Church Records

A Georgia court ruled that a member of a nonprofit corporation failed to prove that he had a “proper purpose” for his request to inspect several categories of corporate records.

Key point 6-03.1. Church members generally have no right to inspect church records unless such a right is conferred by state nonprofit corporation law, a church's charter or bylaws, state securities law (if the church has issued securities), or a subpoena. Church records enjoy no privilege against disclosure, with the exception of documents that are protected by the clergy-penitent privilege under state law.

A Georgia court ruled that a member of a nonprofit corporation failed to prove that he had a "proper purpose" for his request to inspect several categories of corporate records, and therefore he had no legal right under the state nonprofit corporation law to inspect the records.

A member of a nonprofit corporation sued the corporation on the basis of mismanagement and a violation of the corporate bylaws. The member asked for permission to inspect "all accounting and corporate records … for the purpose of determining the performance of management and the condition of the corporation." In particular, the member asked for permission to inspect records of all asset accounts, invoices and billing statements, profit and loss statements, tax documents, corporate meeting minutes, and membership lists.

The corporation refused this request, and the member asked a court to order the corporation to comply. The court noted that the Georgia nonprofit corporation law allows members of nonprofit corporations to inspect and copy certain corporate records. The statute divides corporate records into two basic categories. The first category includes eight kinds of records, such as articles of incorporation, bylaws, minutes of meetings, and corporate resolutions. These records are accessible to any member who makes a written request at least five business days before the date the member wishes to inspect and copy such records. The second category includes excerpts of minutes of certain corporate meetings, accounting records of the corporation, and the membership list. Members may inspect and copy the records in the second category only if (1) the member's demand is made in good faith and for a proper purpose that is reasonably relevant to the member's legitimate interest as a member; (2) the member describes with reasonable particularity the purpose and the records the member desires to inspect; (3) the records are directly connected with this purpose; and (4) the records are to be used only for the stated purpose. If a corporation does not allow a member who meets these requirements to inspect and copy records, the member may apply to a court for an order permitting inspection and copying of the requested records.

The court noted that "virtually all" of the documents the member was asking to inspect fell into the second category, and so he had to show that he wanted them for a "proper purpose." The member claimed that he wanted the documents "for the purpose of determining the performance of management and the condition of the corporation." The court concluded, however, that the member "has not sufficiently demonstrated that the documents sought are being sought for a proper purpose." Therefore, it denied the member's request to inspect the corporate records.

What this means for churches

This case illustrates a very important point. Church leaders often wrestle with the question of whether or not to honor requests by members to inspect various kinds of corporate records. In most states, members of churches that are incorporated under the state nonprofit corporation law have a legal right to inspect specified corporate records for a "proper purpose." This case illustrates that this requirement is not a mere technicality that is disregarded by the courts. Members demanding to inspect church records have the burden of establishing a proper purpose for their request. Obviously, deciding whether or not a member has met this burden can be a difficult question in some cases. A local attorney should be consulted if there is any doubt.

Parker v. Clary Lakes Recreation Association, Inc., 2000 WL 426454 (Ga. App. 2000).

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