Why Religious Organizations Must Sign Legal Contracts with Third-Party Suppliers
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It is reasonable to assume that churches and other religious organizations, including Non-Profit Organizations (NPOs), do not necessarily see the need to draw up and sign legal contracts with third-party suppliers and consultants.
Why?
There are probably many reasons for this, many of them possibly not even thought out and expressed.
By way of answering this question, the reason that comes to mind is that Christianity is built on several tenets, one of them being trust. In other words, Christians are inherently honest and trustworthy. Therefore, word-mouth agreements should be honored. And work completed, or goods and services supplied are based on word-of-mouth agreements.
However, the practice does not always correspond with this statement. Word-of-mouth agreements do not always end up producing the agreed-upon results.
What is the solution to this challenge?
In straightforward terms, churches and religious organizations must use a contract management system to draw up, review, and sign legal contracts with all third-party suppliers of goods and services.
How?
Succinctly stated, the most efficient way to manage all contractual obligations and relationships with other parties is to sign up with an online contract management system. And the best way to decide which software application is suitable is to sign up with the contract management software free trial.
Reasons why it is essential to implement a contract management system
Let’s consider several reasons why it is essential to implement a contract management system as a church or religious organization:
1. People are human
While the tenets of faith assume honesty and trustworthiness, the counterweight is that people are first and foremost human. Human beings are fallible by nature and design. Therefore, people make mistakes. And the church is filled with human beings. Consequently, it is reasonable to assume that people don’t always do what they say they will. And when there is a verbal agreement that should be a legal contract, very little can be done to remedy the situation if the one-party reneges on their obligations.
For example, let’s assume that you run a mobile coffee shop, and the church you belong to has asked you to provide barista services after every Sunday service and after the mid-week prayer meetings. You agree to supply the coffee, milk, sugar, takeaway cups, and other necessary items at cost price. In the business of daily life, you never get around to discussing the actual cost per cup of coffee. More to the point, the labor cost does not get added to the cost price.
Fast forward to the end of this story.
The church’s finance officer has budgeted $1 per cup of coffee sold while your cost price is closer to 50% more than the budgeted price. Your invoice at the end of the first month is 50% higher than what was anticipated. Who carries the additional cost?
It is easy to see that this scenario can quickly devolve into a negative scenario with the church finances not carrying the cost above budget. On the other hand, you are also not able to absorb the extra costs, which in turn could end up driving you into bankruptcy.
2. Important details could be forgotten
The primary advantage of drawing up a legal contract between all of the parties involved in a contractual relationship is that unless every detail is put on paper, it is easy to forget some crucial information.
Let’s describe this point by continuing with the example first highlighted above. But let’s assume this time that the church leadership has asked you to serve coffee at all annual interchurch conferences. A big three day and night conference is coming up where thousands of delegates and speaks are expected. And the leadership would like to put on a brilliant showcase that shines the spotlight on the church’s outreach and missionary programs.
The first day of the conference arrives, all the delegates arrive, having been promised a coffee bar with a professional barista, and you don’t come. The final conference dates differ from the original dates that were initially discussed. And you weren’t notified of the changes. Or maybe you were told but forgot to change the dates on your calendar.
Again, it is reasonable to assume that both you and the church leadership will be upset with each other. And the relationship between both parties can turn from a positive connection into a negative one where you and the church agree to have nothing more to do with each other.
3. The hiring out of facilities
Let's assume that the church hires out its hall and other facilities to third parties for conferences, parties, and other social engagements. It also stands to reason that the church leadership has to be specific about what type of functions are allowed on the property. For example, allowing a party for underaged teenagers where the hosts provide alcohol and drugs to the teens is not a good idea. Whether the church hosted the party or not, its reputation is still at stake because the party was held on its campus.
Another good example where the church management must be specific in its hiring out agreement is replacing broken items after a function. If we use the same instance of the party for underaged teens, let's assume that a group of drunken teens broke into the church's kitchen and smashed all the crockery in the kitchen. Who is legally liable and responsible for replacing the damaged items?
Final thoughts
In all three instances described above, a legal contract signed by all parties specifying all of the contractual obligations between the individuals and organizations would solve these challenges. In the barista and church contract scenario, the cost price for each cup of coffee would be specified upfront, preventing any price discrepancies later on.
Secondly, the conference dates would be specified in the contract, and any changes to the dates would result in a signed amendment to the contract.
Finally, in the hiring out of the hall scenario, the church would be specific about what types of events are allowed on its campus, and the consequences should any of its property be damaged or destroyed.
