This is probably the most overlooked chapter in the Model Constitution. Most assume the Model is already complete because the only provision in the chapter is required, but *C19.01. simply says a congregation "may adopt provisions providing indemnification". No such provisions actually exist.

What is Indemnification?

Indemnification is an agreement by the congregation to pay the legal fees, etc. of a person if they are sued as a result of their service to the congregation. In other words, as long as what was done was within someone's duties (as an elected, appointed, or hired official) and was done with due diligence (willful misconduct and recklessness would not count), the congregation agrees to pay any legal expenses (to the extent the congregation is able, generally made possibly by insurance).

Indemnification provisions are generally not required (most states allow nonprofits to indemnify any person unless their governing documents say they cannot), but their presence offers assurance to those serving that the congregation will protect them.

Indemnification provisions may also put restrictions on indemnification, such as limiting the time period or amount.

Limitation of Liability

Because indemnification is about liability, this is also the place limits of liability clauses, such as those protecting Congregation Council members, may be placed.

Example Provisions

Though the Model Constitution does not contain any indemnification provisions, the ELCA Constitution and Constitution for Synods does. The below example is based on those provisions.

C19.02.

Subject to the limitations and duties imposed by law, each person who is or was made or threatened to be made a party to any proceeding by reason of the present or former capacity of that person as a Congregation Council member, officer, employee, agent, or other member of any committee of this congregation shall be indemnified against all costs and expenses incurred by that person in connection with the proceeding. Indemnification of any person by reason of that person's capacity as a director, officer, employee, or committee member of any other organization, regardless of its form or relationship to this congregation, is subject to the provisions of section C19.03.

a.

The term "proceeding" means a threatened, pending, or completed lawsuit, whether civil or criminal, an administrative or investigative matter, arbitration, mediation, alternative dispute resolution, or any other similar legal or governmental action. Except as otherwise required by law, the term "proceeding" does not include (a) any action by this congregation against the individual seeking indemnification, or (b) subject to a disciplinary hearing or related process described in Chapter 20 of the Constitution, Bylaws, and Continuing Resolutions of the Evangelical Lutheran Church in America.

b.

The term "indemnification" includes reimbursement and advances of costs and expenses for judgments, penalties, fines, settlements, excise taxes, reasonable attorneys' fees, disbursements, and similar required expenditures.

C19.03.

Whenever a person who, while a Congregation Council member, officer, employee, agent, or other member of any committee of this congregation, is or was serving at the request of this congregation as (or whose duties in that position involve or involved service in the capacity of) a director, officer, partner, trustee, employee, or agent of another organization, is or was made or threatened to be made a party to a proceeding by reason of such capacity, then such person shall be entitled to indemnification only if (a) the Congregation Council has established a process for determining whether a person serving in the capacity described in this section shall be entitled to indemnification in any specific case, and (b) that process has been applied in making a specific determination that such person is entitled to indemnification.

C19.04.

This congregation may purchase and maintain insurance on behalf of itself or any person entitled to indemnification pursuant to this chapter against any liability asserted against and incurred by this Congregation or by such other person in or arising from a capacity described in section C19.02. or section C19.03.