Religious Governance Without Corporate Aggregation: Why Legal Form Matters for Fiduciary Accountability

What ultimately distinguishes governance regimes—understood here as legally constituted systems for allocating authority, fiduciary obligation, and control over assets across time—is not theology or organizational culture, but the presence or absence of a mediating legal person that interposes fiduciary obligation between individuals and property. In doctrinal terms, that is, in the formal grammar of institutional governance:

A director of a 501(c)(3) nonprofit corporation acts as a fiduciary organ of a juridical person—the corporation aggregate—whereas a trustee or leader of an unincorporated association exercises fiduciary (or quasi-fiduciary) authority over assets in the absence of such an intervening legal person; this distinction is not merely semantic but structural, enforceable, and consequential.

The decisive distinction lies in where legal personality is located: in a 501(c)(3) nonprofit corporation, the corporation itself constitutes the juridical person (the corporation aggregate), the board functions as the governing organ of that person, fiduciary duties are owed to the corporation and its charitable purpose, assets belong to the corporation, and continuity is guaranteed by legal personality independent of particular directors; by contrast, in an unincorporated association, even where “trustees” or leaders exist, legal personality is absent or only weakly recognized depending on jurisdiction, fiduciary authority is exercised directly by individuals who hold or control assets personally or through informal trust arrangements, duties are owed to beneficiaries, members, donors, or purposes without mediation by a corporate person, assets belong to trustees, members, or purpose-trust arrangements, and continuity depends on persons, custom, or judicial intervention rather than on institutional form.

In short, within a corporation aggregate fiduciary obligation is interposed between persons and property by the entity itself, whereas in an unincorporated association it is not.

Whether for-profit or nonprofit, the corporation operates within a dense framework of external obligations: formal legal mechanisms, standardized fiduciary duties, and approved accounting principles, guided by generally accepted doctrines and enforced through regulatory, professional, and judicial oversight.

Conversely, the unincorporated association occupies an ambiguous position between two institutional worlds. It may exercise authority over assets and persons while remaining only partially subject to these external disciplines, a condition that too often results in gaps in accountability marked not by intentional misconduct but by informal governance practices, weak documentation, and the absence of enforceable fiduciary constraints.

This institutional ambiguity does not presume bad faith, but it does create space for poor practices and opportunistic behavior to persist without timely detection or correction.

The institutional consequences of this distinction become clearer when the two governance forms are placed side by side. The table below renders the location of legal personality and its effects on fiduciary duty, asset ownership, and continuity explicit in comparative form.

This distinction has direct consequences for fiduciary duty. In a 501(c)(3) nonprofit corporation, directors owe fiduciary duties to the corporation itself, as defined by statute and common law, and those duties are subject to enforcement by public officials, the corporation, and, in limited cases, by courts or members. Directors never own the corporation’s assets, cannot dissolve their fiduciary obligations simply by resignation or exit, and are fully replaceable without disrupting the legal existence or continuity of the entity. This arrangement constitutes fiduciary governance through corporate aggregation.

In comparison, in an unincorporated association, a trustee or leader may hold legal title to assets personally or jointly, may owe fiduciary duties directly without mediation by an institutional legal person, and may combine control, possession, and interpretive authority over organizational purpose. Enforcement mechanisms in such settings are often ambiguous, and even where fiduciary language is invoked, obligations tend to be less standardized, more discretionary, more dependent on individual persons, and harder to police ex ante. This constitutes fiduciary responsibility exercised without the insulation and disciplining effects of corporate form.

This distinction matters specifically for understanding the corporation aggregate. As clarified above, the corporation aggregate is the juridical person itself, not the collegiate body that governs it. The further distinction, then, is that a 501(c)(3) board governs a juridical person, whereas a trustee or leader of an unincorporated association governs in the absence of one. That single difference explains why accountability is structural in the corporate case and personal in the unincorporated one; why continuity is office-based rather than person-based; why institutional trust is demonstrated through form in one context but largely presumed in the other; and why events such as exit, death, or internal conflict have radically different consequences depending on whether fiduciary authority is mediated by a corporate person.

These distinctions can be stated conservatively and analytically without polemic. Directors of nonprofit corporations exercise fiduciary authority as organs of a juridical person whose continuity and obligations persist independently of those who govern it, whereas trustees or leaders of unincorporated associations exercise fiduciary authority without the interposition of a corporate person, rendering accountability more directly personal and less structurally constrained. Stated more institutionally, where incorporation interposes a corporation aggregate between persons and property, fiduciary obligation is rendered office-based, standardized, and enforceable; in unincorporated associations, fiduciary authority remains person-centered, discretionary, and comparatively resistant to institutional discipline. Even in its strongest defensible form,

the distinction concerns not legal form alone but accountability architecture: nonprofit directors govern on behalf of a juridical person that stabilizes purpose and obligation across time, while unincorporated association trustees govern in the absence of such a mediating entity.

The analysis to this point has focused on structural distinctions rather than policy conclusions. Nevertheless, the asymmetries identified here raise a question that can no longer be deferred: whether governance arrangements that systematically decouple fiduciary authority from institutional accountability ought to be reconsidered. What follows is therefore not an argument against religious governance as such, but an argument about governance without corporate aggregation.

Framed this way, the distinction strengthens rather than radicalizes the case for reform. It allows one to argue cleanly and non-polemically that the issue is not religious governance as such, but governance without corporate aggregation; that incorporation does not constrain belief or doctrine, but does constrain authority over assets and obligations; and that the resulting asymmetry permits some organizations to benefit from nonprofit trust without adopting the institutional disciplines through which that trust is ordinarily secured. To preserve analytic clarity, this distinction should not be framed as a moral contrast between “good” directors and “bad” trustees, nor as a binary between legality and illegality, but rather as a difference between mediated and unmediated fiduciary authority—a difference that goes to the structural conditions of accountability rather than to the intentions or virtues of particular actors.

Author's note: This essay is distilled from ongoing research for an intellectual history of congregational church governance, with particular attention to the corporate governance of nonprofit religious entities. The analysis is offered from the standpoint of an intellectual historian concerned with institutional form, continuity, and accountability, rather than from that of a legal or accounting professional. The analysis offered here is descriptive and institutional in character, not advisory. Full documentation, archival references, and evidentiary citations supporting the claims advanced here will be provided in the forthcoming volume.