This paper explores the interaction between church-related institutions and the way in which they shape society and are shaped in turn by the environment in which they operate. Like all schools they face operational challenges such as improving educational quality, promoting greater cultural diversity, coping with aging individuals and institutions, living in a complex society, opening campuses to globalization, responding to demands for gender equality, operating efficiently in a changed economic environment, and locating financial resources. Church-related schools face the unique challenges of: (1) how to preserve and promote the religious identity of the school; (2) how to improve relations between the school and its sponsoring body; and (3) how to incorporate religious commitment into institutional life. For the first it is suggested that church-related schools must institutionalize the fundamental mission of their existence. A commitment to reconciliation and communication, and articulation of the rationale for religious higher education is seen as the answer to the second. To meet the third challenge, the paper suggests that the answer lies in becoming proactive, drawing on religious resources to deepen the foundations of civic responsibility, and exercising religious imagination to find alternatives to resolve social conflict. (CH)