investigation, the complaint would not qualify as an effort to avoid harm. Furthermore, if the employee unreasonably delayed complaining, and an earlier complaint could have reduced the harm, then the affirmative defense could operate to reduce damages.

Proof that the employee unreasonably failed to use any complaint procedure provided by the employer will normally satisfy the employer’s burden. However, it is important to emphasize that an employee who failed to complain does not carry a burden of proving the reasonableness of that decision. Rather, the burden lies with the employer to prove that the employee’s failure to complain was unreasonable.

Key Point. Churches with employees should adopt a sexual harassment policy, since this may serve as a defense to liability for a supervisor’s acts of hostile environment sexual harassment (with no tangible employment decision) to the extent that a victim of such harassment does not follow the policy.

The importance of a sexual harassment policy

Key Point. A written sexual harassment policy does not insulate a church from all sexual harassment liability. It will not serve as a defense in any of these situations: (1) a “tangible employment decision” has been taken against an employee; (2) incidents of quid pro quo sexual harassment; or (3) a victim of a supervisor’s hostile environment sexual harassment pursues his or her remedies under the employer’s sexual harassment policy.

The EEOC has observed:

It generally is necessary for employers to establish, publicize, and enforce anti-harassment policies and complaint procedures. As the Supreme Court stated, “Title VII is designed to encourage the creation of anti-harassment policies and effective grievance mechanisms.” Burlington Industries v. Ellerth, 118 S.Ct. 2257 (1998). While the Court noted that this “is not necessary in every instance as a matter of law,” failure to do so will make it difficult for an employer to prove that it exercised reasonable care to prevent and correct harassment.

What terms should be included in a sexual harassment policy? Unfortunately, the Supreme Court has not addressed this question directly. However, other courts have. Here is a list of some of the terms that should be incorporated into a written sexual harassment policy:

  • Define sexual harassment (both quid pro quo and hostile environment) and state unequivocally that it will not be tolerated and that it will be the basis for immediate discipline (up to and including dismissal).
  • Contain a procedure for filing complaints of harassment with the employer.
  • Encourage victims to report incidents of harassment.
  • Assure employees that complaints will be investigated promptly.
  • Assure employees that they will not suffer retaliation for filing a complaint.
  • Discuss the discipline applicable to persons who violate the policy.
  • Assure the confidentiality of all complaints.

Key Point. The assistance of an attorney is vital in the drafting of a sexual harassment policy.

In addition to implementing a written sexual harassment policy, a church should also take the following steps:

Communicate the written policy to all workers.

Investigate all complaints immediately. Some courts have commented on the reluctance expressed by some male supervisors in investigating claims of sexual harassment. To illustrate, a federal appeals court observed: “Because women are disproportionately the victims of rape and sexual assault, women have a stronger incentive to be concerned with sexual behavior. Women who are victims of mild forms of sexual harassment may understandably worry whether a harasser’s conduct is merely a prelude to violent sexual assault. Men, who are rarely victims of sexual assault, may view sexual conduct in a vacuum without a full appreciation of the social setting or the underlying threat of violence that a woman may perceive.”

Discipline employees who are found guilty of harassment. However, be careful not to administer discipline without adequate proof of harassment. Discipline not involving dismissal should be accompanied by a warning that any future incidents of harassment will not be tolerated and may result in immediate dismissal.

Follow up by periodically asking the victim if there have been any further incidents of harassment.

Key Point. EEOC guidelines contain the following language: “Prevention is the best tool for the elimination of sexual harassment. An employer should take all steps necessary to prevent sexual harassment from occurring, such as affirmatively raising the subject, expressing strong disapproval, developing appropriate sanctions, informing employees of their right to raise and how to raise the issue of harassment under Title VII, and developing methods to sensitize all concerned.”

Key Point. Most states have enacted their own civil rights laws that bar sexual harassment in employment, and it is far more likely that these laws will apply to churches since, unlike Title VII, there is no “interstate commerce” requirement and often fewer than 15 employees are needed to be covered by the law.

Examples illustrating sexual harassment

Key Point. Church insurance policies generally do not cover employment-related claims, including sexual harassment. If your church is sued for sexual harassment, you probably will need to retain and pay for your own attorney, and pay any judgment or settlement amount. This often comes as a shock to church leaders. You should immediately review your policy with your insurance agent to see if you have any coverage for such claims. If you do not, ask how it can be obtained. You may be able to obtain an endorsement for “employment practices.” Also, a “directors and officers” policy may cover these claims.

The following examples illustrate the application of Title VII’s ban on sexual harassment to religious organizations.

Example A church is subject to Title VII. A male supervisory employee informs a female employee that her continuing employment depends on engaging in sexual relations with him. This is an example of quid pro quo sexual harassment. The church is liable for such harassment by a supervisor whether or not it was aware of it. The fact that it had a written sexual harassment policy that prohibited such behavior will not relieve it from liability.

Example A church is subject to Title VII. A male employee (with no supervisory authority) repeatedly asks another employee to go to dinner with him. This is not quid pro quo sexual harassment because the offending employee has no authority to affect the terms or conditions of the other employee’s work if she refuses to accept his invitations. If the offending employee’s behavior becomes sufficiently “severe and pervasive,” it may become hostile environment sexual harassment. However, the church generally is not liable for hostile environment sexual harassment by a nonsupervisory employee unless it was aware of it and failed to take “immediate and appropriate corrective action.”

Example A church is subject to Title VII. It adopts a written sexual harassment policy that defines harassment, encourages employees to report harassing behavior, and assures employees that they will not suffer retaliation for reporting harassment. A male supervisory employee engages in frequent offensive remarks and physical contact of a sexual nature with a female employee. The female employee is greatly disturbed by this behavior and considers it inappropriate in a church. In fact, she had sought church employment because she considered it a safe environment and her job would be a ministry. The supervisor eventually dismisses the employee because of her refusal to “go along” with his offensive behavior. Throughout her employment, the employee never informed church leadership of the supervisor’s behavior. Several months after her termination, the employee files a sexual harassment complaint with the EEOC. Will the church be liable for the supervisor’s behavior under these circumstances? After all, it was not aware of the supervisor’s behavior, and it adopted a written sexual harassment policy. The supervisor’s behavior constituted hostile environment sexual harassment for which the church will be liable. The fact that the church leadership was unaware of his offensive behavior is not relevant. Further, the church’s sexual harassment policy is no defense, since the employee suffered a “tangible employment decision” (dismissal) as a result of her refusal to go along with the supervisor’s behavior.

Example Same facts as the previous example, except that the employee was not dismissed and suffered no “tangible employment decision” (firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits). The general rule is that an employer is liable for a supervisor’s hostile environment sexual harassment that does not result in a tangible employment decision against the victim. However, the employer has an “affirmative defense” to liability if (1) it adopted a sexual harassment policy that was adequately communicated to employees, and (2) the victim failed to pursue her remedies under the policy. The church in this case qualifies for the affirmative defense. It adopted a sexual harassment policy, and the victim failed to follow the policy’s complaint procedure. As a result, the church probably would not be liable for the supervisor’s behavior.

Example Same facts as the previous example, except that the church is not subject to Title VII (it only has five employees). The church still may be liable under a state civil rights law, or under other legal theories (such as “intentional infliction of emotional distress,” negligent selection or supervision, assault and battery, invasion of privacy, or false imprisonment).

Example A church is subject to Title VII. It has not adopted a written sexual harassment policy. A female employee files a complaint with the EEOC, claiming that a supervisor has engaged in hostile environment sexual harassment. She never informed church leadership of the supervisor’s behavior before filing her complaint with the EEOC. The church will be responsible for the supervisor’s behavior under these circumstances. It does not qualify for the “affirmative defense” because it failed to implement a sexual harassment policy.

Example Same facts as the previous example, except that the church had adopted a written sexual harassment policy that was communicated to all employees. The church will have an “affirmative defense” to liability under these circumstances, because it adopted a sexual harassment policy and the victim failed to follow it by filing a complaint.

This example and the previous one demonstrate the importance of implementing a sexual harassment policy. Such a policy can insulate a church from liability for a supervisor’s hostile environment sexual harassment—if no “tangible employment decision” was taken against the victim, and the victim failed to pursue his or her remedies under the policy.

Case studies addressing sexual harassment in churches

The following summaries of actual cases illustrate the application of Title VII’s ban on sexual harassment to religious organizations.

Case Study Sanders v. Casa View Baptist Church, 134 F.3d 331 (5th Cir. 1998)

An associate pastor engaged in sexual relations with two female employees in the course of a counseling relationship. The women later informed the senior pastor. As a result, the two women were dismissed, and the associate pastor was forced to resign. The women later sued the church on the basis of several legal theories, including sexual harassment. A trial court threw out the sexual harassment claim, and the women appealed. A federal appeals court concluded that the church was not guilty of hostile environment sexual harassment. It noted that in order for the two women to establish hostile environment sexual harassment they needed to “produce evidence showing, among other things, that [the church] knew or should have known of the harassment in question and failed to take prompt remedial action.” However, since it was established that the church “took prompt remedial action upon learning of [the minister’s] misconduct,” the two women had to prove that the church should have known of the minister’s behavior before it was disclosed. The court concluded that the women failed to do so. The women claimed that the former minister had offended a few other women by complimenting them on their appearances and hugging them. This evidence, even if true, was not enough to demonstrate that the church “knew or should have known” of a “hostile environment.”

The court also rejected the women’s claim that the church had engaged in “quid pro quo” sexual harassment. It noted that for the women to establish quid pro quo sexual harassment, they “were required to produce evidence showing, among other things, that the harassment complained of affected tangible aspects of their compensation, terms, conditions, or privileges of employment. In addition, they were required to develop evidence demonstrating that their acceptance or rejection of the harassment was an express or implied condition to the receipt of a job benefit or the cause of a tangible job detriment. [But the women’s] own testimony that they were subjected to mild criticism of their work and told that they would not be promoted to positions they knew did not exist indicates that their jobs were not tangibly and detrimentally affected by their decisions to end their sexual relationships with [the minister]… . Further, there is no objective evidence in the record supporting the [women’s] claims that they engaged in sex with [the minister] under an implied threat of discharge if they did not.”

Case Study Jonasson v. Lutheran Child and Family Services, 115 F.3d 436 (7th Cir. 1997)

A federal appeals court ruled that a church-operated school was guilty of sexual harassment as a result of its failure to address its principal’s offensive behavior with several female employees. A denominational agency operated a residential school for emotionally and physically impaired children. Over the course of several years, the principal of the school was accused on many occasions of sexual harassment by female employees. There was substantial evidence that school officials were aware of many of these complaints. School officials launched an investigation into the sexual harassment charges. They found that there was a significant basis to the harassment complaints. The school suspended the principal for five days without pay, ordered him to submit to a psychological assessment, and placed him on three months’ probation. It also invited an outside consultant to conduct several days of seminars on sexual harassment. Even after this corrective action, there were several instances of inappropriate behavior involving the principal. During this same year, the principal was given a satisfactory performance evaluation and a raise.

Several female employees who had been harassed by the principal sued the denominational agency on the ground that it was legally responsible for the principal’s acts because of its failure to respond adequately to the accusations against him. A trial court ruled in favor of the women, and awarded them $300,000 in damages. A federal appeals court upheld this ruling. It referred to the “long-term, ostrich-like failure” by denominational and school officials to “deal forthrightly with [the principal’s] treatment of female employees.” The court observed that “the jury was entitled to conclude that [the agency] not only looked the other way for many years but that its corrective action was woefully inadequate, as demonstrated by [the principal’s] later conduct.” This case illustrates the importance of dealing promptly with complaints of sexual harassment. Letting years pass without addressing complaints of harassment will only significantly increase a church’s risk of liability.

After several years of complaints, the agency finally suspended the principal for five days, ordered a psychological assessment, imposed a three-month probationary period, and invited consultants to conduct sexual harassment training. These acts may seem thorough and adequate, but the court concluded that they were not sufficient to avoid liability for sexual harassment, because (1) the complaints against the principal had occurred over so many years; (2) the principal’s acts of harassment were so pervasive; (3) the agency waited years before acting; (4) the agency’s response was insufficient, since the principal continued to engage in harassment even after he was disciplined; and (5) the principal received a satisfactory employee evaluation and a raise during the same year that he was disciplined for harassment.

Case Study Elvig v. Calvin Presbyterian Church, 375 F.3d 951 (9th Cir. 2004)

A federal appeals court ruled that, in some cases, ministers can pursue sexual harassment claims against an employing church without violating the First Amendment. A woman served as associate pastor of a church for one year. Shortly after assuming this position, she claimed that the church’s senior pastor began sexually harassing her and creating a hostile work environment. She made a formal complaint of sexual harassment to the church, which she claimed took no action. She also claimed that the senior pastor retaliated against her by relieving her of certain duties, verbally abusing her, and otherwise engaging in intimidating behavior. Again, the church, which knew or should have known of the senior pastor’s behavior, failed to act. She sued her church in federal court, claiming that the church violated Title VII of the Civil Rights Act of 1964 which bars covered employers from engaging in sexual harassment or “retaliation” against employees. The court dismissed the lawsuit, concluding that any resolution of the plaintiff’s claims would interfere with the church’s constitutionally protected right to choose its ministers. The plaintiff appealed.

A federal appeals court agreed that to the extent that the plaintiff’s claims involved “an inquiry into the church’s decision to terminate her ministry, those claims cannot proceed in civil court and were properly dismissed.” However, the court concluded that she could, consistent with the First Amendment, “attempt to show that she was sexually harassed and that this harassment created a hostile work environment” since this would involve “a purely secular inquiry.”

The court noted that there are two ways for an employer to be liable for hostile environment sexual harassment:

1. An employer is liable for a hostile environment that “culminates in a tangible employment action.” The court concluded that the ministerial exception prohibited it from assigning liability on this basis since it would directly implicate the church’s practices regarding the employment of clergy.2. When no tangible employment action has been taken, an employer is nevertheless liable for hostile environment sexual harassment unless it can establish an “affirmative defense” by showing that it exercised reasonable care to prevent and promptly correct any sexually harassing behavior, and the plaintiff unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer. An employer’s adoption of a sexual harassment policy helps to demonstrate that an employer used reasonable care to prevent harassment, and, an employee’s failure to use a complaint procedure provided by the employer will normally preclude the employee from pursuing a sexual harassment claim.

The court concluded that neither the First Amendment nor the ministerial exception barred the civil courts from resolving hostile environment sexual harassment lawsuits against churches based on this second form of liability. In other words, a church can be found liable for hostile environment sexual harassment unless it can establish an affirmative defense by having adopted a sexual harassment policy and complaint procedure that an employee chose not to follow.

Case Study Carnesi v. Ferry Pass United Methodist Church, 770 So.2d 1286 (Fla. App. 2000)

A Florida court ruled that it was barred by the First Amendment’s ban on excessive entanglement between church and state from resolving a church secretary’s claim of sexual harassment. A woman was employed as a church secretary and bookkeeper. She sued her church and a denominational agency alleging that a church volunteer who served as chairman of the pastor parish relations committee had sexually harassed her on the job. A state appeals court dismissed her lawsuit on the ground that her claims, “which are based upon the actions of a volunteer rather than another employee, will require a secular court to review and interpret church law, policies, and practices to determine whether an agency relationship existed” between the alleged offender, the committee, the church, and denominational agency, and whether the church defendants could be held liable for the alleged offender’s actions. The court concluded that “this examination would violate the First Amendment’s excessive entanglement doctrine.”

Case Study Dolquist v. Heartland Presbytery, 2004 WL 74318 (D. Kansas 2004)

A federal court in Kansas ruled that a church could be liable for a staff member’s repeated acts of sexual harassment. An ordained female pastor accepted a position with a church. Her duties required continuous contact with the church’s director of music. She claimed that over the course of several years the director of music subjected her to sexually inappropriate behavior which was rude, offensive, oppressive, humiliating, degrading, embarrassing, annoying, and emotionally upsetting. Such conduct included (1) embracing her in an extremely hard, suggestive and sexual manner; (2) making comments about the drug Viagra; (3) telling her that he liked it when she wore short skirts; (4) making explicit gestures and comments; and (5) touching her breasts, buttocks and other personally sensitive areas. The church dismissed the pastor despite her satisfactory job performance. She sued the church in federal court for sexual harassment, and an intentional failure to supervise.

The court ruled that the church could be liable for the music director’s acts on the basis of an intentional failure to supervise since it had the ability to control him and “knew or should have known of the necessity and opportunity for exercising such control.” The court added that a church also can be liable for a negligent failure to supervise, where its failure is due to carelessness or inadvertence.

Case Study Black v. Snyder, 471 N.W.2d 715 (Minn. App. 1991)

A woman was hired as an associate pastor of a church in Minnesota. A year later, she filed a discrimination charge with the state department of human rights against her supervising pastor. She claimed that her supervising pastor repeatedly made unwelcome sexual advances toward her. He allegedly referred to the two of them as “lovers,” physically contacted her in a sexual manner, and insisted on her companionship outside the workplace despite her objections. The woman informed her local church leaders as well as her synod before filing the complaint with the state. Although the church and synod investigated the woman’s allegations, no action was taken to stop the alleged harassment. Less than three months after the complaint was filed with the state, the church held a congregational meeting at which it voted to dismiss the woman as pastor. The reason stated for the discharge was the woman’s “inability to conduct the pastoral office efficiently in this congregation in view of local conditions.”

A state appeals court ruled that the woman could sue her former supervising pastor for sexual harassment. The court also rejected the supervising pastor’s claim that the woman was prevented from suing because she had “consented” to the supervising pastor’s conduct.

Case Study Father Belle v. State Division of Human Rights, 642 N.Y.S.2d 739 (A.D. 1996)

A New York court ruled that a charity was liable for an executive officer’s acts of sexual harassment. A male executive director of the charity engaged in repeated acts of sexual harassment against female employees. The director was the charity’s highest-ranking employee. The harassment included inappropriate and demeaning communications, unwelcome sexual overtures, unwanted physical contact, and threats to fire the women (or make their jobs more unpleasant) if they did not submit to his advances. The director repeatedly begged each woman to be his “girlfriend” or “mistress,” and to marry him or sleep with him. He frequently demanded that the women attend nonwork-related lunches with him. A personnel committee was apprised of these actions, and it conducted an investigation that came to the attention of the governing board. As a result of the investigation, the director was placed on a brief leave of absence. The women later sued the director for sexual harassment. They also sued the charity and each member of the governing board. The court concluded that the charity was liable for the director’s acts of harassment. The court ruled that the director’s acts constituted both quid pro quo and hostile environment sexual harassment, and it found the charity liable for those acts. The court noted that under federal law an employer is “strictly liable” for quid pro quo harassment, since the harasser has the authority to alter the terms or conditions of the victims’ employment based on their response to his advances. Therefore, the charity was liable for the director’s quid pro quo harassment. On the other hand, under federal law, employers are strictly liable for a hostile work environment created by a victim’s supervisor, but not by coworkers lacking supervisory authority. Since the director was the highest-ranking supervisory employee, the charity was strictly liable for hostile environment harassment caused to his actions.

Case Study Smith v. Raleigh District of the North Carolina Conference of the United Methodist Church, 63 F.Supp.2d 694 (E.D.N.C. 1999)

A federal court in North Carolina ruled that the First Amendment did not prevent it from resolving a sexual harassment claim brought by two nonminister church employees against their church. A church’s receptionist and the pastor’s secretary (both of whom were female) claimed that the pastor had sexually harassed them, and they sued the church and a denominational agency for damages. They claimed that the church defendants were responsible for the pastor’s repeated acts of hostile environment sexual harassment since he was a supervisory employee. In particular, the women alleged that the defendants failed to take timely and appropriate action to correct the problem. The court noted that the women were “secular, lay employees who performed nonreligious, administrative tasks for a religious institution,” and that a resolution of their sexual harassment claim would not violate the First Amendment. It further noted that “an employer’s liability for its employee’s sexual harassment of another individual may be premised on the employer’s own negligence. An employer is negligent with respect to sexual harassment if it knew or should have known about the conduct but failed to stop it.” The court concluded that it could decide whether or not the church and denomination “took some action that was reasonably calculated to put an end to the abusive environment” without any inquiry into religious doctrine.

Case Study Smith v. Privette, 495 S.E.2d 395 (N.C. App. 1998)

A North Carolina appeals court ruled that the First Amendment did not prevent it from resolving a sexual harassment lawsuit brought by three female church employees against their church and denominational agencies. Three female church employees (the “plaintiffs”) sued their Methodist church and various Methodist agencies as a result of the sexual misconduct of a pastor. The lawsuit alleged that the pastor “committed inappropriate, unwelcome, offensive and nonconsensual acts of a sexual nature against the plaintiffs, variously hugging, kissing and touching them, and made inappropriate, unwelcome, offensive and nonconsensual statements of a sexually suggestive nature to them.” The plaintiffs further alleged that the pastor’s actions amounted to sexual harassment and assault and battery, causing them emotional distress, embarrassment, humiliation, and damage to their reputations and career potential. The lawsuit alleged that the local church and Methodist agencies “knew or should have known” of the pastor’s propensity for sexual harassment as well as assault and battery upon female employees and that they failed to take any actions to warn or protect the plaintiffs from his wrongful activity. A state appeals court concluded that if a resolution of the plaintiffs’ legal claims did not require the interpretation of church doctrine, then “the First Amendment is not implicated and neutral principles of law are properly applied to adjudicate the claim.”

Case Study Bolin v. Oklahoma Conference, 397 F.Supp.2d 1293 (D. Okla. 2005)

A federal court in Oklahoma ruled that a church was not liable on the basis of sexual harassment for the conduct of a minister. A woman was employed by a denominational office as an administrative assistant. Her supervisor was one of the regional church’s officers. She sued the denomination for sexual harassment based on the following alleged acts of her supervisor:

The supervisor offered to boost her husband’s compensation if she would “cooperate” with him, which she interpreted to mean a sexual relationship. Her husband was a pastor of a local church affiliated with the regional church.She alleged that the supervisor blocked her path by standing in a doorway, and began rubbing her shoulders while saying that “I’m sorry it has to be this way.”The supervisor continued to sexually harass her for the next few months by brushing against her as he took things from her or handed them to her.

The supervisor terminated her, and she sued the supervisor and denomination for sexual harassment. The court noted that for the denomination to be liable for the supervisor’s hostile environment sexual harassment the plaintiff had to show that “the workplace was permeated with discriminatory intimidation, ridicule and insult, that was sufficiently severe or pervasive to alter the conditions of her employment and create an abusive working environment.”

The court concluded that the plaintiff failed to show that the conduct of her supervisor was “so extreme as to change the terms and conditions of her employment.” It concluded, “While no woman should be made to feel uncomfortable in the workplace by virtue of a male supervisor leaning into her and brushing against her, because she can point to only two incidents, her work environment cannot be perceived as being pervaded by hostility toward women. Consequently, there is insufficient evidence to support a hostile work environment claim.” The plaintiff also claimed that her supervisor’s invitation to prevent financial harm to her family in exchange for sexual favors amounted to quid pro quo harassment. Once again, the court disagreed, noting that Title VII makes it unlawful for a covered employer to discriminate on the basis of sex against any individual with respect to his [or her] compensation, terms, conditions, or privileges of employment.” The court concluded that “the plain text of Title VII requires that the person whose employment conditions are adversely affected also be the person who is discriminated against on the basis of sex.”

Case Study Brown v. Pearson, 483 S.E.2d 477 (S.C. App. 1997)

A South Carolina court ruled that a denominational agency and one of its officials were not liable for a pastor’s acts of sexual harassment. Three female church members claimed that their pastor sexually harassed and abused them over a period of several months. The pastor resigned from his denomination before it could review the charges of sexual harassment. The denomination accepted the resignation as a “withdrawal under complaint or charges,” and discontinued its investigation into the women’s charges. It later spent $4,000 for training pastors in handling sex abuse allegations and for sending the three women to a “survivors of clergy sexual abuse” retreat. The women later sued the denomination and one of its officers, claiming that they were responsible for the pastor’s sexual harassment. The women asserted that the denomination “had a duty to prevent the sexual harassment of its parishioners by a member of the clergy and to help in healing afterward rather than being indifferent.” They insisted that the denomination should be found guilty of negligence for violating this standard.

The court disagreed, noting that the women “have cited no precedent and we are aware of none that stands for the proposition a church owes its parishioners a duty of care regarding its handling of their complaints.” The court also rejected the women’s claim that the denomination was liable for the pastor’s harassment on the basis of a breach of a fiduciary duty. First, it concluded that no fiduciary relationship existed between the women and the denomination. It noted that the women had no contact with the denomination other than a single meeting with one official. Further, the women’s personal expectation that the denomination would “take action” on their complaints did not create a fiduciary relationship: “The steps taken unilaterally by the [women] do not constitute an attempt on their part to establish the relationship alleged, and there is no evidence that [the denomination] accepted or induced any special, fiduciary bond with any of [the women] under these facts in any event.” Even if a fiduciary relationship did exist, it was not violated since “there is no evidence of a breach of that duty. There is no evidence that [denomination] acted other than in good faith and with due regard to [the women’s] interests.”

Case Study Alcazar v. Corporation of Catholic Archbishop of Seattle, 2006 WL 3791370 (W.D. Wash. 2006)

A federal court in Washington ruled that the ministerial exception prevented it from resolving several claims brought by a seminary student against a religious organization, including sexual harassment. The student was assigned to a church in Washington to assist the officiating priest. The victim claimed that he was sexually harassed on numerous occasions by the priest. The student complained of this behavior to the archdiocese, which resulted in an investigation and transfer of the student to another parish. The victim claimed that the archdiocese took additional adverse actions against him on account of his accusations, and as a result, he sued the archdiocese in federal court. The lawsuit asserted several grounds for relief, including sexual harassment. The court cautioned that the ministerial exception “does not foreclose all employment claims against a religious employer, but simply limits them.” When a sexual harassment claim is made against a religious employer, a court may only consider the following three questions: (1) Was the victim subjected to a hostile work environment? (2) If so, did he exercise reasonable care to correct that environment? (3) Did he unreasonably fail to avail himself of those measures?

Case Study Wooten v. Epworth United Methodist Church, WL 2049011 (M.D.N.C. 2007)

A North Carolina federal court ruled that a female church employee could proceed with a sexual harassment lawsuit against her church, but it dismissed her claims against a denominational agency on the ground that “there is nothing in the record suggesting that the Conference exerted any control over the plaintiff’s employment. On these facts, it can be determined as a matter of law that the Conference was not the plaintiff’s employer.”

Case Study 2008 WL 5216192 (M.D.N.C. 2008)

A federal court in North Carolina dismissed a church employee’s allegations of sexual harassment on the ground that the offending behavior, even if true, was not sufficiently severe to amount to harassment. A church hired a woman (the “plaintiff”) as its director of music. As part of her job duties, the plaintiff worked with various musicians and was the staff member in charge of monitoring electronic equipment usage. A few years later the church hired a seminary student (Tim) as its youth director. The plaintiff worked with Tim occasionally, and saw him at weekly staff meetings. She later met with the church’s senior pastor, pursuant to the church’s personnel policy, and made the following allegations of sexual harassment:

Prior to a worship service, Tim placed a photograph of a male bodybuilder wearing a Speedo bathing suit in the plaintiff’s office. He later asked her if she had received his “surprise.”Soon after the picture incident, Tim showed the plaintiff a website project he had been working on for the church youth. When the plaintiff informed him that the technology committee would have to approve the project, he became angry and called her a “stupid [expletive].”While preparing for the trip to New York City, the plaintiff discovered a ticket to the “museum of sex,” which is located in New York City, in her office mailbox. Upon her return from New York, Tim asked if she had received the coupon and if she had used it.The plaintiff went to Tim’s apartment to pick up her daughter from a church youth event. Tim suggested that her daughter and another member of the church youth group use his bedroom.At some point during his employment, Tim returned a computer to the plaintiff which had a copy of movie (rated PG-13) in the DVD drive. The plaintiff’s husband viewed the film and found it offensive due to its sexual content.

The plaintiff alleged a host of other problems with Tim, and felt verbally and physically threatened by him. She sought psychiatric care and was treated for stress, anxiety, and depression. The church never formally disciplined Tim for his behavior. However, his behavior led to a decision by church leaders not to renew his employment as youth director.

The plaintiff resigned her position at the church, and then sued the church for sexual harassment in violation of Title VII. The court concluded that the plaintiff had not presented “sufficient evidence on which a jury could find that the harassment was sufficiently severe or pervasive to alter the conditions of her employment.” It observed:

Title VII does not protect against all unwanted workplace distractions. Behavior such as “simple teasing, off-hand comments, and isolated incidents (unless extremely serious) will not amount to discriminatory changes in the terms and conditions of employment … . A plaintiff must show that the harassment was “severe or pervasive enough to create an environment that a reasonable person would find hostile or abusive, and the victim must subjectively regard that environment as abusive.” As there is no doubt that [the plaintiff] subjectively regarded the environment as abusive, it must be determined whether a reasonable person would also see the environment as hostile or abusive. In making the objective determination as to whether the work environment was abusive, courts consider: (1) the frequency of the discriminatory conduct; (2) its severity; (3) whether it is physically threatening or humiliating, or merely an offensive utterance; and (4) whether it unreasonably interferes with an employee’s work performance. Courts must also consider all of the surrounding circumstances, including the social context in which the particular behavior occurs.

The court reviewed the five instances of a hostile environment alleged by the plaintiff (and summarized above) and concluded:

These five instances, without more, are not enough for a reasonable person to find that the work environment was hostile or abusive. While [Tim’s] actions were inappropriate, they were certainly not frequent, occurring only five times over sixteen months. Moreover, these five instances were neither particularly severe in nature nor physically threatening or humiliating. Tim never used sexually explicit language nor propositioned or inappropriately touched [the plaintiff], and did not engage in behavior that demeaned the status of women in general. Some of these incidents could interfere with a person’s work, but the extent of the interference cannot reasonably be considered great. While his behavior may have been unsuitable for the workplace, Title VII does not attempt to purge the workplace of vulgarity. These isolated incidents engendering mildly offensive feelings are not enough to sustain an action under Title VII.

Even considering these five instances in light of the plaintiff’s other interactions with Tim, the work environment cannot be seen by a reasonable person as hostile or abusive. Title VII does not ensure a happy workplace, only one that is free from unlawful discrimination.

The court also rejected the plaintiff’s contention that a church is a working environment that must be sheltered from the “cruder aspects of secular life,” thereby creating a lower standard for sexual harassment: “Her personal reasons for choosing to work for a church are not relevant to whether an objectively reasonable person would find the work environment to be abusive.”

Case Study 2012 WL 2912516 (W.D. Okla. 2012)

A federal district court in Oklahoma ruled that a church could be sued on the basis of sexual harassment for the conduct of a supervisory employee even though it was not aware of it at the time it occurred. A female church employee (the “plaintiff”) claimed that over the course of a year she was sexually harassed by her supervisor. The harassment included both language and physical conduct. The plaintiff resisted her supervisor’s advances, and this led directly to a reduction in her hours.

The plaintiff reported the sexual harassment to the church. After doing so, her hours continued to be reduced until she was terminated. The church insisted that the plaintiff quit her job.

The plaintiff sued the church, alleging sexual harassment, and claiming that she was subjected to a sexually hostile work environment due to the actions of her supervisor. The court noted that “a plaintiff may prove the existence of hostile work environment sexual harassment in violation of Title VII where sexual conduct has the purpose or effect of unreasonably interfering with an individual’s work performance or creating an intimidating, hostile, or offensive working environment … . For sexual harassment to be actionable, it must be sufficiently severe or pervasive to alter the conditions of [the victim’s] employment and create an abusive working environment.”

The church claimed that the plaintiff had not shown that any alleged harassment was sufficiently severe or pervasive to alter the conditions of her employment. The court disagreed, and rejected the church’s request that the lawsuit be dismissed:

The court finds plaintiff has set forth sufficient evidence to create a genuine issue of material fact as to whether she suffered sexual harassment that was sufficiently severe or pervasive to alter the conditions of her employment and create an abusive working environment. Specifically, plaintiff has submitted evidence that for a year … she was verbally and physically sexually harassed by her supervisor, and that on a weekly, and near daily basis, he referred to her by sexually offensive names and on some 15 occasions, on a weekly and near bi-weekly basis, he either grabbed, groped, pinched, slapped, and squeezed her breasts or buttocks … or he forcibly pinned her against a wall with his body and kissed or tried to kiss her, or he directly requested she engage in sexual intercourse.

The court rejected the church’s argument that it could not be liable for the supervisor’s conduct since it had no knowledge it was occurring. It observed, “An employer is subject to liability to a victimized employee for a hostile environment created by a supervisor with immediate (or successively higher) authority over the employee.” Since the supervisor was the plaintiff’s immediate supervisor having immediate authority over her, “whether the church had knowledge of any alleged sexual harassment is not dispositive of the church’s liability.”

Case Study Peacock v. UPMC Presbyterian, 2016 WL 890574 (W.D. Pa. 2016).

A federal court in Pennsylvania dismissed a sexual harassment lawsuit brought by a former religious hospital employee on the ground that the offending conduct was not sufficiently severe or pervasive.

A former female employee (the “plaintiff”) sued a denominationally affiliated hospital, claiming that she had been the victim of unlawful sexual harassment in violation of Title VII’s ban on sex discrimination in employment. She claimed that three brief comments by her supervisor and a nonsupervisory employee amounted to hostile environment sexual harassment. She conceded that she was relying on only these three incidents to establish her claim for sexual harassment, but she insisted that these instances were “representative of the overall environment” and that she was subjected to this type of behavior on a daily basis.” A federal district court dismissed the plaintiff’s sexual harassment claim. It began its opinion by observing:

To state a prima facie claim of hostile work environment sexual harassment, a plaintiff must plead that: (i) she suffered intentional discrimination because of her sex; (ii) the discrimination was severe or pervasive; (iii) the discrimination detrimentally affected her; and (iv) the discrimination would negatively affect a reasonable person in plaintiff’s position. To rise to the level of actionable harassment, the workplace must be permeated with discriminatory intimidation, ridicule, and insult that was sufficiently severe or pervasive to alter the conditions of the victim’s employment and create an abusive working environment.

The court concluded that even if all of the plaintiff’s allegations were true, and “as inappropriate for the workplace as the conduct may be,” the plaintiff failed to establish a viable claim: “Simply put, on this record, this behavior does not rise to an actionable level. These three incidents, even when taken together, are neither sufficiently severe nor pervasive to establish a hostile work environment claim.”

The court cited the following examples of prior cases in which the courts rejected sexual harassment claims:

ten incidents of alleged inappropriate harassment over a ten-year period was not sufficiently severe or pervasive, Davis v. City of Newark, 285 Fed. App. 899 (3d Cir. 2008); the issuance of two letters of reprimand over a four-month long period was not sufficiently severe or pervasive, Gonzalez v. Potter, 2010 WL 2196287 (W.D. Pa. 2010); a male supervisor’s alleged comments to a female employee that “the last time I saw you, you were quiet, a virgin, and unmarried,” “when the cat’s away the mice will play,” and “you have good child bearing hips” were not sufficiently severe or pervasive, Porta v. Dukes, 1998 WL 470146 (E.D. Pa. 1998).

Sexual conduct and speech of fellow employees may be offensive, but it will not constitute sexual harassment unless the workplace is permeated with sexually offensive conduct that is “sufficiently severe or pervasive to alter the conditions of the victim’s employment and create an abusive working environment.”

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

6 Questions to Assess Vehicle Insurance

Managing the money of the church includes being up-to-date on insurance policies.

After Hurricane Harvey struck southeast Texas, an Oklahoma church sent 150 people to help with disaster relief.

Before they left, church leaders worked to bolster safety on the nearly 1,000-mile round trip: They rented 18 newer-model vans and required volunteer drivers to complete an online training course.

This was in addition to making sure the vehicles, drivers, and passengers had insurance coverage.

“God forbid, if we had an accident with a van load full of people—you can run up some pretty high medical expenses,” said John Trotter, elder and administrator for the Oklahoma church.

Managing the money of the church includes being up to date on insurance policies—knowing what types of coverage are essential, that policies include all possible drivers and vehicle scenarios, and that the limits are adequate.

Here are six questions to help church leaders when evaluating vehicle insurance coverage.

1. When does a church need vehicle insurance?

Of course, if a church owns a vehicle, it clearly needs a policy to cover that vehicle. Also, if a church plans to rent a vehicle, it needs appropriate insurance through its own company or through the rental company. (Whether or not to purchase insurance through a rental company is handled later in this article.)

In most cases, a volunteer driving his or her own vehicle on the church’s behalf will need personal auto insurance, which typically will be that person’s primary coverage. The church’s policy generally is responsible for damages and liability beyond the personal auto policy, said Scott Figgins, vice president of underwriting for Brotherhood Mutual Insurance Company.

However, laws vary by state, so the church should discuss specifics with its insurance company.

Churches should discuss “non-owned and hired” (NOHA) insurance coverage with their agent, said Tom Strong, GuideOne Insurance’s senior loss control manager. NOHA will offer protection when they rent a vehicle (hired) and when volunteers drive their own vehicles (non-owned), Strong said. In most states, for volunteers driving their own vehicles, their personal insurance is the primary coverage and the NOHA is for additional coverage.

Churches should make sure their policy includes noninsured motorist coverage, said Eric Spacek, GuideOne’s former risk management and loss control director. That coverage is important “if you’re involved in an accident, even if it’s not the church driver’s fault, but the other vehicle doesn’t have coverage,” Spacek said.

Vehicle insurance for an employee typically will exclude medical coverage “because they should be covered under workers’ compensation statutes,” noted Zach Lutzke, underwriter for Church Mutual. But to keep from being caught off guard, a church should check to make sure employees are fully covered, Lutzke stressed.

2. What specific types of insurance are needed for church employees and volunteers?

Types of vehicle insurance that churches might need include: liability, property damage, uninsured/underinsured motorist (depending on the state), auto medical coverage (this, too, varies by state), hired/non-owned/rental, and various miscellaneous items that could apply to a church, Lutzke explained.

“The most important piece of advice that I can give is for churches to understand their activities and exposures and then discuss those exposures with their insurance representative,” Lutzke said. “The representative should be able to provide insight into what options are available and how each coverage option would apply. “

Most commercial auto policies cover any permissive user, including employees and volunteers, Figgins noted. The policies exclude anyone using a church vehicle without permission.

A personal auto policy “follows you no matter what car you get in,” Figgins explained. “So if you are driving your neighbor’s car, you’re covered. If you are driving a rental car, you’re covered, etc.”

A commercial policy, on the other hand, he said, is “like putting the policy in the glove box of the vehicle, and anyone who operates it (with permission) is covered.”

That means churches need to be careful if they provide a vehicle, for example, to a pastor for his personal use as part of his compensation package. If the vehicle is the only car the pastor has, he could have a gap in coverage if he were to operate another vehicle, Figgins said.

“To avoid this [gap], you can add an endorsement to a commercial auto policy called ‘Drive Other Car Coverage,'” Figgins said. “This would provide named individuals with coverage that would follow them to other vehicles.”

3. What should a church know before allowing someone to drive on its behalf?

The church should check the driving record of a potential driver and verify that the person has insurance coverage that meets the minimum damage and liability limits under state law.

“If the church is submitting an application for insurance, we’ll ask them for [the names of] the primary drivers using the vehicle, and we’ll run a Motor Vehicle Record (vehicle report) on those drivers,” Figgins said.

Charlie Cutler, managing partner for ChurchWest Insurance Services, said that too often a pastor asks someone to drive for a church event who has a couple of accidents and a DUI that nobody in the church knows about. Or, he added, this individual could have a medical condition—such as epilepsy—that could make driving hazardous.

“The main thing to look at [besides insurance history] is whether somebody is physically able to drive and perform the task,” Cutler said.

“A lot of accidents are the result of inexperienced drivers who aren’t familiar with how to operate [certain church-owned vehicles],” Figgins added. “So, we have online training and other resources for people who are regularly going to operate those vehicles, and we think it’s a really good idea to get some practice driving before you put them on the road with a van full of people.”

It’s also crucial that the person is licensed to drive a particular vehicle. In most states, a commercial driver’s license is required for vehicles designed to seat 16 or more passengers, including the driver, Figgins said. In many states, a 15-passenger van is the largest vehicle that can be driven without a special endorsement. But in some cases, even that requires a commercial license. Church leaders should make sure they know state requirements.

4. Exactly how much vehicle insurance coverage does a church need?

The figure most often given by the experts interviewed: $1 million in coverage.

“That’s certainly adequate in most circumstances,” Figgins said. “Then again, if you have a bad accident, it can be significantly more than that. It’s not beyond the realm of possibility to have a multimillion-dollar loss from an automobile accident.”

With such medical and liability concerns in mind, a church should thoroughly discuss coverage options with its insurance company and its board or insurance committee.

5. What about purchasing insurance from the rental company?

“Churches can buy coverage at the time of a rental, and that’s always a valid option,” Figgins said. But in most cases, it’s better for a church to have its own insurance that covers all scenarios—be it owned, rented, or borrowed vehicles driven on the church’s behalf. If a church depends exclusively on buying insurance on a case-by-case basis, there’s probably going to be a time when purchasing insurance is overlooked and the church ends up not properly covered, he said.

Also, a church’s own insurance policy is usually cheaper than buying additional insurance when renting vehicles, especially if the church rents regularly, Lutzke said.

However, there could be exceptions to that general practice, he added: “Depending on the value of [the vehicle or vehicles] being rented, that limit of insurance may or may not be sufficient in the event of a loss. Every policy will also have a limit of insurance for liability; depending on the contract that is being signed with the rental company, there may be a need for higher limits of insurance. For example: a contract might require $1 million in auto liability coverage, but the [church] may only have $500,000 liability limits.”

Another possible benefit of purchasing coverage when renting: liability could shift to the rental company. “Depending on contractual agreements that are made, purchasing insurance through the rental company may transfer all of the liability exposure to the rental company. In the event that a claim exceeds limits, the obligation to pay further may fall upon the rental company instead of the [church],” Figgins said.

Figgins noted another possible benefit of purchasing insurance through a rental company: The rental company’s insurance might not have a deductible, which would be better than a church’s insurance policy that includes a deductible.

“Also, if you have an accident with a rental vehicle, [the rental company] may also charge additional costs for things like the administrative cost of handling the claim, loss of rental income while the vehicle is out of service for repair, diminished value, etc.,” Figgins said. “Usually the coverage provided by the rental car company includes these expenses, whereas the standard commercial auto policy may not. Therefore, it is important to include these potential extra expenses when deciding how to manage this exposure.”

Another consideration: Many credit-card companies include coverage as a value-added benefit if the rental is paid with that particular card, Figgins said. “Having someone who has this protection on a credit card rent the vehicle could also be a cost-savings method,” he explained.

Finally, the decision of whether or not to have coverage for rental vehicles through the church’s insurance policy might come down to frequency of using rental vehicles.

“Generally, I would say that if you plan to only rent vehicles for a few days per year, you are probably better off to purchase the coverage from the rental company,” Figgins advised.

6. What can a church do to promote safety and are there ways promoting safety can also save money on insurance?

Ongoing maintenance on church-owned vehicles is just as important as vetting drivers, Figgins said. That includes regularly inspecting tires, particularly on vans and buses.

“When I talk about vehicles, I talk about not only the driver component, which is very important, but also the equipment,” said Frank Sommerville, attorney and a senior editorial advisor for Church Law & Tax. “Because if you have a church-owned vehicle, typically there’s not anyone who’s responsible for its maintenance, not like a personal vehicle.”

“Churches [generally] don’t use their vehicles that often,” Figgins added. “So even if a tire is new and has good tread on it, if it has sat in one spot for a long time, that can create a problem and de-tread . . . and you can have a blowout that can often result in a significant loss.”

Regarding safety issues, Sommerville expressed great concern about the use of 15-passenger vans.

In 15-passanger vans, there are “stability issues, weight distribution issues, driver issues, because the center of gravity is much higher and different than a car,” Sommerville said.

(An article on ChurchLawAndTax.com, “Q&A: Are New 15-Passenger Vans Safer?” has more information on problems related to 15-passenger vans.)

Working to help ensure safety can also save churches money. Insurance can be less expensive for a church that can demonstrate it vets drivers and takes steps to prevent accidents. A lot of companies offer credits for safe drivers and vehicle safety measures, such as antilock brakes and collision avoidance systems, Figgins said.

But beyond financial considerations, Figgins encourages churches to always keep something else in mind: “Insurance doesn’t bring kids back that lose their lives in an automobile accident. So, to protect the people of the church and its reputation, it’s important to do the things that are necessary. Not just making sure you have enough insurance, but also [doing what you can] to prevent the accident from happening in the first place.”

Why Hiring Ex-Offenders Should Be a Priority for Churches

How churches can prioritize support and employment for those leaving prison—while still considering the risks.

About 600,000: That’s the number of prisoners reentering American communities each year. Whether you know an ex-offender personally or not, you are bound to encounter someone with a criminal background in your day-to-day life.

The stigma around individuals with criminal histories has made their reentry into society exponentially more difficult. Though employers are liable if they discriminate and choose not to hire an individual because of their criminal background, employers can still get away with that bias fairly easily.

“They do their background checks and see something they don’t like, and they say, ‘Oh, we’re sorry, we’re not hiring’ or ‘We found someone else who’s more appealing to us’ . . . They would never even say that it was because of [the background check] or to any degree something beyond that,” explains attorney and Church Law & Tax Editorial Advisor Midgett Parker.

Enter the local church, supposedly a warm space that welcomes all. But in reality, does it fully embrace and support those with criminal backgrounds? Christianity Today magazine’s September 2016 cover story would argue that is, unfortunately, not often the case. “The United States has more than 300,000 churches, meant to welcome, build, and sustain relationships—and there aren’t many groups that need that kind of relational support more than people who are released from jail,” writes Morgan Lee, CT’s associate digital media producer. Yet “[i]n spite of the dramatic growth of incarceration, ministries to those in and returning from prison remain a distinct minority of evangelical organizations.”

Craig DeRoche is senior vice president at Prison Fellowship, an organization that ministers to prisoners and their families. He wants to see the church culture around embracing ex-offenders change. “As Christians, we can’t exclude our faith from the reality of our culture. It will rob us of the opportunity to truly live as Christ wants us to live,” he says. “We can’t turn a blind eye and dismiss it anymore.”

One of the ways for churches to seize that opportunity is through hiring processes. “We need to hire people who have been incarcerated, people who are set out on a new path in their lives,” says DeRoche. “We want to see them live out their God-given potential, and that begins in the church.”

Though local churches seem to be a prime first place of employment for ex-prisoners as they re-enter society, there are inevitable risks involved either way. As Parker explains, “You don’t hire them, then you’re at risk. You do hire them, then you’re also at risk.”

How to Prevent and Protect

According to Parker, during the hiring process, sit down with your ex-offender candidates and do the following:

  • Inquire. Ask them questions about their full histories and backgrounds.
  • Verify. Go to the courthouse and check public records to verify what they have disclosed. Answer the following questions: What were the charges? What were they convicted for? How long were they in prison? Did they disclose everything?
  • Document. Write those verified answers down. Keep a confidential personnel file for each candidate.
  • Repeat. Every so often, go through the preceding steps and run checks on every staff member, those with or without a prior criminal record, because statuses have the potential to change over time.

Along with the steps outlined above, check for rehabilitation efforts (such as anger management counseling) and call their references. “The questions are: Are they truthful? [Or] are they trying to hide it?” Parker says. “If they’re hiding it, you should be more suspicious.”

Remember: The Equal Employment Opportunity Commission (EEOC), citing Title VII of the Civil Rights Act, has warned various organizations—including churches—that they face liability if they unlawfully discriminate against a people of a protected class (including race, gender, and criminal background). Should a church’s applicant be rejected because of their criminal history, the EEOC could bring legal action against the church.

Risks of Negligent Hiring and Selection

The church administrator’s responsibility is to ensure the safety of their congregations and their staff. If a crime were to occur, the church may be sued for risk of negligent hiring—thus, every church (like any other organization) should have knowledge of the backgrounds of their staff members prior to the start of any employment.

Yet churches have a unique advantage when it comes to hiring those with criminal records. “Churches, more than secular employers, have the ability to find out where the person is in their spiritual journey, and who they are today,” says DeRoche. “We’ve seen, here at Prison Fellowship, countless examples of folks who have had radical transformations in Christ. The church has the opportunity to evaluate where somebody is and take the responsible steps for our congregation, and the person who has the job, by not exposing them to temptation.”

The safest way to prevent this risk of negligent selection in job placement—which is “[o]ne of the most significant legal risks facing churches today,” according to a 2013 Church Law & Tax article—is to assign an ex-offender to a role or duty unrelated to their offense. “Don’t hire someone who has been convicted of sexual child abuse to lead a youth ministry, because it is related to the job,” Parker says. “You wouldn’t hire someone who has been convicted of financial fraud to be your bookkeeper.”

It is crucially important—and cannot be stressed enough—that churches should not put others or the church in danger by placing an ex-offender in a role where history has demonstrated bad judgment. Certain crimes, such as sexual crimes, will mean additional safeguards need to be in place in order for a person to serve safely—and resources like Reducing the Risk are key to implementing those safeguards.

After the Hire

Should a church choose to hire an ex-offender, here are the immediate steps Parker suggests churches take:

  • Prepare. Just like any other new hire, prepare your staff for the incoming new hire. Cultivate a warm team community.
  • Embrace. Mentor and provide abundant guidance for the individual.
  • Train. Train current staff to embrace this new hire. “Let your staff know that they are coming back from a bad experience,” says Parker. “Train them to show respect, to be receptive and engaging, and to provide hope that there are opportunities for gainful employment in the church.”
  • Create accountability. People can change, and churches should lead the charge in supporting stories of redemption. However, this doesn’t discount the need for additional safeguards and measures to be put in place. This will help not only to reduce the risk of lawsuits against the church, but it will also help protect churchgoers from unnecessary risks.

There is hope for ex-prisoners—and it is a responsibility of the church to equip and guide them to break through societal stigmas.

“Rather than telling other folks in our community what to do, we can start with ourselves,” says DeRoche. “Churches can unlock opportunities, and they can truly speak into the culture of their local community.”

Emily Lund is assistant editor for Church Law & Tax. Alexandria Kuo is the former Church Law & Tax editorial intern.

4 Ways to Make an Agenda Work for You

Consider which approach may work best for your meetings.

Robert’s Rules just wouldn’t have clout if it didn’t provide a standard order of business. It provides a six-part agenda that can get you started:

  1. Reading and approval of minutes
  2. Reports from officers, boards, and standing committees
  3. Reports from special committees
  4. Special orders of business
  5. Unfinished business and general business
  6. New business
  7. Most assemblies use this basic plan. Fine.
  8. But have you ever considered whether this approach is efficient for your group? Likely, it’s not. Consider #2. How will you decide who should report first, or report at all? And why delay the big, new, exciting topics (#6) till last?
  9. Here’s today’s good news—there are other options that may work better. (And yes, it’s okay per Robert’s Rules to adopt a different order of business than is outlined above if a majority of the entire membership agrees).
  10. 1. Priority Agenda
  11. This option places the most important items first and then moves downward. For example, don’t leave the coverage of your new five-year strategic plan till the end of a two-hour meeting when everyone is exhausted. Put it at the top. Look at what needs to be accomplished and prioritize.
  12. 2. Consent Agenda
  13. This tactic is one of my favorites because it screams “efficiency.” You simply group non-controversial topics into one vote—one big item on your agenda.
  14. Specifically, it would work like this: Present the agenda. Tell everyone, “Notice the consent agenda at the top of our order of business. It includes items which will not be discussed today because we believe they are non-controversial. We’ll take one vote on all of them—a yes or no on all.”
  15. And then you ask everyone, “Is there anything that you would like to pull off of the consent agenda?” (Why? Maybe there’s an item someone feels is actually controversial or needs to be discussed for a bit.) To be clear, if any member asks to remove an item from the consent agenda, that item should be removed on their request. No vote about the removal is needed.
  16. Once the above question is asked, a quick, one-vote process takes care of all the items remaining on the consent agenda: “All those in favor of adopting the items on the consent agenda, say ‘Aye.’ All those opposed, say ‘No.’”
  17. There’s no danger—anything can be removed if requested. And the advantage is productivity—no unnecessary debate on small points about which no one disagrees!
  18. 3. Subject-Based Agenda
  19. A third option groups topics by large categories. Example: Discuss everything about specific line items of the strategic plan at the same time—who, when, budget, everything. This method allows focus and, therefore, progress.
  20. 4. Presiding Agenda
  21. And #4 might help a presider in particular. On a presider’s agenda copy only, add a column to the agenda, and type special notes there (e.g., Recognize Jane on this topic. Carlos will have a report on this topic.) An annotated copy will support efficiency for leadership.
Sarah E. Merkle is a professional parliamentarian and presiding officer. One of five lawyers worldwide to have earned the credentials Certified Professional Parliamentarian-Teacher (CPP-T) and Professional Registered Parliamentarian (PRP), she helps boards, associations, corporations, and public bodies navigate rules applicable to governance and business meetings.

What Church Employees Need to Know About Negotiating Compensation

Why you shouldn’t be afraid to talk about money in ministry settings.

Most people who work for a church do so out of a sense of calling: They want to serve Jesus, their fellow believers, and their neighbors.

But they still have to eat, as David A. Miller of the Slingshot Group points out. And they’ve got bills to pay.

Over the past decade, Miller has helped more than 200 youth pastors find work at churches. His advice for them: Ask about the money early on. Few things are deal-breakers for job candidates, he says. Money is one of them.

“If you know that you need to make $50,000 but the church only wants to pay $35,000—that’s not going to work,” he says. “A church is not going to jump that much.”

Pastors and other job candidates are often uncomfortable starting the conversation about compensation. That puts them in a difficult position, says Miller. As a potential solution, he often suggests churches put a compensation range in their job descriptions and advertisements. That’s a big help.

But pastors and other church workers also need to push past feelings of guilt when discussing money. There’s no shame in trying to take care of your family, says Miller.

“It’s gross to think you are going to get rich in ministry,” he says. “It’s not gross to know what you need.”

He advises that a job candidate at a church should ask about the pay range early on. That way they don’t get too far down the road with a church, only to back out.

Dave Fletcher—executive pastor at First Evangelical Free Church in Fullerton, California—agrees. He suggests that candidates ask about the salary/compensation range after the first interview.

“Let’s make sure we are in the same ballpark,” he says.

Think through what you need

Negotiating compensation has two parts.
One part is knowing what a church can realistically afford to pay. The other is knowing what you need in terms of compensation.

Mike Waddy, pastor of First Baptist Maury City—a small town in west Tennessee—has eight kids. So he’s got to be careful when thinking about compensation. It’s not that he deserves more pay due to his higher bills. (In fact, churches that pay based on individual need instead of the value of the role are violating the law.) But a lot of people depend on him, and he’ll need to make sure the role’s compensation is adequate for his needs.

He’s been a pastor at two churches over the past 14 years. He’s also talked with two other churches about possible calls that didn’t pan out.

Waddy suggests that pastors or other church staff members go into an interview with a church knowing what they need to make and being up front about it. That simplifies the negotiating process—at least in the beginning.

“You don’t want to come across as saying, ‘I am in this for the money,’” he says. “But you know what you need to pay your bills.”

Those questions are vital, because money is one of the major stressors for the families of pastors, according to LifeWay Research.

A 2017 survey of the spouses of Protestant senior pastors found that more than one in three (36%) say they worry about making ends meet every month. Nearly half (46%) say they worry about not being able to save for the future. Perhaps most telling of all, the majority (61%) say the compensation paid by the church isn’t enough to support their family.

Do your homework

Taking a job at a new church can often mean moving , so it’s important to understand the cost of living in a new community, says Fletcher. Moving from a small town to a big city or across the country can come with sticker shock, due to the cost of living.

Fletcher’s advice? Ask a lot of questions in the interview process.

Among them:

  • What does it cost to live in this community?
  • How much are public school teachers (one possible comparison for church staff) paid?
  • Does the church expect that the spouses of pastors and staff work?
  • What are housing costs like?
  • What are taxes like?

Having the right information can help a job candidate decide if a church is a good fit, says Fletcher.

Visit our sister-site ChurchSalary, for compensation guidelines based on education, experience, church income, church setting, and more.

For Greg Asimakoupoulos, a longtime pastor who now serves as chaplain at a retirement community outside of Seattle, understanding the cost of living in a new community was crucial.

He’s made five moves—including two cross-country moves—and had to negotiate compensation each time. For him, moving from the Chicago suburbs to the West Coast came with sticker shock.

“I was just grateful to have a position and a call,” he says. “I didn’t even look at the bottom line issues.”He’s also learned about negotiating the hard way. At his first church, there was no negotiating: He was single at the time and simply took what the church offered.

Every move to a new church became more complicated.

At his second church, Asimakoupoulos was married, and his wife was expecting. So he had to pay more attention to issues like the cost of living.

A friend gave him some advice early on that’s served him well over the long haul.

“Be sure that you ask for what you think you need right up front,” he says. “That’s the point in the conversation where you have the most leverage. Once you land at the church, you have lost some bargaining power.”

Understand the church’s financial health

Marty Duren, executive editor for LifeWay Pastor, says that pastors should ask about the church’s overall financial health when negotiating compensation. That includes asking about giving trends and whether or not the church has ever had financial difficulties (e.g., making payroll or excessive debt). Doing so can help a pastor determine whether the compensation they are negotiating is sustainable, says Duren, who is also a bivocational pastor.

“Knowing the giving trends of the church allows the candidate to determine whether the church can fulfill its financial commitment to the new employee,” Duren says.

Waddy agrees. “I have made the mistake of thinking that the church had the money today,” he says. “But they didn’t have the money two years later.”

Waddy also cautions pastors to be realistic in their requests. Sometimes a church—especially a congregation that’s been without a pastor for a while—will offer more than they can really afford, he says. It’s better to walk away than to take a job where the church can’t afford the compensation a pastor needs, or where the compensation eats up so much of the budget that there’s no money left for ministry.

“You want to make sure you are not messing with a church,” he says.

Try “Yes, and…” when negotiating salary

Things get tricky once the interview process concludes and there is an offer on the table. By this point in the process, the job candidate and the church have begun to build a relationship.

So taking a hard line when negotiating terms—especially about salary—can have consequences, says Miller.

If a pastor or potential church staffer turns down a job because of compensation, they can get a bad reputation.

“You give yourself a bad reputation when you turn them down for money,” he says.

In Miller’s experience, churches are becoming reluctant to negotiate when it comes to salary. Instead, he says, they often start with their best offer—or “what they consider the best offer.”

Asking for more money after the offer is made can have consequences down the road.

“Even if you get the money you are asking for, someone on that staff is not going to be happy with you,” he says.

Once a job candidate gets an offer, Miller suggests they take some time to think. Sometimes the offer is right on target. Other times, it may be low but acceptable. Still other times, it may be low and not acceptable.

If the offer is low, the candidate should ask, “Would I turn the job down if this is the final offer?” If the answer is yes, then make that clear, says Miller. If the answer is no, then a pastor can take the job, but still do some negotiating.

In the case of a low but acceptable offer, Miller suggests accepting the job, but with a caveat—asking if the salary can be adjusted.

“You are not saying, ‘It’s either make a better offer or I am not coming,’” he says. “You are letting them know what you need.”

If the offer is really low—say, $10,000 less than expected or hoped—it’s best to walk away. “They are not lowballing you $10,000,” Miller says.

Instead, the church most likely doesn’t have the budget for what your target was.

In that case, he says, just walk away. Don’t ask for more money. Even if you get it, it won’t be worth it. The church may eventually regret paying a pastor this additional amount—and it could poison the relationship from the start.

Ask for easy things

Negotiating for salary is difficult. For churches, the salary figure has the most emotional baggage, says Miller. But other benefits don’t have that baggage.

“The benefits are easier to negotiate,” Miller says—so ask for easy things, like more vacation days, time for a study break, funds for continuing education or conferences, or getting the church to pay for your work cellphone. And don’t forget to ask about retirement benefits.

Some of these benefits—especially vacation or other time off—don’t come with an out-of-pocket price tag, so a church is more likely to say yes to such benefits than they are to a larger salary, says Miller.

Sometimes the right benefits—or the right time of life—can make a lower salary workable.

That was the case for Asimakoupoulos when he left his role as a pastor and become a chaplain. At the time, his kids were out of college and his family had built up some equity in their home, so he knew he could live on less. The chaplain’s job offered good benefits, so he didn’t need to make as much.

“You have to be honest with yourself and the people you want to work with,” he says. “Maybe I don’t need to make as much at this point in my life.”

Duren also suggests that a pastor or church staffer ask about whether they can pursue speaking engagements or other work outside the church. Being able to do that may mark the difference between “can” and “can’t” for a pastor considering a church role.

If the pastor or church staffer has kids about to go to college or anticipates their family’s expenses will increase significantly in the future, outside income can be a big help—especially in a small church or congregation of limited means.

Being flexible about outside work can be a win-win, says Duren. But it’s important to discuss ahead of time.

“If the church’s compensation package cannot keep pace, the candidate should have freedom to pursue outside speaking or writing opportunities, or engage in an income-producing hobby, to make financial ends meet,” he says.

Don’t be afraid

On the other hand, don’t be afraid to ask for what you need, says Fletcher. Be brave and have the conversation if an offer is too low. The worst a church can do is not hire you. And it’s better to not take a job than to take a job and resent your new church from the start.

Remember the big picture: In any job negotiation at a church, a candidate wants to know, “If I work for those people, will they take care of me?”

If the answer is yes, then things will work out. If the answer is no, it’s better to walk away, says Fletcher.

“The best place to get fired is in the interview,” he says. “The worst place to get fired is as an angry new employee.”

Participate in the National Church Compensation Survey to provide churches with information they need to determine fair pay.

Bob Smietana is a freelance religion writer, based outside of Nashville.

Facing a Future Without the Clergy Housing Allowance

Ways churches can prepare should this tax benefit ever go away.

The latest constitutional challenge to the clergy housing allowance brought by the Freedom From Religion Foundation (FFRF) cleared its first significant legal hurdle in October, when a federal district court judge ruled the valuable longtime tax benefit for ministers to be an unconstitutional preference for religion. The parsonage allowance pertaining to church-owned housing remains unaffected.

The decision may now head to the Seventh Circuit Court of Appeals. Were the Seventh Circuit to affirm the lower court’s decision (a decision is expected to come during the second half of 2018), it would apply only to ministers in that circuit (Illinois, Indiana, and Wisconsin). It would become a national precedent binding on ministers in all states if (1) such a decision is ever affirmed by the United States Supreme Court, or (2) the Internal Revenue Service follows a Seventh Circuit affirmation to promote consistency in tax administration nationwide. Because the Supreme Court accepts less than 1 percent of all appeals, it is uncertain that the Court will agree to hear the case and, moreover, uncertain how the Court would rule. Absent a Court decision, it’s unclear how other federal circuits would address future litigation as well.

With the situation far from certain, churches nationwide should think through preparations now that would help ready their pastors were the clergy housing allowance ever to go away. Senior Editor Richard Hammar identifies three immediate implications of such an outcome that churches can address now:


1. Compensation. The sudden elimination of this tax benefit would immediately thrust many clergy into a dire financial position with a mortgage loan based on a tax benefit that no longer is available. Many church leaders would want to reduce the impact of such a predicament by increasing compensation, likely through some type of phased approach
.


2. Tax payments. Many ministers would need to increase their quarterly estimated tax payments or voluntary withholdings to reflect the increase in income taxes in order to avoid an underpayment penalty
.


3. Future home purchases. Ministers currently considering the purchase of a home should not base financing decisions on the availability of a housing allowance unless and until the courts conclusively rule in favor of the constitutionality of the allowance or their congregation is able to assure them that their compensation will be increased to compensate for the loss of the allowance
.

We asked Ted Batson, tax attorney and CPA with the accounting firm CapinCrouse, to evaluate the financial and administrative aspects of these three implications, and provide additional recommendations as churches and pastors navigate this uncertain situation.

Let’s assume for a moment that the housing allowance is suddenly a lost benefit for all clergy. What would happen?

Many pastors who currently take advantage of the benefit will quickly figure out that they can’t make it on their current salaries. So churches will need to plan for the potential need to increase their pastor’s compensation. This includes asking the congregation to give more generously to support the increase. However, if the churches can’t increase their pay, these pastors will decide whether they have to (a) become bivocational, (b) find an opportunity at a church that will pay more, or (c) leave the ministry.

If a pastor chooses either of the last two options, it will put the current church in a bind because it most likely can’t afford to replace the pastor who has left or may have to accept a less qualified candidate. This could lead to other options for the church. For instance, a church could decide to consolidate with another church or share a pastor.

Let’s say a church wants to do what it can, in terms of compensation, to retain that pastor. How would it implement Hammar’s first recommendation?

If the housing allowance is invalidated in 2018, it could be difficult to take this step right away because a church might have very limited budget dollars available. And, if the case goes to the Supreme Court, the appeals process will take time; I don’t expect any final decision in that scenario until 2019 or 2020.
So, churches might consider now, in 2018 and 2019, setting aside a contingent reserve amount to help board members, other leaders, and the entire congregation get used to the notion that the church might have to pay the pastor a higher salary. That way churches would have the additional money needed in case the housing allowance is invalidated.
I’d also encourage churches to budget reserve amounts in “bite-size chunks” so that the budget can still handle it. For instance, budget one-third to one-half of the anticipated increase in the pastor’s compensation in cash reserves each year until a final decision is made. It lessens the burden of a sudden and big jump in the pastor’s compensation.
One thing to note: a salary increase wouldn’t need to match the lost housing allowance benefit dollar-for-dollar. Rather, the increase should focus on the increase in the pastor’s income tax liability resulting from the lost benefit since this is the amount the pastor will be out-of-pocket. For instance, in the case of the loss of a $20,000 annual housing allowance, the pastor’s increased tax liability is likely to be approximately $5,000. This would be the amount by which the pastor’s salary would need to increase to make up for the lost housing allowance benefit.

What if the housing allowance doesn’t go away and you’ve set aside all this money?

There are some who might say, “Why would you actually segregate the cash when you don’t need it?” And I’d say, “You’re saving it against the possibility. And then if, for instance, the courts eventually rule in favor of the allowance, you have a windfall you can use for some other purpose.”

If the pastor does need the additional compensation at some point, what about unreasonable or excessive compensation?

This should be a concern anytime you’re making a significant increase in a pastor’s compensation. For larger churches that compensate their ministers well, this could be a concern. But note that since all such churches will likely be increasing their pastors’ compensation, it is likely that the compensation in comparison with others will not be out of line. Of course, if you’re talking about pastors in small churches with tight budgets, you might have a long way to go before you would actually have to worry about penalties related to excessive compensation.

What if a church simply decides to start raising the pastor’s salary right now in anticipation of losing the housing allowance deduction?

The problem with gradually increasing the pastor’s compensation against the possibility of the housing allowance going away is that you are stuck with that decision. The pastor is receiving higher pay based on something that might not happen.
Creating a cash reserve that anticipates the possibility provides flexibility while not locking the church in. That seems to me like a better option.

Hammar also indicates the need to prepare for increased quarterly estimated tax payments or voluntary withholdings. What other affects may pastors feel?

I agree with Hammar about the need to increase quarterly payments or voluntary withholdings, and there are effects beyond just increased payments or withholdings: the potential increase in taxable income due to lost deductions. If a pastor’s adjusted gross income becomes more, because he or she is no longer able to exclude the housing allowance, the pastor might lose some other deductions that could have otherwise been claimed.
Consider, for example, the 2 percent of adjusted gross income threshold for miscellaneous itemized deductions. If my adjusted gross income is $100,000, 2 percent of that is $2,000. So if I have miscellaneous itemized deductions, which some pastors may have for unreimbursed expenses, under current rules, I am able to deduct those to the extent they exceed $2,000.
Now let’s say I had a housing allowance of $10,000. With an invalidation of the benefit, my adjusted gross income is $110,000 instead of $100,000. This means that I can only deduct those miscellaneous itemized deductions to the extent they exceed 2 percent of $110,000, or $2,200.
Note that the tax reform proposals currently in the House and Senate (as this issue was going to press) repeal many currently available itemized deductions, so this may be a moot point.

What are some specific ways the loss of the housing allowance would affect a pastor’s housing situation?

If pastors lose the housing allowance, I think it will be a real and immediate concern for a high percentage of ministers—maybe up to 80 or 90 percent of them. If you’re a pastor from a large church with a large budget, the church will be able to more readily absorb an increase in the pastor’s salary resulting from the loss of the housing allowance. But pastors in most small and medium-sized churches are going to have to make some lifestyle choices.
I would imagine there are pastors who have made certain housing choices because they have a housing allowance. They may have purchased furnishings for their home based on the housing allowance. Or they may have purchased a bigger home than they otherwise would have purchased, or made other similar decisions based on the availability of the housing allowance.
If the housing allowance goes away, pastors will need to rethink their personal budgets. Some pastors will say, “I can’t afford this 2,500-square-foot home. I’m now going to have to sell this one and buy a 1,900-square-foot home, because that’s all the mortgage I can afford with the loss of the housing allowance.”
To afford their current house, pastors may have to supplement their income with a second job or their spouse may have to find another job. Pastors also may have to give up on plans to construct an addition to their current home. They may decide not to renovate or buy new furniture. Maybe the lawn-care service will need to go. They may give up cable.
Again, there are a number of choices pastors will need to make—and some of them will be difficult. They may say, “We like this house. We like the neighborhood. We like the schools. Our children have friends here. We’re going to stay in this house even though it will stretch us financially. We’re going to give up other things. We won’t eat out as much. We will take less-expensive vacations.”
On top of that, it will affect other critical areas, like saving for retirement or for their children’s education. Pastors might not be able to put away as much for these future expenses as they want to.

It creates some challenging financial man-agement issues, doesn’t it?

Yes—for both the pastor and the church. If the housing allowance goes away, pastors will have to learn to manage their finances without this tax benefit.
Without the housing allowance, churches will be trying to come up with ways to help their pastor afford a home in the neighborhood where the church is located, because there is value in having the pastor live in the same community as the church. This might cause some churches to consider increasing compensation for the pastor as we have discussed. It also might cause some churches that don’t have a parsonage to consider purchasing one.

This also means pastors currently looking to buy should make a decision that keeps the possibility of this lost benefit in mind, right?

If you’re going to make an expenditure tied to the availability of the housing allowance, think carefully.
Pastors will have to weigh a number of lifestyle choices besides whether or not to take out a big mortgage.

Sorting Options amid Uncertainty

How should churches respond if the housing allowance is invalidated? Currently, my firm isn’t attempting to answer this question for the churches we serve. The case still has potential issues with legal standing, and the Seventh Circuit may remand the decision back to federal district court or overturn it. Additional issues exist with the effective date and who is affected by a ruling. When a circuit court rules on a tax issue, it is technically only binding on persons within that circuit. The IRS may or may not agree to enforce it as the law of the land. As to timing, the decision is effective when it is final, but could be stayed until the case is either taken up by the Supreme Court or denied certiorari by the Supreme Court. These factors delay any effective date of the ruling. We plan on providing guidance after the Seventh Circuit’s rules.

If the decision is upheld by the Seventh Circuit, and potentially the Supreme Court, churches will need to educate their ministers on the change and its ramifications. If the housing allowance is disallowed, Congress may adjust other laws to provide relief for some ministers or other existing laws may provide relief. Only the cash housing allowance is in dispute and not the provision of the parsonage. The parsonage may provide some avenues of planning in light of an adverse ruling.

A factor complicating this issue, and making recommendations difficult, is potential tax law reform under consideration. Proposed tax law changes might mitigate some of the housing allowance benefits through changes in itemized deductions. But, again, it is difficult to speculate.

Whatever the tax law landscape, churches can’t begin to determine potential budget additions without evaluating the effects on individual ministers. To evaluate the effect of the potential change on a minister’s taxes, and thus the potential effect on the church’s budget, a church should ask each minister to provide an estimate of the potential tax effects. A church may engage a professional to help with this analysis. Once the potential tax costs facing its ministers are determined, a church can begin to assess its actions to assist ministers in mitigating the tax effects.

When considering a new house purchase, ministers will need to evaluate the potential increase in taxes from losing the housing allowance. It is doubtful churches will be able to provide enough additional compensation to mitigate all the tax consequences of losing the housing allowance.

—Elaine Sommerville, editorial advisor and CPA and sole shareholder of the accounting firm Sommerville & Associates, P.C.

9 Ways to Reverse a Downward Giving Trend

A positive approach to encourage stewardship and generosity.

Here are some of the steps our church has discovered by trial-and-error ithat have helped us slow down, then reverse, a downward giving trend.

1. Emphasize generosity, not just giving

The Bible is full of great teaching about stewardship and generosity, but we must always remember that God’s Word is not as concerned with our money as with our hearts. Which is why we need to teach more about generosity than giving.

2. Teach stewardship, not just giving

People want to be generous. Church members want to support the church ministries financially. What’s stopping them isn’t a lack of desire, but a lack of ability. They want to give, but they don’t know how to do it without taking an already paper-thin financial margin and breaking it totally.

3. Assume good intentions

We need to start with the assumption that the people who voluntarily show up at church week after week are wanting the church and its ministries to succeed. When I mention our church’s financial needs, I’ll often use a phrase like “this is not about guilting anyone into giving. I’m assuming you’re here because you want to help, so I’m letting you know about one of the ways you can help, if you’re able.”

4. Teach them how the church is funded

As I mentioned in my previous post on this subject, there’s a growing group of people who are so unaware of the realities of church life that they assume the church is financed by an outside entity, and that their donations are just a supplement to that.

5. Practice good stewardship of what is given

People are less likely to donate to a church that isn’t demonstrating good stewardship of what they give. For most churches and pastors, poor stewardship is not a matter of extravagance, but of unseen waste.

6. Hold special giving celebrations

New generations are less likely to give in a steady stream, and more likely to give in single doses. So let’s provide opportunities that match the way they are most likely to give.

Also, when church members see a facility upgrade or hear about a ministry need that was met, they’re more excited to give the next time.

7. Give quarterly updates

People want to give when their gifts can be helpful. Sharing the need before the year ends allows them to do this.

8. Break down the need into doable bites

One year, we came in at $8,000 under our expected income. That seems like a lot of money to make up all at once—and it is. So I broke it down for the congregation this way. At an average attendance of 150 people per Sunday, that $8,000 shortfall could have disappeared if every attender had given just $1 more each week ($150 x 52 = $7,800).

If our church averaged 75 people, it would have meant $2 more per Sunday, and so on. Obviously, not everyone is going to give exactly $1 every week, but when the need is broken down that way, people can see that every little extra thing they do can add up to a significant impact.

9. Do the kinds of ministries people want to fund

Keeping the lights on in the building won’t get anyone excited about giving. Unless they can see a direct connection from keeping the lights on to doing ministry that matters to them. As pastors, we see that direct connection regularly. But the average church attender doesn’t. So we need to make it obvious for them.

This article was adapted from Pivot ‘s “9 Ways To Reverse A Downward Giving Trend In An Otherwise Healthy Church.” Used with permission.

4 Effective Methods to Prepare for Gun Violence at Church

How church leaders can consider financial costs and practicality in their response planning.

The recent shootings at First Baptist Church in Sutherland Springs, Texas, which left 26 dead and several others injured, have once again focused attention on church safety, with many church leaders asking what steps they should implement to protect their congregations. Most churches in America are safe places. While incidents of shootings on church property are shocking, they are rare. But “open access” policies of most churches make them susceptible to violent acts. While such acts cannot be completely prevented, there are steps that church leaders can take to reduce the risk. Let’s review some of them.

Four possible options

Here are four possible response options that leaders of churches of all sizes and settings should consider:

1.Off-duty officers. The optimal response to the threat of an armed assailant on church property is to have two or more uniformed off-duty law enforcement officers on site during services, with a police car parked in a highly visible location outside the church. Such persons should be thoroughly screened before being hired, receive extensive training in dealing with volatile situations and the use of firearms, and receive continuing training in the use of firearms and job-related skills. They will serve as a deterrent to crime because of their uniform and vehicle. Further, according to some courts, these individuals become on-duty police officers, even while otherwise acting as private security guards, when responding to criminal activity, which can reduce a church’s liability based on negligence for their actions. Churches considering the use of uniformed off-duty police officers should check with the local police department regarding the recruitment of such persons as security guards, and the number that are needed. There is a cost involved with using police officers to provide security, but those costs are diminished by the fact that you will not be using them for more than a few hours per week.

2.Private security. Churches also may consider hiring uniformed private security guards. This is a far-less effective response than using uniformed law enforcement officers, since private security guards typically have less training in both firearms and crisis response. Further, unlike law enforcement personnel, they do not become “on duty” when responding to a crime, and so the church faces a higher risk of being liable for their negligent response. And, the cost of hiring private security guards often will be comparable to using police officers.

3.Tap church members. A third option is to use church members who are legally authorized to carry a concealed weapon. They would not wear uniforms, but would instead blend in with the congregation as plain-clothed security guards. The problem here is the wide range of competency among permit holders in handling firearms. Some permit holders have a very minimal ability in the use of firearms, resulting in a significant risk of collateral damage. Others have extensive training and ability. As a result, church leaders should not treat all permit holders equally. Churches can help to bolster the competency of such persons in the protection of church members by taking the following actions:

  • place a reasonable limit on the number of concealed weapons permit holders that the church will use as part of its response to armed shooters;
  • perform a thorough background check on each person, including references;
  • use a written application that includes a description of the applicant’s weapons training;
  • periodically confirm that the individual’s permit is active;
  • only use concealed weapons permit holders who have passed the same firearms training course that is prescribed for local law enforcement personnel in your community; and
  • only use these persons as auxiliaries who at all times are under the control and direction of law enforcement personnel.

4. Implement technology. The use of technology is another viable option. In evaluating the feasibility of various technologies to prevent or reduce the risk of shootings in public schools, the United States Department of Justice noted that the effectiveness, affordability, and acceptability of each technology must be considered. Devices that often are employed by churches and commercial businesses to prevent or reduce the risk of criminal acts include surveillance cameras, entry control devices, and metal detectors (see “Facts About Metal Detectors”). In each case, church leaders should consider how the device will work, how much it will cost, and how well their congregations will accept the use of them.

Observations to consider prior to taking action

First, let me repeat that church shootings, and other violent crimes on church premises, are rare.

Second, the law imposes upon any place of public accommodation, including a church, a duty to protect occupants against foreseeable criminal acts. The level of protection is directly proportional to the degree of foreseeability. Many courts assess foreseeability on the basis of the following factors: whether any criminal conduct previously occurred on or near the property; how recently and how often similar crimes occurred; how similar the previous crimes were to the conduct in question; and what publicity was given the previous crimes to indicate that the church knew or should have known about them. If shootings or other violent crimes on church property are highly foreseeable based on these factors, then a church has a heightened duty to implement measures to protect occupants from such acts.

Third, many church leaders and congregations, guided and informed by their theological and ethical values, feel compelled to take steps to protect human life from acts of violence whether or not they have a legal duty to do so.

Fourth, in making decisions regarding which protective measures to implement, church leaders should consult with local law enforcement professionals, the church insurance agent, and legal counsel. These same persons should also review the church’s emergency response plan.

Facts About Metal Detectors

  • Metal detectors work very well. They are considered a mature technology and can accurately detect the presence of most types of firearms and knives.
  • However, metal detectors work very poorly if the church is not aware of their limitations before beginning a weapon detection program and is not prepared for the amount of trained and motivated manpower required to operate these devices successfully.
  • When a questionable item or material is detected by such a device, the detector produces an alarm signal; this signal can be audible, visible (lights), or both. Unfortunately, a metal detector alone cannot distinguish between a gun and a large metal belt buckle. This shortcoming is what makes weapon detection programs impractical in many contexts. Trained employees are needed to make these determinations.
  • Metal detectors are usually not effective when used on purses, bookbags, briefcases, or suitcases. There is usually a large number of different objects or materials located in, or as part of, the composition of these carried items that would cause an alarm.
  • The difficulty in interpreting the results of metal detector scans will require many persons to be pulled aside, as at an airport, for more thorough screening, including pat downs. The end result will be clogged lines of parishioners, shoes in hand, impatiently waiting to enter their church. One can easily imagine the firestorm this would elicit.
  • Walk-through metal detectors are expensive. An additional cost would be the use of trained operators. In a research report issued by the Department of Justice, it noted the numerous logistical challenges encountered by the New York City Board of Education with implementing its metal detector program. For one school of 2,000 students, the program requires nine security officers for two hours every morning. “The initial purchase price of a portal metal detector is almost insignificant compared with the ongoing personnel costs to operate the equipment in a complete weapon detection program,” the report noted.
  • A greater problem is that churches usually have multiple entry points. Few churches can afford to have multiple entry setups with complete metal detection equipment and trained operators. The cost of the equipment would be quite high, but not nearly as prohibitive as the manpower to run these multiple systems.
  • Metal detectors would not stop a dedicated and armed assailant, who could overpower the screeners.
  • Handheld scanners are available, but generally are used as a supplement to portal metal detectors. As in airport procedures, the handheld detectors allow the security staff to more accurately locate the source of an alarm on a person’s body, after he or she has already walked through a portal system and triggered an alarm.
  • Most church leaders, even in high crime areas, would consider metal detectors at church entrances offensive to congregational members and visitors and fundamentally incompatible with the nature of the church as a sanctuary. Even if metal detectors at church entrances would be an effective deterrent to violent crime, and affordable, they would be considered unacceptable by most church members. This would especially be so for churches in low crime areas, and with no history of shootings or other violent crimes on or near church property.

Extended coverage on this topic is included in the March/April 2018 issue of Church Law & Tax Report.

Attorney Richard R. Hammar is senior editor of ChurchLawAndTax.com.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Why Taking Minutes Is a “Must”

Four reasons to take thorough, accurate minutes at your meetings.

Taking minutes arguably tops the list of “most thankless jobs,” and those who assume the role often wish they hadn’t been such a willing volunteer. But accurate minutes are a parliamentary procedure “must” for all nonprofits—including homeowners’ associations, churches, unions, sororities, and political parties. But why?

1. Minutes are required by law

It’s always good to know the law, right? Before you and your group get into trouble, here’s the legal basis for taking minutes.

State Laws: Most (if not all) states require corporations to keep minutes of the proceedings of its members, board of directors, and committees.

Federal Laws: In addition to state laws governing minutes, the IRS is also interested in whether non-profits are documenting their governance decisions. The IRS has devoted a section of Form 990 to “Governing Body and Management,” which, among other questions, asks whether “the organization contemporaneously document[ed] the meetings held or written actions undertaken during the [previous] year by . . . the governing body [and] [e]ach committee with authority to act on behalf of the governing body” (Form 990, Section VI, Question 8).

Documentation can occur by any means permitted under state law but must “explain the action taken, when it was taken, and who made the decision” (Form 990 Instructions at 21).

“[C]ontemporaneous” means “by the date of (1) the next meeting of the governing body or committee (such as approving the minutes of the prior meeting) or (2) 60 days after the date of the meeting or written action” (Form 990 Instructions at 21).

I know what you’re thinking: So, is this really a legal “must” or just a favorite of Robert’s Rules of Order? Admittedly, the IRS does not require nonprofits to document their governance decisions (Form 990, Part VI – Governance – Use of Part VI Information). But the agency is up front about its intent to use the information in Form 990 Part VI to “assess noncompliance and the risk of noncompliance with federal tax law of individual organizations” (Form 990, Part VI – Governance – Use of Part VI Information).

The bottom line: Keeping accurate, current minutes is an important part of documenting decisions to demonstrate an organized approach to governance and strategic planning and to defend against investigations into failed compliance. And the law would love you to write them up ASAP, or at least within 60 days.

2. Minutes save time and help prevent confusion

Let’s face it—meetings can be boring and mind-numbing, i.e., a perfect recipe for distraction and a great excuse to check (and re-check) every app on your phone. Even without longwinded speeches and endless agenda items, the details of a meeting can be hard to follow if amendments and procedural motions are in play.

The upshot? It’s easy to leave a meeting without a clear understanding of the actions taken. And even if you think you know which motions passed and failed, odds are you won’t be able to recall the precise wording or the details that will most certainly become important when members begin to execute approved plans, or when someone suggests an alternative course several weeks or months later.

Minutes fill this memory gap and provide a clear record (i.e., the exact wording) of motions that passed and failed. Well-organized minutes of previous meetings also act as a ready reference down the road when the chair or other members want a quick answer to previous decisions on a specific topic.

3. Minutes protect against baseless accusations

The latest edition of Robert’s Rules advises that in addition to recording any actions taken, minutes should also, among other things, list the type of meeting (regular, special, etc.); the date, time, and place; any notice required for specific motions; and who was present.

You have two options on the “who was present” part of the record: Include names of everyone there or in large assemblies where a list of individual members attending may not be practical, include a statement that “a quorum was present at the start of the meeting.”

We’re talking prudence here. For members interested in challenging actions that a governing body or organization has taken, quorum and notice are easy targets. Having minutes that are airtight on those factors goes a long way toward quieting any accusation that “you didn’t tell us about the meeting” or “you voted on X without enough people there.”

As noted in this post, well-kept minutes can also assist in IRS or other governmental investigations. Minutes are key evidence of an organization’s compliance with laws and regulations regarding meetings and governance. Being able to demonstrate that your board, committees, and organization met at regular intervals, with a sufficient number of members present, and took lawful action related to your mission is key to answering inquiries and alleviating compliance concerns.

4. Minutes provide a basis for future action

Finally, minutes are an extremely helpful tickler file: What’s happening next for your group? What decisions should be delayed? When do we have a deadline? Minutes aren’t merely a record of how much money the board decided to spend on new iPads for the staff. They’re a reminder of which motions were referred to which committees, and when those committees are slated to report back.

Minutes are also suggestive of topics that the group wasn’t ready to discuss. Hint: Look for motions that were postponed indefinitely, postponed to the next meeting, or tabled. And they’re a roadmap for guiding future discussion. Think: What specific steps can we take at the next meeting on that strategic plan that we put in place six months ago?

In sum, taking minutes might be laborious (and thankless), but doing the job and doing it well will both keep your organization out of trouble and help it move forward efficiently.

Sarah E. Merkle is a professional parliamentarian and presiding officer. One of five lawyers worldwide to have earned the credentials Certified Professional Parliamentarian-Teacher (CPP-T) and Professional Registered Parliamentarian (PRP), she helps boards, associations, corporations, and public bodies navigate rules applicable to governance and business meetings.

Let Financial Ratios Strengthen Your Church Budget

Learn about—and use—the various ratios that financial experts use to strengthen and improve your church budget process.

Follow this guidance tracking budgets through various financial ratios, and learn why these measurements are important for building financial health.

For many of these ratios, the top number should be divided by the bottom number. This will produce a usable measurement for tracking trends and making comparisons.

Income and giving ratios

There are four ratios that can help you better understand your congregation’s giving patterns.

1. Net income ratio

change in unrestricted net assets
____________________________
unrestricted revenues

This ratio reveals the change in unrestricted net assets to unrestricted revenues. It shows whether your church’s general operations are positive or negative, and by how much. It answers the question of whether the church is making or losing money in its day-to-day ministry.

Obviously a church is not a business that’s trying to generate a profit to stockpile cash. However, if a church continually loses money in its basic operations, it will eventually have to close.

The benchmark for this ratio is a positive result for the year. A more important benchmark, however, is for the ratio to show an improving trend over the years, factoring in both years of surpluses and years of deficits.

2. Unrestricted contributions per average adult attendee and giving unit

unrestricted contributions
________________________________
average adult attendees and giving units

This measurement introduces the concept of a giving unit. A giving unit is a group of family members, or any recurring supporter, who contributes jointly to the church. This excludes individuals who make a smaller one-time gift supporting a specific event. To identify only the regular recurring giving units, set a minimum dollar threshold, such as giving units that contribute more than $250 annually.

This calculation can be compared to other years to see trends and determine the effects on the church and budget. It is also useful to calculate what contributions would be if every giving unit made a certain amount (e.g., $40,000 a year) and tithed on that amount. Your church could use this measurement to make the congregation aware of the current giving per adult attendee and giving unit, and what the projected giving level would be if everyone participated.

3. Total contributions per average adult attendee and giving unit

total contributions – the combination
of accrual pledges and large one-time gifts
______________________________
average adult attendees and giving units

The key difference between this result and the measurement of unrestricted contributions to average adult attendees and giving units is that this one uses total (unrestricted and restricted) contributions and removes the effect of pledges (which are essentially a noncash accrual) and large one-time gifts.

The power of this measurement comes through analyzing trends in congregational giving habits from year to year. During the period of a capital campaign this figure may be inflated due to an increase in smaller gifts, which are not removed from the calculation.

4. Median household income given to the church

total contributions per average
adult attendee and giving unit
(Measurement 3)
____________________________
local median household income

This ratio determines total contributions per average adult attendee and giving unit to local median household income (from the US Census Bureau, American Community Survey). It shows what percentage of the local median county household income adult attendees and giving units are contributing. In essence, it reveals the additional giving capacity of your congregation.

The trends in this data from year to year are important because there are two indicators that affect the outcome of this ratio: congregational giving and local median household income. For example, if local median county income decreased from one year to the next, the measurement could appear to increase while overall giving actually remained the same.

This measurement will enable church leaders to see changes in giving habits from year to year in response to stewardship teaching and focus.

Cash flow ratios

A church without necessary reserves will be scrambling to operate in the short term, no matter what the other balances are. Positive net income and net asset balances won’t make up for inadequate cash reserves or help in months when giving is down. Fortunately, there are five cash-flow measurements you can use to monitor reserves and identify any needed adjustments.

Numbers 1 through 3 offer different cash flow ratios you can use to calculate how many days of cash reserves your church has, using different perspectives from the financial statements. The result of each calculation is multiplied by 365 to determine a total number of days.

1. Days of expendable net asset reserves

unrestricted, undesignated net
assets + board-designated net
assets for operations
__________________________ X 365
cash expenses (total expenses – depreciation)

The first “days of cash” ratio tells how many days of operating expenses are available in net asset reserves. It takes into account the accrual of current assets and current liabilities. Expendable net assets represent the total resources available to spend on operations, excluding future gifts made or revenues generated by the church. It’s similar to a savings account.

Expendable net assets consist of unrestricted, undesignated net assets, which are net assets that result from achieving positive net income from all sources of revenues (excluding restricted revenues). It also includes amounts designated by the board for operating purposes other than capital expenditures. You divide this total by the amount of cash expenses to find your net asset reserves. Since all of these ratios measure cash flow, I use the term “cash expenses.” These are total expenses less deprecation, the most significant noncash expense recorded.

2. Days of operating cash and investments on hand to fund annual cash expenses

operating cash and investments
___________________________ X 365
cash expenses + capitalized interest

This second “days of cash” ratio calculates the days of operating cash and investments on hand to fund annual cash expenses specifically related to liquid assets. That means it only considers operating cash and investments, not other current assets and liabilities. Again, you divide operating cash and investment by the sum of cash expenses plus capitalized interest (interest paid in cash but not expensed by the church) to find on-hand funds.

This measurement will calculate a result that is slightly different (typically higher) than the first ratio (net asset reserves) because it does not include the impact of other current assets and liabilities.

An appropriate benchmark for this ratio is to have 40 to 80 days of cash expenses on hand. Furthermore, a result of less than 20 days could indicate that your church should take action quickly to improve this measurement.

3. Available days of cash flow coverage

operating cash and investments
___________________________ X 365
cash expenses (including debt principal payments)

This final “days of cash” ratio represents the number of days of operations (including making scheduled debt payments) available when calculated from the sum of operating cash flow. This number comes from the statement of cash flows, operating cash and investments on hand at the beginning of the year, and the amount available from the operating line of credit.

Again, divide beginning cash, cash flows from operations, and available line of credit by the amount of total cash expenses and debt principal payments.

Here’s another way to state this: If your church used all of the cash generated from operations, all available cash and investments on hand at the beginning of the year, and your available line of credit, how many days would you be able to operate on these sources of cash? This number represents your maximum level of reserves, and should always be the highest of the three “days of cash” numbers.

4. Liquidity ratio

operating cash and investments
_______________________________
current liabilities – building fund current
liabilities, deferred revenue, and short-term
construction line of credit

The liquidity ratio measures how operating cash and investments are able to cover current operating liabilities, which exclude current building fund liabilities. (These typically have a separate source of cash from restricted revenues or budgets.) This ratio reveals how many times actual operating liabilities can be funded from operating reserves.

Divide operating cash and investments by current liabilities (excluding those items noted in the ratio).

A low result may indicate that the church is keeping fewer liquid reserves and is less likely to be able to handle unexpected operating expenses, events, or new opportunities that may come along.

5. Net cash availability measurement

total cash and investments – adjusted current liabilities (current liabilities excluding amounts borrowed on a construction line of credit) and temporarily restricted net assets

The fifth and final cash flow item is not a ratio but a measurement of the sum of total cash and investments less certain amounts the church may owe or be required to spend for specific purposes due to donor restrictions. This measurement calculates the amount of cash available for other uses after the church has satisfied its adjusted current liabilities and set aside appropriate funds for temporarily restricted projects. Amounts borrowed on a construction line of credit are also excluded, as they will ultimately be refinanced with the debt and paid over time.

Your statement of financial position answers the question, “How much cash do we have?” but it doesn’t answer the question, “Whose cash is it and how much of it can we spend?” The answers to those questions are typically very different. Therefore, this is one of the most important measurements you can provide church leadership.

The minimum for this number is at least one month’s worth of cash expenses. Any positive amount less than this is in the warning range. Any negative amount indicates the church is borrowing from temporarily restricted funds—a warning that corrective action is needed.

Expense ratios

Expense ratios can help identify trends in the outflow of resources over the years. They also allow you to compare your church with other churches and check the reasonableness of your expenses.

1. Personnel and mandatory debt service payments to total expenses (excluding depreciation expenses)

personnel (salaries including benefits)
+ mandatory debt service payments
(principal + interest expense)
________________________________
total expenses – depreciation expense

The largest expense of most churches is salaries and benefits. Debt service payments—which are a reduction of a liability and not an expense—represent the second largest outlay. Together, these items represent a majority of resource outflows from the local church.

Continually monitor these levels as a percentage of cash expenses. Cash expenses are total expenses minus depreciation, the most significant noncash expense recorded. It is also important to promptly follow up on changes in trends or unusual variances from peers to ensure that your resources are continually maximized.

This ratio, which can be split into two separate pieces, allows you to look at two of your largest outflows and determine the portion of the operating budget that will be used. Often, a growth cycle results in an amount of debt the church anticipates being able to pay off as more people start attending. However, the church needs to be able to pay the bills and provide the services that will attract new people with the current budget. Reviewing this ratio in advance of any major debt decisions will help you analyze the feasibility of facility expansion goals.

Reasonable benchmarks for these ratios are:

  • Personnel costs (salaries and benefits) should fall between 40 percent and 55 percent of expenses.
  • Mandatory debt service payments, including interest, should be no more than 15 percent of total expenses.
  • Total personnel and debt service costs should be no more than 40 percent to 70 percent of total church expenditures.

2. Expenses (excluding depreciation) per average adult attendee and giving unit

total expenses (excluding depreciation expense)
________________________________
average adult attendees and giving units

This measurement tells you the cost to the church for each adult attendee or giving unit. It takes total cash expenses and divides that total by the average adult attendees or giving units.

The power of this measurement is in the peer group comparison. This allows your church to see if your cash expenses are high or low compared to your peers. Analyzing trends over the years is also important. Another benefit of this measurement is that it can be subtracted from total contributions per attendee and giving unit to show if contributions are high enough to cover the monetary cost per individual. In other words, are you taking in enough contributions to cover the costs of having people attend your church?

3. Total missions categories to total expenses

total outreach expenses (local and global)
_________________________________
total expenses

This ratio looks at the combined total of local and global outreach (missions and benevolence) expenses as a percentage of total expenditures. It can be separated into two pieces and calculated by local and global activities. Global activities include actual expenditures for cross-cultural missions activities in the United States and other countries. This includes direct support to missionaries; outside agencies, including national partners; and cross-cultural missions trips. It excludes internally allocated costs and salaries of employees included within missions for some church budgets. This is because internal allocations vary significantly among churches.

Local outreach includes expenditures for local missions activities not classified as “global.” This includes direct support of community-based church ministries, local missionaries and agencies, and benevolence given to local individuals. It excludes internally allocated costs and salaries of church employees included within missions for the same reason as stated above.

This ratio can be useful in benchmarking your total outreach expenditures with other churches. More importantly, when a church experiences economic difficulties, the ministry and mission expenses are usually the first to be decreased as debt service payments are not discretionary and personnel costs are difficult to reduce. Declines in this ratio can allude to other issues. Monitoring these ratios over time will allow the church to identify any significant changes.

4. Facility cost per square foot (excluding interest expense)

total facility costs (excluding interest
expense on the debt and depreciation)
_______________________________
total facility square footage

This measurement answers the question, “How much does it cost to operate the church building?” Total facility costs include building and grounds maintenance, personnel salaries and benefits, outside contract labor, utilities (excluding telephone), security, liability insurance, and rent or mortgage payments. It should also include the cost of general repairs to the facility and other facility-use expenses, but not equipment purchases or the cost of major renovations. This overall expense excludes both vehicle-related expenses and interest expense on debt and depreciation.

Facility expenses measurements can vary, depending on whether the church has new or older facilities and is in one or multiple locations. Facility expenses measurements can also vary by geographic area. The most accurate comparison would be against churches with buildings of a similar age as yours (e.g., built within a decade of your own).

The ratios detailed above can provide valuable insights for leaders. They are tools that can be used proactively to minimize the need to respond to financial crises later.

Related articles:

Vonna Laue has worked with ministries and churches for more than 20 years. Vonna was a partner with a national CPA firm serving not-for-profit entities through audit, review, tax, and advisory services. Most recently, she held the role of executive vice president for a Christian ministry that works to enhance trust in the church and ministry community.

Q&A: How Do We Pay Nonexempt Staff for After-hours Communications?

Employers must pay nonexempt employees their regular hourly rate plus overtime for all on-call time.

Many churches have policies stating that nonexempt workers are prohibited from off-the-clock work, such as answering calls, texts, and emails from home. But I’m looking for guidance in the circumstance where it is expected, and even required, for employees to answer such communications after hours.

Employers may require nonexempt employees to be on call at all times, but they must pay nonexempt employees their regular hourly rate plus overtime for all on-call time. For this reason, many employers explicitly prohibit employees from responding to texts, emails, and calls after scheduled work time.
Some states require employers to pay a minimum amount of time—usually two to three hours’ worth—whenever nonexempt employees respond to an after-hours call, email, or text. If these employees are not on call and the church does not require an employee to respond to after-hours calls, texts, and emails, federal law still requires the employer to compensate the employee at least one-tenth of an hour of pay each time the employee responds to a call, email, or text.
In other words, your church needs to manage its expectations and costs. If it doesn’t want this kind of activity going on, it needs a policy prohibiting after-hours communications, and it needs to communicate that policy regularly and directly. And then it needs its church leadership, including pastoral staff, to reinforce the policy, especially when it comes to the expectations of support staff. When a pastor refused to stop contacting his support person after hours with an expectation of an immediate reply, his church started deducting $100 from his pay for each text and email sent after hours. It didn’t take long for the pastor to stop contacting his support person after work.
For a helpful factsheet on rules and violations related to overtime pay for nonexempt employees, see Fact Sheet #53 at DOL.gov. While this fact sheet explores violations related to the health care industry, the information also applies to churches.
Frank Sommerville is a both a CPA and attorney, and a longtime Editorial Advisor for Church Law & Tax.
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