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.
The vast majority of UMC assets (over 90%) are held by local churches. While local churches own this property, the trust clause stipulates that local church property (of all sorts – real estate, tangible personal property, and intangible property including financial assets) “shall be held in trust for The United Methodist Church and subject to the provisions of its Discipline.”
Yet annual conferences have important roles to play in managing these UMC assets. They exercise oversight of local assets held in trust for the denomination, as is also made clear in the BOD. ¶2503 states that local church property is “subject to the Discipline, usage, and ministerial appointments of said Church as from time to time authorized and declared by the General Conference and by the annual conference within whose bounds the said premises are situated.” (Emphasis added.) Elsewhere, annual conferences are given clear rights in the purchase and sale of any real property by local churches.
If, as explored last week, a US annual conference were to declare itself independent of the UMC, this would raise the question of what would happen to the assets of the local churches within that annual conference. Would they remain with the UMC or go with the departing annual conference?
While the Protocol (and perhaps other proposals) would address this question, since the BOD currently makes no provision for US annual conferences to leave the denomination, the answer to this question is complicated, more so than the relatively straightforward answer to the question of the property of local congregations exiting annual conferences that remain within the UMC.
The BOD connects local church property both to the denomination as a whole and to the annual conference in which it resides. This would raise complications for local church property within a departing annual conference. There would be conflicting obligations of trust for the local church to the departing annual conference and trust to the continuing denomination.
A local church who wanted to abide by the annual conference’s decision could say that it was acting in accordance with its obligation to use its property in trust for the annual conference. A local church that wanted to stay in the UMC in opposition to the annual conference’s decision could say that it was acting in accordance with its obligation to use its property in trust for the denomination. The latter might be the stronger case, but that doesn’t mean the former would have no case. Either way, lawsuits would likely ensue.
Here’s where the difference in legal statuses of the UMC as a whole and of the annual conference would come into play. The denomination as a whole is not a legal person able to own property or bring lawsuits to claim property; the annual conference (or at least its board of trustees) is.
Since the annual conference is generally the body tasked with enforcing the trust clause on local churches, a departing annual conference would have no incentive to enforce that clause on its churches on behalf of the denomination it was leaving. Thus, it’s safe to assume churches that wanted to leave with the annual conference would not face trust clause property barriers from that annual conference.
However, a local church or factions within a local church that wanted to stay with the denomination probably could sue to sever their trust clause obligations to the departing annual conference, arguing that they were instead being faithful to their trust clause obligation to the denomination.
One of the questions they would face in making their case would be how the situation could be remedied under a legal settlement. In other words, they would probably have to propose joining another annual conference to remain part of the UMC, thus entangling the other annual conference and probably the jurisdiction (who has authority over annual conference boundaries) in the lawsuit.
It is also possible that either loyalist churches or individuals within the departing annual conference or an adjacent loyalist annual conferences could sue to try to gain control of the property of local churches that willingly depart with an annual conference. They would have to prove standing, as discussed last week. That is, these loyalist players would have to demonstrate that they were harmed by the departing local churches and indicate who should receive the property if it was found that the property should stay with the UMC.
The BOD makes no provisions for the transfer of local church property to another church or an individual without consent of the annual conference, so it would probably be difficult (though not impossible) for other local churches to sue to gain control of the property of churches departing with their annual conference. That property would probably need to be given to a loyalist annual conference.
Adjacent annual conferences could also sue, since under current principles of United Methodist polity, they could, with the jurisdiction’s consent, claim the territory “vacated” by the departing annual conference. Such a case might be weaker for annual conferences trying to cross jurisdictional lines to claim territory, since the BOD clearly gives jurisdictions the right to set annual conferences boundaries within their own territory.
GCFA could also use its authority to “safeguard and protect the interests and rights of the denomination,” but it is unlikely that GCFA would have the resources to bring thousands of suits against all departing congregations.
A departing annual conference could also try the reverse strategy: to sue a local church within its borders that wanted to remain in the UMC, seeking that their property be transferred to the departing annual conference. It’s not clear that the annual conference could win such a suit. It’s likely that a lot of the argument would hinge on when and to what extent the BOD applied to a departing annual conference vs. when and to what extent whatever new rules it adopted for itself were in effect.
Of course, sometimes the threat of a lawsuit is an effective tactic to force others to negotiate. Thus, even if they weren’t confident that they could win, departing annual conferences could threaten to sue loyalist local churches, hoping to provoke negotiations about financially severing the tie between the church and the annual conference.
The bottom line is, again, that there are plenty of opportunities for lawsuits. Note that I am not recommending any of the lawsuits mentioned in this piece. I am merely trying to explore some of the legal issues around property that might arise in the UMC within the tumult of the next several years with the hope that by surfacing these issues, such lawsuits can be avoided.
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Showing posts with label property. Show all posts
Showing posts with label property. Show all posts
Monday, February 24, 2020
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.
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.
Monday, February 3, 2020
A Primer on UMC Assets: Local Church Assets
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 previously discussed, The United Methodist Church as a whole is not a legal entity capable of owning property or financial assets. Local church property (real or personal, tangible or intangible) is owned by local legal entities and held in trust for the denomination as a whole.
This trust clause applies to the property of all parts of The United Methodist Church, but local churches are in a unique position with regard to the trust clause for several reasons: ¶2503 explicitly names the annual conference, which generally is a legal person capable of owning property, as having authority over local church property. Several other places in the BOD also give the annual conference explicit powers regarding the sale or transfer of local church property or its release from the trust clause. ¶2509.2 gives annual conferences the authority to bring lawsuits to enforce the trust clause. All of these provisions add up to clear enforcement of the trust clause on local churches by annual conferences.
Thus, the trust clause as applied to local church property has generally stood the test in secular courts. While in some instances departing congregations have negotiated with their annual conferences to take assets, when the trust clause has ended up in court, annual conferences have almost always won ownership of the property of departing congregations. Incidentally, that’s true not just for the UMC, but also for the Episcopalian Church and other bodies that also have a trust clause in their church law.
As cut and dried as the trust clause may appear, there are facets to keep in mind when thinking through the sorts of conflicts and potential lawsuits that might arise over ownership of local church property.
First, while most people assume that the trust clause means that the annual conference owns local church property, that’s not technically true. The annual conference has authority over local church property, and local church property reverts to the annual conference if it ceases to be owned by a local UMC congregation, but the annual conference is not the legal person who owns the church property.
Who technically owns local church property depends on whether a congregation is incorporated. Most sizable congregations are incorporated as 501(c)3 organizations, but many small congregations are not. This means that for incorporated congregations, the property is owned by the local congregation as a corporate entity. For unincorporated congregations, the property is technically owned by the trustees, who as humans are legal persons. In either case, property ownership is exercised in trust for The United Methodist Church. The owner(s) of local church property can’t do whatever they want with it; they must abide by the stipulations of The Book of Discipline.
One problem here is that most bankers, investment brokers, and real estate agents are not familiar with the intricacies of the BOD. While it would violate the BOD, it might be possible for local leaders to work with bankers, brokers, or real estate agents unfamiliar with the trust clause to sell or otherwise dispose of local church property without annual conference consent. Such action would violate the Book of Discipline and thus expose the local church and its leaders to lawsuits from the annual conference, but it might be harder for the annual conference to recover property that was already disposed of.
Of course, the exit provision passed by General Conference 2019 and any future exit provisions passed by General Conference 2020 reduce the chances for lawsuits between local congregations and annual conferences over control of property.
Second, it’s important to remember that local church property includes more than just buildings. The trust clause applies to all other property that a local church owns, from its hymnals to its choir robes to its sound equipment to its vans to its tableware. It also applies to all financial assets owned by a local church. Thus, the question of property ownership goes beyond whether departing congregations can continue to worship in their same building. Any or all of these items could be a point of conflict between a departing church and the annual conference.
Certainly, the church building itself (and perhaps a parsonage) would likely be the biggest point of contention, since that generally represents the largest chunk of a local church’s assets. After that, who cares who keeps the Sunday School books, right? Maybe, but maybe not.
Especially when it comes to financial property, local congregations may have significant assets beyond their building over which annual conferences may want to assert their ownership. And larger churches may have a non-negligible amount of property in the form of vehicles, equipment, books, supplies, etc. Annual conferences have an incentive to assert their right to this property, even if just to give themselves better leverage in bargaining with a departing congregation.
Again, exit provisions reduce the chances for lawsuits between local congregations and annual conferences over control of buildings, equipment, and any other property. It is therefore worthwhile to keep in mind the scope of assets that could be at stake in such lawsuits.
Third, it is worth noting the variety of local church financial decision-makers established by the BOD. This array of decision-makers increases the chances for conflict over assets within the local church itself.
The Book of Discipline outlines property-related responsibilities for the charge conference, the board of trustees, the financial secretary, the treasurer, the finance committee as a whole, and, in cases where they exist, the permanent endowment committee and the directors of the local church foundation. Moreover, in multiple-point charges, there may be both local church trustees for the property of each congregation and a board of trustees for property owned by the charge as a whole.
The authority to make all decisions regarding property, both real and personal, is vested in the charge conference. Yet, to carry out its property and financial decisions, the charge conference relies upon the work of the board of trustees, the treasurer, the finance committee, and (if they exist) the permanent endowment committee and directors of the local church foundation. These individuals have access to and oversight of the property of a church. Thus, they might be able to direct this property to another church body (either another denomination or the annual conference) in defiance of or in absence of a charge conference decision, especially since charge conferences usually meet rarely.
Again, such action would violate the Book of Discipline and ultimately lead to lawsuits, but in an instance in which there is a lot of internal conflict within a church about that church’s continued relationship with the UMC, there is the possibility for factions within the church to use control of church property as a means to achieve their preferred outcome.
Since this type of conflict would occur within a church, an exit plan would not necessarily mitigate it. Control of property within a highly divided congregation may actually become more contentious with the existence of an exit plan. Such a plan could make local property a prize to be fought for between local “leave” and “stay” factions, with each group seeking control of the property. Nonetheless, an exit plan that sets or allows a congregation to set a relatively high standard of agreement for exiting is likely to reduce internal conflict around that decision.
As previously discussed, The United Methodist Church as a whole is not a legal entity capable of owning property or financial assets. Local church property (real or personal, tangible or intangible) is owned by local legal entities and held in trust for the denomination as a whole.
This trust clause applies to the property of all parts of The United Methodist Church, but local churches are in a unique position with regard to the trust clause for several reasons: ¶2503 explicitly names the annual conference, which generally is a legal person capable of owning property, as having authority over local church property. Several other places in the BOD also give the annual conference explicit powers regarding the sale or transfer of local church property or its release from the trust clause. ¶2509.2 gives annual conferences the authority to bring lawsuits to enforce the trust clause. All of these provisions add up to clear enforcement of the trust clause on local churches by annual conferences.
Thus, the trust clause as applied to local church property has generally stood the test in secular courts. While in some instances departing congregations have negotiated with their annual conferences to take assets, when the trust clause has ended up in court, annual conferences have almost always won ownership of the property of departing congregations. Incidentally, that’s true not just for the UMC, but also for the Episcopalian Church and other bodies that also have a trust clause in their church law.
As cut and dried as the trust clause may appear, there are facets to keep in mind when thinking through the sorts of conflicts and potential lawsuits that might arise over ownership of local church property.
First, while most people assume that the trust clause means that the annual conference owns local church property, that’s not technically true. The annual conference has authority over local church property, and local church property reverts to the annual conference if it ceases to be owned by a local UMC congregation, but the annual conference is not the legal person who owns the church property.
Who technically owns local church property depends on whether a congregation is incorporated. Most sizable congregations are incorporated as 501(c)3 organizations, but many small congregations are not. This means that for incorporated congregations, the property is owned by the local congregation as a corporate entity. For unincorporated congregations, the property is technically owned by the trustees, who as humans are legal persons. In either case, property ownership is exercised in trust for The United Methodist Church. The owner(s) of local church property can’t do whatever they want with it; they must abide by the stipulations of The Book of Discipline.
One problem here is that most bankers, investment brokers, and real estate agents are not familiar with the intricacies of the BOD. While it would violate the BOD, it might be possible for local leaders to work with bankers, brokers, or real estate agents unfamiliar with the trust clause to sell or otherwise dispose of local church property without annual conference consent. Such action would violate the Book of Discipline and thus expose the local church and its leaders to lawsuits from the annual conference, but it might be harder for the annual conference to recover property that was already disposed of.
Of course, the exit provision passed by General Conference 2019 and any future exit provisions passed by General Conference 2020 reduce the chances for lawsuits between local congregations and annual conferences over control of property.
Second, it’s important to remember that local church property includes more than just buildings. The trust clause applies to all other property that a local church owns, from its hymnals to its choir robes to its sound equipment to its vans to its tableware. It also applies to all financial assets owned by a local church. Thus, the question of property ownership goes beyond whether departing congregations can continue to worship in their same building. Any or all of these items could be a point of conflict between a departing church and the annual conference.
Certainly, the church building itself (and perhaps a parsonage) would likely be the biggest point of contention, since that generally represents the largest chunk of a local church’s assets. After that, who cares who keeps the Sunday School books, right? Maybe, but maybe not.
Especially when it comes to financial property, local congregations may have significant assets beyond their building over which annual conferences may want to assert their ownership. And larger churches may have a non-negligible amount of property in the form of vehicles, equipment, books, supplies, etc. Annual conferences have an incentive to assert their right to this property, even if just to give themselves better leverage in bargaining with a departing congregation.
Again, exit provisions reduce the chances for lawsuits between local congregations and annual conferences over control of buildings, equipment, and any other property. It is therefore worthwhile to keep in mind the scope of assets that could be at stake in such lawsuits.
Third, it is worth noting the variety of local church financial decision-makers established by the BOD. This array of decision-makers increases the chances for conflict over assets within the local church itself.
The Book of Discipline outlines property-related responsibilities for the charge conference, the board of trustees, the financial secretary, the treasurer, the finance committee as a whole, and, in cases where they exist, the permanent endowment committee and the directors of the local church foundation. Moreover, in multiple-point charges, there may be both local church trustees for the property of each congregation and a board of trustees for property owned by the charge as a whole.
The authority to make all decisions regarding property, both real and personal, is vested in the charge conference. Yet, to carry out its property and financial decisions, the charge conference relies upon the work of the board of trustees, the treasurer, the finance committee, and (if they exist) the permanent endowment committee and directors of the local church foundation. These individuals have access to and oversight of the property of a church. Thus, they might be able to direct this property to another church body (either another denomination or the annual conference) in defiance of or in absence of a charge conference decision, especially since charge conferences usually meet rarely.
Again, such action would violate the Book of Discipline and ultimately lead to lawsuits, but in an instance in which there is a lot of internal conflict within a church about that church’s continued relationship with the UMC, there is the possibility for factions within the church to use control of church property as a means to achieve their preferred outcome.
Since this type of conflict would occur within a church, an exit plan would not necessarily mitigate it. Control of property within a highly divided congregation may actually become more contentious with the existence of an exit plan. Such a plan could make local property a prize to be fought for between local “leave” and “stay” factions, with each group seeking control of the property. Nonetheless, an exit plan that sets or allows a congregation to set a relatively high standard of agreement for exiting is likely to reduce internal conflict around that decision.
Monday, January 20, 2020
A Primer on UMC Assets: Trust vs. Ownership
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 recounted in my previous two posts, the assets of The United Methodist Church are governed by the two principles of ownership by legal entities (usually non-profit corporations) and trust for the denomination. These two principles apply to all forms of property owned by any official entity within The United Methodist Church – including annual conferences, jurisdictions, boards and agencies, and others – not just to buildings owned by local churches.
Having laid out this basic framework, it is worth exploring in some greater detail the relationship between trust and ownership. Both give certain parties rights relative to property, but the nature of those rights and who holds them differs in the two scenarios.
Before I go further, however, it is important to note a couple of very important caveats. First, as indicated above, I am a theologian, not a lawyer. The following is an attempt to give a general explanation for laypeople of broad principles that structure the polity of the church. It is not specific legal advice that will be accurate in all cases.
Second, the specifics of property law vary from place to place. There are differences in property law between the different countries in which The United Methodist Church exists. But there are also differences across state property laws in different states in the United States. Since a lot of property law exists at the state rather than the federal level, that means there can be significant variation across annual conferences or other bodies of the church. Very little can be said with any specificity that will apply to all United Methodist bodies in all places.
Those caveats out of the way, here’s some of what can be said generally about ownership and trust.
Both ownership and trust come out of a Western legal tradition of understanding property wherein ownership is largely construed in terms of the rights to use that property and control over the use of that property. Put simply, an owner is a legal entity that has the ultimate right to control how and by whom a piece of property is used. The owner can use it themselves, or they can allow others to use it, but the decisions regarding that use lie with the owner. In general, an owner can do whatever they want with their property, within the limitations of the law.
Trust is an arrangement between three parties that puts some restrictions on the rights and use of property not found under the most basic form of ownership. In a trust, one party (technically, the grantor, trustor, or settlor) conveys ownership of a property to a second party (the trustee) with the stipulation that the property must be used for the benefit of a third party (the beneficiary).
Prior to setting up a trust, the trustor owns the property outright. But they give up that ownership in transferring that property to the trustee. There are certain cases in which a grantor might be able to receive that property back (“revocable trusts”), but in general, they relinquish all claims of ownership to the property (“irrevocable trusts”).
The trustee assumes ownership of the property, but they are not free to do anything they way with it, as under basic ownership. Their rights to the property are limited by the stipulation that they use that property for the good of the beneficiary. They are legally prohibited from doing anything with the property that would harm the interests of the beneficiary. Yet as owner of the property, the trustee does get to make decisions about how to use that property for the good of the beneficiary.
The beneficiary does not own the property – the trustee does, but the beneficiary does receive the benefits of the use of that property. The beneficiary cannot make any and all decisions about the use of the property – again, that power is reserved for the trustee, but those decisions are supposed to be in the beneficiary’s best interest. The beneficiary may have some power to assert what they see as in their best interest, but that power is limited. They don’t own the property, so there are things they can’t legally force the trustee to do with the property.
To give an example from family property, let’s assume there is a wealthy parent with a chunk of money. As owner of that money, they can use it any way they want – spend it, invest it, give it away, even gamble with it. As long as they’re not doing anything illegal with it (buying drugs, offering bribes, etc.), it’s theirs to use.
Now assume that parent acts as a trustor to put this money in a trust administered by their lawyers, who would serve as the trustees, for the sake of their children’s education, the children thus being beneficiaries.
The parent relinquishes ownership of the money put into this trust, but they establish some rules for how that money should be used when they transfer it to the trust. Doing this with the money might bring a tax benefit to them, but they can no longer spend or use that money for themselves.
The lawyers, as trustees of the money, are responsible for making sure the money is being well-stewarded and used for the purposes set up. They cannot spend that money however they want, even though they are the executors of the trust, which legally owns the money.
The children benefit from that money, but they don’t own the money. They benefit from the money is thus limited by the rules set up by the parent. They cannot use the money to buy a car, for instance, since the parent stipulated that the money be used for their education.
How does this basic framework apply to the UMC? In this instance, individual donors are the trustors, giving over money to various UMC legal persons, who function as the trustees, for the benefit of the denomination as a whole, the beneficiary.
Not all donors may realize that’s what they’re doing when they give to the offering plate, but that’s essentially what’s going on. Except in rare circumstances, upon giving property to a church entity, the donor loses ownership of and rights over that property. Just as you can’t get your money back after a donation to the Red Cross, you generally can’t get back the money you give to the church.
The UMC legal entity (local church, annual conference, board or agency, etc.) as the trustee is the legal owner of the property. But they are required to use that property for the benefit of the whole of the United Methodist connection, within the restrictions and stipulations set up by donors for particular pieces of property. They cannot simply use their property in any way that they want. This is why, for instance, there are rules and restrictions regarding selling, mortgaging, or renovating local church buildings – those buildings must contribute to the good of the connection as a whole.
The UMC as a whole is the beneficiary of the trust, which means that all property owned by UMC entities is supposed to benefit the connection as a whole. But since the UMC is the beneficiary and not the owner, that means that there are things that General Conference (as decision-making body for the whole connection) might not be able to ask or require that various church entities do with their property, since the UMC as a whole does not own it and thus does not have full rights to decision how to use that property.
Again, there are many very complicated and technical issues at stake here, and it is impossible to comment on the application of these basic principles to all of them. Future posts will try to look at how these general issues play out in more specific cases and especially how this system can break down.
As recounted in my previous two posts, the assets of The United Methodist Church are governed by the two principles of ownership by legal entities (usually non-profit corporations) and trust for the denomination. These two principles apply to all forms of property owned by any official entity within The United Methodist Church – including annual conferences, jurisdictions, boards and agencies, and others – not just to buildings owned by local churches.
Having laid out this basic framework, it is worth exploring in some greater detail the relationship between trust and ownership. Both give certain parties rights relative to property, but the nature of those rights and who holds them differs in the two scenarios.
Before I go further, however, it is important to note a couple of very important caveats. First, as indicated above, I am a theologian, not a lawyer. The following is an attempt to give a general explanation for laypeople of broad principles that structure the polity of the church. It is not specific legal advice that will be accurate in all cases.
Second, the specifics of property law vary from place to place. There are differences in property law between the different countries in which The United Methodist Church exists. But there are also differences across state property laws in different states in the United States. Since a lot of property law exists at the state rather than the federal level, that means there can be significant variation across annual conferences or other bodies of the church. Very little can be said with any specificity that will apply to all United Methodist bodies in all places.
Those caveats out of the way, here’s some of what can be said generally about ownership and trust.
Both ownership and trust come out of a Western legal tradition of understanding property wherein ownership is largely construed in terms of the rights to use that property and control over the use of that property. Put simply, an owner is a legal entity that has the ultimate right to control how and by whom a piece of property is used. The owner can use it themselves, or they can allow others to use it, but the decisions regarding that use lie with the owner. In general, an owner can do whatever they want with their property, within the limitations of the law.
Trust is an arrangement between three parties that puts some restrictions on the rights and use of property not found under the most basic form of ownership. In a trust, one party (technically, the grantor, trustor, or settlor) conveys ownership of a property to a second party (the trustee) with the stipulation that the property must be used for the benefit of a third party (the beneficiary).
Prior to setting up a trust, the trustor owns the property outright. But they give up that ownership in transferring that property to the trustee. There are certain cases in which a grantor might be able to receive that property back (“revocable trusts”), but in general, they relinquish all claims of ownership to the property (“irrevocable trusts”).
The trustee assumes ownership of the property, but they are not free to do anything they way with it, as under basic ownership. Their rights to the property are limited by the stipulation that they use that property for the good of the beneficiary. They are legally prohibited from doing anything with the property that would harm the interests of the beneficiary. Yet as owner of the property, the trustee does get to make decisions about how to use that property for the good of the beneficiary.
The beneficiary does not own the property – the trustee does, but the beneficiary does receive the benefits of the use of that property. The beneficiary cannot make any and all decisions about the use of the property – again, that power is reserved for the trustee, but those decisions are supposed to be in the beneficiary’s best interest. The beneficiary may have some power to assert what they see as in their best interest, but that power is limited. They don’t own the property, so there are things they can’t legally force the trustee to do with the property.
To give an example from family property, let’s assume there is a wealthy parent with a chunk of money. As owner of that money, they can use it any way they want – spend it, invest it, give it away, even gamble with it. As long as they’re not doing anything illegal with it (buying drugs, offering bribes, etc.), it’s theirs to use.
Now assume that parent acts as a trustor to put this money in a trust administered by their lawyers, who would serve as the trustees, for the sake of their children’s education, the children thus being beneficiaries.
The parent relinquishes ownership of the money put into this trust, but they establish some rules for how that money should be used when they transfer it to the trust. Doing this with the money might bring a tax benefit to them, but they can no longer spend or use that money for themselves.
The lawyers, as trustees of the money, are responsible for making sure the money is being well-stewarded and used for the purposes set up. They cannot spend that money however they want, even though they are the executors of the trust, which legally owns the money.
The children benefit from that money, but they don’t own the money. They benefit from the money is thus limited by the rules set up by the parent. They cannot use the money to buy a car, for instance, since the parent stipulated that the money be used for their education.
How does this basic framework apply to the UMC? In this instance, individual donors are the trustors, giving over money to various UMC legal persons, who function as the trustees, for the benefit of the denomination as a whole, the beneficiary.
Not all donors may realize that’s what they’re doing when they give to the offering plate, but that’s essentially what’s going on. Except in rare circumstances, upon giving property to a church entity, the donor loses ownership of and rights over that property. Just as you can’t get your money back after a donation to the Red Cross, you generally can’t get back the money you give to the church.
The UMC legal entity (local church, annual conference, board or agency, etc.) as the trustee is the legal owner of the property. But they are required to use that property for the benefit of the whole of the United Methodist connection, within the restrictions and stipulations set up by donors for particular pieces of property. They cannot simply use their property in any way that they want. This is why, for instance, there are rules and restrictions regarding selling, mortgaging, or renovating local church buildings – those buildings must contribute to the good of the connection as a whole.
The UMC as a whole is the beneficiary of the trust, which means that all property owned by UMC entities is supposed to benefit the connection as a whole. But since the UMC is the beneficiary and not the owner, that means that there are things that General Conference (as decision-making body for the whole connection) might not be able to ask or require that various church entities do with their property, since the UMC as a whole does not own it and thus does not have full rights to decision how to use that property.
Again, there are many very complicated and technical issues at stake here, and it is impossible to comment on the application of these basic principles to all of them. Future posts will try to look at how these general issues play out in more specific cases and especially how this system can break down.
Monday, February 11, 2019
What are the differences between the five exit plans?
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.
As indicated last week, one likely scenario for General Conference 2019 is that a exit plan will be passed without any other plan also being passed. But the question remains: which exit plan?
There are currently five different exit clause petitions that will come before GC2019 - Brooks (Petition 90051), Tull (Petition 90056), Ottjes (Petition 90058), Boyette (Petition 90059), and Taylor (Petition 90066). Here is how these five plans stack up on a variety of points of comparison.
Brooks (Petition 90051)
Breadth of reason for departure: Departure not limited to disagreements over sexuality
Timeframe for departure: Exits allowed during 2020
Timeline for process: Not stipulated
Local church majority needed to approve: 2/3 of church conference or church local conference
Role of District Superintendents, bishops, and annual conferences: DS presides at church local conference vote of disaffiliation
Payment of unfunded pension liabilities: Not mentioned
Local church assumes property debt: Not mentioned
Use of denominational reserve funds: Not mentioned
Payment of apportionments: Departing church pays apportionment for year of withdrawal (2020)
Other stipulations: Departing church must pay penalty of 50% average annual budget
Tull (Petition 90056)
Breadth of reason for departure: Departure not limited to disagreements over sexuality
Timeframe for departure: two years after passage
Timeline for process: Not stipulated
Local church majority needed to approve: 2/3 of church conference
Role of District Superintendents, bishops, and annual conferences: prohibited from delaying vote by local church
Payment of unfunded pension liabilities: Yes
Local church assumes property debt: Yes
Use of denominational reserve funds: Not mentioned
Payment of apportionments: Departing church pays twice yearly apportionment
Other stipulations: Departing church repays all moneys received from the annual conference in the previous two years. Departing church pays filing fees to release trust clause claims.
Ottjes (Petition 90058)
Breadth of reason for departure: Limited to disagreements about sexuality
Timeframe for departure: No limit
Timeline for process: Must include 90 days of discernment
Local church majority needed to approve: 2/3 of church conference
Role of District Superintendents, bishops, and annual conferences: Must facilitate departure
Payment of unfunded pension liabilities: Not mentioned
Local church assumes property debt: Yes
Use of denominational reserve funds: Not mentioned
Payment of apportionments: Not mentioned
Other stipulations: None
Boyette (Petition 90059)
Breadth of reason for departure: Limited to disagreements with the Book of Discipline
Timeframe for departure: No limit
Timeline for process: Must include 30 days of discernment
Local church majority needed to approve: 55% of church conference or 2/3 of charge conference
Role of District Superintendents, bishops, and annual conferences: Must facilitate departure
Payment of unfunded pension liabilities: Yes
Local church assumes property debt: Yes
Use of denominational reserve funds: Used to offset unfunded pension liabilities
Payment of apportionments: No
Other stipulations: None
Taylor (Petition 90066)
Breadth of reason for departure: Disagreement with changes to Book of Displine stance on homosexuality passed by GC2019
Timeframe for departure: Must finish by Dec. 31, 2023
Timeline for process: Not stipulated
Local church majority needed to approve: 2/3 of church conference
Role of District Superintendents, bishops, and annual conferences: DS appoints a task force on church viability after exit; bishop sets terms of departure with the cabinet
Payment of unfunded pension liabilities: Yes
Local church assumes property debt: Yes
Use of denominational reserve funds: No
Payment of apportionments: Departing church pays apportionments for the year before and the year following departure
Other stipulations: Departing church pays back last five years of annual conference grants. Departing churches can continue to sponsor benefit plans through WesPath.
As indicated last week, one likely scenario for General Conference 2019 is that a exit plan will be passed without any other plan also being passed. But the question remains: which exit plan?
There are currently five different exit clause petitions that will come before GC2019 - Brooks (Petition 90051), Tull (Petition 90056), Ottjes (Petition 90058), Boyette (Petition 90059), and Taylor (Petition 90066). Here is how these five plans stack up on a variety of points of comparison.
Brooks (Petition 90051)
Breadth of reason for departure: Departure not limited to disagreements over sexuality
Timeframe for departure: Exits allowed during 2020
Timeline for process: Not stipulated
Local church majority needed to approve: 2/3 of church conference or church local conference
Role of District Superintendents, bishops, and annual conferences: DS presides at church local conference vote of disaffiliation
Payment of unfunded pension liabilities: Not mentioned
Local church assumes property debt: Not mentioned
Use of denominational reserve funds: Not mentioned
Payment of apportionments: Departing church pays apportionment for year of withdrawal (2020)
Other stipulations: Departing church must pay penalty of 50% average annual budget
Tull (Petition 90056)
Breadth of reason for departure: Departure not limited to disagreements over sexuality
Timeframe for departure: two years after passage
Timeline for process: Not stipulated
Local church majority needed to approve: 2/3 of church conference
Role of District Superintendents, bishops, and annual conferences: prohibited from delaying vote by local church
Payment of unfunded pension liabilities: Yes
Local church assumes property debt: Yes
Use of denominational reserve funds: Not mentioned
Payment of apportionments: Departing church pays twice yearly apportionment
Other stipulations: Departing church repays all moneys received from the annual conference in the previous two years. Departing church pays filing fees to release trust clause claims.
Ottjes (Petition 90058)
Breadth of reason for departure: Limited to disagreements about sexuality
Timeframe for departure: No limit
Timeline for process: Must include 90 days of discernment
Local church majority needed to approve: 2/3 of church conference
Role of District Superintendents, bishops, and annual conferences: Must facilitate departure
Payment of unfunded pension liabilities: Not mentioned
Local church assumes property debt: Yes
Use of denominational reserve funds: Not mentioned
Payment of apportionments: Not mentioned
Other stipulations: None
Boyette (Petition 90059)
Breadth of reason for departure: Limited to disagreements with the Book of Discipline
Timeframe for departure: No limit
Timeline for process: Must include 30 days of discernment
Local church majority needed to approve: 55% of church conference or 2/3 of charge conference
Role of District Superintendents, bishops, and annual conferences: Must facilitate departure
Payment of unfunded pension liabilities: Yes
Local church assumes property debt: Yes
Use of denominational reserve funds: Used to offset unfunded pension liabilities
Payment of apportionments: No
Other stipulations: None
Taylor (Petition 90066)
Breadth of reason for departure: Disagreement with changes to Book of Displine stance on homosexuality passed by GC2019
Timeframe for departure: Must finish by Dec. 31, 2023
Timeline for process: Not stipulated
Local church majority needed to approve: 2/3 of church conference
Role of District Superintendents, bishops, and annual conferences: DS appoints a task force on church viability after exit; bishop sets terms of departure with the cabinet
Payment of unfunded pension liabilities: Yes
Local church assumes property debt: Yes
Use of denominational reserve funds: No
Payment of apportionments: Departing church pays apportionments for the year before and the year following departure
Other stipulations: Departing church pays back last five years of annual conference grants. Departing churches can continue to sponsor benefit plans through WesPath.
Friday, February 8, 2019
Why "exit only" is the plan most likely to pass GC2019
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.
Most of the coverage of the plans laid before the delegates of General Conference 2019 has focused on four: the Connectional Conference Plan, the One Church Plan, the Simple Plan, and the (Modified) Traditional Plan. Yet the plan most likely to pass GC2019 is none of these. The mostly likely plan to pass GC2019 is an exit plan - that is, a plan that relaxes the trust clause which states that the denomination, not local churches, owns church buildings - which could be passed without being tied to a larger piece of legislation.
First of all, none of the other plans seem a shoe-in. Even the supporters of the Connectional Conference Plan and the Simple Plan acknowledge that they do not have enough support to pass. Traditionalists in Good News seem to think that the One Church Plan has insufficient votes, though they may be underestimating their opponents. At the same time, traditionalist messaging in support of the Connectional Conference Plan and exit plans and their unwillingness to declare preemptive victory suggests they doubt their own plan has enough votes. Centrist messaging has given fewer tells, so it is unclear what their take on the situation is. Moreover, the Holy Spirit and other surprises may always happen, but at this point, it does not seem a foregone conclusion that one of the four main plans will pass.
Yet, there seems to be building momentum from a variety of places on the theological spectrum for an exit clause to be passed. Traditionalists associated with the WCA have declared their intention to leave the denomination if the Modified Traditionalist Plan is not passed (and maybe even if it is). Good News is actively advocated the adoption of one of three exit clauses. Although Uniting Methodists has called for a referral of exit plans to GC2020, it is still likely that some centrists and progressives would like to let traditionalists leave, since it would strengthen their position in the remaining denomination. It is also possible some progressives might want to leave the denomination. Thus, an exit clause could have support across a range of American United Methodists. Because there are five petitions that present exit clauses alone, each of which will be voted on separately, it is entirely possible that such a petition would pass, but that no major plan would pass in addition.
Considering this possibility leads to three questions:
1. How would delegates from the central conferences view an exit clause?
It is unlikely that an exit clause could pass without some support among central conference delegates. Relaxing the trust clause so that American churches could leave the denomination could seem to central conference delegates like Americans fighting about American money, and thus an issue without clear implications for them.
This is where the terms of the exit clause become important. "Cheap" exit clauses - ones that pay unfunded pension liabilities but which pay nothing in apportionments or even drain denominational reserve funds are likely to be less palatable to central conference delegates. Apportionment dollars fund grants and programs that central conferences depend upon. Central conference delegates might see such "cheap" exit clauses as a betrayal of their trust in American partners and a direct financial hit to their conferences. If central conference delegates do support an exit clause, it is likely to be one that includes some level of apportionment payout for departing churches.
2. Which exit clause will be approved?
There are currently five different exit clause petitions that will come before GC2019 - Brooks (Petition 90051), Tull (Petition 90056), Ottjes (Petition 90058), Boyette (Petition 90059), and Taylor (Petition 90066). That body will have the responsibility of amending and refining as many of those as they want, but they are likely to pass only one. To do more would seem redundant. Good News has indicated support of three of the five (Ottjes, Boyette, and Taylor), though it has suggested amendments to two of them (Ottjes and Taylor). The other two exit plans may also find support from different quarters.
Yet the five different plans come with different terms for exiting, which may be further amended during discussion. Key differences include the following: How broad is the exit - must an exit be tied directly to the debate over gay marriage and ordination? How long will the exit window be open? What size majority within a local church must vote for exit? Will district superintendents, bishops, annual conferences, or others outside the local church have a role in approving exit? By what calculation will exiting churches pay for their unfunded pension liabilities? Will denominational reserve funds be used to underwrite exiting churches' unfunded pension liabilities? Will exiting churches be required to pay back apportionments or even a year or two of future apportionments? A post next week will run down how the five current petitions address these and other areas.
3. What will the denomination look like after churches take the exit clause?
If an exit only plan is indeed all that is passed by GC2019, who will take that exit? While the conventional wisdom would say, "traditionalists," the question still remains how many. Moreover, will others also take the exit? Are there progressives who would like to leave as well? Are there other congregations who would like to shed their denominational ties for reasons that are not directly tied to debates over sexuality? Would any churches in the central conferences use the opportunity to exit the denomination - either because of issues related to sexuality or because of unrelated power struggles among local leaders?
When the dust settles, how many people will be left within The United Methodist Church, where will they be located, and what will their theological and spiritual inclinations be? And how much money will they continue to give toward connectional ministries through the apportionment system? The GCFA board has already recommended a 23% reduction in US apportionments for the 2021-2024 quadrennium. If substantial number of American United Methodists leave the church, this will have further deleterious effects on general agencies and other connectional ministries.
My point here is not that an exit only situation would necessarily be good or bad. I pray that God lead the church and GC2019 in their decision-making. I know that whatever decisions are made, some change will come, and change always has both good and bad aspects to it.
I do, however, think that it would behoove GC delegates and other leaders to begin thinking about what an "exit only" scenario would look like and what it would mean for the church, rather than focusing all their attention on the other plans. The more prayerful time and reflection that goes into an "exit only" plan, the better it will be, if that is indeed what comes to pass.
Most of the coverage of the plans laid before the delegates of General Conference 2019 has focused on four: the Connectional Conference Plan, the One Church Plan, the Simple Plan, and the (Modified) Traditional Plan. Yet the plan most likely to pass GC2019 is none of these. The mostly likely plan to pass GC2019 is an exit plan - that is, a plan that relaxes the trust clause which states that the denomination, not local churches, owns church buildings - which could be passed without being tied to a larger piece of legislation.
First of all, none of the other plans seem a shoe-in. Even the supporters of the Connectional Conference Plan and the Simple Plan acknowledge that they do not have enough support to pass. Traditionalists in Good News seem to think that the One Church Plan has insufficient votes, though they may be underestimating their opponents. At the same time, traditionalist messaging in support of the Connectional Conference Plan and exit plans and their unwillingness to declare preemptive victory suggests they doubt their own plan has enough votes. Centrist messaging has given fewer tells, so it is unclear what their take on the situation is. Moreover, the Holy Spirit and other surprises may always happen, but at this point, it does not seem a foregone conclusion that one of the four main plans will pass.
Yet, there seems to be building momentum from a variety of places on the theological spectrum for an exit clause to be passed. Traditionalists associated with the WCA have declared their intention to leave the denomination if the Modified Traditionalist Plan is not passed (and maybe even if it is). Good News is actively advocated the adoption of one of three exit clauses. Although Uniting Methodists has called for a referral of exit plans to GC2020, it is still likely that some centrists and progressives would like to let traditionalists leave, since it would strengthen their position in the remaining denomination. It is also possible some progressives might want to leave the denomination. Thus, an exit clause could have support across a range of American United Methodists. Because there are five petitions that present exit clauses alone, each of which will be voted on separately, it is entirely possible that such a petition would pass, but that no major plan would pass in addition.
Considering this possibility leads to three questions:
1. How would delegates from the central conferences view an exit clause?
It is unlikely that an exit clause could pass without some support among central conference delegates. Relaxing the trust clause so that American churches could leave the denomination could seem to central conference delegates like Americans fighting about American money, and thus an issue without clear implications for them.
This is where the terms of the exit clause become important. "Cheap" exit clauses - ones that pay unfunded pension liabilities but which pay nothing in apportionments or even drain denominational reserve funds are likely to be less palatable to central conference delegates. Apportionment dollars fund grants and programs that central conferences depend upon. Central conference delegates might see such "cheap" exit clauses as a betrayal of their trust in American partners and a direct financial hit to their conferences. If central conference delegates do support an exit clause, it is likely to be one that includes some level of apportionment payout for departing churches.
2. Which exit clause will be approved?
There are currently five different exit clause petitions that will come before GC2019 - Brooks (Petition 90051), Tull (Petition 90056), Ottjes (Petition 90058), Boyette (Petition 90059), and Taylor (Petition 90066). That body will have the responsibility of amending and refining as many of those as they want, but they are likely to pass only one. To do more would seem redundant. Good News has indicated support of three of the five (Ottjes, Boyette, and Taylor), though it has suggested amendments to two of them (Ottjes and Taylor). The other two exit plans may also find support from different quarters.
Yet the five different plans come with different terms for exiting, which may be further amended during discussion. Key differences include the following: How broad is the exit - must an exit be tied directly to the debate over gay marriage and ordination? How long will the exit window be open? What size majority within a local church must vote for exit? Will district superintendents, bishops, annual conferences, or others outside the local church have a role in approving exit? By what calculation will exiting churches pay for their unfunded pension liabilities? Will denominational reserve funds be used to underwrite exiting churches' unfunded pension liabilities? Will exiting churches be required to pay back apportionments or even a year or two of future apportionments? A post next week will run down how the five current petitions address these and other areas.
3. What will the denomination look like after churches take the exit clause?
If an exit only plan is indeed all that is passed by GC2019, who will take that exit? While the conventional wisdom would say, "traditionalists," the question still remains how many. Moreover, will others also take the exit? Are there progressives who would like to leave as well? Are there other congregations who would like to shed their denominational ties for reasons that are not directly tied to debates over sexuality? Would any churches in the central conferences use the opportunity to exit the denomination - either because of issues related to sexuality or because of unrelated power struggles among local leaders?
When the dust settles, how many people will be left within The United Methodist Church, where will they be located, and what will their theological and spiritual inclinations be? And how much money will they continue to give toward connectional ministries through the apportionment system? The GCFA board has already recommended a 23% reduction in US apportionments for the 2021-2024 quadrennium. If substantial number of American United Methodists leave the church, this will have further deleterious effects on general agencies and other connectional ministries.
My point here is not that an exit only situation would necessarily be good or bad. I pray that God lead the church and GC2019 in their decision-making. I know that whatever decisions are made, some change will come, and change always has both good and bad aspects to it.
I do, however, think that it would behoove GC delegates and other leaders to begin thinking about what an "exit only" scenario would look like and what it would mean for the church, rather than focusing all their attention on the other plans. The more prayerful time and reflection that goes into an "exit only" plan, the better it will be, if that is indeed what comes to pass.
Monday, July 2, 2018
Recommended reading: The US Supreme Court on trust clauses
While a Supreme Court case decided in this summer's spate of rulings did not gather much national notice, it may be the one most relevant for the future of the UMC. In a dispute between the Episcopal Church's South Carolina diocese and breakaway churches over control of property, the US Supreme Court declined to hear an appeal by the breakaway churches. This leaves in place a lower court ruling that upholds the Episcopal Church's version of the trust clause, in which all property belongs to the denomination, not individual churches.
For more on this case, read this Religion News Service article.
The case could have significant implications for the UMC, since the number of similar property disputes within Methodism could increase significantly over the next two years if more congregations try to exit the denomination without permission. This Supreme Court ruling will make it harder for them to do so and take their property with them.
For more on this case, read this Religion News Service article.
The case could have significant implications for the UMC, since the number of similar property disputes within Methodism could increase significantly over the next two years if more congregations try to exit the denomination without permission. This Supreme Court ruling will make it harder for them to do so and take their property with them.
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