The good news is that you are free to write bylaws that conform to your ministry’s sincerely held beliefs and practices. The not-so-good news is that a civil or criminal court has the authority to hold you accountable if you do not follow your own rules.
Bylaws are essentially rules governing an organization’s major decisions and key activities. Generally, bylaws define and describe the rights and responsibilities of members, leaders, staff, and others related to the organization. Bylaws also describe how leaders are selected and when elections are to be conducted. Other key issues typically addressed in bylaws include:
Carefully draft and implement bylaws that accurately describe your ministry’s actual practices and beliefs. All decision-makers within the ministry should have their own copy of the bylaws, and regular attention should be given to compliance with the rules they contain.
When changes are needed, the procedures described in the bylaws must be followed to amend or otherwise alter those rules before changing the ministry’s practice. Because bylaws are governed by non-profit corporation statutes, ministries should rely on the counsel of a local attorney whenever changes to the bylaws will be made.
Because organizations tend to change over time, it is a good idea to review your bylaws at least every three to five years.
Most ministries adopt a set of bylaws when the ministry is first formed. These bylaws are often deposited in a file folder at the back of a little-used file cabinet for years at a time. During that time, the ministry’s practices often change, sometimes significantly. When the bylaws are finally recovered from their folder, the ministry is faced with one of two options: 1) conform the ministry’s practices to comply with the bylaws; or 2) amend the bylaws to reflect the ministry’s practices.
Whenever your organization plans to make a major decision or a change in its practices, the bylaws should be consulted to determine if the proposed decision or change is allowed and/or being handled properly. If the bylaws pose a problem for the proposed change, then the organization should not make the change before amending the bylaws to allow it.
Because organizations tend to change over time, it is a good idea to review your bylaws at least every three to five years to make sure that the organization is still following its own rules and that the bylaws are not in need of amendment to address the current needs of the organization.
The purpose of an indemnification provision is to protect individuals who are working for the ministry from incurring out-of-pocket costs if they’re sued in connection with their work on behalf of the organization.
Who should be covered: Ministry leaders and employees should be protected. You may also want to extend this protection to volunteers who are working on behalf of the ministry. Indemnification provisions should be drafted so that the ministry is able to avoid paying the legal expenses of individuals who are not furthering the purpose of the ministry, or who are acting outside of their authority.
How should indemnification be conveyed: If an individual is sued in connection with his or her ministry work, the bylaws should give the organization’s governing board the right to decide when and if such individual will be indemnified for out-of-pocket costs associated with the lawsuit. This protects the ministry from being required to cover costs associated with wrongful or criminal acts.
Reviewing ministry bylaws: If your bylaws already include an indemnification provision, it’s recommended that a locally licensed attorney review them to ensure that ministry leaders maintain the right to decide when and if the indemnification obligation is triggered. If the organization’s bylaws do not contain an indemnification provision, then an attorney should be consulted to develop indemnification wording, as well as to walk the ministry through the process of amending its bylaws.
It’s important that ministry leaders review the organization’s existing bylaws and think through the indemnification process before a lawsuit is filed against the organization’s leaders, employees, or volunteers.
These sample indemnification provisions are available for your ministry to share with your attorney as a starting point for consideration.
INSURANCE COVERAGE AND INDEMNIFICATION OF MINISTRY LEADERS, EMPLOYEES AND VOLUNTEERS
SECTION 1. INSURANCE. The Ministry will purchase and maintain liability insurance on behalf of any and all persons who are or were a director, officer, leader, employee, committee member or volunteer of the Ministry (while serving in their capacity as such). Such insurance will be purchased for the purpose of protecting such persons from covered loss resulting in liability asserted against the above individuals in connection with their activities on behalf of the Ministry.
SECTION 2. INDEMNIFICATION REQUESTS. Should any director, officer, leader, employee, committee member or volunteer of the Ministry incur any liability as a result of their affiliation with or service to the Ministry that is not covered by the Ministry’s insurance policy, and should such liability result in any out-of-pocket cost to such individual, then such individual may request indemnification from the Ministry. The granting of full or partial indemnification shall be at the discretion of the governing board of the Ministry as set forth in Section 3 herein.
SECTION 3. INDEMNIFICATION DECISIONS. In relation to any indemnification request that is made pursuant to Section 2 herein, if such request is made by an individual who is not currently serving on the governing board of the Ministry, then the indemnification decision (whether to indemnify the requesting individual, and the dollar amount of such indemnification), will be made by the governing board. Such decision of the governing board will be final. If the indemnification request is being made by a person who is currently serving on the governing board, then the indemnification decision (whether to indemnify the requesting party, and the dollar amount of such indemnification), will be made by the remaining disinterested members of the governing board. A decision on the indemnification request by a majority of disinterested members of the Board of Directors will be final.
*Important information: Brotherhood Mutual is pleased to provide Legal Assist as a complimentary resource. The services we offer through Legal Assist are intended to provide general legal information to our current and prospective policyholders.
The information we provide is intended to be helpful, but it does not constitute legal advice and is not a substitute for the advice from a licensed attorney in your area. Accordingly, no attorney/client relationship is created through this process, and no legal advice will be provided. We strongly encourage you to regularly consult with a local attorney as part of your risk management program.
