Is ‘sole membership’ the SBC’s best option for NOBTS?

The central issue in discussions about sole membership and New Orleans Baptist Theological Seminary is simple, but the details are complex. The central issue: Is sole membership the best way for an SBC entity in Louisiana to protect its relationship with the Southern Baptist Convention? After a long and thorough investigation, the trustees and president of the seminary concluded no, it is not. Trustees of the school are presently at work on an alternative way to accomplish the goal of sole membership in a form better suited to Baptist polity and the laws of Louisiana. A proposal on strengthening the ties binding the seminary to the SBC will be made at the 2005 meeting of the Southern Baptist Convention.

The SBC Executive Committee disagrees with our conclusion. The difference in opinion will be resolved the Baptist way. SBC Executive Committee staff member and attorney Augie Boto informed us the seminary, not Convention messengers or the Executive Committee, should initiate any proposals to change the seminary charter. To do otherwise would violate entity and SBC by-laws and could endanger the legal strategy of the SBC in defending against lawsuits. Therefore the seminary will bring two options before messengers attending the 2005 Convention. Out of respect to the role of the Executive Committee in Southern Baptist life, one of those options will be sole membership. Out of respect to the role assigned to seminary trustees by the SBC, the other option will be an alternative to sole membership. The choice made by the messengers at the 2005 Convention will be implemented immediately by the seminary.

What is sole membership?

Sole membership is a legal approach to the organization of a nonprofit corporation making one person or organized body the only member of that corporation. The sole member typically has the ultimate authority to control the affairs of the corporation. Draft legislation known as the Revised Model Nonprofit Corporation Act was cited as the basis of the Executive Committee recommendation. Introduced in 1964, this act has now been adopted by nine of the fifty states. It allows the single member to share some of its control and authority with the directors or trustees of the corporation. While the single member retains its ultimate authority and guaranteed rights and responsibilities, the responsibility and authority for the day-to-day running of the corporation’s affairs remains with the trustees. The sole member, therefore, is insulated from liability claims arising from the operation of the corporation. Sole membership is a different approach to corporate organization than Southern Baptists have historically adopted for their organizations.

Why not sole membership?

The president and trustees of the seminary concluded sole membership is not an appropriate strategy for an SBC entity in Louisiana because Louisiana has not adopted the Model Act. Instead Louisiana has its own Nonprofit Corporation Act, which interprets and applies the concept of sole membership quite differently than does the Model Act. Ten of the other SBC entities are in states governed by the Model Act, but because the seminary is chartered in Louisiana, it is governed by Louisiana law. Unlike the Model Act, the Louisiana Act does not specifically permit the sharing of responsibilities, duties, and obligations between the sole member and the trustees of the corporation. Instead, the sole member of a Louisiana nonprofit corporation retains substantially all authority and control of the corporation, in spite of efforts to delegate some of its authority and responsibility to others. The risk of exposure to liability of the SBC for acts of the seminary could be enlarged if the SBC becomes the single member of the seminary under Louisiana law and thus is treated as if it operated the seminary. The assets of the whole Cooperative Program could be made available to satisfy a claim for damages resulting from the operation of the seminary, rather than simply the assets of the seminary. 

Concern for historic Baptist polity is a second reason to reject sole membership in Louisiana. This would be a small step in a new direction for Southern Baptists. Historically Southern Baptists exercise decisive influence over the entities, while giving entity trustees operational control of the ministry and activities of the entity.  Convention-elected trustees operate within the guidelines of a convention-determined ministry assignment and a convention-determined business and financial plan in accordance with a convention-approved charter and are funded by a convention-endorsed budget. With those mandates guiding them, trustees have operational control and supervision over whom the entity employs and how it fulfills its ministry assignment. No change in those mandates can be made without the approval of the Convention. To use a sports metaphor, the SBC sets the rules while the trustees call and run the plays. Sole membership is a step toward adding operational control to decisive influence. It is not the size of the step, but rather the direction of the step that matters.

To take such a new and different step appears unnecessary to NOBTS Trustees. The legal counsel of the seminary and an independent legal consultant informed trustees that Louisiana law now protects the rights of the SBC. To make those rights even clearer, some changes could be made to the charter, but those changes would be minor. In the opinion of the attorney for the seminary, if our trustees challenged the SBC in a Louisiana court, they would lose. The current charter also has a history of protecting the SBC from liability in lawsuits filed against the seminary. A number of Louisiana attorneys have told us the risk for SBC liability in this state would be much greater with sole membership than under our present charter. Why take the increased risk? New Orleans Baptist Theological Seminary wants the ties binding it to the SBC to reflect historic Baptist polity and the realities of Louisiana law.

 More information on the seminary’s position can be found on the seminary website: www.nobts.edu.

Charles Kelley is president of New Orleans Baptist Theological Seminary.