Mid council moderators receive a to-do list

At the Moderators’ Conference, the PC(USA)’s General Counsel highlights a 12-item collection of legal and risk issues

by Mike Ferguson | Presbyterian News Service

April Davenport

LOUISVILLE — New mid council moderators and vice-moderators were given a 12-item to-do list as part of a workshop during the Moderators’ Conference last week, along with guidance provided by April Davenport, the PC(USA)’s General Counsel.

The checklist, titled “Oft-Seen Legal and Risk Issues with PC(USA) Councils,” isn’t legal advice, Davenport noted. Rather, it’s information and guidance.

Here’s the checklist, along with some of what Davenport had to tell the roomful of recently elected moderators and vice-moderators:

• Councils sometimes forget to offer leaders and members annual training. For example, congregations are required by the Book of Order to have a sexual misconduct policy and a child and youth protection policy. “Church employees and those responsible for childcare, Sunday school, youth group and other programs and mission for minors should be given annual training on those policies,” according to the checklist. Having an antiracism policy is the newest policy requirement.
• All councils should consider drafting employee handbooks or manuals. Church leaders, such as the personnel committee, should schedule an annual meeting to go through the handbook and review its contents for possible updating.
• Councils forget to renew leases or covenants with third parties who use space on or in church property. “These documents govern the relationship between the parties and set out the terms and conditions of how the third party is allowed to use space as well as risk management and indemnity and insurance matters,” the checklist states. Davenport noted there’s increasing interest among PC(USA) congregations in using excess capacity “and perhaps generating additional revenue.” She recommended hiring an attorney “to walk alongside you” because “if you start leasing property and a portion is not being used for exempt religious purposes, you can lose all or part of that tax exemption.” It’s helpful, she said, to have documentation in session minutes and to have the group connected to a session committee.
• Councils who lease or rent a space on or in church property to a third party should use a written lease agreement in which the third party is required to provide a certificate of insurance. “There’s a lot of conversation in the church and in other denominations about the cost of insurance and insurance companies non-renewing churches,” Davenport said. The 226^th General Assembly (2024) directed Research Services to survey the church to help generate ideas for helping churches and presbyteries “in this tough insurance market,” she said.
• All councils should maintain and update their files on insurance coverage. According to the checklist, sometimes lawsuits are filed years after the events about which the plaintiff seeks damages. “It’s important to keep insurance records for decades, not just years,” Davenport said.
• Councils shall, where permitted by civil law, form corporations, and those corporations should have bylaws that address how and when the corporation and its board should/must meet.
• Councils have corporate records such as articles of incorporation and bylaws and should keep past and present copies of those records. The checklist reminds mid council leaders that as those corporate records are amended, the amendments must be filed with the Secretary of State or the county clerk.
• Councils forget to file their annual report with the Secretary of State. That can result in the council’s corporation being identified as inactive, which means it exists in the eyes of the law but has no business — or worse, it can be listed as inactive based on issues such as failure to pay corporate or payroll taxes.
• Councils sometimes fail to apply to the Internal Revenue Service for their own Employer Identification Number, or EIN. The EIN for the Presbyterian Church (U.S.A.) is not to be used by councils as their own. Having an EIN is important when, for example, a council applies for a grant.
• Care should be taken to file documents and remit payroll taxes to the IRS that are both timely and accurate. Penalties can accrue, and individual liability for noncompliance is a possibility.
• If a congregation is to be dissolved, care should be taken with the timing as the existence (or not) of the ecclesial body can have ramifications on the secular issues. If the congregation is dissolved, is the corporation still alive? “My best guidance is to remember the corporate things to which you need to attend,” Davenport said.
• Acknowledge all contributions, including pledge receipts, stock gifts, gifts from Individual Retirement Accounts, wills and trusts, etc., in an appropriate and timely manner. The IRS’ “Tax Guide for Churches and Religious Organizations” has answers to many common questions, according to the checklist.

More information is available in the “Legal Resource Manual for Presbyterian Church (U.S.A.) Councils and Churches,” a 2020 publication available here.