When a church has a turnover in its official ranks, it is important to notify all stakeholders and parties of the change. This announcement is more than a mere courtesy. Letting others know there has been a change in church leadership has important legal implications.
Church officials are agents of the institution. As such, agents have powers to represent the church in limited ways. An agent’s authority should be specified in a policy, job description, and/or procedures. Agents who rely on word-of-mouth risk exceeding their authority when making decisions.
Parties outside the church often rely on the understanding that certain church officials with whom they are dealing have the proper authority to make decisions. In some cases, the authority is expressed by the church in a written agreement. Some parties rely on what is called the Apparent Authority of the official. For instance, the financial secretary might appear to have the authority to approve invoices.
A legal issue arises when a former church official is mistakenly believed to have remained in their previous position. In many instances, this occurs because individuals get comfortable handling transactions and continue doing so for convenience. This becomes a problem when the decisions made for the church are executed by former officials.
Agency power arises in situations such as who has the authority to purchase goods, hire vendors, and obligate the church in contracts. An existing vendor hired by a former official may have the impression that person continues to hold such authority. If the former official enters into an agreement with a vendor, the vendor may have a claim to hold the church responsible.
Some private contracts have a notification provision embedded in the terms. Depending on who the church official is, the contract may require that the other party be made aware that a change in the person who holds the position has taken place.
Churches that have bank accounts must notify the institution when the authorized signors for the account have changed. Many banks will require a board resolution or some other documentation to validate the authority of the new signors. Notifying financial institutions removes the liability of former officers having unapproved access to church accounts.
Some insurance companies require notification when church offices change hands. The coverage for a fidelity bond and liability insurance shelters specific officers from certain risks. Former officers who remain on the insurance policy as covered persons could send mixed signals to a plaintiff that an individual remained in office.
From a vendors’ point of view, a general notification of a change in office is beneficial. This signals to the vendor or supplier that this individual no longer has the responsibility previously held. As such, any statements made by the former official are a personal opinion that should have no effect on the church.
Church leaders should make a list of critical stakeholders who are impacted when officers change positions and roles. One can start by having the outgoing officer list all their outside contacts. This group of companies should be notified of the change. The church may also go through its roster of creditors, vendors, and outside accounts to create a list of companies to contact. A simple form letter should be sufficient.
An important audience for notification includes church members. Individuals who are responsible for ministries and functions owe a duty to the church. Members rely on these agents as official church representatives when engaging with the ministries. Notice of changes in officials will help alleviate the risks that members will unknowingly depend on the wrong person.
Ensuring the public and church members know of changes in officials is an important governance step. This process will help ensure everyone knows who has the required authority to make decisions.