Key point. Nonprofit corporation laws generally give members a right to inspect corporate records at a reasonable time for a proper purpose. Members of churches incorporated under such a statute therefore have a limited inspection right. However, this right does not apply unless the member can demonstrate a proper purpose.
An Ohio court ruled that a member of a nonprofit corporation did not have a legal right to inspect corporate records.
A nonprofit organization was incorporated under an Ohio statute that gives members a legal right to inspect "all corporate records … for any reasonable and proper purpose and at any reasonable time." A member of a nonprofit corporation asked to inspect (1) minutes of the board; (2) financial records; and (3) membership records. His stated purpose was to determine whether or not he had been secretly "excommunicated" from the organization. The member sued the corporation when it refused to respond to his request. A court ruled that the member was not entitled to inspect any of the records in question. It noted that Ohio nonprofit corporation law "requires that two elements be met before the books and records of a nonprofit corporation can be examined: (1) the person requesting the records must be a member of the organization; and (2) the member must have a reasonable and proper purpose for wanting to see the corporate books."
The court concluded that the member had no legal right to inspect the corporation's records. On the one hand, if he in fact were not a member, then he would fail the first requirement (only members have a legal right to inspect corporate records). On the other hand, if he in fact was still a member, then he failed the second requirement since there would be "reasonable and proper purpose" in inspecting corporate records to ascertain this fact.
What this means for churches
Many churches are incorporated under state nonprofit laws that provide members with a limited right to inspect corporate records. These laws generally require that the person requesting the records be a member, and that he or she be motivated by a proper purpose. This case illustrates the difficulty that may be encountered by members in establishing a proper purpose for a request to inspect records.
Nozik v. Mentor Lagoons Yacht Club, 678 N.E.2d 948 (Ohio App. 1996).