Restructuring: It All Makes Sense Now

In the course of my life I’ve learned that if you have a question and are willing to wait long enough, the answers generally present themselves in time.

One such question I had was why Synod and the Districts were treating restructuring as an immediate urgency. Why was Synod’s and Districts’ first response “restructuring” after the CEF crisis became public? Why was a “working group” formed when a still-unnamed group told the Synod BOD that the restructuring document was DOA as it presently stood? I had many such “why” questions.

Synod’s “Wow, isn’t it amazing that all three Districts asked to restructure at the same time?” line was never credible to me – what I saw was something got them all spooked and they thought restructuring would fix it. Why else would the church push so hard for an organization change when (one would think) it’s priority would’ve been to do whatever it could to help the CEF depositors that had been badly traumatized by a church that had broken faith with them for more than a decade?

You know – repentance, restitution, confession and absolution, that kind of stuff you regularly hear about on a Sunday AM.

Add to that the fact that a public justification for restructuring wasn’t made until the process was already well underway – the “LCC Restructuring Process” page reports that restructuring started Oct 21, 2015 while Bill Nye’s “FACTORS THAT LED TO A CALL FOR A MAJOR OVERHAUL OF THE LCC STRUCTURE AND HOW THE NEW STRUCTURE IS DESIGNED TO MAKE THINGS BETTER?” document came out April 2016. Though what was proffered sounded good, none of it required the kind of urgency that restructuring was being sold as needing.

Why was that?

Then there’s the Working Group’s decision to move the organizational portions of the new structure into the Statutory and Synodical Bylaws so the changes took immediate effect without a confirmation vote by the congregations. This certainly got restructuring passed – it also resulted in much dismay among the delegates “What do you mean there’s no confirmation vote by the congregations?” and “What do we tell the people back home?”

The end result is that while restructuring was passed – the manner it was passed burned a lot of political capital and sowed division in the membership with many members considering the action a significant breach of trust.

Clearly the leadership had serious motivation to get this done – though the fundamental reason was not communicated to the rest of us.

Recently one of the central players in this process made a statement that – to me – explains Synod’s desperate push to amalgamate all of LCC into one corporate entity.

It wasn’t about accountability.

It wasn’t about creating a closer relationship between Synod and its church workers.

It wasn’t about saving money.

All of these benefits were argued for after the restructuring process was already well under way.

What initially got the ball rolling and kept it going was Synod’s inability to get directors and officers liability (D&O) insurance. 

For those of you wondering what D&O insurance has to do with anything – here’s some background.

Setting Things Up:

The Government of Canada requires a Not For profit organization to have a Board of Directors:

Under the NFP Act, a corporation is required to specify in its articles either a fixed number of directors or a minimum and maximum number of directors 

The general duties of the directors includes:

The board of directors is accountable to the members. It is responsible for managing and supervising the activities and affairs of the corporation. 

Membership on a Board brings with it certain liabilities under the law. One of those potential liabilities is if a 3rd party sues the Board for a decision it made, the Board members would have to retain and pay for legal counsel in order to mount a defence. To mitigate this risk some insurance companies offer what is called Directors and Officers insurance which covers legal costs arising from defending a Board member performing their duty.

What This Meant for LCC:

After the ABC District CEF scandal broke Synod could only find D&O insurance coverage for actions taken by Synod’s Board in the performance of its duties. What Synod could not find was coverage that protected its Board members in the event someone sued them for the actions of 3rd parties.

As an example, supposed ABC District’s Board of Directors did something. As a result of that action a lawsuit was filed naming both the ABC and Synod Boards as defendants. The ABC Board members would have insurance coverage to fund their defence while the Synod Board members would have to mount and fund their own defence.

This put Synod in a very difficult position. Had LCC retained its structure of Synod plus a federation of Districts, Synod’s Board members risked having to fund their own defence in the event they were sued for the actions of one of the District Boards. This would’ve made it incredibly hard if not impossible to recruit people to serve on the Synod Board of Directors. And if Synod could not populate its Board it would’ve been out of compliance with the Not for Profit Act and unable to conduct business. All this leads to the distinct possibility that – if Synod couldn’t get D&O insurance to protect its Board members – it might have had to shut down.

In short, Synod likely had one of two unpleasant choices –

1. restructure into one corporate body so the Board could be properly insured as well as attain the hoped-for benefits listed earlier, or
2. shut down entirely leaving the Districts, seminaries, and various other related organizations as a set of disjoint stand-alone organizations to figure out what to do next.

Whether one agrees or disagrees with the “why” and “how” all this went down, at least it makes sense now.