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Effective Church Financial Management Systems

Over the past 10 months, I and and many other Voice of the Faithful (VOTF) volunteers, with input from many VOTF members, have worked on formulating and improving a policy statement on effective church financial management systems and getting that statement approved by VOTF officers. The 8.23.2007 issue of In the Vineyard, the VOTF bi-weekly electronic newspaper, carried the approved policy statement, which follows.

If anyone has any comments or questions, please use the Reply capability of this site, or e-mail me at frankdouglas62@yahoo.com.

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VOTF National Representative Council
Resolution on
Effective Church Financial Management Systems

August 2007 - Recent media disclosures and an important university study provide compelling evidence that secrecy, ineffective internal financial controls, inadequate disclosure, and insufficient oversight characterize the financial activities, records, and reports of too many Catholic parishes, dioceses, and Catholic Conferences (the public policy and lobbying arms of the Church).

Establishing effective Church financial management systems will provide the financial transparency and accountability necessary to solve these problems. Moreover, 89 percent of American Catholics want a substantial voice in the financial decisions of their Church (the National Catholic Reporter, September 30, 2005).

Therefore, VOTF calls on lay Catholics to work in partnership with pastors and bishops to provide the responsible management of Church financial resources that justice and good stewardship demand.

Background
The Center for the Study of Church Management at Villanova’s School of Business reported in January 2007 that 85% of U.S. dioceses responding said that they had uncovered embezzlement schemes over the past five years. More than 10% reported that the amounts stolen exceeded half a million dollars. The study reported that the Catholic Church has some of the most rigorous financial guidelines of any denomination, but found that the guidelines were often ignored in parishes. Some of the cash that goes into the collection plate does not always get deposited into the church’s bank account because of high-living clerical life-styles or embezzlement or both.

In January 2007, the Diocese of Bridgeport, Conn., removed the pastor of a Greenwich, Conn., parish over the expenditure of some $500,000 without proper documentation. That follows the revelations last year that a prominent Darien, Conn., priest, Michael Jude Fay, had walked off with $1.4 million to bankroll a luxurious lifestyle of New York trips and Florida vacations with a male friend. In Virginia, a priest was accused of stealing $600,000 to help support a woman who may be his wife, while last September two Palm Beach, Fla., priests were arrested for allegedly stealing $8.6 million from their parish. In Boston, priests’ trust has been shaken by pension fund mismanagement.

On January 18, 2007, the Accounting Practices Committee, a group of lay experts who advise the United States Conference of Catholic Bishops (USCCB), called for tighter internal controls over finances in the nation’s more than 19,000 parishes.

Many of the recommendations of the Villanova Center for the Study of Church Management, as documented in Internal Financial Controls in the U.S. Catholic Church, and of the bishops’ Accounting Practices Committee have been incorporated in the general and specific recommendations that follow.

General Recommendations

1. VOTF strongly advocates the establishment of sound financial management systems, policies, procedures, controls, and practices at all levels of the Catholic Church, including parishes, dioceses, and Catholic Conferences, that provide enhanced financial accounting, full disclosure of financial information, and effective oversight.
2. Policies, procedures, controls, and practices should be documented, maintained current, available on the Internet, and provided to Church members upon request. Documentation should include a detailed description of financial controls, tools, standards and procedures.
3. At all levels, financial statements should be prepared on a consistent basis from year to year, in accordance with Generally Accepted Accounting Principles (GAAP), published on a timely basis including comprehensive and informative footnote disclosure. Disclosure of financial information should be accurate, detailed and comprehensive.
4. At all levels, policies should be implemented to guard against fraud and embezzlement, protect whistleblowers (e.g., by establishing communication channels for church workers to report suspected irregularities or fraudulent activities while protecting their anonymity), and report all suspected cases of fraud to law enforcement authorities.
5. At all levels, policies and procedures should be designed and implemented to provide effective oversight, with significant participation by knowledgeable lay persons, in the development, monitoring, and improvement of financial management systems.
6. At all levels, high priority should be given to identifying and correcting deficiencies in current financial systems. Specifically, VOTF recommends that initial improvements to parish, diocesan, and Catholic Conference financial systems be completed by December 31, 2008.
7. Catholic conference financial policies should ensure full disclosure of all expenditures for legislative initiatives.

Specific recommendations for parishes, dioceses, and Catholic Conferences:

Parishes
Parish financial management systems should provide for:

1. Effective parish finance councils, as required by canon law. The council should include members with knowledge and experience in parish finances and/or financial management (e.g., financial managers, accountants, or business managers and owners). Members of the council should represent a cross section of the parish community and include members that are elected by the parish community.
2. Thorough training for parish finance council members relative to their roles and
   responsibilities.
3. An open budgeting process that solicits input from all members of the parish
   community.
4. Effective security controls over all revenue and disbursements, especially with
   respect to cash and cash equivalents. Examples of such controls include church ushers securing money in tamper proof bags with numbered seals; rotating money-counting teams; separation-of-duties standards, such as ensuring that bookkeepers recording the funds aren’t the ones counting and depositing them; pre-numbered receipts; and two signatures on checks for large disbursements.
5. A system of internal controls, including those to prevent embezzlement.
6. Preparation of annual audited or compiled financial statements by an independent CPA in conformity with Generally Accepted Accounting Principles (GAAP) and made available to the parish community.
7. Full, supplemental disclosures including:
8. • Monthly or quarterly financial reports including a balance sheet and income statement (receipts and disbursements.)
   • Preparation of an annual budget (approved by the parish finance council) that is made available to the parish community.
   • Annual report to parishioners from the parish finance council containing: i) the names, brief background, and expertise of parish finance council members; ii) dates when the council met; iii) date(s) when the approved parish financial statements and budget were made available to parishioners during the preceding fiscal year and when they will be made available during the current year.
   • Periodically, but at a minimum, every 5 years, a detailed statement itemizing the estimated fair market value of assets owned by the parish.

Dioceses
Diocesan financial management systems should provide for:

1. Diocesan financial councils including members with experience and expertise in financial management (e.g., financial managers, accountants, business managers). VOTF recommends that diocesan financial councils include significant representation by persons elected by parishioners, parish councils, parish finance councils, priests and religious communities.
2. An open budgeting process that solicits input from parish councils, parish finance councils, and other members of the diocese.
3. A system of internal controls, including those to prevent embezzlement.
4. Preparation and issuance of audited financial statements conducted by an independent CPA in conformity with Generally Accepted Accounting Principles (GAAP). VOTF recommends that the CPA firm be changed periodically (e.g., every 3-5 years)
5. Diocesan policies should include a conflicts of interest policy and require selection of the diocesan auditor by a person other than the diocesan chief financial officer.
6. Financial accounting and reporting systems should comply with the existing guidelines in the Diocesan Financial Issues document approved by the United States Conference of Catholic Bishops. In addition, we recommend the use, as appropriate, of the work products of the National Leadership Roundtable on Church Management and VOTF’s Structural Change Working Group, and other best practices (e.g., Business Administration – Best Parish Practices published by the Archdiocese of Chicago).
7. Full, supplemental disclosures including:
   • A description of the ownership/affiliation structure of all diocesan and parish entities.
   • Receipts and disbursements of diocesan appeals and appeals of all diocesan-related entities.
   • A description of the pension plan for priests and other Church workers including financial statements, vesting rules, actuarial assumptions and portfolio performance.
   • Financial disbursements to other Church entities, including the Vatican.
   • A schedule of financial support provided to and by Catholic Conferences for lobbying activities, including with regard to legislation designed to extend, temporarily suspend, or eliminate civil or criminal statutes of limitations on child sexual abuse suits, reporting child abuse, or other legislation designed to protect children from sexual abuse.
   • Payments to and contracts with public relations firms and a description of the activities for which these firms were engaged including amounts paid to defeat legislation designed to extend, temporarily suspend, or eliminate civil or criminal statutes of limitations on child sexual abuse suits, reporting child abuse, or other legislation designed to protect children from sexual abuse.
   • Costs and detailed information associated with all insurance policies, and any amounts invested in self-insurance programs.
   • Description of lawsuits and liability claims filed against the diocese, the costs of defending such claims, including fees paid to lawyers, any amounts paid to claimants, and receipts from insurance companies in settlement of claims.
   • The number, names, and costs associated with each known, admitted, or credibly accused priest and/or other church worker who has been credibly accused of sexual crimes against children and vulnerable adults and who are still receiving financial support from the Catholic Church.
   • Periodically, but at a minimum every 5 years, a detailed statement itemizing the estimated fair market value of assets owned by the diocese.

Catholic Conferences
Catholic Conference (and other similar Church lobbying organizations) financial management systems should provide for:

1. Full annual disclosure, on a line item by line item basis, of all receipts and sources of receipts for all legislative initiatives. Full annual disclosure, on a line item by line item basis of all expenditures made for legislative initiatives. The disclosure of expenditures should include, but not be limited to, payments made to legal, lobbying and public relations firms as well as the purpose of such expenditures.
2. Full annual disclosure of the amount of financial or other support each state (or inter-state) Catholic conference receives from each diocese.

Voice from the Desert » Blog Archive » Effective Church Financial Management Systems

Women Deacons Coming Soon?

According to a preeminent U.S. expert on women deacons, all a Bishop has to do to ordain a woman to the permanent diaconate is petition Rome for a special canonical permission. In an extensive interview in the January 3 issue of U.S. Catholic, Dr. Phyllis Zagano comments: “All a bishop has to do is ask for derogation from the law, as recommended in a 1995 document of the Canon Law Society of America, which parsed how it could happen. You need derogation from the law to install a woman as an acolyte, derogation from the law to install a woman as a lector, and derogation from the law to ordain a woman as a deacon. I think that bishops could ask for a regional permission … or even a sub-regional permission.”   CLICK ON  THE FOLLOWING TO READ ALL OF THE ARTICLE: 

How to Claim Parish Rights

The following is taken from:  http://www.futurechurch.org/sopc/howtoclaimparishrights.htm

This brochure seeks to educate the average parishioner about basic canonical processes for claiming parish rights, particularly with regard to suppressing or merging parishes. The advice of a competent canon lawyer is strongly recommended in any pursuit of redress. Canonical information in this brochure was derived from the book “The Parish in Catholic Tradition: History, Theology and Canon Law” by Fr. James A. Coriden, who is a professor of canon law at Washington Theological Union and one of three general editors of “The Code of Canon Law: A Text and Commentary” (Paulist Press).

About Parishes and Dioceses.

Parishes are first and foremost places where Catholics experience Jesus’ saving presence and grow to Christian maturity through the preaching of the Word, partaking of Eucharist and the other sacraments and of course, the faith-filled companioning of one another. Parishes are not administrative units but true churches.

Dioceses on the other hand, are administrative units. The bishop’s primary duty is to provide oversight in service of the common good of the local communities. In this capacity, he and his staff guide, assist, coordinate, support and serve as spokespeople for local congregations. In the words of Fr. James Coriden, “Dioceses exist to unify and enable the local churches.”

Sometimes the rights of parishes are not respected. In a March, 2006 letter, the Vatican’s Cardinal Dario Castrillon Hoyos instructed that the financial assets of a newly closed parish must be transferred to the receiving parish, not to the diocese. Hoyos who is head of the Congregation of the Clergy, wrote to U.S. Conference of Catholic Bishops’ president, Bishop William Skylstad asking him to relay this instruction to all U.S. Bishops. Hoyos said it was “not uncommon” for U.S. dioceses to wrongly invoke canon 123, which allows a closed parish's assets to go to the diocese, many of which are cash strapped because of the clergy sex abuse crisis. He said, "Only with great difficulty can one say that a parish becomes extinct. A parish is extinguished by the law itself only if no Catholic community any longer exists in its territory, or if no pastoral activity has taken place for a hundred years." He wrote: “In most cases 'suppressions' are in reality an 'amalgamation' or 'merger' and as such the goods and liabilities should go to the enlarged parish community and not to the diocese.” (Read the full text of Castrillon Hoyos letter at www.futurechurch.org)

In 2004, the Boston Archdiocese suppressed 70 parishes because of the priest shortage and financial needs arising from clergy sex abuse claims. Over the next eighteen months, twelve parishes were restored but only after parishioners occupied their churches in around the clock prayer vigils while seeking canonical and civil redress. Seven parishes have appeals pending with the Apostolic Signatura, the highest court in the Catholic Church. It is surprising that all seven were accepted because the Signatura, like the U.S. Supreme Court, can simply reject appeals, and usually does. In May 2006, the Signatura instructed O’Malley to safeguard all parish properties while the seven appeals are heard. According to canon law specialists, the decree instructions to Sean O’Malley, the archbishop of Boston, are completely unprecedented.

How does a parish community vindicate or defend its rights in canon law when there is a perception that they have been violated. Who may claim these rights on the parish’s behalf?

Who Can Claim Parish Rights?

The Parish Pastor and His Substitutes. Canon 532 says, “The pastor represents the parish in all juridic affairs in accord with the norm of law.” This means that the pastor is obligated to safeguard the legitimate interests of the parish and he is “not at liberty to permit the rights of the congregation to be violated or abridged, even by those in higher authority” (Coriden, p. 84). He is also bound to call upon the parish community to assume its rightful responsibilities. Parochial administrators, assistant pastors and priests charged with the care of communities are all bound to safeguard the rights and obligations of the communities they pastor.

Those entrusted to Pastorally Care for the Parish. In cases of pastoral need, such as the priest shortage, canon 517.2 permits lay ministers, deacons, lay men and women, vowed religious or a community of such persons to be given pastoral charge of a parish. In this situation, these ministers have the same responsibilities as priest pastors to tend to the rights and obligations of the parish community. The priest who has been given supervisory canonical powers and faculties of pastor “ has a residual and secondary duty to pursue the rights of the parish. But the ministerial leader...who is the one in charge on the scene and has a personal and pastoral relationship with the members of the community, bears the primary responsibility,” according to Fr. James Coriden (p. 85).

The Parish Finance Council and Pastoral Council. If those entrusted with the pastoral care of the parish cannot or will not act to defend the rights of the parish community, the agent of the parish is the pastoral council. Canon 536 tells us its main role is to help foster parish pastoral activity and represent the parish community. The same obligation is incumbent on the finance council, particularly for issues related to parish assets (c. 537).

The Parishioners. Because parishioners have a direct and legitimate interest in the welfare of their parish and could suffer real harm from the suppression and destruction of their church, their legal standing is found in the canonical provisions that incorporate them as members of the parish, either territorial or personal or their de facto acceptance as parish members, which entitles them to pastoral care (cc.102, 518). While large numbers of parishioners may represent the parish better than just a few, the “supreme court” of the Catholic Church, the Apostolic Signatura, has recognized as few as two parishioners as having legal standing to pursue an appeal opposing the suppression of their parish (Prot. No. 22036/90 C.A., Chicagien. Suppressionis paroeciae, D.mi Anzelmo et Caiambrone vs. Congr. pro Clericis; decision given June 20,1992. (The Parish in Catholic Tradition by Fr. James Coriden, p.86).

People Outside the Parish. Other Church officials whose duties involve the care of parishes also have responsibility to see to the defense of parish rights and fulfillment of parish obligations for parishes within their authority. These could include deans of deaneries or vicariates (c. 555), episcopal vicars (c. 476), the presbyteral council (c. 495.1, 515.2, 122.2), the diocesan promoter of justice (c. 1430) and of course the diocesan bishop and vicar general (cc. 384, 391-394, 396, 475; Directory on the Pastoral Ministry of Bishops, 174-183).

How to Vindicate Parish Rights.

In his book, The Parish in Catholic Tradition: History, Theology and Canon Law, Fr. James A. Coriden lists four lines of action that those responsible for defending parish rights can pursue:

1. Be alert and participate in information-gathering and decision-making processes in advance of any action against the interests of the parish.

2. After the fact, seek a solution through direct appeal, conciliation or mediation.

3. Take administrative recourse against an action that is perceived to be adverse to parish rights.

4. Bring the matter before an ecclesiastical court.

Participation in Decision-making Processes.

It probably goes without saying that those representing the parish and all who care about its welfare must be fully engaged in any and all studies, plans or reviews involving its future well being. Parishioners and parish leaders should all be involved and carefully monitor the process. For an excellent example of one diocese’s work to engage and empower parishioners visit the Cleveland Dioceses’s Vibrant Parish Life process at www.vibrantparishlife.org

Direct Appeal, Conciliation or Mediation.

Once an action has been taken that is perceived to be contrary to the rights of the parish community and will harm or adversely affect it, the first step is to represent the interests of the parish, in person, directly and in a respectful way. For example before putting anything in writing, appropriate parish leadership should seek a personal meeting with the bishop to show the evidence and present the parish’s point of view. That failing, mutually agreed upon people with mediation and arbitration gifts could be engaged to seek just resolution of differences. Some dioceses have mediation and due process offices. Canon law places a high premium on exhausting all other effective means of resolving differences before pursuing canonical litigation. This being said, it is important to be aware that there is a limited amount of time to pursue canonical appeal after a decision has been taken.

Administrative Recourse.

Canons 1732-1739 outline the procedures for appealing an administrative decision either to the person who made it or to that person’s hierarchical superior. According to Coriden, “This process can be effective because it gives access to the persons who have the ability to make a difference (see c. 1739).”

Appeal in writing to the person who made the decision perceived to be harmful to the community. An example could be the decision to close or merge a vital, solvent and apostolically fruitful parish community, solely because there is no priest available to live on the premises or because of the value of parish real estate.

Appeal in writing to the hierarchical superior of the one who took the action. For example, parish representatives may write to the diocesan bishop about an action taken by the pastor or to the Congregation for the Clergy in Rome for an action taken by the bishop. This may be taken “for any just reason” (c 1737).

Timing is important. Canon law specifies that there are specific time frames within which the appeals must be lodged. For example, the first written appeal must be made within ten working days of the action that is perceived to be harmful, such as the announcement of the decision to close or merge a given parish. Canon law provides for suspension of the action while the appeal is being considered. Thus the parish should remain open while the appeal process is under way.

Appeal to the Apostolic Signatura. The Signatura has authority to review administrative decisions. For example, if the first appeal was to the diocesan bishop and the second to the Congregation for the Clergy, the next step is to appeal to the Apostolic Signatura, the supreme tribunal in the Church. (c. 1445.2). Such appeals are made either directly to Rome or through the Apostolic Nuncio in Washington D.C. at 3339 Massachusetts Ave. N.W.,Washington D.C. 20008. Names and addresses for appropriate Roman Curia officials are listed in the Official Catholic Directory, published by P.J. Kenedy & Sons, New York.

Ecclesiastical Courts.

Every diocese has an ecclesiastical court. While most of the docket is filled with marriage cases, canon law prescribes that these courts are open to a wider range of rights claims (cc. 221, 1491,1400.1, 2, 1502-1504). The diocesan courts have rarely been used for this purpose but one may consider submitting a petition in this venue as well.

Conclusion.

Claiming parish rights does not in any way denigrate legitimate authority of church leaders or the communal nature of the church. Instead, Fr. Coriden says, “it emphasizes the communitarian principle within the church and focuses on the church’s true nature as a communion of local communities. It is an authentic expression of the Catholic tradition” (p.91).

References:

The Canon Law: Letter and Spirit Canon Law Society of Great Britain and Ireland, Collegeville, Minn.: Liturgical Press, 1996.
The Code of Canon Law (Latin-English Edition). Washington, D. C.: Canon Law Society of America, 1983.
Congregation for Bishops. Directory on the Pastoral Ministry of Bishops, May 31, 1973. Ottawa: Canadian Catholic Conference, 1974.
Coriden, James A. The Parish in Catholic Tradition: History, Theology and Canon Law. Mahwah, NJ.: Paulist Press,1997.
Diocesan Efforts at Parish Reorganization. Clearwater, Fla.: Conference for Pastoral Planning and Council Development, 1995
John Paul II. Apostolic Constitution Pastor Bonus (on the Roman Curia), June 28, 1988. Published as an appendix in Code of Canon Law Annotated. Montreal: Wilson & Lafleur Ltd., 1993, pp.1166-1279.
Provost, J. “Parish Membership-Who Gets Counted?” The Priest, July-August 1980, 30-38

Some Catholics in Bismarck questioned Bishop Kagan past in Rockford

 

Questions for the new bishop

2011-11-14T18:45:00ZQuestions for the new bishopBy THOMAS HATZENBUHLER BismarckBismarckTribune.com

November 14, 2011 6:45 pm  •  By THOMAS HATZENBUHLER Bismarck

Prior to his appointment as bishop-elect of our diocese, Monsignor David Kagan served as the misconduct officer for the Diocese of Rockford, Ill.

At the time of his service as misconduct officer, a fellow clergyman, the Rev. Mark Campobello, was accused of sexually abusing two young girls.

In 2004, Campobello pleaded guilty to two counts of sexually abusing minors.

Had the state of Illinois not been so pertinacious in the pursuit of justice for these two young victims, Campobello's misdeeds may have been blurred into obscurity and speculation.

As the diocese's misconduct officer, Monsignor Kagan chose to impede the legal process by asserting that the records of Campobello's reassignments within the church, all investigative conversations between himself and Campobello and the circumstances of Campobello's voluntary institutionalization at a mental health facility fell within the purview of canonical law and were therefore accessible only by the church (Illinois V. Campobello, 2002).

Nevertheless, and despite Monsignor Kagan's efforts, the Catholic Diocese of Rockford settled the lawsuit filed against Campobello by the two known victims of his sexual abuse for the amount of $2.2 million.

This indifference particularly worries me because

I am an alumnus of the Catholic elementary and junior high school that Monsignor Kagan will soon directly oversee, the Cathedral of the Holy Spirit in Bismarck.

I fully understand that Monsignor Kagan was himself not responsible for the despicable abuse rendered by Campobello; nevertheless, I hold the man, who willingly - with a faithful conscience - protected such an individual, both legally and morally, to be of equal or greater moral ineptitude and offense.

Given his clear history of holding canonical laws above those of the state, I cannot help but conjecture about the authority by which Monsignor Kagan is either able or allowed to be a moral guide for others, much less for children

Click on the following to see numerous additional comments:(55) Comments

The above is taken from the following:  Questions for the new bishop

Magisterium’s clock is stuck in 1965 — Sean O Connaill. Association of Catholic Priests

 

And so I am certain that ‘all that has gone wrong since’ is a result of the failure of the Catholic magisterium to maintain the spirit of Vatican II – that spirit of hope and confidence and equal dignity in the church.  Above all it was the result of a betrayal by the magisterium of not just the spirit but the letter of Lumen Gentium.

One illustration will suffice.  According to Lumen Gentium 37 (1965) Catholic lay people would be “empowered to manifest their opinion on those things which pertain to the good of the Church”  ….  “through the institutions established by the Church for that purpose

…..The magisterium’s clock is still stuck in 1965, still stuck in Curial fear of any Catholic assembly it cannot control and manipulate. What an ocean of tears has been shed in consequence!”.

Click on the following for more details:  Magisterium’s clock is stuck in 1965 — Sean O Connaill. Association of Catholic Priests

Vatican orders Cleveland bishop to reverse church closures – USATODAY.com

 

Borre said the Vatican's Congregation for the Clergy, the panel that handled the appeals, ruled in favor of the parishioners regarding both closing procedures and canon law.

"This is very significant because it means that Lennon erred procedurally and substantively," Borre said. "If he had been reversed only procedurally, he could reboot, start the procedure again and fix the procedural error.

"But he cannot fix a substantive error."

Click on the following for more details:  Vatican orders Cleveland bishop to reverse church closures – USATODAY.com

Catholic Church's canon-law courts come out of obscurity as internal litigation grows | cleveland.com

In recent years, clergy and lay people in the United States have increasingly turned to the church's internal legal system to challenge a bishop's or pastor's decision about even the most workaday issues in Catholic life, according to canon lawyers in academia, dioceses and in private practice. Sometimes, the challengers even win....

The reasons for the uptick are complex and reach back decades, involving changes in the church and broader society. Canon lawyers say the American concern for individual freedoms likely has played a role. So has the explosion of information on the Internet. But the change is also an unexpected consequence of the clergy molestation crisis, with the scandal exerting an influence far beyond cases that directly involve abusers.

Click on the following to read the entire story:  Catholic Church's canon-law courts come out of obscurity as internal litigation grows | cleveland.com