Finding the balance between church leadership, charity boards and good governance

Churches have been caring for their communities for a very long time. Food relief, emergency accommodation, counselling, children's programs, disability services and countless other forms of practical support have started because a local church saw a need and decided to do something about it.

Most of those ministries don't begin with a strategic plan or a conversation about corporate structure. They start with people. Someone needs food, somewhere safe to sleep, some support getting through a difficult season, or simply a community that will notice them. A few people decide to help, some volunteers come alongside them, donations start arriving and something that began fairly organically starts to grow.

I think there is something really valuable about that. Churches can be incredibly good at responding to need without waiting for every detail to be perfect. Faith communities already have people, relationships, volunteers and a shared sense of purpose, which means they can often mobilise around a problem remarkably quickly.

The interesting part comes a few years later, when that little ministry isn't so little anymore.

Perhaps it now employs staff. There might be government funding, grants, significant donations, leases, vehicles, property, service agreements or hundreds of people accessing support. Somewhere along the journey a separate charitable entity might have been established, with its own board, ABN and registration with the Australian Charities and Not-for-profits Commission. Depending on what it does, it may also have deductible gift recipient (DGR) endorsement.

At that point, the conversation has changed. It is still ministry and it may still be deeply connected to the church that started it, but it is also an organisation with responsibilities of its own.

Our tendency to say “it’ll be right”

There is a very Australian attitude of “it'll be right” that I think sometimes unfortunately finds a particularly comfortable home in churches. We know each other. We trust each other. Everyone has good intentions. God has provided this far. Nobody wants to make things unnecessarily complicated and, perhaps most importantly, nobody wants the ministry to become too corporate.

I understand that instinct. In fact, I share some of it. The last thing I want to see is a community organisation becoming so obsessed with policies, processes and governance that it loses the humanity that made it effective in the first place.

There is, however, a point where “it'll be right” becomes an excuse for not doing the work required to make sure it actually is right.

Sometimes there is almost a blind faith that because the work is good, the organisation behind it must be good as well. We trust that the money is being handled properly because good people are handling it. We assume risks are being managed because nothing serious has happened yet. We rely on relationships rather than documenting responsibilities because everyone currently gets along. This model is fine, until it's not.

Faith and good governance aren't opposites. I would actually argue that for Christian organisations they should reinforce each other. If we genuinely believe that people, resources and opportunities have been entrusted to us, then taking reasonable steps to protect and manage them is part of good stewardship.

Trusting God doesn't remove our responsibility to manage money properly, protect vulnerable people, declare conflicts, understand risk or ask difficult questions. Having faith in someone's character doesn't mean we shouldn't have financial controls. Prayer and discernment absolutely have a place in Christian leadership, but they don't replace accountability.

When the ministry becomes a charity

This distinction becomes particularly important when a ministry has become a separate charitable entity. A registered charity isn't simply another church committee because culturally everybody still thinks of it that way. There are actual obligations attached to running it.

Registration with the ACNC comes with ongoing responsibilities. Depending on the organisation and its structure, that includes maintaining entitlement to registration, pursuing its charitable purposes, keeping appropriate records, reporting to the ACNC and complying with the governance requirements that apply to it. The people sitting around the charity's board table aren't there simply because somebody needed a few names to put on an ASIC or ACNC form. They have genuine responsibilities attached to governing that organisation.

DGR endorsement adds another dimension where it applies. The ability to receive tax-deductible donations is valuable, particularly for organisations that rely heavily on community generosity, but it isn't simply a fundraising feature. The organisation needs to understand the basis on which that endorsement exists and make sure its structure, activities and use of funds continue to meet the requirements applying to it.

None of this means a church-based charity needs to behave like a listed company. Governance should be proportionate to the organisation. A small community charity doesn't need layers of bureaucracy designed for an organisation a hundred times its size. It does need enough structure to know who is responsible, where money is going, what risks exist, whether legal and regulatory obligations are being met and whether the organisation is actually achieving what it exists to do.

The awkward question: who is actually in charge?

This is where I think church-based charities can become particularly interesting from a governance perspective.

The church may have started the charity. It may have funded it, provided its volunteers, given it a building and carried its reputation in the community. The charity may still use the church's name and see itself as an expression of the church's mission. It is completely understandable that the church's leadership would continue to feel a strong sense of responsibility for what happens there.

At the same time, if a separate organisation has been established and people have been appointed to its board, those people have been asked to govern it.

Problems start when those two realities haven't been properly reconciled.

You can end up with a board that is responsible on paper while everybody knows that the important decisions are actually made somewhere else. Perhaps the eldership makes them. Perhaps it's the senior pastor. Perhaps it's a ministry leadership team, or even a founder who hasn't held a formal role for years but remains enormously influential.

Most of the time that arrangement can quietly carry on because everybody agrees. The weaknesses only become visible when they don't.

That is usually the worst possible time to start working out who actually has authority.

Who appoints the CEO? Who approves the strategy and budget? Who determines acceptable risk? What decisions belong to the charity board and what decisions are reserved for the church? If the charity board believes a decision creates an unacceptable financial, employment, safeguarding or regulatory risk, can it say no? What happens if the church leadership and charity board genuinely disagree about the direction of the organisation?

Those aren't questions designed to undermine trust. They are exactly the sort of questions worth answering while trust is strong.

Elders and directors aren't doing the same job

I don't think the answer is to decide whether the eldership or the charity board is more important. They aren't competing governance structures trying to win control of the same organisation. At least, they shouldn't be.

Church eldership carries responsibilities that I wouldn't expect a charity board to assume. Spiritual leadership, doctrine, pastoral oversight and discerning the direction of the church are fundamentally different responsibilities from governing a charitable organisation.

Likewise, appointing a charity board should mean something. Those directors need to oversee strategy, finances, organisational risk, regulatory compliance, safeguarding, employment, technology, cyber security, insurance and the long-term sustainability of the organisation. They need enough information and enough authority to exercise genuine judgement about those things.

I think one of the most dangerous arrangements is asking a board to carry responsibility without giving it the authority to fulfil that responsibility. A charity board can't simply exist to approve decisions that have already been made somewhere else. If the church wants a board to genuinely govern the charity, it also needs to allow that board to govern.

That doesn't mean giving away the mission or severing the relationship with the church. It means being much clearer about the nature of that relationship.

Independence doesn't mean separation

I don't particularly like the idea that professionalising a church-based charity means pushing the church away from it. If the charity exists because of the church's mission and community, losing that connection can create a different problem altogether.

I would rather see the relationship become more intentional.

The church should have appropriate ways of protecting the mission and identity that led to the charity existing in the first place. Depending on the structure, that might be reflected through membership, appointment rights, reserved matters or other provisions in the governing documents. There should also be regular conversations between church and charity leadership so that neither group discovers the other's direction through a board paper or an announcement.

The charity board, however, should still have room to do the job it has been appointed to do.

Good structures make it possible to have both.

The constitution obviously matters here, but culture matters just as much. You can have perfectly drafted governing documents and still have an organisational culture where everyone ignores them because “that's not how we do things around here.” You can also have an arrangement that works beautifully because the current pastor, chair and CEO have excellent relationships, only to discover that nobody knows how it is supposed to work once one of those people leaves.

Healthy governance needs to survive changes in personalities.

The mission deserves good governance

This is probably where I ultimately land on all of this.

I don't want church-based charities to become corporate machines. I don't want volunteers who came to feed people spending half their lives completing forms, and I don't want boards measuring things simply because somebody read that boards should have more KPIs.

I want governance to be useful.

If people donate because they trust an organisation, that organisation should manage their money well. If staff come to work because they believe in the mission, they deserve a workplace that is properly led. If vulnerable people rely on a service, the organisation should understand the risks involved in providing it. If a charity benefits from ACNC registration or DGR endorsement, it should understand and respect the responsibilities that come with those privileges.

Most importantly, if a church has built something capable of making a real difference in its community, good governance should help make sure that work can continue long after the people who originally started it have moved on.

I think there is a healthy tension that should always exist between the church and the charity it has created. The church should continue asking, “Is this still faithful to why we started it?” The charity board should continue asking, “Are we governing this well enough for that mission to still exist in ten or twenty years?”

Neither question is more spiritual than the other.

Both are questions of stewardship.

Maybe the challenge for churches isn't choosing between faith and governance at all. Maybe it's recognising that sometimes the most faithful response isn't simply “it'll be right.”

Sometimes it's doing the work to make sure it is.