The Missing Link: How to Navigate Principles-Based Governance in Ministry

Synopsis
Governing boards are often keenly aware of the responsibilities for operating a ministry. However, many boards miss the connection to ownership. Boards exist to represent the interests of owners. If your board doesn’t regularly listen to the voice of the owners, or worse yet, isn’t sure who owns the ministry, you’re missing a very important link. 

How principles-based governance works
It’s time to begin unpacking how the principles-based governance model works. We start with the governing board in any ministry. Every nonprofit corporation is legally obligated to have a board of directors and corporate officers. The law obligates the board to act in the best interests of the owners of the corporation, even if such owners are limited to the members of the board only. A board has three duties: duty of care; duty of loyalty; duty of obedience.  

The duty of care obligates the board to care for the ministry, granting the board all authority, responsibility, accountability and liability for the ministry. The board draws its authority from the owners who have formed the board to protect and advance their interests. This duty focuses primarily on the board’s obligation to its owners. 

The duty of loyalty addresses conflicts of interest. No board member may act in the interest of themselves, their family, their business or any other person or organization at the expense of the ministry. Each board member is expected to be loyal, first to the ministry ahead of any other interest. 

The duty of obedience means the board is held legally responsible for keeping all local, state and federal laws and regulations. From accounting practices to employment law to tax filings to safety issues, the board is held accountable by law.  

Knowing your lane
A well-functioning governing board understands its place in the ministry as occupying the central position. Use the analogy of swim lanes in a pool. Governance is in the middle lane. Having been given all authority by the owners, the board delegates all operational authority to the executive leader. Boards are often keenly aware of their responsibilities regarding operations. Some delegate that authority clearly and keep out of operational detail. Others delegate haphazardly, if at all, and regularly interfere with operational details. Rarely is a board unaware of the need to run the ministry. 

However, many boards miss the link to owners. When those are legal owners, such as an association of congregations that own a Lutheran high school, the ownership question is a bit easier to answer. But a board must also be aware of its “moral owners.” Those are individuals or entities that have an interest in the ministry that rises to the level of shareholder in a for-profit business.  

Lutheran Church Extension Fund (LCEF) can help you work through the ownership question. It’s a question that must be answered for your board to properly function in its swim lane. The board reaches back to owners—not only for authority but also for input. Every governing board should have an ownership linkage committee that designs and plans the process for soliciting owner input every year. 

Ownership linkage is the process of asking owners if the ministry is still serving their interests. It helps the ministry look ahead at coming trends and cultural shifts. It keeps the owners connected to their ministry. The process of ownership linkage can take several forms. Town hall events, focus groups, interviews and online surveys, to name a few. The goal is to hear the voice of the owners. The board is then well informed to act on behalf of their owners. A board that neglects its owners sets a course for dysfunction, disconnection and disaster. Losing the faith and trust of owners hurts participation, compromises trust and diminishes financial support, among other struggles. 

At your next board meeting, take time to consider who owns your ministry. Don’t stop with just the legal owners, assuming they are easily defined, challenge yourselves to consider who might be your moral owners, as well. Who has a vested interest in seeing your ministry succeed at the level of a shareholder? When was the last time you intentionally sought their voice? More importantly, in what ways have you ignored their voices? Ownership linkage is vital to strong ministries. If your ministry is struggling, you might have a missing link! 

LCEF provides a Governance Systems Professional to help sharpen board function and guide boards through the process of adopting principles-based governance. Contact LCEF’s Ministry Solutions team at ministry.solutions@lcef.org to learn more.