Church Bookkeeper Says He Owns Church Records

By Raul Rivera

It was a frustrating day for the pastor of a small church in Illinois.  They had hired a CPA to do their accounting, which for two years handled all of the accounting records and gave the church monthly income and expense reports as well as balance sheets.  Each year the accountant also performed the annual audit, in keeping with the church's bylaws.  However, this January the church decided that they would do all of their own accounting.  They called the accountant and asked for the accounting file he used on his computer.  They also asked him to give them the official papers of the annual audits he performed. He told them that the electronic accounting file and audit papers were his and that he would not turn them over.  This was a cause for concern as the church felt they were being strong-armed by the accountant.  Could their accountant do that?  What does the law say about it?

Who owns the books?

It is probably safe to assume that nearly every church believes that church accounting records belong to the church.  But, do they?  When you think about it for a moment, the accounting records are electronic information and they are intellectual property.  This means that whoever creates them, whether he/she is a paid accountant or a volunteer, may have a legitimate claim to them.  Let me explain.  When a church outsources it's accounting to a professional bookkeeper, the bookkeeper performs the work at his/her office on his/her time.  This means that the data generated is his/her own.  Unless the church enters into an agreement with the bookkeeper to specifically make the data the church's intellectual property, he/she could place a claim on it.  Just because you pay for the service, it does not make the data yours.  It has to be specifically mentioned in the agreement that the work done by the bookkeeper is a work for hire.  In 1989, the U.S. Supreme Court held that a work created by a contractor is not subject to the work for hire provisions of Section 101 of Title 17 and that it can only be a work for hire if both parties agree in writing in advance. 

What if the bookkeeper is a volunteer staff?  Even more so, the work created by a volunteer bookkeeper is not necessarily subject to "work for hire" under Section 101 of Title 17 because the church is not paying for the work.  Title 17 makes it clear that a work is protected by copyright from the time it is created and it is the property of the author who created the work.  Moreover, none of the state corporation laws adequately address ownership of the data created. What could happen if the church bookkeeper becomes disgruntled and decides to exit?  He could leave and decide to keep the electronic records, and the church could find itself in an undesirable position. 

How to deal with ownership issues

Like most transactions, the party who is paying for a service holds the most negotiating power before the deal is made.  Before you ever enter into any agreement for your accounting make sure of the following:

1.     Never outsource your accounting on a verbal agreement.

2.     Make sure that the agreement signed between the church and the bookkeeper makes the records and the electronic accounting file a work for hire.

3.     If you use a volunteer bookkeeper, make sure that he/she signs a statement that all work generated, files, and electronic data are church property.

Language to include in the agreement

Below is a sample of some of the wording you should include in the agreement.

All work performed by XYZ Bookkeeping constitutes a "work for hire" as defined under Title 17 and all other relevant copyright laws.  To the fullest extent permitted, the CHURCH shall own all copyrights in and to such Work.  To the extent that any of the work performed by XYZ Bookkeeping is not considered a "work for hire," XYZ Bookkeeping hereby irrevocably assigns, transfers, and conveys to the CHURCH and its successors and assigns all right, title, and interest in and to the Work, including all copyrights, patents, trade secrets, and other intellectual property rights therein.

What you did not know

Years of experience reveal that there is a lot of information that your church does not know, but desperately needs.  You may be reading this article, all the while saying, "I have never thought of this."  It is common for many of the churches that attend our conferences to say the same thing.  I see it at every conference.  That is precisely why attending an upcoming conference may be one of the wisest decisions you could make this year for the well being of your ministry.