A Primer on UMC Assets: Church-Related Institutions

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.

As indicated in a previous post on the ownership of church assets, there is a lack of clarity in how the trust clause applies to one particular set of assets: those of church-related institutions. United Methodists and their predecessors have been persistent founders of a variety of non-profit institutions and organizations: colleges, universities, seminaries, hospitals, nursing homes, social service agencies, camps, retreat centers, and more.

Many such institutions founded by United Methodists and their predecessors have since become independent of The United Methodist Church. They may still recognize their Methodist or EUB heritage, but there are no longer any formal ties between them and the denomination.

Yet many such institutions do still maintain some sort of formal connection to the denomination. The trust clause in ¶2552 refers to “[t]rustees of schools, colleges, universities, hospitals, homes, orphanages, institutes, and other institutions owned or controlled by any annual, jurisdictional, or central conference or any agency of The United Methodist Church,” indicating that such institutions may be bound by the trust clause.

These connections raise a host of related questions: How does one know if an institution is bound by the trust clause? Are such institutions also bound by the Book of Discipline? If there is some sort of split within the denomination, does that effect the assets of these institutions? What happens if these institutions try to cut their ties to the denomination as a result of the church’s turmoil? And of course, how could conflicts over control of these institutions lead to lawsuits?

Conflict over control of church-related institutions has already generated one high-profile lawsuit: the South Central Jurisdiction of the UMC is suing Southern Methodist University over SMU’s unilateral decision to sever (most of) its ties to the jurisdiction. This case has served to increase the questions and anxieties around the relationship of the denomination to its church-related institutions: Will SMU be a pattern for other cases?

Several factors influence the answer to this question.

As previously noted in this series, assets can only be owned by legal persons, including corporations. All or nearly all church-related institutions are established as their own legal corporation, most of them 501(c)3 corporations, i.e., non-profits. This status as legal corporations gives these institutions the legal standing that they need to own assets and do business. It also requires them to have articles of incorporation, which lay out the basic structures and rules by which each institution will function.

These articles of incorporation may also establish some sort of relationship with The United Methodist Church. There is not, however, any formulaic version of that relationship. In writing articles of incorporation, each institution draws upon its own unique history, purpose, church context, and time of writing in laying forth what (if any) formal relationship it has with The United Methodist Church (or predecessor body, if the articles were written before 1968). Thus, each institution’s relationship with the UMC is in many ways unique to that institution.

In general, however, it is useful to think about the sorts of relationships church-related institutions have with the UMC as dealing with one or both of two major issues: ownership and control.

Under ownership provisions, the articles of incorporation would stipulate a body of the UMC that is itself a legal entity as the owner of the church-related institution. This could be a local church, an annual conference, a jurisdiction, or a board or agency. Part of the issue in the SMU case is that SMU’s articles of incorporation previously said that SMU was “owned … by the South Central Jurisdictional Conference.”

Ownership gives a church body some right to the assets of the church-related institution. But that right can mean various things, according to the durability of the institution and the exact wording in its articles of incorporation.

Since each institution is itself a corporation capable of holding assets, ownership can be a largely theoretical concept if the institution is likely to endure indefinitely and has the right to keep all of its assets for itself, which legal persons generally do. On a practical level, an on-going, autonomous institution would continue to manage and control all its own assets, even if the church theoretically owned them.

The articles of incorporation would have to include an unusually strong ownership clause for a church body to take assets from a still-functioning, on-going church-related institution. Such provisions may exist for church-related institutions that are directly overseen and operated by church bodies, such as camps, retreat centers, and perhaps some social service agencies or clergy retirement homes (though I’m not certain about that). Yet for colleges, schools, seminaries, hospitals, and most social service agencies that are not directly run by church bodies, such strong ownership clauses are very unlikely.

Ownership becomes more relevant if an institution closes or dissolves. Who gets the remaining assets? Who assumes the remaining debts? Shutting down might seem like a remote possibility for a large university like SMU, but it might be a more realistic possibility for a church-related camp or retreat center.

Questions of what happens when an institution closes can be answered by a survivor clause in the articles of incorporation that stipulates who assumes assets and debts. If an ownership provision is accompanied by a survivor clause specifying that a part of the church would be the legal successor to that institution, should it ever cease to exist, that gives the church a good claim to the assets of the institution. Without such a clause, it might be hard for a church body to actually benefit tangibly from its theoretical ownership of an institution.

In addition to ownership, the other main avenue of relationship for church-related institutions is control. Here again, SMU’s articles of incorporation are illustrative. They also stipulated that the school would be “controlled by the South Central Jurisdictional Conference.”

Control can come in a variety of forms related to personnel or policy. One common form is the power to appoint some portion of the institution’s trustees, who then exert big-picture control over the institution. Another possible form of control would be the power to appoint staff leadership for the institution, which might be the case for annual conference-related camps, retreat centers, and social service agencies. Yet another possible form of control is the power to approve or veto certain decisions by the institution. Alternatively, the articles of incorporation could require an institution to adhere to certain denominational policies for the institution, perhaps related to some provisions of the Social Principles. Again, the possibilities are many, and the exact arrangements vary from institution to institution.

Moreover, it is also possible for an institution to be church related without that being spelled out in its articles of incorporation. There may be historical ties, on-going funding patterns, missional collaborations, or other bonds between an institution and a body of the UMC. If those relationships are not spelled out in the articles of incorporation, however, then the church has very little leverage in asserting any claims of ownership or control over the institution. It would be easy for the institution (or the church body) to break such connections.

So, is the SMU case indicative of things to come? The answer is likely yes and no. It is possible that there will be other cases wherein ownership and control are contested and even litigated, but each case is likely to play out differently because of the unique relationship established between each church-related institution and the UMC in that institution’s articles of incorporation. SMU had relatively strong language in its articles of incorporation connecting it to the South Central Jurisdiction. Most church-related institutions will not have such a strong connection laid out in their founding documents. Indeed, three other colleges have disaffiliated without triggering lawsuits.

Moreover, while church-related institutions directly run by church bodies (such as camps) may allow those church bodies to claim the institution’s assets for their own use, assets for most church-related institutions will remain in the hands of those institutions and cannot be transferred to the church itself. Thus, the fights that do occur are more likely to be fights about control over institutions rather than fights about ownership of property, as is mostly the case for SMU.

Amy Valdez Barker: In Relationship – Not Control

Today’s post is by Rev. Amy R. Valdez Barker, PhD. Rev. Valdez Barker is Executive Director of Global Mission Connections for Global Ministries of The United Methodist Church.

I am a recovering “control-freak. I am a Type A personality who wants things to be organized, strategized and implemented well. In some places, this has served me well. At other times, my need for control would get out of hand when it moved me away from people and towards the attitude of perfectionism.

I planned Conference-wide youth events, and because I worked with a team who planned every minute, every second of the gathering, I knew exactly what was supposed to happen. I wanted everything to go off perfectly! Whenever we deviated from the agenda, we would roll with the bump (though it drove me a bit crazy), but then do all that we could to get things back into order. That’s how I made sense of my world and even provided safety and security for parents and youth who wanted to be sure things would go according to plan.

Now, things never went 100% according to plan. There were always people or groups who would do something completely unplanned or unanticipated. They were youth after all, always wanting to see where they could push the boundaries, test their leaders and create new adventures.

Even so, I loved them! (And I still love them.) I’m a much better Christian, a much better mother and a much better human because of my ministries with youth then and today. Those experiences remind me of who I was and the type of person God continues to call me to be.

But, managing all those details and anticipating the limitless possibilities and surprises with plans “B” and “C” was exhausting. It didn’t allow me to be as present with the people and enjoy the moments as much as I could have. If I wanted to move closer to where God was leading me, I needed to let go of my controlling/perfectionist tendencies and move closer to where God was leading me and not where I was convinced I had to go. I needed to recover the balance of trusting God more and myself a good bit less. In other words, I had to let go of being a “control-freak.”

In my estimation, I think our denomination is at a point where we have to face our own failures as political “control-freaks.” General Conference 2019 has shown us that each part of our connection is trying to control the other by doubling-down on rules, regulations, policies and mandates in order to dictate how the Holy Spirit is moving in different parts of our world. But, this hasn’t been helping us grow the church and in many ways has been counter-productive to the strengthening of the kin-dom of God.

I used to think that if we all abided by the same set of rules and beliefs, (i.e., our ecclesiology) things would simply change and everybody would be clear about what it means to be a United Methodist Christian. And if we all agreed on that, there would be no ambiguity or differences. We would be nice, neat and uniform. In reality, I discovered how mis-guided and wrong I had become, worrying about protecting the idea of a united (single-thought/belief) institution that I thought I knew and loved.

As I look back at my experiences now, I realize it wasn’t the uniformity of the institution or the security of all believing and interpreting everything the same that I loved and held onto for our church.

No, it was the relationships. It was the incredible people I have met through a worldwide connection that has expanded my heart and my mind to a multitude of perceptions, cultures, experiences and contexts that are a part of the wideness of who God is and what God does in the world.

I’ve fallen in love with all of God’s people in their wisdom and expertise and in their failures and their challenges. I have fallen in love with God’s people who are put together and completely broken. I’ve fallen in love with God’s people from the east and from the west. I’ve fallen in love with God’s people from the tips of Alaska to the southernmost places in Cape Town, South Africa or Tierra del Fuego in South America.

The beauty of God’s people who come from every region of the world and every region of the world has shown us the problems, the challenges and the gifts of life, culture, and religion. God has taught me that the most important part of being in God’s kin-dom is the relationship we have with God and with one another.

This insight has left me wondering about what it means to be in relationship and yet have no control. I think we have many illustrations of that now and what it could look like for a Methodist connection.

Some people say that if we go into autonomous relationships there is no accountability. I disagree with that. The accountability comes in communication and expectations of the relationships. We often handle that now with MOU’s or Memorandum of Understanding, a fancy term for a covenant between partners. Sometimes our autonomous relationships are much stronger because we each have the ability to act independently and yet, there is a mutuality in growing together in grace and love.

I have met with leaders from the Korean Methodist Church, the British Methodist Church, the Methodist Church of the Caribbean and the Americas (MCCA) and the Uniting Church of Canada. All of these leaders and many more Methodist/Wesleyan and ecumenical partners appreciate and respect the relationships we at Global Ministries have built with them over the years. We work hard to find our common mission and vision and seek ways to collaborate so that we can have a greater impact for the people wherever we are together.

We learn so much from one another. I have learned about different types of leadership structures in these Methodist Churches.

For example, the MCCA use local lay pastors, circuit pastors and then area/regional elders to reach their communities across many islands and countries in the Caribbean. This is another way of dividing the labor for missional leadership.

I’ve learned how to start new churches from the Fijian Methodists and discovered their innovative practices of eco-tourism to support mission and ministry, while also educating about God’s creation. I’ve told their story to many US Annual Conference leaders and encouraged them to reach out to these Methodist colleagues to learn more and find ways to adapt it for their own context. This is what we mean by connecting the church in mission.

The gift of the autonomous relationships is that we can come together around mission, even if our theological understandings, our organizational structures, and our missional contexts may differ. When it comes to loving our neighbors by alleviating human suffering and seeking peace and justice for all, we can do that better together. We recognize that and so do our Wesleyan/Methodist partners throughout the world. It’s not always perfect, but it’s still the great gift of being in relationship for the sake of God’s mission. We don’t control each other; we learn from each other. I believe this is a better way for us to be a global church. We can be united around mission and join God in expanding the harvest.

As Bishop Carter put it simply in his chapter in the book Where Do We Go from Here? we must be:
“One with Christ – this is Unity.
One with each other – this is faithfulness.
One in ministry to all the world – this is fruitfulness.” (p. 43)

That’s what it could look like for a future Methodist global connection. If we are going to be one with Christ, then we’ve got to give up the need to control one another through polity and governance. If we are going to be one with each other, then we’ve got to focus on the people we are with and the journey we are on together, or in other words, live in the moment. And finally, if we are going to be one in ministry with all the world, then we the people of The United Methodist Church need to focus on the mission and truly be in ministry to all the world. Our UMC needs to give up control and put our whole trust in Christ our Savior for the sake of the future of mission and ministry.