Thousands of religious congregations merge every year. According to Jim Tomberlin and Warren Bird, in their book Better Together—Making Church Mergers Work, church mergers are common and becoming more so.
It’s important for the merging entities to work with legal professionals who are well-versed in religious organization transactions with a network of local counsel to assist with state-specific requirements.
We recently worked with California attorneys to help several former United Methodist congregations merge with newly formed entities. It’s no secret that California law includes a lot of rules, regulations, and bureaucracy, but this process led us to discover just how cumbersome it can be.
The California Attorney General has review power over nonprofit mergers. The role is limited to review, not approval, when it comes to religious nonprofit corporations. However, that will not keep them from holding up the process before it can go to the Secretary of State. When a California attorney politely told the AG’s examiner that his requests exceeded what the law provided, he essentially invoked Clint Eastwood, implying, “Go ahead. Make my day.” While agreeing that we could go ahead and try to obtain Secretary of State approval, we would have to answer his questions sooner or later.
Fortunately, the churches were able to provide the information and to sufficiently answer the AG’s questions to pass the test. They all obtained AG clearance and official merger status with the SOS.
At Dalton & Tomich, we help religious organizations and other nonprofits with their legal needs. If your church is exploring a merger, give us a call today.
