Less than two weeks before Christmas, a no-turning-back moment occurred for Catholic church leaders. On December 12, 2025, the jury reached its verdict in the Hartshorne and New York Attorney General consolidated actions against the Roman Catholic Diocese of Albany. The jury found multiple individuals—including two bishops, senior diocesan personnel, and St. Clare’s executives—personally liable for fiduciary breaches connected to the collapse of the St. Clare’s Hospital pension plan, resulting in $54.2 million in compensatory damages, plus statutory interest, owed to the plan’s beneficiaries. The jury’s findings mark a pivotal moment for Catholic institutional governance in the United States, and serve as a cautionary lesson for Catholic organizations.

This crucial protection allows religious organizations to make employment decisions regarding their ministers, free from the interference of secular laws including federal and state “nondiscrimination” laws that require employers not to discriminate on the basis of certain classes (often including religion, sexual orientation, and “gender identity”). Without the protections of the ministerial exception, religious organizations would be forced to choose their ministers based on secular laws and not solely on the internal decisions of the organization. While Napa Legal has published several resources on the subject in the past, it is time for a comprehensive summary of the doctrine as well as an update on the caselaw affecting application of the ministerial exception in 2026.

Most small companies probably base their compensation policies on a simple analysis of the market: when hiring a new key employee, a company will likely determine how much money it can afford to spend on compensation, decide how much it will take to get the quality employee the company wants, and set the salary rate and benefits accordingly. While a 501(c)(3) nonprofit will likely make similar considerations, did you know that “excessive compensation” can result in penalty taxes (called “excise taxes”) under federal law?

Most organizations that Christians, especially Catholics, would typically think of as religious orders (convents of nuns, monasteries of monks, etc.) will qualify as religious orders for federal tax purposes with special exemptions. But there are many other types of religious organizations that may also qualify. Read on to get a better understanding of what federal tax law means by “religious order” and how the term differs from its common, non-legal use.

If you work with a faith-based nonprofit, serve on a board of directors, or are thinking of joining a board, you have likely heard that directors have fiduciary duties. These duties (typically the duties of care, loyalty, and obedience) bind directors to uphold certain standards of conduct in their service to the nonprofit organization. This resource will introduce you to the duty of loyalty.