A Primer on Local Church Assets

A Primer on Local Church Assets

By David W. Scott –

As I have tried to explain in a series of articles found on UM & Global (umglobal.org), The United Methodist Church as a whole is not a legal entity capable of owning property or financial assets. Local church property (real or personal, tangible or intangible) is owned by local legal entities and held in trust for the denomination as a whole.

This trust clause applies to the property of all parts of The United Methodist Church, but local churches are in a unique position with regard to the trust clause for several reasons: ¶2503 of the Book of Discipline explicitly names the annual conference, which generally is a legal person capable of owning property, as having authority over local church property. Several other places in the Discipline also give the annual conference explicit powers regarding the sale or transfer of local church property or its release from the trust clause. ¶2509.2 gives annual conferences the authority to bring lawsuits to enforce the trust clause. All of these provisions add up to clear enforcement of the trust clause on local churches by annual conferences.

Thus, the trust clause as applied to local church property has generally stood the test in secular courts. While in some instances departing congregations have negotiated with their annual conferences to take assets, when the trust clause has ended up in court, annual conferences have almost always won ownership of the property of departing congregations. Incidentally, that’s true not just for the UM Church, but also for the Episcopal Church and other bodies that also have a trust clause in their church law.

As cut and dried as the trust clause may appear, there are facets to keep in mind when thinking through the sorts of conflicts and potential lawsuits that might arise over ownership of local church property.

First, while most people assume that the trust clause means that the annual conference owns local church property, that’s not technically true. The annual conference has authority over local church property, and local church property reverts to the annual conference if it ceases to be owned by a local UM congregation, but the annual conference is not the legal person who owns the church property.

Who technically owns local church property depends on whether a congregation is incorporated. Most sizable congregations are incorporated as 501(c)3 organizations, but many small congregations are not. This means that for incorporated congregations, the property is owned by the local congregation as a corporate entity. For unincorporated congregations, the property is technically owned by the trustees, who as humans are legal persons. In either case, property ownership is exercised in trust for The United Methodist Church. The owner(s) of local church property can’t do whatever they want with it; they must abide by the stipulations of the Book of Discipline.

One problem here is that most bankers, investment brokers, and real estate agents are not familiar with the intricacies of the Discipline. While it would violate the Discipline, it might be possible for local leaders to work with bankers, brokers, or real estate agents unfamiliar with the trust clause to sell or otherwise dispose of local church property without annual conference consent. Such action would violate the Book of Discipline and thus expose the local church and its leaders to lawsuits from the annual conference, but it might be harder for the annual conference to recover property that was already disposed of.

Of course, the exit provision passed by General Conference 2019 and any future exit provisions passed by General Conference 2020 reduce the chances for lawsuits between local congregations and annual conferences over control of property.

Second, it’s important to remember that local church property includes more than just buildings. The trust clause applies to all other property that a local church owns, from its hymnals to its choir robes to its sound equipment to its vans to its tableware. It also applies to all financial assets owned by a local church. Thus, the question of property ownership goes beyond whether departing congregations can continue to worship in their same building. Any or all of these items could be a point of conflict between a departing church and the annual conference.

Certainly, the church building itself (and perhaps a parsonage) would likely be the biggest point of contention, since that generally represents the largest chunk of a local church’s assets. After that, who cares who keeps the Sunday school books, right? Maybe, but maybe not.

Especially when it comes to financial property, local congregations may have significant assets beyond their building over which annual conferences may want to assert their ownership. And larger churches may have a non-negligible amount of property in the form of vehicles, equipment, books, supplies, etc. Annual conferences have an incentive to assert their right to this property, even if just to give themselves better leverage in bargaining with a departing congregation.

Again, exit provisions reduce the chances for lawsuits between local congregations and annual conferences over control of buildings, equipment, and any other property. It is therefore worthwhile to keep in mind the scope of assets that could be at stake in such lawsuits.

Third, it is worth noting the variety of local church financial decision-makers established by the Discipline. This array of decision-makers increases the chances for conflict over assets within the local church itself.

The Book of Discipline outlines property-related responsibilities for the charge conference, the board of trustees, the financial secretary, the treasurer, the finance committee as a whole, and, in cases where they exist, the permanent endowment committee and the directors of the local church foundation. Moreover, in multiple-point charges, there may be both local church trustees for the property of each congregation and a board of trustees for property owned by the charge as a whole.

The authority to make all decisions regarding property, both real and personal, is vested in the charge conference. Yet, to carry out its property and financial decisions, the charge conference relies upon the work of the board of trustees, the treasurer, the finance committee, and (if they exist) the permanent endowment committee and directors of the local church foundation. These individuals have access to and oversight of the property of a church. Thus, they might be able to direct this property to another church body (either another denomination or the annual conference) in defiance of or in absence of a charge conference decision, especially since charge conferences usually meet rarely.

Again, such action would violate the Book of Discipline and ultimately lead to lawsuits, but in an instance in which there is a lot of internal conflict within a church about that church’s continued relationship with the UM Church, there is the possibility for factions within the church to use control of church property as a means to achieve their preferred outcome.

Since this type of conflict would occur within a church, an exit plan would not necessarily mitigate it. Control of property within a highly divided congregation may actually become more contentious with the existence of an exit plan. Such a plan could make local property a prize to be fought for between local “leave” and “stay” factions, with each group seeking control of the property. Nonetheless, an exit plan that sets or allows a congregation to set a relatively high standard of agreement for exiting is likely to reduce internal conflict around that decision.

David W. Scott is Director of Mission Theology at the General Board of Global Ministries. This essay orginally appeared on UM & Global (umglobal.org) and is reprinted here by permission. The opinions and analysis expressed here are Dr. Scott’s own and do not reflect in any way the official position of Global Ministries, nor Good News. Dr. Scott is neither a lawyer nor an accountant, and thus the information in this analysis should not be interpreted as legal advice.

A Primer on Local Church Assets

Rebooting for Ministry

By Sarah Parham –

I have shared the deepest honor in walking with people as they discern their call into next steps of following the Lord for many years now, first in campus ministry, and now in missions mobilization. As Christian believers, our first and only permanent call is to God alone. However, God does have a history of giving people secondary, specific calls or assignments to a particular people and ministry. 

One thing that often gets talked about as people discern transitions, particularly in missions mobilization, is a release from current ministry contexts. When a person enters a context with a sense of calling, it is a weighty thing, and one that cannot simply be dropped on a whim. When you ask a person who has experienced this type of calling how you know when you are released, a typical response is, “you’ll know” – like you “know” when you’ve met your perfect mate, or you “know” when you’ve walked into just the right house.

Well, the truth is, they are right.

I have had the unfortunate privilege to have failed in this particular way, and as the old adage says, failure is the greatest teacher. In my last ministry setting, I had the strange situation of quitting twice. The first time I did not have the sense of release from my calling to that place, but rather a crushing dread of staying. Four years later, when I experienced a true release from that ministry setting, I knew. I did not have a release the first time. There are some lessons I learned while quitting the same ministry twice. While it isn’t easy to describe exactly what a ministerial release is, I can say with certainty some things it is not.

First, the ministerial release is not an urgent sense of retreat. The ministry I worked in was experiencing a season of pain. We were in a difficult situation, and I felt like I was being crushed. As I look back, the verse that speaks to being pressed but not crushed comes to mind. In fact, Paul in 2 Corinthians 4 is calling the church to not lose heart in ministry. It is not easy; there will be hard times. But being “pressed” is not release. These pains are like the pains of labor that bring forth new life – a new life that still needs tender nurture.

Second, a ministerial release is also not self-protective. There was a part of me that feared for my own reputation should the ministry fold. As it turns out, that isn’t God’s chief concern. Just after speaking of being pressed but not crushed, Paul speaks of “being given up to death for Jesus’ sake.” Ugh. Please note here that I’m not talking about a lack of self-care or formation that will hold us up in ministry. That is essential. God did not say he would work us to death, but rather that death is at work in us, once again bringing about life.

Third, a ministerial release is not something the minister does, but something that is done to him or her. As noted above, to hold the burden of loving the flock well is a great weight. When done well, it is held with open hands. This kind of release is not the sense of opening your hands from a tight grip. Rather, ministerial release is when God removes the weight from your open hands. The keeper of the flock is released from his or her responsibility. When I felt pressed by the ministry, my instinct was to thrust back against what was pressing me. This is not release. When it was time for me to move on, my hands were free to wave and to wipe my own tears.

Lastly, a ministerial release is a calling to go toward something new which then requires the leaving of something now. As I write this, I am preparing to attend the retirement celebration for TMS Global’s beloved Vicki and Frank Decker. They have gifted us with a living example as they consistently remind us that they are not retiring, but rather rebooting. Our new calling may not be known. Like Abraham, God calls us to follow him to what he will show us next. Our hands ever remain in the same position, open, palm facing upward, ready to receive whatever joys and burdens he gives us for the life of the world.

Sarah Parham is senior director of domestic mobilization at TMS Global (tms-global.org).   

A Primer on Local Church Assets

Squirming Through Prayer

By B.J. Funk –

I always read John Wesley’s Covenant Prayer with a questioning heart, particularly over one section. Though challenging, to say the least, most of the prayer I get. There’s just this one part that bothers me. The part that makes me want to completely ignore him are the words, “Let me be employed for you or laid aside for you. Let me be full. Let me be empty.”

Laid aside for Jesus? Be full or empty? Seriously? So, how then can I work for you, Lord? I squirm under what are to me such uncomfortable and unnecessary words.

But then I think of Jim Elliott, the young Christian who trained as a missionary. However, the spears of the natives he hoped to convert ended his life before he got started.  At the young age of 28, Jim Elliot and four missionary comrades were martyred by Auca Indians on the Curaray River in the jungles of Ecuador. These young missionaries had prepared for the mission field. They were, in John Wesley’s prayer, literally “laid aside for Jesus.” It makes no sense until we recognize that Jim Elliott prayed a similar prayer.

“God, I pray, light these idle sticks of my life and may I burn up for Thee. Consume my life, my God, for it is Thine. I seek not a long life but a full one like Yours, Lord Jesus.” In his diary entry for October 27, 1949, Jim wrote, “Was much encouraged to think of a life of godliness in the light of an early death.” Perhaps his most repeated quote is, “He is no fool who gives what he cannot keep to gain what he cannot lose.”

Jim Elliott was laid aside for Jesus.

Then, there is that adorable Dutch servant, Corrie ten Boom, who survived a German concentration camp and when she was freed, traveled the world telling about the goodness and grace of God inside a concentration camp. In her later years, she suffered a stroke. Her helper and friend wrote The Five Silent Years of Corrie ten Boom, reminding us that God could indeed work through the silence of this unbelievable minister of God. Without a word, she witnessed daily of God’s love and power.

Corrie ten Boom was laid aside for Jesus.

Amy Carmichael was an Irish missionary who served in India for 53 years in the first half of the 20th century. So dedicated that she never took a furlough, Amy boldly began rescuing little girls and boys from Temple prostitution. That became her life’s mission. Having found Jesus as a teenager in a Methodist boarding school and determining that she would never marry, she was empowered and eager to give up everything to serve the Lord. Always in poor health, she was bedridden for a period of years. At the end of her life during her time in bed, Carmichael’s writing and devotional ministry flourished. When asked by a young woman considering the mission field, “What is it like to be a missionary?” Amy answered, “Being a missionary is a chance to die.”

Amy was laid aside for Jesus.

Dietrich Bonhoeffer is known for his faith and his resistance to Nazi dictatorship. Arrested in 1943 by the Gestapo and imprisoned for a year and a half, he was transferred to a concentration camp. Accused of being tied with a plot to assassinate Hitler, he was hanged in 1945 as the Nazi regime was collapsing. Twenty-one days later, Adolph Hitler committed suicide. A quote from his doctor gives a beautiful documentary on Bonhoeffer’s life.

“At the place of execution, he again said a short prayer and then climbed the steps to the gallows, brave and composed. His death ensued after a few seconds. In almost fifty years that I worked as a doctor, I have hardly ever seen a man die so entirely submissive to the will of God.”

Bonhoeffer was laid aside for Jesus.

Slowly, understanding sinks into my heart. Only God knows what he wants to get from my life, and if I am fully his, he is free to get what he wants in any way he wants. That sort of surrender is the surest way to a life of peace and joy. I’m whispering it today, but pray that I can one day say it louder and with deeper conviction. Lord Jesus, let me be laid aside for you.