Houston Graduate School of Theology

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Ethical Fundraising Practices

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By Dr. Herb Fain, HGST Professor of Legal and Social Ethics, and Professor Constance Fain, Thurgood Marshall School of Law Preventing financial misconduct during the fundraising process is crucial for a church, the same as with any other organization. Consequently, religious, charitable, and for-profit organizations are legally and ethically obligated to engage in proper fundraising practices during the solicitation, collection, and utilization stages of the fundraising process. When a parishioner sustains harm caused by the financial transgressions of a pastor, or some other church official or worker involving the parishioner’s contributions to the “building fund,” a lawsuit against the church and other responsible parties may be brought. If the infraction is tortious, the church’s liability could be vicarious, direct, or both depending on the circumstances.

Recommendations from Fundraising Experts and Others

The following list contains useful recommendations from fundraising experts, pastors, accountants, attorneys, and others that should help churches reduce even the appearance of internal fundraising misconduct related to construction of a sanctuary or other religious facilities. In general, financial transparency and accountability are essential to a church’s avoidance of legal and ethical breaches while engaged in raising money for the “building fund.” Financial transparency in a church means that the church should do the following:

  1. Conduct an annual audit of [its] financial statements;
  2. Share complete, clear, audited financial information openly with the congregation;
  3. Have a comprehensive system of internal control in place;
  4. Actively engage in preventing fraud; and
  5. Purposefully foster an internal culture of openness.

The church should have an outside auditor or an external certified public accountant conduct and audit all the financial records including “building fund” data. In addition, the church should employ the most qualified, trustworthy member to examine the spending connected with the “building fund.” The Building Fund Committee (hereafter “committee”) and pastor should set realistic fundraising goals.

  1. The committee and pastor should distribute literature, such as fliers containing fundraising information. The data should be posted on the church’s website informing the parishioners of upcoming “building fund” fundraiser events and should explain more about the committee. Also, the pastor and committee members should communicate to the congregants the specific goals and mission of the Building Fund Committee.
  2. The committee or appropriate persons should do the necessary research and produce the data to support the church’s need for the funding, which will make it easier to persuade the parishioners to contribute.
  3. These goals connected with the “building fund” should be clearly and plainly conveyed to all persons who are directly and indirectly involved in the funding endeavor.
  4. The pastor and the committee should look particularly and precisely at their target audience (the congregation) prior to organizing the specifics of the fundraiser, because although the objective is to raise money to build a sanctuary, there must exist congregants who are willing and able to write checks or contribute cash. The funding operation or campaign is more likely to be successful if the committee determines the identity of those parishioner contributors who in fact will be donating money for the fundraising project.
  5. Avoid pressuring parishioners to contribute their money to the “building fund.” Utilize positive approaches to raise funds in order to get support to erect a sanctuary or remodel an existing structure. Stress “the idea of FUNdraising, or having a good time.” (Mintzer and Friedman)
  6. In making a final decision on a place for a fundraising activity, the pastor and the committee need to be aware of what the applicable statutes and regulations allow at the event, such as parking, soliciting funds, noise levels, alcohol consumption, etc.

Following these guidelines can help prevent the unpleasant side of fundraising so that the joy of stewardship might be experienced throughout the project.