# LCMS Commission on Constitutional Matters Minutes_St. Louis Missouri_April 2 1994_S9
# Machine transcription, uncorrected — CHI Digital Archive (demonstration)

their corporations, and colleges, universities and seminaries. The convention either elects the boards of
these corporations or through the Handbook authorizes others to elect or appoint the boards. Thus all of
these corporations are part of LCMS, Inc. in the "broad sense" and are considered "controlled" and
"owned" by LCMS, Inc. The synodical Handbook approved by the convention is considered an
"affiliation agreement" between the various corporate entities. (The Worker Benefit Plans are excluded
from this list, since they as well as a portion of the LCMS Foundation operate as trusts under Federal
law.)
Bylaw 3.190 states "The Lutheran Church-Missouri Synod, Inc., shall be maintained as the corporate
entity of The Lutheran Church-Missouri Synod, out of which is conducted those programs, business, and
legal affairs of the Synod not specifically delegated in the Bylaws to other officers or corporations." Thus,
the business and legal affairs involved with conducting the convention fall under the LCMS, Inc.
corporate entity. Bylaw 3.191 states "It (The Board of Directors of LCMS, Inc.) shall also be authorized
to take, on behalf of the Synod, any actions not expressly or by reasonable implication delegated to other
officers, corporations, councils, boards, or commissions of the Synod."
Under normal circumstances these bylaws appear to apply to LCMS, Inc. and its Board of Directors in the
"narrow sense." Based on that assumption the LCMS, Inc. and its Board does not "control" the other
corporate entities, since ultimate "control" rests with the convention and LCMS, Inc. in the "broad sense."
Situations, however, may arise where the LCMS, Inc. Board of Directors has the authority to act in behalf
of the convention between conventions.
LCMS, Inc. in the "broad sense" does have an "economic beneficial interest" in all the corporations
created by the convention or allowed under the Handbook. In the "narrow sense" this may be limited to
those corporations with a direct now of funds to or from LCMS, Inc.
The accounts and published financial statements of the Synod should reflect LCMS, Inc. in both a "broad"
and "narrow" sense. The financial statements in the "narrow sense" might report only those activities over
which the LCMS, Inc. has direct control under Bylaws 3.190 and 3.191. Reporting in the "broad sense"
should be under the concept that the synodical Handbook approved by the convention is an "affiliation
agreement" between the various national and district corporate entities. Under this concept the Synod's
net equity in each of the other corporations might be reported as assets in the financial statements with
appropriate footnote disclosure of the relationship, summary financial data, and intercorporate
transactions. This reporting would provide the members of Synod an accounting of the assets, liabilities,
revenues and expenses over which the Board of Directors has control while also reporting the total net
assets of the Synod over which the convention has ultimate control.
Although this discussion is initiated in part on the assumption the AICPA will adopt its exposure draft on
"Reporting of Related Entities by Not-for-Profit Organizations," the suggested reporting in any event has
great merit in properly communicating the finances of the Synod.
The Commission on Constitutional Matters recognized the complexity of the matter involved and concluded
that because of the lack of time for consideration, the request having only been recently received, the
Commission would require an opportunity to digest the matter and identify the issues which require
consideration. Commission member Walter Tesch was asked to prepare a preliminary analysis. As a result
of the discussion which took place, the Commission determined that it would hold a telephone conference
on May 7, 1994 at 11:00 central daylight time for the purpose of plotting a course for dealing with the
issues and developing questions to be asked. Any questions which had occurred to the members were to be
forwarded to the Secretary for compilation prior to the telephone conference. It was also suggested that
articles of incorporation and bylaws of other corporations identified in the request be secured in order to
determine what they contain with respect to their relation to the LCMS and to LCMS, Inc.