A Board Meeting Without Any Board Members Present

By Raul Rivera

State laws concerning board meetings require that certain criteria be met in order for a board meeting to become legally valid. At a minimum, the board members need to receive "proper notice." Every state has a provision regarding proper notice. By definition, proper notice is the number of days prior to a board meeting wherein each board member receives a notice that a board meeting will take place. Many states require two days, but some require 10. Our software program, The Complete Church Compliance Kit, will handle your board meeting notices and minutes to make sure you comply with state and IRS requirements. Additionally, there are "quorum" requirements for board meetings. In short, quorum means the "minimum number of board members required to be present at a board meeting in order for it to be a legally valid board meeting." Your bylaws must have a quorum provision in it so that it is clear what the minimum number ought to be. My recommendation is that a clause be added to the quorum article in your bylaws so that the attendance of the pastor be required in order for there to be a quorum.

So long as those two minimum requirements are met, you are ready to conduct board meetings for your church. That may be fine if you and your board are all living in the same city and conducting a board meeting is convenient. But what about the many pastors across America that have young churches and do not have board members that all live in the same city or even the same state? What if it becomes impossible to conduct a board meeting, whether it be face-to-face or through teleconference? The answer to that problem is found in your bylaws. I propose an amendment to your church bylaws that gives the board the authority to make decisions without having to hold official board meetings.

The name of this article is "Action By Unanimous Written Consent Without Meeting." This article allows the pastor to put into writing a decision of the board and then email it to each board member with a place for them to either sign or email back a consent. If each board member gives their consent, then that decision has the same full force and effect as the unanimous vote of the Directors. Below is the text that I recommend be used in your bylaws.

Any action required or permitted to be taken by the Board of Directors under any provision of law may be taken without a meeting, if all members of the Board shall individually or collectively consent in writing to such action. Such written consent or consents shall be filed with the minutes of the proceedings of the Board. Such action by written consent shall have the same force and effect as the unanimous vote of the Directors. Any certificate or other document filed under any provision of law which relates to action so taken shall state that the action was taken by unanimous written consent of the Board of Directors without a meeting and that the Bylaws of this corporation authorize the Directors to so act and such statement shall be prima facie evidence of such authority.

What is an Integrated Auxiliary of the Church?

Many churches start up schools to teach and train men and women to preach the Gospel and to also provide a solid Christian based education for their children. While starting a school is a good idea, it is important to know that how you structure the legal side of the school can make a difference on four levels as listed below:

1. Legal liability protection for the church and school;
2. Tax exempt status for the school;
3. The ability to ordain faculty and other school employees and to pay their salaries as ministers; therefore, they can have housing allowance and social security tax exemption, and;
4. Annual reporting requirements being exempted, such as Form 990.

The best way to establish the school is to separately incorporate the school as an integrated auxiliary of the church. Under the current tax code, an integrated auxiliary qualifies to be classified as an extension of the church for tax purposes even though it is separately incorporated with its own Federal Tax ID number.  The catch to making it all work is understanding what constitutes an integrated auxiliary by definition. The IRS defines it in IRC 6033 and in Revenue Procedure 86-23 as follows:

1. Internal Support Test: The organization has to receive at least 50% of its financial support from the church.
2. The organization has to be separately incorporated as a charitable organization.
3. The organization has to have special language that affiliates it to the church.

The IRS went a little further and also gave a definition of what it means to be affiliated. It is as follows:

1. Because the organization is required to be separately incorporated, the articles of incorporation and bylaws must reveal that the two organizations share a common set of beliefs, doctrines, or practices.
2. The headquarters church has the power to add, control or remove at least one of the subordinate organization's officers or directors.
3. The name of the subordinate organization indicates that there is some sort of relationship (similar names, or shared names such as First Christian Church and First Christian School).
4. The subordinate organization submits financial and operational reports to the headquarters church.
5. The headquarters church affirms its relationship with the subordinate organization.
6. Upon dissolution, the organization's assets are to be distributed to the church.
7. An organization must have some sort of "substantial connection" with a particular church as a condition of being considered an "integrated" auxiliary.

The types of organizations that you can incorporate separately can vary widely. They can be men's and women's organizations, seminaries, mission societies, and youth groups, outreach ministries, evangelistic traveling preaching ministries and much more.