Biblical Risk Management, Part 2

For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it?

Luke 14:28 ESV

In Part I of this series, we discussed the biblical standard for risk management in ministry defined in Jesus own words to his disciples.  Jesus was well aware that he was sending out his disciples as sheep into a world of wolves.  He commanded them to be “shrewd as snakes and innocent as doves” (Matt 10:16).  But what does that look like in today’s modern ministry business?  I believe four (4) pillars must form the foundation of any strong ministry risk management program:

·       Prayer

·       Premiums (Insurance)

·       Written Policies, and

·       Written Procedures

Let’s briefly look at each and how they operate both independently and collectively.

Prayer – If your ministry is not actively praying over every aspect of its business, then you are missing out of the greatest power available to you for both protection and growth.  Unfortunately, some in the ministry believe that things like accounting and board governance do not have a spiritual component.  That is absolutely false!  When I say, “the devil is in the details,” that is exactly where Satan loves to exert his chaos.  He works in the shadows exploiting things like lack of computer security, failure to correctly document transactions, shoddy accounting practices.  These often result because management takes the attitude that “we are just a ministry.”  Paul tells us our enemy is not flesh and blood but the schemes of the devil (Eph 6:11-12).  While the IRS, the EEOC, or a state agency may be the one to penalize or even shut down your ministry for noncompliance, do not doubt that the devil was working to take your ministry out of play from the beginning.  As such, you should arm your ministry  - all of your ministry - daily with the full armor of God (Eph 6:11).  That begins with asking the Holy Spirit for his power and protection over every aspect of your business.

Premiums – The second-best line of protection is correct insurance coverage.  Nonprofit ministry covers so many different and unique areas of risk, that it is important for your agent and your insurance carrier to have specific expertise with ministries and nonprofits.    Many carriers – in fact, the majority – do not.   They do not understand issues like open invitation childcare, volunteer liability, fundraising risk, open-facility safety and security and  religious expression issues that go on at your church every Sunday!  Many standard business policies exclude those activities.  It is very important to work with your agent and carrier to avoid “gaps” in your coverage.  Yes, there is a cost involved, but it is the cost of doing ministry in today’s world.  And, it is well worth the cost both to the leaders and to the donors whose money you steward.

Written Policies – A well-written company policy will become Exhibit 1 in any legal action involving your ministry.  It will show the agency or court that your ministry understood the nature and magnitude of the risks involved and took active steps to develop a reasonable response.  If you don’t have a written policy (especially the ones that every nonprofit and ministry should have), then your ministry will, at best, appear ignorant.  At worst, your ministry will appear like it simply does not care.  Either is just bad stewardship of your God-given responsibilities and donor funds.  If you don’t know the policies you need or why you need them, please consult legal counsel.  They will help analyze what is needed, educate you as to why it is needed, and draft specific policies for your organization. Note: Be wary of internet form policies.  The laws affecting your business often vary from state-to-state.  It is important for your policies to address your specific ministry business.

Written Procedures – A policy that is not implemented is just words on a page.  You must have a plan in place to ensure your employees know the policy, understand the “why” behind the policies and then follow express procedures to make sure the policy is carried out consistently. In risk management, these procedures are often called “controls.”   The IRS and other agencies understand that ministry businesses are human and sometimes a mistake and violation of policy and procedure may happen.  But in cases where good policies and procedures are in place, agencies will simply admonish the business for the mistake.  On the other hand, if no policy or procedures for compliance existed and the exact same noncompliance had occurred, stiff fines would be levied, and even tax-exemption status revoked.

This information is provided as a general guide to highlight critical business issues facing your ministry.  It should not be construed as professional legal, tax, or human resources advice or service. Every situation should be evaluated independently, and professional advice sought from a lawyer or tax professional.