Pastor, Church & Law

“Accountings” of Church Funds

§ 06.03.02

Key point 6-03.02. Most courts have viewed requests by church members for an “accounting” of church funds to be an internal church matter over which the civil courts have no jurisdiction.

Do church members, or a government agency or officer, have the right to demand an accounting of church funds? The courts have reached conflicting answers to this question.

Case studies

  • A group of church members who had contributed funds to their church demanded that the church give an “accounting” of the use of the contributed funds. When the church refused, the members turned to the courts for relief. A trial judge ordered an immediate accounting, as well as annual audits “forever,” and required the church to disclose the contents of a church safety deposit box to the complaining members. The church appealed, arguing that the civil courts had no jurisdiction over a church, and even if they did, they had no authority to order accountings or annual audits. A Florida court, in upholding the trial judge’s ruling regarding an accounting and inspection of the church’s safety deposit box, observed that “we are of the opinion that this is not an improper interference by the government into a church, or ecclesiastical, matter. When the members of the church decided to incorporate their body under the laws of the state of Florida, they submitted themselves to the jurisdiction of the state courts in all matters of a corporate nature, such as accounting for funds.” However, the court reversed the trial judge’s order requiring annual audits forever, since “we cannot agree it is proper to order annual, ad infinitum, audits of the books” of a church.107 Matthews v. Adams, 520 So.2d 334 (Fl. App. 1988).
  • The Oklahoma Supreme Court refused to permit a number of dismissed church members to inspect church records or demand an accounting of church funds. Five members of a local church became concerned over the way their pastor and church board were conducting church business. The members filed a lawsuit asking a civil court to issue an order giving them access to the church’s financial records. The members were immediately dismissed by a unanimous vote of the church at a hastily called business meeting. The Supreme Court refused to permit them to inspect the church’s financial records. The former members insisted that they needed access to these records to prove that church leaders diverted church funds to uses that were not authorized by the church. The court observed: “Some of their claims alleging diversion of church property to non-church uses may have been capable of invoking civil judicial relief, and some may not have been. … We need not, however, address the extent to which their claims were cognizable when they filed suit, because their expulsion mooted any claims they had as to the diversion of church property to non-church uses.” In other words, non-members no longer have “standing” to use the courts to protect their former church from an alleged diversion of funds to unauthorized uses. Only members can sue to protect church assets.108 Fowler v. Bailey, 844 P.2d 141 (Okla. 1992).
  • An Illinois court ruled that it lacked jurisdiction to resolve a lawsuit brought by church members who demanded an accounting of church funds. Six members of a church filed a lawsuit asking the court to order an accounting of church funds as a result of what they perceived to be financial irregularities involving their minister. A state appeals court declined the members’ request. It observed, “It is eminently clear that the basis of this lawsuit is to have the courts examine the way the church is managing its financial affairs; to substitute the prudence of a court’s judgment for that of the [minister] who is entrusted by church doctrine to exercise such judgment; to impose court supervision over all financial matters of an entire religious faith; and to have a court interfere with the proper succession in the hierarchy of a religious faith. These matters, however, are beyond the realm of judicial jurisdiction.”109 Rizzuto v. Rematt, 653 N.E.2d 34 (Ill. App. 1995).
  • A court in the District of Columbia ruled that the First Amendment guaranty of religious freedom prevents the civil courts from resolving internal church disputes over accounting and reporting practices, except in limited circumstances.110 Bible Way Church v. Beards, 680 A.2d 419 (D.C. App. 1996)

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