Protect Your Board Against Lawsuits

Lawsuits against churches and ministries are on the rise, making their board members especially vulnerable. Sometimes, courts have found directors and officers personally liable when their actions have resulted in financial damages.

Consider these examples:

  • Providing inadequate bookkeeping or financial oversight.
  • Allowing personal motives to drive church-related decisions.
  • Failing to preserve tax-exempt status.

Even well-meaning actions could put the personal assets of board members at risk. However, by taking steps to limit liability, church and ministry boards can find stronger legal positions in which they can properly function.

Incorporate your ministry

If a church is incorporated, board members can gain the same legal protections that apply to board members in businesses. This protection comes with two requirements:

  • The Prudent Person Rule protects board members from personal liability for board actions or decisions unless a “reasonably prudent person” would have avoided such actions or decisions under the circumstances.
  • The Duty of Loyalty Rule says that a board member’s actions and decisions must be free of personal motives.

When incorporating, first contact an attorney who is familiar with not-for-profit laws in your state.

Include bylaw protection

If your bylaws do not include indemnification provisions, enlist the help of a local attorney to draft some. These provisions could prevent board members from having to pay out-of-pocket costs if they are sued in connection with their ministry work. Evaluate your bylaws regularly by appointing a task force to review the bylaws for necessary changes or additions.

Consider charitable immunity laws

Most states have charitable immunity laws that can protect volunteer workers—and potentially board members—from being sued in connection with their volunteer service. That immunity, however, is limited because the laws generally:

  • Protect volunteers only, not church organizations or employees.
  • Prevent certain people from suing.
  • Protect some—not all—activities.
  • Removal from a lawsuit requires that volunteers hire an attorney.

Charitable immunity laws are complicated and vary by state. Ask a local attorney to review applicable state and federal charitable immunity laws with you.

Insure your board members

Standard general liability insurance policies do not cover claims against directors or officers for financial damages resulting from their failure to perform their duties. Separate directors and officers coverage helps protect board members’ personal assets in the event of certain financial damages and lawsuits. It also covers financial damages that other parties undergo when leaders fail to perform their duties properly.

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Wind and Hail – Deductible Buyback
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Tags: insurance, coverage, ministry
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Common Questions About Our Agency
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Coming to your area in 2023
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Kingdom Advancing Grant
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ACG Retreat in Kansas City
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Better Achieve Your Mission in 2023
Better Achieve Your Mission in 2023
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November 18, 2022
Our Team is Growing, Again!
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We Want To Hear From You!
We Want To Hear From You!

There are a lot of hats worn in any growing ministry – and we want to serve every one of them. 

Tags: insurance
November 10, 2022
Evaluate Your Ministry's Fire Safety Plan
Evaluate Your Ministry's Fire Safety Plan

With the holiday season right around the corner, it’s wise for ministries to evaluate their fire safety plan. Whether your ministry is hosting a holiday party, prepping treats for charity, or running a community kitchen, make sure you’re well-prepared with these tips.

Tags: insurance, property, volunteer safety, fire safety
November 10, 2022
Holiday Season Safety & Security: 3 Things to Plan Before Christmas
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The holidays present unique opportunities and challenges for churches that aren’t typical during other times of the year. A lot of the ministries that I work with are seeing steady increases in attendance and are praying for a significant jump in Christmas service participation this year. 

Tags: insurance
October 26, 2022
October 2022 Blog: What is a 403(B)(9) Retirement Plan?
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In this article, Brad Brown from Plan A Wealth Management gives a wonderful insight into why ministries might consider choosing a 403(B)(9) retirement plan.  

Tags: insurance, property, taxes, retirement, retirement plan
September 21, 2022
Inflation's Major Impact on Ministries
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Tags: insurance, schools, churches, building, property
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Report Reveals How Students are Feeling About Their Safety at School
Report Reveals How Students are Feeling About Their Safety at School
Tags: insurance, schools, building, property, child safety
September 21, 2022
Top 10 Requested Forms
Top 10 Requested Forms
Tags: insurance, schools, churches, building, property
September 9, 2022
School is Back in Session
School is Back in Session

As school is back in session, it’s important to make sure your school is equipped with the correct safety procedures. Thinking about your school’s physical security as a series of layers can help you find gaps in your plan. Transportation and volunteers are just two important aspects of your school safety plan to think about.

Tags: christian schools, back to school, volunteer safety, child safety, transportation
August 17, 2022
Uvalde School Shooting Causes Ministries to Question Their Preparedness
Uvalde School Shooting Causes Ministries to Question Their Preparedness

If there is one thing I have learned over the last decade while working private security and as a sworn peace officer, the more critical the incident, the more likely change will come out of it. Much like a pendulum, an incident occurs, and everyone cries for change.

Tags: church payroll, finance, IRS regulations, paying employees, tax code
August 17, 2022
Next Generation LEDs Performance, well beyond expectations
Next Generation LEDs Performance, well beyond expectations

Updating the lighting in your worship center with LED can offer significant energy savings while improving overall lighting performance.

Tags: church payroll, finance, IRS regulations, paying employees, tax code
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Our Team is Growing!
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We are so excited to welcome the newest member of the American Church Group of Colorado team, Lyndsie Glowinski.

Tags: church payroll, finance, IRS regulations, paying employees, tax code
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Does Your Ministry Need Cyber Insurance?
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Churches are increasingly becoming targets for cyber criminals. The most common attack is by sending “phishing” emails where the perpetrator poses as someone familiar to the ministry staff (like a senior pastor, deacon, elder, or someone trustworthy) and requests some sort of response.

Tags: church payroll, finance, IRS regulations, paying employees, tax code
July 15, 2022
Shepherding Ministries in a Time of Change
Shepherding Ministries in a Time of Change

Anyone who turns on the news, flips through a magazine, or browses the web can see that American society and culture are experiencing rapid transitions. Some ministries have valid concerns that issues surrounding societal shifts may expose them to negative publicity, governmental scrutiny, or litigation.

The questions become: when and how can ministries operate within their deeply held religious beliefs when they may conflict with others’ rights?

Tags: ministry, insurance, religious freedom, protection