Decision Number 539

Validity of Delegation by Annual Conference to its Council on Ministries or other Agency of Authority to Make Adjustments in Budget Adopted by Conference, and Right of Conference Treasurers to Make Short-Term Investment of Benevolence Funds

Digest

An Annual Conference may not delegate to its Council on Ministries or any other agency authority to change the allocations of benevolence funds in the budget adopted by the conference. The Annual Conference Treasurer may, under proper circumstances, invest benevolence money on a short-term basis.

Statement of Facts

At the 1983 session of the South Carolina Annual Conference, Bishop Roy C. Clark received a written request to rule on the following questions:

Under Paragraph 266.3(b), which states, "Contributions to Benevolences shall not be used for any cause other than that which they have been given," does an annual conference have authority to delegate to Council on Ministries, or any other of its agencies, the right to distribute such budgeted funds?

Therefore, do paragraphs 715.2(b) and 715.3 require that all money received by the conference treasurer be credited and held in the specific fund(s) for which it is designated and deny withdrawal, even for short term investment, for the benefit of any cause other than that for which it was originally given?

The bishop's ruling was as follows:

First, Paragraph 266.3(b) has reference to the local church treasurer(s) and is not specifically relevant to the question of annual conference powers regarding the distribution of funds.

However, the basic principle underlying Paragraph 266.3(b), namely that the treasurer(s) should disburse funds as determined by the official administrative body, and that contributions to benevolences should be used for the cause to which they are given, are affirmed either explicitly or by implication in the relevant Disciplinary paragraphs governing procedures on the Annual Conference level.

Second, Paragraphs 715.2(b) and 715.3 require the Conference treasurer to credit monies received to the several agencies included in the Conference benevolent budget. Further, they require that such funds be used for the causes given. No mention of short term investment use is made. The South Carolina Annual Conference has directed that when these funds are used for short term investment, all interest earned shall be credited proportionally to each agency account from which the investment funds are taken. It appears that such a procedure safeguards the integrity of the allocation of funds to designated agencies and in fact enhances those causes during the period when the funds would not otherwise be needed.

The substantive issue seems to be the provision in Addendum 2B for the CCOM to redirect funds allocated for program purposes to emergent missional needs when those funds will not be expended for their original purpose due to a lack of interest or readiness for them in local churches.

Paragraph 709.6 specifically provides that the Council on Finance and Administration shall have the authority "To recommend to the Annual Conference for its action and decision procedures for dealing responsibly with situations in which budgeted funds, as approved by the Annual Conference, are inadequate to meet emerging missional needs or unforeseen circumstances." In Addendum 2B the Council did recommend to the Annual Conference a procedure for dealing with emerging missional needs for which budgeted funds would otherwise be inadequate. The Annual Conference members approved this procedure with full knowledge of its provisions and with clear indication that it was their will that benevolent funds be administered in this manner. Presumably all donors during the conference year will be aware, to the extent individual donors are ever aware of the distribution of the conference benevolence funds, of the potential uses to be made of their gifts. This seems to satisfy the basic principle that funds be used for the purpose or purposes for which they are given.

A strict interpretation of Paragraphs 715.2(b) and 715.3 in isolation from Paragraph 709.6 might seem to support an objection to Addendum 2B. However, in the light of Paragraph 709.6, the provisions of Addendum 2B preserve the intent of Paragraph 715.2(b) and 715.3 which is to preserve the integrity of funds administered by the conference treasurer.

In his ruling the bishop refers to Addendum 2B which is an amended Section B to Report No. 2 of the Council on Finance and Administration and reads:

The allocations for program implementation represent totals of program proposals approved for each board and agency. Local church and district requests for some programs may require more than or less than is allocated. We recommend that the CCOM be authorized to compare program requests with budget allocations at its fall meeting and make adjustments within the total set by conference for program implementation, allowing that such adjustments may include allocating funds from unrequested programs to meet emergent program needs.

This recommendation is in accord with Paragraph 709.6 of the 1980 Discipline which makes it the responsibility of CFA

To recommend to the Annual Conference for its action and decision procedures for dealing responsibly with situations in which budgeted funds, as approved by the Annual Conference, are inadequate to meet emerging missional needs or unforeseen circumstances.

Jurisdiction

The Judicial Council has jurisdiction under Par. 56 of the Constitution and Par. 2612 of the Discipline. 

Analysis and Rationale

We agree with the ruling that although Par. 266 relates to local church treasurers, the same intent with respect to Annual Conference treasurers is set forth in Par. 715, so that in both instances "Contributions to benevolence shall not be used for any cause other than that to which they have been given."

We agree with the ruling that the Annual Conference treasurer may invest on a short-term basis money credited to separate items of the benevolence budget. Par. 709.5 of the Discipline authorizes the Conference Council on Finance and Administration to develop policies governing short-term investment of conference funds.

Delegation of authority to a conference agency to revise the allocation of funds in the benevolences budget after it has been adopted by the conference is an entirely different matter. Par. 709.6 provides no basis for such delegation or for diversion of benevolence funds from the budgeted causes for which they have been contributed. That sub-paragraph authorizes the Council on Finance and Administration to recommend to the Annual Conference for its action and decision procedures for dealing with emerging missional needs when budgeted funds are inadequate. There doubtless are a number of plans, perhaps including a budgeted contingency fund, that might be recommended and validly adopted-but not delegation of authority to the Conference Council on Ministries to divert money from the purposes for which budgeted by the Conference.

As we pointed out in Memorandum No. 521 on a question raised in this same conference, the Council on Ministries has a narrowly-defined advisory and consultative function in connection with the adoption of the conference budget. The major responsibility is entrusted to the Council on Finance and Administration. The authority of that Council is limited to recommendation, not decision, let alone revision of conference determinations.

Much the same question was before us in Decision No. 400. There the question was whether the North Mississippi Annual Conference could properly authorize a committee of its Council on Ministries to reduce disproportionately the budget allocation of certain conference boards when the available anticipated funds appeared insufficient for all to receive their full allocations. We held that neither Par. 831.9 of the 1972 Discipline (essentially the same as Par. 717.9 of the present Discipline) nor any other paragraph charged the Annual Conference Council on Ministries with the responsibility for the distribution of conference funds.

It will be noted that throughout the disciplinary provisions relating to the Conference Council on Finance and Administration and the conference budget, the authority of the council is to recommend. See Pars. 708.6, 709.2, 709.13, 710.l(b), (d) and (e), 710.2(a) and (b), 710.3(b)(1), (3) and (4), 710.4, 710.5(a) and (c) and 710.6.

In many instances the Discipline makes it even clearer that it is the conference that must decide by specifying that the recommendations of the council are for action, or action and determination of the conference. See Par. 709.1, 709.3, 709.8, 710, 710.1(a), 710.3, 710.5(b), 711 and 711.2.

Where the Discipline does, as in Par. 716, authorize an Annual Conference to delegate to its Council on Finance and Administration the making of a specified decision-not changing the conference budget-the authorization is clearly stated. 

As we said in Decision No. 332: 

It is the policy of the Church that contributions to benevolences shall not be used for any purposes other than those causes for which given.

As we held in Decision No. 400, distribution of conference benevolences by the conference treasurer must be as the Annual Conference has "acted and determined." As we there said: 

Not only is the power reserved to the Annual Conference but the Annual Conference cannot delegate its power to one of its agencies.

Decision

The bishop's ruling is affirmed with respect to short-term investment of benevolence funds. The ruling is reversed with respect to delegation by an Annual Conference to one of its agencies of authority to divert funds from a budgeted benevolence cause to some other use.