Church Records

A Georgia court ruled that a church treasurer had a legal right to demand that a church’s former pastor and former treasurer turn over the church’s financial records.

Key point. 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 church treasurer had a legal right to demand that a church's former pastor and former treasurer turn over the church's financial records.

A church removed its pastor and appointed a new church treasurer ("Andy"). When Andy tried to change the signature cards on the church's bank accounts, he discovered that the former pastor's niece and another church member had already attempted to withdraw the money and had succeeded in closing one bank account containing $5,000. He also noted that the church computers with current financial records had been removed and recent financial files were also missing. In addition, all of the furniture, books, tapes, and other items from the bookstore had been removed. Also, there was a balloon note for $400,000 but no record of the money being deposited in any church bank account. Andy later testified that when he took over as treasurer there was no money in any of the church's accounts, the insurance had lapsed, and they had to wait until they took up the weekly offering to pay the bills.

Andy filed a lawsuit in which he asked a court to compel the former pastor and former treasurer to turn over the church's financial records. He relied on a provision in the church bylaws specifying that any member could inspect the books and records of the church for any proper purpose and at any reasonable time upon written demand and under oath stating the purpose. He insisted that as church treasurer, trustee, and member of the executive committee he was responsible for preparing a budget, monitoring income and expenses, and keeping financial records for the church. Nevertheless, despite repeated requests, the former pastor and former treasurer refused to turn over the necessary church financial records.

The former treasurer testified that he had not turned over any tax returns, budgets, audited financial statements, or checking, savings, or investment account records. Also, he had not furnished records of deposits, contributions, or tithes. He said that tithes from the congregation were deposited into the pastor's "executive account" and his salary as well as other staff members' salaries were paid from that account.

A trial court ordered the former pastor and former treasurer to provide a complete financial accounting for the past three years and required them to return any church property in their possession. It concluded that there was "no credible evidence that any religious doctrine prohibited the church from providing the requested records." The court also ruled that the refusal to turn over the records was frivolous and vexatious and it ordered the former pastor and former treasurer to pay attorney fees and costs of $24,657.

The former pastor and former treasurer appealed, claiming that the dispute was ecclesiastical and therefore the first amendment guaranty of religious freedom prevented the civil courts from resolving it. A state appeals court disagreed. It noted that state nonprofit corporation law (under which the church was incorporated) "requires that nonprofit corporations maintain appropriate accounting records in written form or in some form capable of conversion into written form within a reasonable time." Further, state nonprofit corporation law gives members the legal right to inspect and copy these records if the member's demand is made in good faith and for a proper purpose.

The court acknowledged that the statute specifies that "if religious doctrine governing the affairs of a corporation is inconsistent with the provisions of this chapter on the same subject, the religious doctrine shall control to the extent required by the Constitution of the United States or the Constitution of this state or both." However, the court concluded that "there was no religious doctrine of the church that was inconsistent with these statutes. Moreover, the church bylaws specifically give members the right to review financial documents."

What this means for churches

This case is important for two reasons. First, it illustrates that church members are given a broad legal right to inspect church records under the nonprofit corporation laws of many states. This of course assumes that a church is incorporated under such a statute. Further, as was true in this case, church bylaws may provide additional inspection rights. Therefore, even if a church is not incorporated, this does not necessarily mean that members have no right to inspect church records, since such a right may be set forth in the church's bylaws or other governing document. Second, the church's former pastor and former treasurer had to pay nearly $25,000 in attorneys' fees incurred by the new treasurer in asserting his right to inspect records.

Denial of a member's legitimate request to inspect church records, where such a right is clearly given by state law or a church's governing documents, may expose church leaders to similar damages.

Greer v. Davis, 534 S.E.2d 853 (Ga. App. 2000).

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