Why all UUs should examine their congregation's ties to the UUA

Articles by a CPA and a law professor

The following is a reprint of a letter I wrote to members of the congregation I attend, Westside Unitarian Unitarian Congregation in Seattle. This post includes a letter by a CPA and congregational treasurer, along with a letter by a law professor and UU.

Reprinted below with permission is a short piece titled “WATCH YOUR CHURCH’S ASSETS! The Association’s Backdoor Way of Owning Your Church” by Rebecca Pace. Rebecca Pace, a certified public accountant, certified financial investment expert, and treasurer of Heritage Unitarian Universalist Church of Cincinnati, has issued a warning about the financial and contractual entanglements with the Unitarian Universalist Association (UUA) that may pose risks to congregations.

Westside has a history of seeing and presenting things through rose-colored glasses and has struggled with foresight. For a prime example, despite warnings from several exiting members, most of the congregation and leadership didn’t foresee rapidly losing over 40 percent of its members and a huge portion of its pledging income.

Now, I believe Westside is being shortsighted again, putting itself at risk by being so deeply tied to the UUA through its bylaws and mortgage. This entanglement not only limits Westside’s ability to be self-determining but could also be a major disappointment to those who have invested their money in the congregation.

Westsiders would be naïve or stuck in the past to think, "Oh, the UUA would never do that." Rev. Alex Holt, in his open resignation letter from the UU Ministers Association, wrote how UUA officials unprecedentedly tried to interfere in Westside’s internal business and decision-making. I was on the board at that time. And things have only worsened in the UUA since then. I know of a congregation so appalled by the UUA that it cut its annual contributions by 85 percent this year. Other congregations with foresight are revising their bylaws and distancing themselves from the UUA.

Except for those okay with their money and investment in the congregation ending up with the UUA in Boston, members should be hesitant about willing Westside money and investing in the building before these issues are fixed. Those who believe Westside should be able to be independent and self-determining have another reason for Westside to address this issue

I believe that Westside’s leadership and the congregation as a whole should seriously consider these issues and take proactive steps to address them.

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WATCH YOUR CHURCH’S ASSETS! : The Association’s Backdoor Way of Owning Your Church by Rebecca Pace CPA

As I understand it, this is how it works. If a congregation affiliated with the UUA after a certain date they were required to put a clause in their bylaws that their assets would revert to the UUA if they "ceased to exist". Before that date it was not required, but it was "requested" and is commonly in many church bylaws.1

If a congregation borrowed from the UUA (a mortgage) or received some other benefits, they were required to add the reversion clause.

What this means is that each congregation MUST read their own bylaws and figure this out themselves.

If a congregation changes their bylaws in anticipation of closing, or if a congregation donates assets to another organization or otherwise disposes of property that would have gone to the UUA under the bylaws, the congregation's trustees are on the hook to pay the UUA the value of those diverted assets.

The UUA Board has a policy on how the assets from church closures are to be used.

As far as the UU Common Endowment Fund--there is no question about this. If any funds are managed by the UUA Common Endowment Fund and the congregation ceases to exist or simply withdraws, or expresses an intent to withdraw, all invested money becomes the property of the UUCEF. 2 This is because the UUCEF can only hold money that is pledged to the benefit of the UUA. The UUCEF has a fiduciary responsibility to see that the donor's intent for their money to benefit the UUA is carried out. If a congregation withdraws from the UUA they are indicating that they are no longer interested in "benefiting the UUA." If the UUCEF gave the money back to the congregation they would not be working on behalf of the donor. The money would be going to other purposes.

This actually is a burden of the congregation, too. Did the donor give the money to further the aims of the UUA, or to benefit the local congregation? Splitting hairs? Be careful. What was the donor's intent?

A congregation may withdraw money from the UUCEF for many reasons, but not with the intent to withdraw from the UUA.

Below is the UUA policy on dissolutions, posted after the June 6, 2024 UUA Board of Trustees meeting.

It reads, in part, "once received by the UUA, assets from its dissolving member congregations should be distributed as follows:

A. On request of the congregation, up to 25% to outside nonprofit organizations whose missions are aligned with those of the congregation. The majority of this distribution must be to UU congregations or UUA related organizations...

B. 25% to the UUA's New UU Communities fund....

C. 25% to the UUA held within the Unitarian Universalist Common Endowment Fund LLC,

D. 25% flexible, based on congregational circumstance...

Footnotes:

1 Rule 3.3.5, on Rules and Regulations for New Congregations - “A congregation shall include in its articles of incorporation or other organizing documents a clause providing that the assets of the congregation will be transferred upon dissolution to the Association. Notwithstanding the foregoing, if a congregation obtains the prior written consent of the Association’s Board of Trustees, the congregation may name an organization that is affiliated with the Association (such as a district, camp, conference center or other congregation) as the recipient of the congregation’s assets upon dissolution.”

2 Operating Agreement of the Common Endowment Fund of the UUA effective June 1, 2021 Article XII Reversionary Clauses 12.2 With respect to Members. If a Member dissolves as an entity or for any reason loses its status as a Qualified Entity, and that Member continues to hold Units at the time of such dissolution or loss of status, then after all outstanding debts of the Member are paid, and provided that the Manager is an organization described in Section 501(c)(3) of the Code at such time, the undivided portion of the Net Asset Value of the Fund attributable to such Member’s then outstanding Units shall become the property of the Manager, or its successor, subject to all applicable laws. Under such circumstances, with the prior written approval of the Manager, in connection with its dissolution of loss of status such Member may recommend to the Manager another Unitarian Universalist organization that is a Qualified Entity (such as a district, camp, conference center or congregation) as the recipient of an amount equal to the undivided portion of the Net Asset Value of the Fund attributable to such Member’s outstanding Units, which recommendation shall be given strong consideration by the Manager.

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“Vulnerability of church funds to confiscation by the Unitarian Universalist Association” by law professor William Jordan JD

Pace later sent me the below link to a recent article (pdf) titled “Vulnerability of church funds to confiscation by the Unitarian Universalist Association” by William Jordan JD, professor emeritus of law at the University of Akron and member of the UU Church of Akron. Jordan has previously raised concerns and objections to the current UUA.

Jordan’s letter starts:

The recent behavior of the Unitarian Universalist Association (UUA) has given rise to concerns that the UUA may seek the dissolution of congregations and force them to turn their assets over to the UUA. This is an understandable concern in light of the likely resistance of many congregations to the new dogma embodied in proposed changes to Article II of the UUA ByLaws.

Vulnerability of church funds to confiscation by the Unitarian Universalist Association

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