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 New York court ruled that a church member had the legal authority to inspect church records despite the pastor's refusal to allow him to do so.
Most church leaders are not sure how to respond when a member asks to inspect church records. Do members have a legal right to have access to church records? If so, under what conditions? Are there exceptions? These are very relevant and important questions for which church leaders should have answers. A recent New York case addresses these issues and provides helpful guidance.
A church member (and former church officer) suspected that the senior pastor and several current church trustees diverted or misappropriated church funds. When his request to inspect church financial records was denied, he sued the church citing a provision in the state nonprofit corporation law authorizing members of nonprofit corporations to inspect specified corporate records.
The New York nonprofit corporation law contains the following language regarding the inspection of records:
Except as otherwise provided herein, every corporation shall keep, at the office of the corporation, correct and complete books and records of account and minutes of the proceedings of its members, board and executive committee, if any, and shall keep at such office or at the office of its transfer agent or registrar in this state, a list or record containing the names and addresses of all members, the class or classes of membership or capital certificates and the number of capital certificates held by each and the dates when they respectively became the holders of record thereof. A corporation may keep its books and records of account in an office of the corporation without the state, as specified in its certificate of incorporation. Any of the foregoing books, minutes and records may be in written form or in any other form capable of being converted into written form within a reasonable time. Any person who shall have been a member of record of a corporation for at least six months immediately preceding his demand … upon at least five days written demand shall have the right to examine in person or by agent or attorney, during usual business hours, its minutes of the proceedings of its members and list or record of members and to make extracts therefrom.
A trial court rejected the member's request to inspect corporate records, and the case was appealed. A state appeals court ruled that the member did have the right to inspect the church's financial records as a result of the above-quoted statute. It observed: "Not-For-Profit Corporation Law § 621 authorizes any person who is a member of a not-for-profit corporation for at least six months immediately preceding an unsuccessful demand to inspect the corporation's books and records to commence a special proceeding to compel the production of those books and records …. Contrary to the [trial court's] determination, the issue of whether the plaintiff, who seeks to enforce a statutory right, is entitled to the production of the church's books and records, can be determined by resort to neutral principles of law" involving no inquiry into church doctrine.
What this means for churches
This case provides church leaders with some useful insights into the meaning of state nonprofit corporation laws that give members a limited right to inspect corporate records. Consider the following:
- The right of inspection is not absolute. It only exists if a church is incorporated under a state nonprofit corporation law that gives members such a right.
- The right of inspection only extends to members.
- The right of inspection only extends to those records specified in the statute creating the right.
- Most such laws provide that the member may inspect documents "for a proper purpose" at a "reasonable time."
- Members may lose the right to inspect church records if they are dismissed or suspended from membership pursuant to procedures specified in the church's bylaws or other governing document.
- Some state nonprofit corporation laws may limit the right of inspection to records created during the current or previous year. Be alert to any such limitation under your state's law.
- Any decision to withhold documents from a member should be made with the advice of an attorney.
Tae Hwa Yoon v. New York Hahn Wolee Church, Inc. 870 N.Y.S.2d 42 (N.Y.A.D. 2008).