 To keep watch over denominational agencies, ‘Follow the Money’  The Layman Volume 40, Number 2, Posted July 30, 2007
Sooner or later, most issues of moment, no matter how pious the language that enshrouds them, will find their way into a financial statement. Thus this editor who by disposition and training is inclined more toward theology than arithmetic, has often turned his focus to budgets and balance sheets. ‘Hearts and Hands’ Sometimes rhetoric and rubles don’t match. Denominational leaders, for example, applaud the progress they say they have made in their $40 million “Hearts and Hands” fund raising campaign. They report that the campaign has raised just over $26 million in pledges and gifts, mostly from the presbyteries. But a review of the figures shows that most of this is not new money raised by “Hearts and Hands.” It is money that the presbyteries are pursuing in campaigns of their own, money that will stay within the boundaries of the presbyteries to meet their own church-development goals. “Hearts and Hands” has given itself a free ride, taking credit for raising funds that would probably have been raised even if there had been no “Hearts and Hands” campaign. This truth comes to light when one follows the money. Benevolence or business? Again, following the money, we note the announcements that several congregations that have chosen to disassociate from the Presbyterian Church (USA) are making “mission gifts” to their former presbyteries. The language invites examination. Are these allocations real mission gifts as they are often described, or are they exit fees? Do the transactions that they represent reflect benevolence or business decisions? Take the case of Central Presbyterian Church of Huntsville, Ala. v. the Presbytery of North Alabama. Central’s congregation declared itself no longer a member of the Presbyterian Church (USA). North Alabama claimed Central’s property, and the congregation defended its deed in court. North Alabama Presbytery found itself facing an escalating financial crisis. Having spent $65,000 on legal fees, it discovered “certain aspects of Alabama law which appear unfavorable to the presbytery.” Presbytery officials had to weigh the cost of losing their case at the state level and then risking a lot more money on an appeal that might go as far, in their view, as the U.S. Supreme Court. Like most presbyteries, North Alabama is not wealthy. Facing the prospect of protracted litigation, it started borrowing money from neighboring presbyteries, presumably in the hope that a North Alabama win might provide legal precedent for the others. But how much indebtedness was this presbytery willing to incur on a case whose outcome had become doubtful? It was time to do a deal. In order to settle the matter, Central agreed to give the presbytery $250,000, $110,000 of which is to be designated for a church camp whose ministry the people of Central have loved and supported. With the remaining $140,000, the presbytery can bail itself out of legal expenses that it has already incurred and, for the moment, assuage the pain of losing Central’s annual contributions to the presbytery’s budget. Following the money, one learns that Central did, in fact, make a “mission gift,” but one also discovers that this benevolence had significant business implications. The buck stops here As the flow of departing congregations increases, we can anticipate numerous variations on the above-described business arrangement. For the local congregation, it makes sense to pay an exit fee if the amount is less than anticipated legal expenses and, if prorated over a few years, the amount is less than the church would have contributed to the presbytery if it had remained a part of the denomination. Many presbyteries will have no choice but to deal, considering their declining income, dwindling reserve funds and the expected cost of litigation. A cluster of departing congregations that pools its resources in common defense of their property rights can break the bank of most presbyteries, while denominational headquarters, whose income is falling fast, has shown itself in no condition to bail them out. Louisville has already suffered several financial crises requiring denominational leaders to make major budget cuts, but the big one is yet to come. Within five years, when presbyteries have expended the exit fees that they negotiate with departing congregations, they will face significant budget reductions. At that point, will they cut their own programs in order to fund current-level contributions to denominational headquarters? It is reasonable to assume that they will pass much of that hurt on to Louisville. Following the money, one observes a national organization that is feeding upon itself in a desperate attempt to survive. Ministries and staffs are being downsized. Reserve funds are being consumed. Assets are being sold. Empty church offices are being leased to non-church entities. The institution is doing what all dying institutions are inclined to do – cannibalizing itself. Follow the money Presbyterians will want to keep close watch over one remaining denominational entity that administers significant assets, the Presbyterian Foundation. Among its accounts are millions of dollars whose use was restricted to specified purposes by the donors. As Louisville’s appetite for foundation disbursements increases, it is prudent to inquire into the mechanisms employed by the foundation to ensure that donor designations are honored. We have seen no evidence that suggests any misfeasance or malfeasance in this regard, but it is reasonable to assume that the degree of financial hunger now being experienced by denominational agencies could – in the absence of transparency and accountability safeguards – lead to excessive creativity in the interpretation of donor restrictions. Thus, we would encourage Presbyterian Foundation officials to scrupulously avoid making block grants to denominational agencies from donor-restricted accounts, recognizing that the foundation’s fiduciary responsibility ceases, not when it transfers funds to an intermediary agency, but when those funds have actually been spent for purposes identified by the donor. In short, we believe that the advice this editor received long ago applies to foundation officials today: Follow the money. The Rev. Parker T. Williamson is editor emeritus of The Layman. |
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