Best corporate governance practices: financial accountability of selected churches in the Free State province

[摘要] English: South Africa's economy tells a daunting story of poverty, economic inequalities, unemployment statistics that have reached an all-time high and the increased threat of receiving a 'junk rating by grading agencies. These realities result in the mounting social and economic ills of society that are amplified by the repercussions of government's poor record in service delivery.Social services are on the verge of a collapse because they are not properly supported by the government. The insufficient subsidies provided by government, as well as the significant delay or non-payment of subsidies, result in subsidy crises to many social organisations. The aftereffect of the subsidy crises is that some old-age homes, children's homes, orphanages, kids' shelters, welfare homes, care havens, homes for orphaned HIV/AIDS, to name but a few, are battling to survive. This is an untenable situation as millions of vulnerable South Africans, particularly children and elderly people, are dependent on social organisations for their survival.The shrinking economic resources, the social needs of communities that are left unfilled by government, as well as the reigning subsidy crises, provide fertile soil for churches to be involved in these social challenges. As South Africa is a developing country, the provision of social services by churches are imperative and the government cannot afford to lose the wide range of contributions to social services by churches.The future of some churches are, however, affected by the unprecedented decline in membership, as well as the negative impact of secularisation and migration. Many churches are facing aging members, youth leaving the church and several church buildings are sold due to the battle for financial survival. The challenges faced by churches are amplified by the media being flooded with reports of scandals ranging from 1) alleged financial misconduct amongst some of the most well-known televangelists in the United States of America, the 2) controversial sex scandals in the Roman Catholic Church and 3) many instances of misconduct in church finances.These challenges impose significant threats to the financial sustainability of some churches. In addition, it threatens the sustainable involvement of churches in the provision of social services. The root of all these challenges can be traced back to the concept of corporate governance. As soon as churches have a significant presence and influence in their community, stakeholders will normally take on a role of encouraging and demanding the illustration of sound corporate governance principles by churches.The term corporate governance has evolved to become a mainstream concern amongst all stakeholders in various industries and across the different sectors of the economy. The King Reports have provided, not only in South Africa, but also internationally, the lead in good governance and is generally accepted as the source document for what constitutes sound governance. The abovementioned challenges surrounding churches arouse the concern as to what extent churches should implement sound corporate governance principles, as prescribed by the King Reports.This study consists of a literature component and an empirical component. The aim of the literature study was to provide 1) an overview of the development of corporate governance, with specific reference to the King Reports, 2) a regulatory framework of non-profit organisations and churches and 3) an overview of the relevance of the principles of corporate governance from the King Reports to all types of organisations, and for the purpose of this study, specifically churches.The empirical research component was conducted by means of a semi-structured interview. The principles of good governance as prescribed by the King Reports have been used as the main source in the development of the interview schedules. The aim of the empirical study was primarily to analyse the extent to which corporate governance guidelines are implemented by a selected sample of congregations. The congregations were selected from two denominations, namely the Dutch Reformed Church and the Apostolic Faith Mission Church, in the Free State region. The interviews were used to obtain insight from important role players of the respective congregations. The answers provided by the interviewees enabled the researcher to reach conclusions and make recommendations regarding the implementation of corporate governance principles. The results of this study should assist congregations in enhancing and improving the implementation of corporate governance principles. This should therefore assist congregations in maintaining financial sustainability and in taking up their rightful place in playing an indispensable role in the provision of, amongst others, social services in South Africa.The study is set out in 5 chapters. Chapter 1 provides the introduction to the study, sketching a few of the scandals that the world and churches are currently faced with as a means to illustrate the importance of corporate governance. This is followed, in Chapter 2, by an overview of the development of corporate governance. The chapter also discuss the development of the different sectors in the economy, with specific focus placed on the non-profit sector, of which churches form part. The chapter concludes with a discussion on the importance and relevance of corporate governance in the non-profit sector.Chapter 3 provides an overview of the history and establishment of the two denominations as mentioned, in South Africa, coupled with an overview of the governance structures of the denominations. This is followed by an analysis of the findings gathered from the interview schedules in Chapter 4. Chapter 5 finally consists of the conclusions and recommendations for improvement of corporate governance by churches and further research possibilities.

[发布机构] University of the Free State