UPDATED Jan. 13, 2020
There has been a lot of discussion about the “assets” of The United Methodist Church related to the possibility of a division within the church. What will happen to those assets has become a topic of debate, with varying proposals part of the different plans.
Yet before United Methodists make plans to divide their assets, it is important to come to a clearer understanding of just what those assets are and how they may (or may not) be disposed of in the future. Thus, this is the first post in an on-going series about UMC assets.
First, it’s important to explain two critical legal frameworks that impact all United Methodist assets: the concept of legal personhood and the trust clause.
Under most countries’ property laws, assets can only be owned by “legal persons,” a lawyerly term meaning both actual humans and government-recognized entities such as corporations. The United Methodist Church is not a human, with the exception of individuals who own property in trust for unincorporated local churches (more on that in a future post), and it does not have legal claim over the assets owned by any of the humans associated with it. Thus, when we’re talking about United Methodist assets, we’re mostly talking about the assets of government-recognized non-human legal entities, which in the US usually take the form of 501(c)(3) non-profit corporations.
But there is a very important point to be made about assets and legal entities within the UMC. The United Methodist Church as a whole is not a legal entity itself, as ¶141 of the Book of Discipline makes clear:
“These terms [“The United Methodist Church,” “the general Church,” “the entire Church,” and “the Church”] refer to the overall denomination and connectional relation and identity of its many local churches, the various conferences and their respective councils, boards and agencies, and other Church units, which collectively constitute the religious system known as United Methodism. Under the Constitution and disciplinary procedures set forth in this Book of Discipline, “the United Methodist Church” as a denominational whole is not an entity, nor does it possess legal capacities and attributes. It does not and cannot hold title to property, nor does it have any officer, agent, employee, office, or location. Conferences, councils, boards, agencies, local churches, and other units bearing the name “United Methodist” are, for the most part, legal entities capable of suing, and being sued, and possessed of legal capacities.” (emphasis added)
Thus, The United Methodist Church as a whole does not directly own any assets, since the church as a whole is not a legal entity capable of owning assets.
Thus, when people are talking about the fate of UMC assets, what they’re really talking about is the assets owned by local churches (and associated entities), annual conferences (and associated entities), jurisdictional and central conferences (and associated entities), and boards, agencies, and other general church legal entities. There is not some pool of money out there separate from the assets of these specific groups.
While the UMC as a whole does not own assets, all of the assets of each of these groups are held in trust for the UMC as a whole. This is the famous “trust clause” of the UMC, which reads, in part:
“All properties of United Methodist local churches and other United Methodist agencies and institutions are held, in trust, for the benefit of the entire denomination, and ownership and usage of church property is subject to the Discipline. … In consonance with the legal definition and self-understanding of The United Methodist Church (see ¶ 141), and with particular reference to its lack of capacity to hold title to property, The United Methodist Church is organized as a connectional structure, and titles to all real and personal, tangible and intangible property held at jurisdictional, annual, or district conference levels, or by a local church or charge, or by an agency or institution of the Church, shall be held in trust for The United Methodist Church and subject to the provisions of its Discipline. Titles are not held by The United Methodist Church (see ¶ 807.1) or by the General Conference of The United Methodist Church, but instead by the incorporated conferences, agencies, or organizations of the denomination, or in the case of unincorporated bodies of the denomination, by boards of trustees established for the purpose of holding and administering real and personal, tangible and intangible property.” (Book of Discipline ¶ 2501; emphasis added)
In other words, the UMC as a whole doesn’t own anything, but ownership by specific UMC-related legal persons is subject to the provisions of The Book of Discipline. This applies to most famously to local churches, but also to districts, annual conferences, jurisdictions, and boards and agencies.
There are different amounts of property at each of these levels, though. US local churches, districts, and annual conferences collectively owned $63.5 billion of property in 2018, an average of $1.2 billion per annual conference, over 90% of which is at the local church level. All five jurisdictions together held less than $4 million in property, though corporate entities related to the jurisdictions held additional assets. The apportioned funds, Africa University, and the apportionment-supported general boards and agencies collectively had $621 million in net assets in 2018, or about half the property in an average annual conference. The vast majority of UMC assets, then, are in the form of local church property.
The trust clause may or may not apply to other UMC-related entities like colleges and hospitals. ¶2552 refers to “[t]rustees of schools, colleges, universities, hospitals, homes, orphanages, institutes, and other institutions owned or controlled by any annual, jurisdictional, or central conference or any agency of The United Methodist Church,” yet it continues, “It is recognized that there are numerous educational, health-care, and charitable organizations that traditionally have been affiliated with The United Methodist Church and its predecessor denominations, which are neither owned nor controlled by any unit of the denomination.” It depends upon the specifics of each entity’s articles of incorporation, as a future post will elaborate.
While The United Methodist Church is not a legal entity capable of owning assets, General Conference can make rules that impact the assets owned by units of The United Methodist Church that are legal entities. General Conference can do so by inserting such rules into the Book of Discipline, which functions as a legal document for local church, conference, and agency government.
One well-known example of General Conference exercising such power is the restriction on agencies investing in companies that engage in businesses contrary to the Social Principles. ¶717 reads, in part: “United Methodist institutions shall endeavor to avoid investments in companies engaged in core business activities that are not aligned with the Social Principles through their direct or indirect involvement with the production of anti‐personnel weapons and armaments (both nuclear and conventional weapons), alcoholic beverages or tobacco; or that are involved in privately operated correctional facilities, gambling, pornography or other forms of exploitative adult entertainment.” There are a variety of other examples of such rules.
Thus, it is possible that General Conference 2020 (or any other General Conference) could, by normal legislation, insert provisions into the Discipline that would allow or even require legal entities that are part of the system of The United Methodist Church to transfer assets to other legal entities not part of the UMC, such as successor denominations or departing congregations, thereby effecting a division of assets. It is also possible that doing so might conflict with the fiduciary responsibility of such legal entities to use their assets for the purposes stipulated in their charters. Part of the question hinges on whether this process would involve the transfer of the trust (more likely allowable, since the legal entity would continue as is) or the transfer of parts of the entity's assets (less likely allowable, since it could violate the charter)."Of course, agencies, annual conferences, and congregations routinely make grants to support the ministry of non-United Methodist legal entities (partner denominations, non-UMC nonprofits, etc.), and such units of the church could certainly make grants to support the ministry of departing portions of the denomination, if they so chose and if those grants fit within the designated missional purposes of those agencies and annual conferences. However, such grants would be at the discretion of the (still-UMC-affiliated) agency, annual conference, or congregation. It would not be required unless stipulated by General Conference by amendment to the Book of Discipline.
Barring action by General Conference, UMC assets will continue to be held in trust for the UMC as a whole, regardless of who may or may not be part of the denomination at any future point. As ¶2501.2 says, “Property can be released from the trust, transferred free of trust or subordinated to the interests of creditors and other third parties only to the extent authority is given by the Discipline.”
UM & Global blogmaster and United Methodist layman Dr. David W. Scott serves as Director of Mission Theology at the General Board of Global Ministries. The opinions and analysis expressed here are Dr. Scott's own and do not reflect in any way the official position of Global Ministries. Dr. Scott is neither a lawyer nor an accountant, and thus his explanation herein should not be interpreted as legal advice. UM & Global is the collaborative blog of United Methodist Professors of Mission.