By Sam Breakey, CBWC Church Health Strategist

As suggested in an earlier article, a congregation requires good governance (the skeleton), and a Christ-dependent gospel calling (the heart) to sustain vibrant ministry. In this post, I wish to identify twospecific characteristics of healthy church structure.

Become Moulded In God’s Image For One Purpose

Ryan Sandulak writes, “The local church is created in the image of God… and this image is fundamentally corporate in nature.”* Scripture tells us that God has been revealed to us in the Trinity, God the Father, God the Son, and God the Holy Spirit. These three persons cooperate as one being, towards one end.
Congregations follow a similar pattern. A church is not one person but is comprised of many people who function together, like a human body, toward a unifying purpose under the authority of Jesus Christ. While we identify various participants in this structure, (pastors, elders, deacons, members, etc.) each one is to be mindful of the other and those they are called to serve.

This ‘Triune God’ template is replicated in the triune local church. Biblically, a church is comprised of three entities that have equal influence while on God’s mission. In Baptist congregations we know them as Elders/Deacons, Pastors, and Congregants. Each one fulfills a role that requires collaboration with the others. Notice that when you read in the New Testament of pastors, elders, teachers, evangelists and prophets that they are always spoken of in the plural form. Spiritual leaders are intended to lead and serve in a mutually dependent relationship that reflects the cooperative interaction of the Father, Son, and Holy Spirit.
Churches that have clearly written guidelines about how the three parties make decisions and minister together have a solid foundation for impactful ministry. When this biblically-based church structure breaks down, congregational conflict increases and missional influence decreases.

Make No Room For Generalists 

Church members, staff included, tend to be generous people offering their insight widely. Congregational government infers that every matter must be important to every member, but, sometimes in congregational life there can be ‘too many cooks in the kitchen.’ One pastor I know rented scaffolding during his holiday and painted the exterior of the church by himself, because it wasn’t a priority to others.  Board members have been known to recommend which prizes should distributed at Sunday School picnics and many a congregant has second-guessed the colour pallet in the sanctuary. In each case, a party feels responsible for something beyond their responsibility.

As an example of role boundaries, let me offer terms of reference for your senior board team, be they Elders, Deacons, or Church Council. Dan Hotchkiss** describes four board priorities:

1. Delegating authority with clear guidelines under which that authority can be exercised;
2. ‘Controlling its agenda’ by focusing on the long-term future;
3. Partnering with the pastor to pursue common goals and expectations; and
4. Hosting future-oriented conversations.

Larry Nelson, a good friend and advisor to numerous Christian organisations, once told me that “leaders must know the boundaries within which they can work and be given complete freedom to authoritatively engage their role within those boundaries.”

In summary, church structure should reflect the three-way collaborative relationship of the Trinity. Pastors, church leaders, and congregants are called to pursue one mission by depending upon each other, under Christ. Further, each partner must know and be trusted to fulfill their specific roles without the intrusion of another.

FAQ: 
Q: What other characteristics contribute to the health of a church board?
A:According to a study of 500 churches by the Evangelical Council for Financial Accountability***

• Board members were chosen by someone other than the lead pastor.
• Policies were in place—and the board had the ability—to ask an underperforming staff member to resign.
• The board was able to challenge and correct a lead pastor when necessary.
• An active strategic planning process was in place.
• Time and energy were devoted to assessing risks and opportunities.
• The board guided the staff with strategic—but not tactical—input.

Q: As a pastor, how can I know what I am free to do to fulfill my role?
A:Seek answers to the following questions from your board:

• What decisions do I have the clear authority to make where I do not have to tell the board?
• What decisions do I have the authority to make, and will make, wherein I need to advise the board what I did or am planning to do?
• What decisions MUST I get the board’s approval on before acting?

Q: How many members make up an ideal board?
A:The median church board has eight members, including the Lead Pastor.

Q: How long should a board meeting last?
A:When the agenda is future oriented, longer is better. Boards that meet for 21 – 40 hours per year to focus on their primary ministry calling, tend to be the most effective.

Q: How can we engage the congregation in a way that creates partners rather than micro-managers?
A:Scripture teaches both the principle of spiritual eldership and the principle of the priesthood of believers. Healthy congregations practice both, rhythmically. Like tides that ebb and flow along a shoreline, congregational decision-making that honours the authority of spiritual leaders as well as the insight and confirmation of the wider spiritual family, will instigate decision ownership and unity. The greater the issue, the greater the impact of honouring both principles.****

Sam Breakey,
CBWC Church Health Strategist
sbreakey@cbwc.ca

By Sam Breakey, CBWC Church Health Strategist

The term ‘congregational governance,’ for many, draws the same reaction as a cordial invitation to watch paint dry! While that may be so, figuratively speaking, governance is as important to the health and vitality of a congregation as a skeleton is to your body. Without an anchoring framework, the heart of a body or the mission of a congregation cannot intentionally pursue its purpose.

Church leaders of various denominational backgrounds agree that three partners cooperate in congregational leadership: God (Father, Son, and Holy Spirit), the Pastor (local and/or regional), and church members (elected church leaders and regular church members). They differ—sometimes significantly—in the level of influence each partner should have. If one is comfortable, theoretically, with the structure of their own church, there shouldn’t be any problem, right? After all, most of us don’t really care how other churches makes decisions and maintain accountability; we just care about our own. Yet, congregational life is not that simple. Two additional factors increase ambiguity even when we are familiar with our own fellowship’s way of exercising leadership.

First, culturally speaking, we live in a world that tells us that ‘where we are now’ is more important than ‘where we have come from.’ The rootedness that once contributed security and familiarity to our lives, now fosters a craving for something new. Working with churches across Western Canada, I often hear the phrase ‘we are not your average Baptist Church; our people come from many different backgrounds.’ They are regularly surprised to hear that the same phenomenon is just as evident elsewhere. Our hunger for new expressions of faith, movement from city to city for work, and our desire for programs that better serve the ages represented in our family, all contribute to movement from one church or denomination to another. Throw in some hurtful experiences, and each congregation now has a potpourri of decision-making baggage and processes that can contribute to misunderstanding.

Second, a church may have clarity about how its pastor, board, and congregation should interact but personalities and uncertainty interfere. People often have a better idea of what they can’t do than what they should do. In one context, the church bylaws clearly stated the roles of the pastor, the associate pastors, and the elected leaders, but had little to say about how they interact. Right and wrong assumptions were being made about who reported to whom, but there was no guidance on what to do when one party was at odds with another. They found themselves in an uneasy, unending dance. Staff and board members, and congregants require clarity about their roles. They must be clear about where they have freedom to act effectively, and what their illimitations are. It is not enough to say, ‘Well-meaning people will work it out through prayer and patience.’

Having made it this far into the article, I’m sure you can see how your personal and congregational endeavours have been impacted by poor congregational governance. Earlier, I mentioned the relationship between the human heart and the skeleton. If the skeleton of a church is good governance, the heart of a church is its unique calling, under Christ, to love, serve, and disciple, its community. A body without a skeleton is limp, but one without a heart is passionless. Both interplay to function in health as one body.

It is not uncommon for a passionate congregation to be held back by those nagging tensions that seem to pop up whenever progress is being made. A healthy church is one that is freed to pursue a clear unifying purpose through people and structures that serve Christ’s call. Good governance will be the pathway clearer for that call.

A follow up article on “The Characteristics of Good Governance” will be posted next month.

Sam Breakey, CBWC Church Health Strategist

sbreakey@cbwc.ca

FAQ:

Q: We are having problems in our church. Does CBWC have a church leadership resource that we can use to help us make unifying decisions?

A: The short answer is no; we do not have one specific resource that you can apply to every situation. We do however, have resources (plural) that will help you determine together what structure best reflects scriptural guidelines and the uniqueness of your congregation. Contact your Regional Minister for more information.

Q: We seemed to have lost our way. We are unsure about our future as a congregation and how we can reconnect with our community. Do you have any suggestions?

A: The CBWC Church Health Initiative is designed to help congregations regain their focus and calling to their community. For more information, contact our Church Health Strategist or your Regional Minister.

This article was published in the July issue of Treasurer’s Corner. Subscribe here. 

SaveSave

In the last article, we discussed when the need arises for drawing up an agency agreement and the purpose it served. This month, we will be taking a deeper look into this document in understanding the technical requirements in signing such an agreement with another agent or intermediary that is not a qualified donee and not registered with the Charities Directorate of Canada.

To recap, an agency agreement should entail the following:

1. the obligations of the agent to the charity;
2. a funding schedule and the reporting obligations of the agent;
3. the conditions of the charity’s involvement;
4. the funds that will be made available; and
5. the activities the agent is to carry out on behalf of the charity.

Obligations of the agent to the charity

Because charities must be able to demonstrate appropriate direction and control over their resources, the agent is bound by an agreement that spells out in written form all activities the agent will engage in, and how it will report back to the charity with details of the activities.

Funding schedule and reporting obligations of the agent

A detailed funding budget needs to be submitted by the agent to the charity on a yearly basis. Where possible, monthly or quarterly accounting details on the bookkeeping activities should be reported as well. The financial submissions should include a segregated report on the usage of funds given by the charity, whereby verification can be done if required. The intermediary takes special steps to separate the funds donated by the charity from other funding sources, so as to account for it when required. The charity should release funds periodically and gradually to ensure the agent complies with the terms and performance expected of the working relationship.

Conditions of the charity’s involvement

Any special conditions of the charity’s involvement should be highlighted in the agency agreement. Such conditions should be reviewed periodically to ensure full compliance. The charity reserves the right to withdraw funding support if there is a breach of the agreed to conditions at any given time during the review process.

Funds that will be made available

Funding arrangements should be discussed as part of the agreement before signing off. A list of funds required should be detailed in writing, with appropriate budget line items, to ensure clarity and transparency. This will help avoid unpleasant miscommunications and misunderstandings that can arise, especially when overseas projects are involved.

Activities of the agent, on behalf of the charity

The agent’s activities must comply with Canadian laws and laws of the country where the projects are being implemented. This is to ensure full compliance by the charity which must abide by the laws of Canada in carrying out only legal activities, whether it is approved in Canada or in another foreign country.

Questions & Answers

Q: Do you have a sample agency agreement for review?

A: Yes, a sample agency agreement can be downloaded from this link, with permission from the CCCC: https://cbwc.ca/wp-content/uploads/2018/06/Agency-Agreement-Sample-Document.pdf

Q: Why must the charity be concerned over the details of the agency agreement?

A: The agency agreement serves to protect both parties, which have different expectations and needs. The charity’s chief concern is to have direction and control when such an agreement is signed. Hence, the agreement needs to explicitly detail the list of activities and financial reporting requirements. The agreement provides a way to monitor, through proper bookkeeping, all financial transactions from the charity that support the work of the agent.

Q: Is the agency agreement considered a legal document?

A: Yes, the agency agreement is legally binding between the two parties. If the charity loses direction and control over the conditions stated in the agreement, the working relationship/arrangements can be made invalid and the agreement will be null and void thereafter. Secondly, the agreement is the legal document that will show proof that the charity is in direct control of the partnership with the nonqualified donee, in case an audit is conducted on the charity by the Charities Directorate. Failure to have the agency agreement in place while working with a non-qualified donee will compromise the charity in a non-compliance position with the operating rules of running a registered charity in Canada.

This article is adapted from archived Treasurer’s Corner articles, and Canadian Council of Christian Charities resources on agency agreements.

According to the Income Tax Act (ITA), a registered charity can only use its resources in two ways, whether inside or outside Canada:

1. On its own activities (those which are directly under the charity’s control and supervision, and for which it can account for any funds expended); and
2. On gifts to Qualified Donees

A charity usually carries on its activities using its staff (including volunteers, directors, or employees) or through an intermediary (for example, an agent or contractor). However, when using an intermediary, it must still direct and control the use of its resources. A charity cannot merely be a conduit to funnel money to an organization that is not a qualified donee.

(In this context, an intermediary is a person or non-qualified donee who is separate from the charity, but that the charity works with to carry out its own activities.)

What is an Agency Agreement?

An Agency Agreement is a document used to establish a working relationship with the intermediary or non-qualified donee. The definition will be outlined here, and more details on the contents and responsibilities that constitute an Agency Agreement will be reviewed in next month’s newsletter.

An Agency Agreement is a written agreement between a charity and an intermediary who provides services outside Canada. It helps demonstrate how the Canadian charity exercises control and direction over its own resources and activities for a particular project or projects carried out by an agent. Among other things, an Agency Agreement should include:

• the obligations of the agent to the charity;
• a funding schedule and the reporting obligations of the agent;
• the conditions of the charity’s involvement;
• the funds that will be made available;
• the activities the agent is to carry out on behalf of the charity.

Questions & Answers:

Q: Must a registered charity in Canada only be allowed to make donations to another registered charity with the Charities Directorate, otherwise known also as “qualified donees”?

A: Yes, donations can only be donated to another registered charity within Canada, otherwise known as “qualified donees”. The Charities Directorate search engine provides an online access website to search out if a registered charity is indeed registered with the Charities Directorate and if the registered charity is still an active entity or if its charitable status has been revoked, because of past offences. The search engine is here: https://www.canada.ca/en/revenue-agency/services/charities-giving/charities-listings.html

Q: Can a registered charity then support overseas mission work of another organization, that is not registered with the Charities Directorate in Canada?

A: No, such financial support is deemed unlawful for the registered charity in Canada, if the donations are sent to “non-qualified donees”.

Q: How does the registered charity mitigate in such a case when there is activity involved with a non-qualified donee?

A: In such a case, the registered charity can deploy its own staff to work on the grounds in the mission field in discussion or an intermediary can be established, commonly known as a third-party arrangement. The establishment of an intermediary will require a signed Agency Agreement with the mission agency directly working overseas.

Q: Can an Agency Agreement be used to deal with a “non-qualified donee” in Canada?

A: Yes, it is possible to establish an intermediary with the organization in Canada by using the proper Agency Agreement, under special circumstances. It is recommended that the registered charity must review such arrangements in greater details to abide with the written rules of the ITA in this case.

We will examine the technical requirements of an Agency Agreement in next month’s issue of the Treasurer’s Corner.

This article was published in the May 2018 edition of Treasurer’s Corner. To subscribe, click here.