Constitution, Bylaws and Charters - Part 1
A District of Columbia appeals court ruled that it was prohibited from resolving a lawsuit brought by members of a church claiming that the board of trustees breached its fiduciary duties by authorizing an interest-free loan to the pastor
Key point 6-03.2. Most courts have viewed requests by church members for an "accounting" of church funds to be an internal church matter over which the civil courts have no jurisdiction.
Key point 6-07.03. Church board members have a fiduciary duty to use reasonable care in the discharge of their duties, and they may be personally liable for damages resulting from their failure to do so.
Key point 6-07.10. Church board members may be personally liable, under state nonprofit corporation law, for loans they authorize for any officer or director of the church.
Key point 9-07. The first amendment allows civil courts to resolve internal church disputes so long as they can do so without interpreting doctrine or polity.

A District of Columbia appeals court ruled that it was prohibited by the first amendment from resolving a lawsuit brought by members of a church claiming that the board of trustees breached its fiduciary duties by authorizing an interest-free loan to the pastor and by failing to provide the congregation with adequate information regarding the church's finances. In 1993, a church selected a new pastor. A few months later the official board of the church, consisting of the pastor, deacons, and trustees, agreed to lend the pastor money toward his purchase of a $325,000 home at an interest rate of six percent. The pastor did not take part in the vote. At a "special called" meeting of the church membership, the board recommended approval of the loan. One church member suggested that the loan be interest-free, commenting that "the church should not profit from this loan to the pastor." The membership approved a no-interest loan at the meeting and eventually loaned the pastor some $256,000 for the purchase, which took place in 1994. In 1996, the pastor signed an agreement to repay the loan, and the purchase money mortgage held by the church was recorded. In December of 1996, certain church members wrote a letter to the pastor requesting disclosure of certain financial information to the membership within fourteen days. Specifically, they requested "all the facts and documents surrounding the church's role in helping the pastor purchase a home," along with any audit reports for the years 1994, 1995 and 1996. They also asked for records of the "special called" meeting at which the loan to the pastor had been approved, and the church's records of past filings with the Internal Revenue Service. They apparently had learned of an audit and management report prepared by an outside CPA and submitted to the trustee board in 1993, which warned that loans made by the church to "members and sons of the church" would endanger its tax-exempt status. The members also alleged that the congregation was asked to approve a $50,000 expenditure for a new car for the pastor in 1996 "without knowing how much money the church actually had on hand or what its financial budget was."

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