Monday, February 10, 2020

A Primer on UMC Assets: Annual Conferences and Jurisdictions

Today's post is by UM & Global blogmaster Dr. David W. Scott, Director of Mission Theology at the General Board of Global Ministries. The opinions and analysis expressed here are Dr. Scott's own and do not reflect in any way the official position of Global Ministries. Dr. Scott is neither a lawyer nor an accountant, and thus the following should not be interpreted as legal advice.

While the vast majority of UMC assets are held by local churches, annual conferences and jurisdictional conferences have important roles in managing UMC assets held in trust for the denomination (as described last week). In addition, annual conferences and jurisdictional conferences, as incorporated “legal persons,” own assets themselves, which are also held in trust for the denomination.

Perhaps the most interesting question regarding annual conference and jurisdictional assets related to possible futures of the UMC is what would happen to these assets if a US annual conference or jurisdiction were to leave the denomination.

Based on samples of 10 annual conferences in the US, the assets owned by the annual conferences run a range from $15 million up to $100 million in net assets. Most annual conference net assets were in the $15-50 million range. This represents between 3-7% of the total assets within an annual conference’s area. Since districts tend to own little if any property, this means that over 90% of the assets in any given annual conference are still in its local churches.

Jurisdictions also have some assets. Based on publicly available information for four out of the five jurisdictions, they each have between $300,000 and $1,200,000 in assets, almost entirely in financial rather than tangible form. No information on assets was publicly available for the Western Jurisdiction, but it seems likely that their numbers are similar to the other jurisdictions. Again, the trust clause applies to these jurisdictional assets as well.

Currently, the Book of Discipline makes no provisions for a US annual conference or jurisdiction to leave the denomination. There are provisions for central conferences and/or their annual conferences to become autonomous, but these apply only outside the US. Certainly, GC2020 could add a provision for US annual conferences to exit the denomination (as in the Protocol), but for now, there is no provision.

An annual conference or jurisdiction could, nonetheless, declare itself independent of the UMC, and such a scenario is not completely implausible in the current situation of the church. There have been rumblings of such a plan from the Western Jurisdiction or parts thereof, but it is also possible that a traditionalist annual conference could try to exit the UMC, as Tom Lambrecht has submitted legislation to allow that.

By departing with its property, an annual conference or jurisdiction would be breaking its trust to the UMC. The BOD is not clear, however, who would have the job of enforcing the trust clause against a departing annual conference or jurisdiction. This raises the legal question of standing. Not just anyone could try to sue to reclaim that property on behalf of the UMC. Suit could only be brought by a person or entity with standing, a legal term that essential means a valid interest in the case.

To determine standing, courts usually ask whether the party bringing the lawsuit has been harmed by the actions of another, and whether that harm could be redressed by a court ruling in their favor. Thus, to prove standing, a United Methodist entity would have to prove that they were financially or in some other way harmed by the departing annual conference taking their property, and that the situation could be made better by giving the property to someone else.

As it turns out, there are a variety of possible entities that might have standing in such a case. ¶2509.2 of the BOD says, “Any denominational unit authorized to hold title to property and to enforce trusts for the benefit of the denomination may bring suit in its own name to protect denominational interests.” That is a potentially broad category.

The entity with the best case for standing in a lawsuit against a departing annual conference would be that annual conference’s jurisdiction, who could make the case that the loss of the assets of that annual conference interfered with the jurisdiction’s ability to provide United Methodist spiritual care for the people living within its area. The jurisdiction could then seek redress by the property of the departing annual conference being given to a neighboring remaining annual conference, who could then extend its ministry to the area vacated by the departing annual conference.

It is also possible that suit could be brought by a loyalist church within the departing annual conference, who could argue that their ability to receive United Methodist spiritual care had been harmed by the loss of the assets of the departing annual conference. The proposed redress would be the same: give the assets to a neighboring annual conference, who would then extend its ministry to the area of the departing annual conference. Such a suit might be more difficult to bring if the jurisdiction opposed it or had taken no action to reassign the vacated territory, since the jurisdiction has the right to determine the boundaries of annual conferences within its territory, not churches or the secular courts. Nonetheless, such a suit could still be brought.

A neighboring loyalist annual conference could also sue to claim the assets of a departing annual conference, but it might be more difficult to prove how they were harmed by the departing annual conference keeping their assets, since their purview for the care of the UMC’s interest covers only their own territory. Similarly, any annual conference, local church, or individual at a further distance would have more difficult time yet providing standing.

GCFA is another possibility to bring a suit. GCFA has authority “[t]o take all necessary legal steps to safeguard and protect the interests and rights of the denomination; to maintain resources related to the denominational interests of The United Methodist Church, and to make provisions for legal counsel where necessary to protect the interests and rights of the denomination.” Since annual conference property could be construed as relevant to the “interests and rights of the denomination,” GCFA could have standing to bring a suit. The proposed redress, however, would probably involve giving the assets of the departing body to a remaining body, not to GCFA itself, since GCFA only administers the general funds of the church and is not in the business of holding local church property.

An entire jurisdiction might present a more difficult situation for those remaining to try to prove standing to sue for the property of that jurisdiction, but there are still plenty of opportunities for lawsuits here. The BOD reserves the right to determine jurisdictional borders to the General Conference, which cannot itself bring a lawsuit, but it could direct some other church entity to do so. GCFA might also use its authority here to “safeguard and protect the interests and rights of the denomination.”

For both annual conferences and jurisdictions, it is possible that courts would want to avoid becoming entangled in the politics of a church split. In the absence of clear provisions within the Book of Discipline for who is supposed to enforce the trust clause on annual conferences and jurisdictions, a lawsuit related to exercising the trust clause on annual conferences themselves (not on churches) might be dismissed. Or it might be allowed to proceed. There is, however, a very clear potential for lawsuits, perhaps from a variety of parties, even if the outcome of those lawsuits is not clear.

This still leaves questions about the property of churches within a departing annual conference or jurisdiction, a topic I’ll address next week.


  1. How is Lake Junaluska counted into these numbers? Or SMU?

    1. They are both separate 501(c)3 organizations and thus are not included in the direct assets of the jurisdictions, although the jurisdictions may have indirect ownership and control of them. They count as church-related institutions, which I've discussed in this post: