Fundraising and Designated Gifts

Church board members may be personally liable for diverting designated funds or trust funds to some other purpose.

Key point 6-07.05. Church board members may be personally liable for diverting designated funds or trust funds to some other purpose.

* The Massachusetts Supreme Judicial Court ruled that the First Amendment guarantee of religious freedom prevented it from resolving the claims of a donor that her gift to her church should be rescinded due to misrepresentations made by the pastor at the time of the gift. An Italian immigrant (James) established a successful gravel business and owned several tracts of land. Upon the death of James and his wife, most of their property passed to their six children. The pastor of a Catholic church was interested in acquiring an 8-acre tract from the family as the site of a new sanctuary. Two of the six siblings agreed to donate their interest in the land to the church, but the other four siblings were reluctant to transfer their interests until the pastor assured them that the new church would be named "St. James" in honor of their father, and that the church would remain a tribute to James "forever." During the negotiations for the property the pastor did not inform any members of the family that canon law permitted the closure of the church in the future. A church was constructed on the land in 1958. By the 1990s, however, question arose concerning the continuing viability of the church. A local newspaper story listed the church among those that the archdiocese planned to close. The current pastor of the church assured the congregation that the story was false. The church launched a capital fundraising campaign. A retiree in her 80s (Eileen) contributed $35,000 to the campaign. She later testified, "If I had known that the archdiocese … was giving any consideration to closing St. James, I would not have made the gift of $35,000." In 2004, the archdiocese ordered the closure of St. James. During one of the last worship services before the church closed, Eileen asked the pastor, "Why didn't you tell us the church was closing?" He replied, "I didn't know it."

Eileen, as well as the sole surviving sibling to have transferred the land to the church, sued the archbishop. The lawsuit claimed that the oral assurance by church officials that the church would be named "St. James" forever was a binding and enforceable commitment that was breached by the church's closure. The lawsuit also alleged negligent misrepresentation, breach of a fiduciary duty, and asked the court to order a reversion of the property to the surviving sibling.

The Supreme Judicial Court noted that the First Amendment guaranty of religious freedom "places beyond our jurisdiction disputes involving church doctrine, canon law, polity, discipline, and ministerial relationships," and that "among the religious controversies off limits to our courts are promises by members of the clergy to keep a church open." The court concluded that it had jurisdiction over church property disputes "if and to the extent, and only to the extent, that they are capable of resolution under neutral principles of law" involving no inquiry into church doctrine or polity.

The court concluded that the sole surviving sibling who conveyed property to the church had standing, since she gave up her rights in the property in reliance on the pastor's assurance that the property would always be used as a church in memory of James. In other words, her rights were different from members of the congregation generally. Similarly, the court concluded that Eileen had standing to sue:

It is clear that Eileen has alleged an individual stake in this dispute that makes her, and not the state attorney general, the party to bring suit …. A gift to a church generally creates a public charity. It is the exclusive function of the attorney general to correct abuses in the administration of a public charity by the institution of proper proceedings. It is his duty to see that the public interests are protected … or to decline so to proceed as those interests may require. However, a plaintiff who asserts an individual interest in the charitable organization distinct from that of the general public has standing to pursue her individual claims. In this case, Eileen's claims are readily distinguishable from those of the general class of parishioner-beneficiaries …. She claims that she lost substantial personal funds as the result of the archbishop's negligent misrepresentation to her. This claim is personal, specific, and exists apart from any broader community interest in keeping the church open. She has alleged a personal right that would, in the ordinary course, entitle her to standing.

However, the court ruled that the First Amendment prevented it from resolving the sibling's claims. For example, the sibling claimed that the pastor breached a fiduciary duty to her by not informing her at the time she conveyed her interests in the property to the archbishop that the church could be closed according to canon law. In rejecting this argument, the court observed:

A ruling that a Roman Catholic priest, or a member of the clergy of any (or indeed every) religion, owes a fiduciary-confidential relationship to a parishioner that inheres in their shared faith and nothing more is impossible as a matter of law. Such a conclusion would require a civil court to affirm questions of purely spiritual and doctrinal obligation. The ecclesiastical authority of the archbishop and [the pastor] over the parishioners, the ecclesiastical authority of the archbishop over the pastor, the state of canon law at the date of the property transfer … the canonical obligation of the pastor, if any, to inform parishioners of canonical law—all of these inquiries bearing on resolution of the fiduciary claims would take us far afield of neutral principles of law. We decline to hold that, as a matter of civil law, the relationship of a member of the clergy to his or her congregants, without more, creates a fiduciary or confidential relationship grounded in their shared religious affiliation for which redress is available in our courts.

The court also rejected Eileen's claim that the archbishop acted negligently in failing to inform the local pastor of the plans to close the church when he knew he would be soliciting funds to sustain the church "now and for the future." The court noted that Eileen's gift was made in 2002, nearly two years before the archbishop decided to close the church. As a result, the pastor's efforts to raise funds for the maintenance of the church, both now and in the future, was not negligent or a misrepresentation. Maffei v. Roman Catholic Archbishop, 867 N.E.2d 300 (Mass. 2007).

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