A Commentary to Accompany The Proposed Bylaws

A COMMENTARY TO ACCOMPANY
THE PROPOSED BYLAWS FOR
CHRIST CHURCH, UNITED CHURCH OF CHRIST

Prepared by Phillip Sparkes November 2017

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Introduction

Since 1995, the primary governing instrument of Christ Church, United Church of Christ has, in practice, been a document that refers to itself as a “constitution.” Proposed amendments to this constitution that were to have been voted on at the annual meeting of the congregation in 2016 were withdrawn when it became clear that they were inconsistent with the controlling provisions of the church’s articles of incorporation. Further examination revealed that several existing provisions in the constitution were also inconsistent with the articles of incorporation or with Kentucky statutes governing corporations not for profit, or both. Moreover, the articles of incorporation themselves were out of date and needed amendment.

Members of Christ Church will be asked to vote on amended articles of incorporation early 2018. But, amending the articles of incorporation alone cannot cure most of the inconsistencies in the current constitution. Thus, after the vote to amend the articles of incorporation, the members of Christ Church will be asked to vote to replace the constitution with a new set of bylaws for the church, bylaws that are harmonious both with the articles of incorporation and with the corporation statutes of Kentucky.

As an aid to understanding the proposed bylaws, this document presents a series of commentaries. The purpose of the commentaries is to explain and give context to the provisions set out in the bylaws. The comments form no part of the bylaws themselves. Neither are the comments in themselves enforceable. The numbering of the comments follows the style “N.n” where “N” is the Arabic number of the article following which the comment appears (zero in the case of the Preliminary Comments) and “n” is the sequential number of the comment.

Preliminary Comments

[0.1] The religious association that is today Christ Church, United Church of Christ, first organized on November 4, 1906 as a mission congregation of the Evangelical Synod of North America. Its original articles of incorporation were filed in the office of the Kentucky Secretary of State on January 25, 1910 under the name Christ Evangelical Church.

[0.2] As mentioned in the introduction, these bylaws replace a document called a “constitution,” which the membership originally adopted in 1995 and amended several times thereafter. (These commentaries refer to that constitution, with its amendments, as “the 1995 constitution.”) In the nonprofit sector, a constitution is customarily the organizing document of an unincorporated association. In the period between its formation in 1906 and its incorporation in 1910, Christ Evangelical Church likely had a constitution in this sense. Strictly speaking, an incorporated nonprofit organization does not have a constitution. Its organizing document is its charter (called, in Kentucky law, the “articles of incorporation”). The article of incorporation must conform to the relevant corporation statutes (now Kentucky Revised Statutes Chapter 273). Usually, the articles of incorporation are skeletal; the corporation’s bylaws supply the flesh. In turn, bylaws must be consistent with both the articles of incorporation and the state corporation statutes. Taken together, the statutes, the articles of incorporation, and the bylaws are, in a colloquial sense, the corporation’s “constitution,” but it is inaccurate and somewhat misleading to refer to them as such.

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[0.3] Unincorporated churches choose to incorporate for a variety of reasons, but among the more important reasons are to be able to hold property and to have limited liability. Historically, an unincorporated association had no legal personality of its own. The indefinite character of the unincorporated association thus made it difficult to acquire, hold, and transfer property, make contracts, or take legal actions. In addition, it potentially exposed association members to personal liability if the association could not meet its financial obligations. Incorporation solves these problems by creating an entity with legal personality separate and apart from the persons who make it up and conferring on this legal “person” certain privileges including limited liability, the right to hold property in its own name, and the ability to sue and be sued. In exchange, the corporation must observe certain formalities or risk losing those privileges. The formalities include a corporate governance structure and adherence to certain prescribed procedures. Consequently, while aa nonprofit unincorporated association has considerable latitude to devise an organizational form and internal processes to suit itself, a nonprofit corporation does not. That said, it is easy enough to find instances where an incorporated association has continued to use or has chosen to adopt informal governance structures and institutional practices that are inconsistent with the laws governing corporations. These structures and practices may even persist for lengthy periods with no evident harm. Nevertheless, they may put corporate status at risk. Short of that, they can give rise to unanticipated situations that can be hard to rectify, the costs of which were entirely avoidable in the first place.

[0.4] An incorporated church has a two-fold aspect. On the one hand, it is a corporate entity operating under state auspices. On the other hand, it is a religious organization dedicated to spiritual ends, with its own internal authority concerning religious s. Metaphorically then, an incorporated church has both a body and a soul. The body – the corporation – is subject to temporal laws, authorities, and institutions. The soul – the community of faith – is a spiritual entity bound by spiritual bonds of union beyond the capacity of government to regulate. Some of the articles in the bylaws deal primarily with matters spiritual; others deal primarily with matters temporal. Of necessity, most deal with a mix of the two. Those who read or apply these bylaws may find it useful to reflect upon whether a provision goes to one or the other, or both.

[0.5] In the bylaws:

(a) the word “must” means “is required to”;
(b) the words “must not” mean “is required not to” or “is disallowed”;
(c) the word “may” means “has discretion to” or “is permitted to”;
(d) the words “may not” mean “is not permitted to” or “is disallowed from”; and (e) the word “should” means “ought to.”

[0.6] The bylaws employ the following numbering scheme and nomenclature:

I. Article
1. Section

A. Subsection
(1) Paragraph

(a) Subparagraph
(i) Sub-subparagraph

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Commentary on Article I, Articles of Faith and Mission Statement

[1.1] Subsection 1(A) is carried forward from the 1995 constitution. It is a verbatim recitation of the Preamble of the Constitution of the United Church of Christ. That preamble, adopted at the uniting General Synod of 1957, expresses the core of the theological consensus that brought together in covenant the Evangelical and Reformed Church, of which Christ Church was then a part, and the Congregational Christian Churches.

[1.2] The doctrinal statement in subsection 1(B) is likewise carried forward from the 1995 constitution. It is a variation of a statement common among many congregations in the United Church of Christ. As the UCC itself explains, “The United Church of Christ embraces a theological heritage that affirms the Bible as the authoritative witness to the Word of God, the creeds of the ecumenical councils, and the confessions of the Reformation. The UCC has roots in the ‘covenantal’ tradition – meaning there is no centralized authority or hierarchy that can impose any doctrine or form of worship on its members. Christ alone is Head of the church. We seek a balance between freedom of conscience and accountability to the apostolic faith. The UCC therefore receives the historic creeds and confessions of our ancestors as testimonies, but not tests of the faith.”

[1.3] The Statement of Faith in subsection 1(C) likewise is carried forward from the 1995 constitution. It is the traditional version of the Statement of Faith of the United Church of Christ, adopted by the General Synod in 1959.

[1.4] The origin of the mission statement in section 2 is not known. Like section 1, section 2 comes from the 1995 constitution. It is worth considering whether, in the wake of the self- evaluation processes undertaken in 2015 and 2016, it too needs to be updated or whether it could be omitted altogether.

[1.5] Section 3 comes from Article III, §7 of the 1995 constitution. It is a better fit here than in an article dealing with membership.

Commentary on Article II, Polity

[2.1] Section 1 states that Christ Church has congregational polity. Congregational polity is a system of church governance, or ecclesiastical polity, in which the local congregation rules itself and elects is own leaders, both clergy and laity. It is a principle of congregational governance that ministers do not govern the congregation by themselves.

[2.2] The articles of incorporation declare that Christ Church is a corporation with members. Thus, the members govern the corporation subject to the laws of the State of Kentucky relating to corporations not for profit and within the bounds set by the articles of incorporation and the bylaws. The members of the church exercise their control over church affairs primarily by taking part in the annual meeting and by choosing the leadership. Between meetings of members, authority to manage the affairs of the church statutorily falls upon the corporation’s board of directors (see KRS 273.207). Regarding the board of directors, see Article VI of the bylaws and the commentaries on Article VI below.

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[2.3] Article V of the constitution of the United Church of Christ, in effect as of July 2, 2015, pertains to local churches. In paragraph 18 it confirms the autonomy of local churches:

The autonomy of the Local Church is inherent and modifiable only by its own action. Nothing in this Constitution and the Bylaws of the United Church of Christ shall destroy or limit the right of each Local Church to continue to operate in the way customary to it; nor shall be construed as giving to the General Synod, or to any Conference or Association now, or at any future time, the power to abridge or impair the autonomy of any Local Church in the management of its own affairs, which affairs include, but are not limited to, the right to retain or adopt its own methods of organization, worship and education; to retain or secure its own charter and name; to adopt its own constitution and bylaws; to formulate its own covenants and confessions of faith; to admit members in its own way and to provide for their discipline or dismissal; to call or dismiss its pastor or pastors by such procedure as it shall determine; to acquire, own, manage and dispose of property and funds; to control its own benevolences; and to withdraw by its own decision from the United Church of Christ at any time without forfeiture of ownership or control of any real or personal property owned by it.

Article VI, Section 2 of the constitution of Southwest Ohio Northern Kentucky Association of the United Church of Christ, adopted November 1, 2014, is in accord.

[2.4] Article III of the constitution of the United Church of Christ discusses the relationships among local churches, associations, conferences, and the General Synod. In paragraph 6 it provides:

Within the United Church of Christ, the various expressions of the church relate to each other in a covenantal manner. Each expression of the church has responsibilities and rights in relation to the others, to the end that the whole church will seek God’s will and be faithful to God’s mission. Decisions are made in consultation and collaboration among the various parts of the structure. As members of the Body of Christ, each expression of the church is called to honor and respect the work and ministry of each other part. Each expression of the church listens, hears, and carefully considers the advice, counsel, and requests of others. In this covenant, the various expressions of the United Church of Christ seek to walk together in all God’s ways.

[2.5] Christ Church formed as a congregation in the Evangelical Synod of North America. In 1934 that denomination merged into the Evangelical and Reformed Church. In 1957 the Evangelical and Reformed Church merged into the United Church of Christ. Though essentially congregational in structure, the Evangelical and Reformed Church had an adjudicatory system that could resolve “divisions in the members of the congregation” on matters of church property. The UCC has no comparable adjudicatory body or procedure to resolve such disputes. The effect is to move such disputes to the civil courts. References to such dispute resolution processes in earlier constitutions and bylaws are omitted from the proposed bylaws.

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Commentary on Article III, Membership

[3.1] Within the United Church of Christ there are no domination-wide membership standards or requirements. As stated in the constitution of the UCC, each local church has the authority to admit members in its own way and to provide for their discipline or dismissal (see comment 2.3).

[3.2] The proposed bylaws distinguish only between members and non-members. Unlike some earlier constitutions and bylaws of Christ Church, there are no subcategories of membership such as active, inactive, affiliate, or friend. This simplifies administration of the membership roll. Section 1 describes how a person becomes a member and when a person ceases to be a member. Relevant procedures are set out in later sections.

[3.3] Section 2 discusses the responsibilities of membership. The UCC’s Parish Life and Leadership Ministry team, speaking about the responsibilities of membership, says:

“Joining the Christian Church brings responsibilities that include:

  • Being a minister. A basic tenet of Protestant Christianity is “the priesthood of all believers.” Every member of the church takes on the mission of the church individually and in community with other members. As Martin Luther said, every Christian is to be a “little Christ” to the world. The ministry and mission of Jesus Christ become the ministry and mission of every believer and church member. A life of service to people and the whole of the creation is a membership commitment.

    Members of Christ’s body bear witness, in action and speech, to God’s presence in the world. This mission they carry out by the way in which they participate not only in affairs connected with their family and their job but also in those of the community at large: politics, education, leisure and art. By personal acts of service and sometimes resistance, which aim to actualize God’s justice, mercy and peace, and by active work to alter structures which deny God’s will for humanity, they participate in the life of Christ.

  • Regularly being part of the worshiping community. Sustenance for the life of faith is derived from participation with the congregation when it gathers regularly for worship and the sacraments. Also, a life of prayer and meditation is expected. They further participate in its life through study of Scripture and earnest thought concerning God’s will for the world and the Church, and through the generous support of its life and mission by gifts, by work, and by active devotion.
  • Being a steward. A steward is a person put in charge of that which belongs to another. Christians believe that everything people have–life, gifts or talents, time, ability to earn money, possessions–are gifts from God. They are given in trust, given with the responsibility to manage them wisely and to offer them faithfully. The offering of money and the investment of time and abilities to the church and its mission are vital acts of membership and signs of faithfulness to the covenant.

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• Being a learner. Commitment is an act of the mind as well as of the heart. Faithfulness and service increase in quality and capacity through a disciplined program of study and learning. A Christian’s growth and maturity occur through a regular encounter with the Bible and through a wide-ranging engagement with other church members in study and discussion.”

[3.4] Because this article distinguishes only between members and non-members, it includes a “conscience clause” in subsection 3(D). The clause is predicated on the principal that privileges go hand in hand with responsibilities. It challenges all members to prayerfully consider whether they have fulfilled the responsibilities of membership to the degree that they can in good conscience claim the privilege they seek to exercise. While the clause speaks to all members, it is especially germane to those members who have only limited involvement in church life.

[3.5] Each member is responsible to support the spiritual welfare of the other members, including a member who has disengaged from the church. A member who cannot be encouraged to return to participation in the life and fellowship of Christ Church should be encouraged to find a new church home. Section 5 affords the member who wishes to do neither the choice to withdraw from membership. A member who does not transfer membership to another church or who does not withdraw from membership, but who remains disengaged from the life, fellowship, and support of Christ Church, may lose membership as provided in section 6.

[3.6] Keeping an accurate membership roll is important because, as remarked in comment 3.4, membership carries with it certain privileges, chief among them participation in the governance of the church. The 1995 constitution prescribes no procedure for updating the membership roll, which now has more than 400 names. Many of those named have not attended Christ Church in a very long time. Section 6 lays out a procedure for keeping the roll up to date, at the center of which is a membership committee. The process affords the member (and others acting on the member’s behalf) multiple opportunities over the course of more than a year to avoid being stricken from the membership roll.

[3.7] Society today expects churches to teach and practice civility and to demand that persons in public life show it. Further, society expects churches to inculcate humility, generosity of spirit, reverence for God’s creation, compassion, and the desire for reconciliation. However, recent decades have shown that churches are not immune from misconduct within their ranks. Section 7 confers on the Church Council express authority to act when a member’s misconduct endangers the welfare of the church.

Commentary on Article IV, Lay Leadership

[4.1] Section 1 sets out the lay leadership positions and describes the duties that attach to the positions. It retains the seven principal leadership positions established in the 1995 constitution and adds four more, which it calls Councilors, in response to concerns that the 1995 constitution now concentrates power in the hands of too small a number.

[4.2] As mentioned in comment [0.4], an incorporated church has a dual nature – it is simultaneously an assembly of believers, the members of which are held together by spiritual bonds, and a civil corporation, the members of which are held together by civil law. The lay

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officers have responsibilities in both respects. In the corporate context, titles are unimportant. For example, the person who functions as the president of a corporation need not have the title “president.” When describing officers and directors, section 1 uses the traditional titles employed by Christ Church.

[4.3] A minor can be a member of the church. Within the body spiritual, the community is free to decide whether a member who is a minor has the same privileges and responsibilities as an adult member, including holding a position of leadership. But, section 1 gives to the several leadership positions responsibilities within the corporation. Kentucky law seems clear that minors can be members of the corporation, but it is unclear whether they can be officers or directors of the corporation. Erring on the safe side, section 2 requires that candidates for leadership positions be legally an adult.

[4.4] Under the 1995 constitution, terms of office are typically three years. Under the proposed bylaws, terms of office are typically two years. The reason for the change is to simply administration of elections. Of the principal elective offices, six – moderator, secretary, coordinator of spiritual life, coordinator of teaching, and two councilors – are elected in even- numbered years and five – vice-moderator, treasurer, coordinator of service, and two councilors – are elected in odd-numbered years.

[4.5] Section 2 imposes two kinds of term limits on leadership positions. The first limits the number of consecutive terms a person can hold any one office to three. The second limits the number of consecutive terms a person can hold any combination of offices to five. A candidate for office is subject to both rules. The 1995 constitution had no procedure for removing someone from office; section 6 of the proposed bylaws changes that.

Commentary on Article V, Clergy

[5.1] As noted in comment 2.1, it is a feature of congregational polity that the local church elects its own leadership, including clergy, but it does so within limits. For instance, Article V presupposes that Christ Church will continue to be part of the United Church of Christ – so do the articles of incorporation – and will abide by its processes. (The alternative would be to leave the UCC.) Some forms of ministry in or on behalf of the United Church of Christ need ecclesiastical authority. In the UCC, this ecclesiastical authority is granted by one of its associations through ordination, commissioning, licensing, and other acts. See articles VI and VII of the UCC constitution. Christ Church has standing within the Southwest Ohio Northern Kentucky Association of the United Church of Christ.

[5.2] The two-fold nature of an incorporated church mentioned in comment 0.4 is personified in the pastor. On one level, the pastor is an employee, albeit the key employee, of the corporation and in that regard is accountable to the Board of Directors and the membership. Viewed from a secular perspective, the church is akin to a small business, the pastor is akin to its chief operating officer, and the relationship of employer and employee is like that in any nonprofit organization.

On an altogether different level, the pastor is called to ministry by God. As the holder of a spiritual office for which he or she must be biblically qualified, the pastor must have

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authorization from and be accountable to ecclesiastical authorities, in the instant case the United Church of Christ. How this happens is outside the scope of these bylaws. In general, see the Leadership and Ministry section of the UCC website, http://www.ucc.org/ministers.

[5.3] Section 5 is purposefully sparse concerning the process of searching for and calling clergy, as is typical in most other congregations within the UCC. This consensus reflects that, at the time of each new search, a congregation will have different wants and needs than it had at the last search. Thus, the qualities and talents sought in a candidate will be different. Thus, section 5 contemplates that the Board of Directors will, after consultation with the membership, tailor the search for a new minister through the makeup of and charge to the search committee. As the UCC’s description of the Search and Call process says, Search and Call takes considerable time and thoughtfulness, with prayerful attention to both logistical detail and the movement of God’s Spirit.”

Commentary on Article VI, Governing Bodies and Working Groups

[6.1] The creators of a nonprofit corporation choose a structure for its governance when they file the articles of incorporation. The basic choice is between a corporation with members and a corporation without members. Most churches that incorporate choose to be corporations with members, and in its articles of incorporation Christ Church has made that choice. With respect to governance of the corporation, a member of a nonprofit corporation is generally analogous to a shareholder of a business corporation. In other respects, though, they are distinct. For example, shareholders are owners of a business corporation; members do not own a nonprofit corporation.

[6.2] The rights of a member of a nonprofit are defined by the nonprofit’s governing documents (the articles of incorporation and the bylaws) and by state nonprofit corporation laws. The membership nonprofit structure allows the members to make major decisions. Foremost among those decisions is the election of directors. (By contrast, in a corporation without members the board of directors is self-perpetuating; the current directors choose their successors.) Under Article IV, the eleven elective lay leaders of the congregation are concurrently directors of the corporation. Other major decisions that typically require assent of the members include merger or dissolution of the corporation, sale of its major assets, and amending the organization’s bylaws and articles of incorporation. These are set out in section 1.

[6.3] Except where the governing documents or statute reserves a decision to the members, authority to manage the affairs of a Kentucky nonprofit corporation vests in the board of directors. See KRS 273. 207. Authority to make important operational decisions is usually granted to the nonprofit board. However, the organization and its board of directors are accountable to the members and are required to act in their best interests. This is another way of saying the directors owe fiduciary duties to the members. The focus of the board of directors is on the secular affairs of Christ Church – managing property, handling finances, entering contracts of various kinds, assuring compliance with applicable laws, etc. The eleven elective leaders established in Article IV together form the board of directors of Christ Church and exercise the powers described in section 2.

[6.4] Care of the spiritual affairs of Christ Church is the province of the Church Council. The eleven lay leaders holding office under Article IV together with the clergy holding office

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under Article V together make up the Church Council and exercise the powers described in section 3. The overlap in membership between the Board of Directors and the Church Council means that, as a practical matter, a meeting of one is concurrently a meeting of the other. This is appropriate since most of the affairs of the church are themselves a mix of the secular and the spiritual. For example, a program of Christian education, while directed to spiritual ends, needs resources such as classrooms and materials that respectively must be maintained by someone and bought from suppliers in secular business transactions.

[6.5] The 1995 constitution set up about a dozen boards and committees, specifying their composition and prescribing their responsibilities. Some 60 people were needed to fill all those positions and those on the Executive Council, an unrealistic proportion of the active membership. The proposed bylaws follow a more traditional corporate model, leaving the creation of committees largely in the hands of the board of directors and the church council and giving them the flexibility to match the talents of church members to the tasks assigned to a committee using a procedure set out in section 3. The board or the council uses this process to create the membership committee in Article III, section 6; the nominating committee in Article IV, section 4; the pastoral search committee in Article V, section 5; and the personnel and pastoral relations committee, finance committee, and property management committee recommended in section 3 of this article.

[6.7] The only committee created by the bylaws themselves is the Endowments and Planned Giving Committee in section 4. It is the successor to the Special Gifts Fund Committee in the 1995 constitution. As the name of the committee suggests, the responsibilities of the successor committee are different as is its composition. The committee keeps its responsibility to advise on operational matters related to endowment funds, but the proposed bylaws direct the committee to undertake added responsibilities especially as regard planned giving. Under the 1995 constitution, it was unclear who had fiduciary responsibility toward the special gifts fund – the Special Gifts Fund Committee, the Executive Council, both, or neither. The proposed bylaws rectify this by setting up corporate lines of responsibility between the board of directors and the committee.

Commentary on Article VII, Meetings

[7.1] Kentucky law governing nonstock, nonprofit corporations requires an annual meeting of members and allows the timing of the meeting to be prescribed in the bylaws. The law allows the calling of special meetings by the president or by the board of directors and allows the bylaws to prescribe who else may a special meeting. Statute also sets the parameters for notice of the meeting. The default requirements of notice are in statute and are the same for both annual and special meetings of members. Section 1, subsection B of this article sets out requirements beyond the statutory minimum.

[7.2] As explained in comment 2.2, statute provides that between meetings of members the board of directors manages the affairs of the corporation. Statute lays out minimal requirements regarding meetings of the board and allows the bylaws to have more stringent requirements if desired. These bylaws include provision for giving notice of meetings through various church organs such as The Guide, but they do not otherwise deviate from the statute.

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[7.3] Because the composition of the Church Council and the composition of the Board of Directors differ in only one detail (the presence of absence of the pastor or pastors), a meeting of the Church Council is also a meeting of the Board of Directors. Similarly, a quorum of the council is also a quorum of the board. (Under these bylaws, the council would have twelve members – eleven lay persons and the pastor. A quorum would be seven, six of whom must necessarily be persons who are directors of the corporation under Article IV. There are eleven directors, hence the six lay members necessary to a quorum of the council themselves constitute a quorum of the board.)

[7.4] At meetings of the members, the board, and the council, a vote is necessary if the body is to act. Under the proposed bylaws, action at a meeting of members requires a majority of those present and entitled to vote rather than a majority of those present and voting, making an abstention a vote against acting. Action at a meeting of the church council or board of directors requires a majority of the authorized strength rather than a majority of those present. This means, for instance, that action by the board of directors always requires a minimum of six affirmative votes regardless of how many directors are present at the meeting.

[7.5] To take a vote implies the need for a motion, which in turn implies a need for a parliamentary authority. Robert’s Rules of Order, the usual default choice, is designed for large assemblies, not for small groups like Christ Church or for business meetings of governing boards like the Church Council. The current Third Edition runs more than 400 pages. The proposed bylaws opt for a much simpler set of rules, Simple Parliamentary Procedure: Guidelines for Better Business Meetings, published by the University of Kentucky Cooperative Extension Service. It runs 12 pages and is available at https://psd.ca.uky.edu/files/simpleparliamentaryprocedure.pdf. Section 3 expects that most committees will decide matters by consensus rather than by vote. If a committee uses voting to decide a matter, the same parliamentary authority applies to the committee. So, too, does the rule that action requires a majority of the committee’s authorized strength rather than a majority of those present.

Commentary on Article VIII, Finances

[8.1] The 1995 constitution has little to say about general church finances except to create a board of finance and lay out its responsibilities. The board of finance is one element in a sort of “federal” governance structure created by the 1995 constitution. That structure does not fit the model of governance contemplated by the statutes under which Christ Church is incorporated. Statute places responsibility for fiscal affairs in the board of directors, who owe fiduciary duties to the corporation and the membership. The proposed bylaws expect that the board of directors will want and need a finance committee to aid it in managing the church’s fiscal affairs and continues the current board of finance as that committee until the board of directors completes the process prescribed in Article VI (see comment 6.5).

[8.2] The 1995 constitution is quite detailed regarding one specific aspect of church finances – the Special Gifts Fund – to which it devotes an entire article. That article (Article IX) creates a seemingly autonomous committee with responsibility for the fund and limits the uses of the monies in the fund. In many respects, Article IX looks like an attempt to set up the Special Gifts Fund as a charitable trust. If Article IX had succeeded in that, the trust would be legally separate from the church, and the committee members, as trustees, would be fiduciaries. Because Article

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IX falls short, the Special Gifts Fund has no separate legal existence. The fund is simply a corporate asset segregated from other corporate assets.

[8.3] When the Special Gifts Fund was set up, the relevant law governing corporate assets of that kind was the Kentucky version of the Uniform Management of Institutional Funds Act (KyUMIFA). It is not clear that the drafters of Article IX of the 1995 constitution tried to align it with that statute, further evidence perhaps that they thought they were creating a trust. In 2010, the Kentucky General Assembly repealed KyUMIFA and replaced it with the Kentucky version of the Uniform Prudent Management of Institutional Funds Act (KRS 273.600 to 273.645). The Uniform Prudent Management of Institutional Funds Act was enacted in response to several long-recognized difficulties with funds like the Special Gifts Fund. The most important change effected by the new law is that it allows churches and other charitable to apply a “total return” framework to their permanent endowment funds. This is a change from the old “interest only” framework employed previously, and seen in many church endowments including the Special Gifts Fund. Allowing only the expenditure of income earned severely limited the usefulness of the endowment by greatly decreasing the distributions that could be made available for fund purposes, e.g., ministries, building improvements, or missions as set out in Article IX.

[8.4] Article IX of the 1995 constitution provides in part that the Special Gifts Fund Committee “shall determine principal and income according to accepted accounting principles.” The allocation of principal and income is an issue generally associated with the administration of trusts, but as already noted Article IX did not create the special gifts fund as a trust. When Article IX created the Special Gifts Fund, the controlling law in this area would have been the Kentucky Revised Uniform Principal and Income Act. That law was repealed by the 2004 General Assembly and replaced with the Kentucky Principal and Income Act (KRS 386.450 to 386.504). That act expanded the definition of “income” to allow adjustments between principal and income, thereby authorizing a “total return” investment strategy. Despite these changes in law and the corresponding changes in accounting principles., the Special Gifts Fund Committee has said that it still adheres to the former rules for distributing principal and income.

[8.5] Monies in the Special Gift Fund are frequently referred to as endowments. They are not. A true endowment is donor-restricted money received from a donor who says to hold the principal in perpetuity and spend only the income for charitable purposes. None of the money in the Special Gifts Fund is donor-restricted. The monies in the fund were set aside (that is, segregated) and restricted by the church itself, not by any donor. Such funds are often called “funds functioning as endowment” or “quasi-endowment.” For financial accounting purposes they are “unrestricted,” while a true endowment is “permanently restricted.” Thus, Christ Church’s “endowment” is essentially a reserve fund, and as such can be spent by the organization for proper organizational purposes. As donors must have known, the reservations on the Special Gifts Fund imposed by Article IX are, and have always been, amendable. The proposed bylaws amend the Special Gift Fund to change its name to the Legacy Fund, to allow administration of the fund consistent with a “total return” approach as authorized by Kentucky Principal and Income Act and the Kentucky Uniform Prudent Management of Institutional Funds Act, and to expand the purposes for which the monies can be spent.

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Commentary on Article IX, Amendments, Repeals, Effective Date

[9.1] The amendment process resembles that under the 1995 constitution of Christ Church, but it adds one step. The effect of this is to allow the board of directors to see any proposed amendment before it goes to the membership for a vote. The notice of the meeting at which an amendment will be voted on must include the text of the amendment or a summary of the proposed amendment. This means an amendment cannot be introduced and voted on at the same meeting.

[9.2] Rather than attempt to amend the 1995 constitution provision by provision, the proposed bylaws are written on a clean slate. The work of the church itself does not start over simply because the bylaws change. Section 3 makes clear that repeal of the constitution does not invalidate the acts taken under the 1995 constitution or earlier constitutions and bylaws.

Commentary on Article X, Transition Provisions

[10.1] The requirement in section 1 for adoption by 3⁄4 of the members present is a response to a provision in Article II, section 3, paragraph E of the 1995 constitution. It reads in part, “Notwithstanding the terms of provisions of the Constitution to the contrary, a quorum is required with an affirmative vote of three-fourths (3/4) of the members present and entitled to vote to approve an Amendment to this provision of the Constitution.” The substance of paragraph E deals with distribution of church assets in case of dissolution. It is inconsistent with the certificate of incorporation, with KRS 273.303 governing distribution of corporate assets upon dissolution of the corporation, and with the provisions of the Internal Revenue Code and IRS regulations governing distribution of the assets of a §501(c)(3) charity. Because of this, paragraph E is at best ineffective and at worst altogether void. Repealing it by a 3/4 vote to adopt the proposed bylaws removes any doubt.

[10.2] February 12, 2018, referenced in sections 2, 3, and 4, is the last day that the congregation could approve the proposed bylaws and still allow time to hold an annual meeting in 2018 under new Article VI. The first election of new officers will occur of that meeting. The incumbents of the offices not up for election in 2018 are continued in office until 2019. This offers continuity during the transition from the 1995 constitution to the new bylaws. Similarly, membership on current boards and committees is continued to give the as the board of directors and the church council time to adjust to the new bylaws.

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1995 Constitution as amended

Article I – Name, etc.

Art. I, §1 – Name

Art. 1, §2, ¶¶ A-C – Articles of Faith

Art. I, §3 – Mission Statement

Article II – Polity

Art. II, §1 – Government ¶A (control)

¶B (autonomy)
Art. II, §2 – Affiliations Art. II, §3 – Property

¶A (powers)

¶B (limitations)

¶C (further limitations)

¶D (divisions in the membership)

¶E (dissolution)

Article III – Membership

Art. III, §1 – Members ¶A (how obtained) ¶B (eligibility)
¶C (definitions)

¶D (inactive members) Art. III, §2 – Affiliates

Art, III, §3 – Friends of the Church
Art. III, §4 – Termination or Change of Membership

Distribution Table
1995 Constitution to 2017 Bylaws

Amended Articles Proposed Bylaws Deleted of Incorporation (reason)

Art. I Art. I

See generally, Article I

Preamble
Art. I, §1(A)-(C) Art. I, §2

See generally, Article II

Art. II, §1(A); Art. VI, §1(A)

Art. II, §1(B) Art. II, §2

Art. VI, §1 Art. VI, §1

See generally, Article III

Art. III, §1(B) Art. III, §1(A) Art. III, §3(A) Art. II, §6 (E)

Conferred by statute

obsolete

Art. VI

One class of members One class of members

13

¶A (transfers) Art. III, §4(B)
¶B (joins another church) Art. III, §1(D)
¶C (inactivity) Art. III, §6
¶D (reinstatement) Art. III, §6(G)
¶E (affiliation) One class of

members

¶F (lapses) Art. III, §6(G) Art. III, §5 – Duties Art. III, §2
Art. III, §6 – Rights Art. III, §3(B)-(D) Art. III, §7 – General Art. I, §3

Article IV – Church Officers See generally, Article IV

Art. IV , §1 – Moderator and Art. IV , Vice-Moderator
Art. IV, §2 – Secretary Art. IV , Art. IV, § 3 – Treasurer Art. IV ,

§1(B)&(C)

§1(D) §1(E) §1(F)

§1(G) §1(H) §5

Art. IV, §4 – Coordinator of
Spiritual Life
Art. IV, §5 – Coordinator of Art. Teaching
Art. IV, §6 – Coordinator of Art. Service
Art. IV, §7 – Vacancies Art.

Art. IV , IV , IV , IV ,

Article V – Pastor See generally, Article V

Art. V, §1 – Pastor (duties) Art. V , §3 Art. V, §2, Additional Art. V , §1 Ordained and Lay Staff
Art. V, §3 Resignation; Search See generally, Committee Article V, §5

¶A (voluntary resignation) Art. V, §4(B) ¶B (requested resignation) Art. V, §4(C)

¶C (notification) Art. V , ¶D (search committee) Art. V , ¶E (interim pastor) Art. V , ¶F (congregation input) Art. V , ¶G (vote to call) Art. V ,

§4(A) §5(B) §5(B)(2) §5(B)(1) §5(C) §5(B)(3)

¶H (dissolution)

Art. VI – Business Meetings

Art. VI, §1 – Congregational Meetings

¶A – Annual meeting date

Art. V ,

14

See generally, Article VII

Art. VII, §1(A)(1)

¶B – Terms of office Art. IV, §1(A)(3)
¶C – Quorum Art. VII, §1(C)
¶D – Action Art. VII, §1(D)
¶E – Devotion Practice varies

Art. VI, §2 – Special Meetings Art. VII, §1(A)(2) Art. VI, §3 – Notice Art. VII, §1(C)

Art. VI, §4 – Parliamentary
Auth.
Art. VI, §5 – Church year Art. VIII, §1

Art. VII – Governing Bodies See generally, Article VI

Art. VII, §1 – Executive See the various

Art. VII, §4

Council

references to

Church Council ¶A – Purpose Art. VI, §3(B) ¶B – Membership Art. VI, §3(A)

Art. IV, §1(A)(3)

Art. IV, §1(A)(3) Art. VII, §2 – Boards See generally,

Article VI, §4 on

committees ¶A – General See Art. VI, §4

¶B – Christ. Ed. See Art. VI, §4(B) ¶C – Prop. Mgt. See Art. VI, §4(A) ¶D – Finance See Art. VI, §4(A);

see also Art. VIII

Art. VIII – Committees See generally, Art. VI, §4

Art. VIII, §1 – Nominating Art. IV, §4
Art. VIII, §2 – Personnel & Art. VI, §4(A) Pastoral Relations
Art. VIII, §3 – Other Art. VI, §4(B)(2)

Art. IX – Endowment See generally, Article VII, §4(B)

Art. IX, §1 – Purpose See Art. VIII, §4(B)(1)

Art. IX, §2 – Governance See Art. VIII, §4(B)(2)

¶C – Organization

¶D – Responsibilities

Art. IX, §3 – Operation ¶1 – The committee
¶2 – Accumulation and

Distribution

Art. VI, §4(C) See Art. VIII, §4(B)(3)-(5)

15

Art. X – Constitution

See generally, Art. IX

Art. X, §1 – Amendments

Art. IX, §1&2

Art. X, §2 – Review

Should be a continual process

16

Provision Source

Preamble

New

Art. I, §1(A)

Art. I, §1(B) Art. I, §2

Art. II, §1(B) Art. II, §2(B) Art. III, §1(A)

Art. III, §1(C) Art, III. §1(E) Art. III, §2
Art. III, §3(B) Art. III, §3(D) Art. III, §4(B) Art. III, §6(A)-(G)

Art. IV, §1(A)(2) Art. IV, §1(B) Art. IV, §1(D) Art. IV, §1(F) Art. IV, §1(H)

Derivation Table 2017 Bylaws

1995 Const., Art. I, §2, ¶B 1995 Const., Art. I, §3

Cf. 1995 Const., Art. II, §1(B) 1995 Const., Art. II, §2
Cf. 1995 Const., Art. III, §1, ¶B

New
Cf. 1995 Const., Art. III, §4, ¶B Cf. 1995 Const., Art. III, §5
Cf. 1995 Const., Art. III, §6 New
Cf. 1995 Const., Art. III, §4, ¶A New

New
Cf. 1995 Const., Art. IV, §1 Cf. 1995 Const., Art. IV, §2 Cf. 1995 Const., Art. IV, §4 Cf. 1995 Const., Art. IV, §6

Art. I, §1(C)

Art. I, §3

Art. II, §1(A)

Art. II, §2(A)

Art. III, §1(B)

Art. III, §1(D)

Art. III, §1(F)

Art. III, §3(A)

Art. III, §3(C)

Art. III, §4(A)

Art. III, §5

Art. III, §7(A)-(C)

Art. IV, §1(A)(1)

Art. IV, §1(A)(3)

Art. IV, §1(C)

Art. IV, §1(E)

Art. IV, §1(G)

Cf. 1995 Const., Art. IV, §5

Art. IV, §1(I)

New

17

1995 Const., Art. I, §2, ¶A

1995 Const., Art. I, §2, ¶C

1995 Const., Art. III, §7

Cf. 1995 Const., Art. II, §1(A)

1995 Const., Art. II, §2

UCC Const. Art. V, ¶11; cf. 1995 Const., Art. III, §1, ¶A

New

New

New

Cf. 1995 Const., Art. III, §6

New

New

New

New

Cf. 1995 Const., Art. VI, §1, ¶B

Cf. 1995 Const., Art. IV, §1

Cf. 1995 Const., Art. IV, §3

Art. IV , §2(A) New
Art. IV , §2(C) New
Art. IV , §3(B) New
Art. IV , §5(A) New
Art. IV, §6 New
Art. V, §1 Art. V , §2

Art. IV, §2(B)

New

Art. IV, §3(A)

New

Art. IV, §4(A)-(C)

Cf. 1995 Const., Art. VIII, §1

Art. IV, §5(B)

New

Art. V, §2(A)

New

Art. V , Art. V , Art. V , Art. V , Art. V , Art. V ,

§2(B) New
§3(A) Art. V , §1
§3(C) New
§4(B) Cf. 1995 Const., Art. V, §3, ¶A
§5(A) New
§5(C) Cf. 1995 Const., Art. V, §3, ¶¶E, F, G

Art. V, §2(C)

New

Art. V, §3(B)

Art. V, §1

Art. V, §4(A)

Cf. 1995 Const., Art. V, §3, ¶C

Art. V, §4(C)

Cf. 1995 Const., Art. V, §3, ¶B

Art. V, §5(B)

Cf. 1995 Const., Art. V, §3, ¶¶D, E, H

Art. V, §5(D)

New

Art. VI, §1(A)

Cf. 1995 Const., Art. II, §1, ¶A

Art. VI, §1(B) New
Art. VI, §3(A) Cf. 1995 Const., Art. VII, §1, ¶B Art. VI, §4(A) New
Art. VI, §4(C) Cf. 1995 Const., Art. IX
Art. VI, §5(B) New
Art. VI, §5(D) New

Art. VII, §1(A)(2) Cf. 1995 Const., Art. VI, §2 Art. VII, §1(C) 1995 Const., Art. VI, §1(C) Art. VII, §2(A)-(E) New
Art. VII, §4 Cf. 1995 Const., Art. VI, §4

Art. VI, §2(A)-(C)

New

Art. VI, §3(B)

Cf. 1995 Const., Art. VII, §1, ¶A

Art. VI, §4(B)

Substantially replaces Art. VII and Art. VIII

Art. VI, §5(A)

New

Art. VI, §5(C)

Cf. 1995 Const., Art. III, §2

Art. VI, §5(E)

Cf. 1995 Const., Art. V, §1

Art. VII, §1(A)(1)

Cf. 1995 Const., Art. VI, §1

Art. VII, §1(B)

Cf. 1995 Const., Art. VI, §3

Art. VII, §1(D)

1995 Const., Art. VI, §1(D)

Art. VII, §3(A)-(D)

New

18

Art. VIII, §1 1995 Const., Art. VI. §5 Art. VIII, §3(A)-(C) New
Art. VIII, §5(A) New
Art. VIII, §5(B)(2) Cf. 1995 Const., Art. IX Art. VIII, §5(B)(4) Cf. 1995 Const., Art. IX Art. VIII, §5(C) New

Art. VIII, §5(E) New
Art. VIII, §5(G) New
Art. IX, §1 Cf. 1995 Const., Art. X Art. IX, §3(A)-(B) New

Art. VIII, §2

New

Art. VIII, §4(A)-(C)

New

Art. VIII, §5(B)(1)

Cf. 1995 Const., Art. IX

Art. VIII, §5(B)(3)

Cf. 1995 Const., Art. IX

Art. VIII, §5(B)(5)

Cf. 1995 Const., Art. IX

Art. VIII, §5(D)

New

Art. VIII, §5(F)

New

Art. IX, §2(A)-(C)

Cf. 1995 Const., Art. X

Art. IX, §4

New

Art. X

Entirely new