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Pastor, Church & Law

written by Richard R. Hammar, J.D., LL.M., CPA

Breach of the Fiduciary Duty of Loyalty

Volume 2 . Chapter 6 . § 6-07.4
Key point 6-07.04. Church board members have a fiduciary duty of loyalty to their church, and they may be personally liable for breaching this duty by participating in board decisions that place the interests of one or more board members above the interests of the church itself.

Directors of nonprofit corporations have a fiduciary duty of loyalty to the corporation. This duty generally requires that any transaction between the board and one of its directors be (a) fully disclosed, (b) approved by the board without the vote of the interested director, and (c) fair and reasonable to the corporation. A board member does not have to offer the church the lowest price for a product or service to discharge the duty of loyalty. All that is required ...

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