Church Treasurers As Fiduciaries

Understanding the legal responsibilities a church treasurer has.

Starnes v. State, 929 S.W.2d 135 (Tex. App. 1996)

Background. Perhaps you have heard the word "fiduciary." It is important for you to be familiar with this word, since as a church treasurer it applies to you. A court addressed the meaning of this term in a recent case. A volunteer was asked by a charity to collect and deposit the proceeds of a fund-raising activity. The charity later discovered that the volunteer had collected $26,000 that was not accounted for. When confronted, he disclosed that he lost the funds through a poor investment. His intentions were good—he was trying to make even more money for the charity. His good intentions did not prevent him from being found guilty of embezzlement. He appealed his conviction, claiming that he could not be guilty of embezzlement since he was not a "fiduciary."

What the court said. The court ruled that the volunteer was a fiduciary. It defined a fiduciary as a person who "acts in a fiduciary capacity," and defined a fiduciary capacity as one "relating to or involving a confidence or trust." The volunteer's obligation to collect and deposit the money from the fund-raising activity "fits both the legal and lay definition of a fiduciary function." It observed:

The relationship between [the volunteer and charity] was based on confidence and trust. [The charity] justifiably placed confidence in [the volunteer], that he would act with a high degree of good faith and honesty in handling the [charity's] money. [His] position necessitated that he act with a high degree of honesty and good faith in handling the [charity's] money. Such a relationship contains all the elements of a fiduciary relationship.

The court concluded that the volunteer was performing a fiduciary function when he collected the funds from the fund-raising event.

What this means for churches

Most church treasurers are authorized to collect and deposit funds on behalf of their church. As a result, they are "fiduciaries" who perform fiduciary functions. What is the legal significance of this status? It imposes on church treasurers various fiduciary duties in the performance of their duties on behalf of the church. These duties were designed to insure that fiduciaries are held to a very high standard of fidelity and integrity in the performance of their duties. Among other things, these duties require fiduciaries to use a high level of care in the performance of their duties, and to avoid transactions and dealings that may be viewed as self-serving.

Key point. A church treasurer is a fiduciary. And, as a fiduciary, you are held to a "higher standard."

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