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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

Dioceses, charities sue over birth control mandate - chicagotribune.com

 

The Roman Catholic dioceses of Springfield and Joliet have joined 41 other religious institutions filing simultaneous lawsuits that challenge the Obama administration's mandate that many religious employers have their health insurance cover the cost of birth control for employees.

Catholic Charities programs in both dioceses also filed simultaneous lawsuits in U.S. District Court on Monday.

Chicago's Cardinal Francis George indicated that the archdiocese's absence from Monday's lawsuits didn't signal satisfaction with that accommodation or less concern about the issue. In previous remarks, he has said the government's efforts amount to a "theft of identity."

Click on the following for more details:  Dioceses, charities sue over birth control mandate - chicagotribune.com

Hundreds of priests and laity gather to discuss future of church - The Irish Times - Mon, May 07, 2012

There are 815 priest members of the association alone. But, following recent disclosures of the censuring of Irish priests by Rome in the BBC This World documentary last week, which detailed Cardinal Seán Brady’s inquiries into serial paedophile Fr Brendan Smyth, what was expected to be a well-attended event now looks like being overcrowded.
That one of those priests censured by Rome is Fr Tony Flannery of the ACP leadership team will serve as just another incentive for restive Catholics to attend this gathering on what is also a bank holiday Monday.

Click on the following for more details:  Hundreds of priests and laity gather to discuss future of church - The Irish Times - Mon, May 07, 2012

Despite Cardinal Dolan’s Claims, Government Has Long Defined “Ministry” - NPQ – Nonprofit Quarterly - Promoting an active an engaged democracy.

Doesn’t the federal government already define “ministry” in various programs and regulations? The IRS has specific provisions in tax law to administer regarding the tax treatment of ministers and their parsonages. As we have noted in previous coverage, the federal government and the courts have long been debating what constitutes a ministry for the purpose of religious entities looking for exemptions for civil rights laws regarding nondiscrimination in hiring.

Click on the following to read the entire story:  Despite Cardinal Dolan’s Claims, Government Has Long Defined “Ministry” - NPQ – Nonprofit Quarterly - Promoting an active an engaged democracy.

Vatican approves blessing of children in the womb

 

The following is taken from:  http://www.usccb.org/news/2012/12-053.cfm

Click on the photocopy to enlarge: 

Cardinal Dolan's Contraception Fight With Obama - The Daily Beast

 

In a sense, the fight over the contraception mandate has its roots in the old divide within the church that began with Vatican II, the ecumenical council convened by Rome in 1962 in the hope of reinvigorating the church. By the time the council concluded in 1965, the agenda had become full-scale reform, and the prevailing reformers imagined a thoroughgoing remaking of the church, informed by the contemporary culture. The progressive ideal, with its strong emphasis on social justice, dominated the American episcopacy for decades, largely shaped by the hand of Joseph Bernardin, the first head of the American bishops conference. Bernardin urged the church to follow “a consistent ethic of life,” by which he meant that Catholics should devote as much concern to such matters as tending to the poor and advocating for peace as they did to protecting the fetus in the womb. One expression of Bernardin’s vision came to life in his own archdiocese of Chicago, in the form of the Developing Communities Project, on the city’s impoverished South Side. In 1984, one of the project’s founders, a Saul Alinsky–trained organizer, traveled to New York and hired a young Columbia University graduate to run the operation. That is how Barack Obama, operating out of an office at the Holy Rosary Church on the South Side, began his career as a community organizer.

By then, among those in the church who believed that the reforms had gone off track was the charismatic Polish pope, John Paul II, and his right-hand man (and eventual successor), Joseph Ratzinger. They began a program of reinterpreting Vatican II, with an emphasis on evangelization, derived from a strongly held orthodoxy. A new generation of churchmen arose, deeply attached to the person, and the theology, of John Paul II, and began to assert itself inside the American church. One of them was Timothy Dolan, whose 1950s upbringing in the Holy Infant parish in Ballwin, Missouri, with its Irish nuns in the classrooms, and its robust community life, instilled in him a lasting vision of the faith as a joyous and liberating thing. “The church is about a yes,” he says. “And the only time she says no is when she detects something negating human dignity.”

Click on the following to read the entire story from Newsweek.:  Cardinal Dolan's Contraception Fight With Obama - The Daily Beast

UPDATE: Priest cancels Rockford, DeKalb stops over allegations

The original story was run by the Rockford Register Star back in March 2011;  see: http://www.rrstar.com/news/x13296072/Priest-cancels-Rockford-DeKalb-stops-over-allegations
March 23, 2011
The Rev. John Corapi has been placed on administrative leave and has canceled scheduled stops in Rockford and DeKalb following allegations of drug use and sexual misconduct.
Corapi, a nationally known Catholic priest, was set to be the only speaker at a Catholic Charities Diocese of Rockford fundraising event Saturday at the Northern Illinois University Convocation Center. Corapi, 63, also was to be in Rockford on Friday meeting with sponsors of the event.
Corapi, in a three-page letter from a former employee sent to several bishops, was accused of abusing drugs as well as having sexual encounters with multiple women.
Here is the update from this summer.

Popular Catholic Priest John Corapi Calls It Quits, Blasts Church Leaders On His Way Out
he was suspended from his religious order in March after one of his female employees accused him of sexual misconduct. Corapi denied the allegations, but suffered a blow when the Catholic television network that beamed his conservative sermons to millions of viewers also suspended his appearances pending an investigation by his religious superiors. …
Corapi, who railed against liberal movements within the church, gained the empathy of many fans with his unusual conversion story. Once a prominent and wealthy real estate agent in Los Angeles, he saw his riches crumble because of cocaine addiction and ended up homeless for three years before checking into a psychiatric facility. He decided to turn his life around in 1984, later enrolled in seminary and was ordained as a deacon in Corpus Christi, Texas, in 1990. He was ordained as a priest a year later by Pope John Paul II.

Click on the following for more details:  Popular Catholic Priest John Corapi Calls It Quits, Blasts Church Leaders On His Way Out


Matt C. Abbott
June 19, 2011
 

By Matt C. Abbott
The man formerly known as Father John Corapi, celebrity Catholic priest, is "not going to be involved in public ministry as a priest any longer" and now wants to be known as John Corapi, "The Black Sheep Dog."

One of Father Corapi’s reactions to his order’s action was a new website—”The Black Sheep Dog”—that is all gone—see:  http://douglawrence.wordpress.com/2012/01/02/the-black-sheep-dog-a-k-a-father-john-corapi-website-is-now-empty-and-dormant/


Recent article from:  http://catholicism.about.com/b/2012/01/26/what-has-happened-to-fr-john-corapi.htm?utm_source=Legatus+Insider+6.05&utm_campaign=Insider+6.05&utm_medium=email

CHAUSA | Catholic Health Association is Very Pleased with Todays White House Resolution that Protects Religious Liberty and Conscience Rights

 

Catholic Health Association is Very Pleased with Today's White House Resolution that Protects Religious Liberty and Conscience Rights

WASHINGTON, DC (February 10, 2012) — The following statement is being released by Sr. Carol Keehan, DC, president and chief executive officer of the Catholic Health Association of the United States (CHA):

The Catholic Health Association is very pleased with the White House announcement that a resolution has been reached that protects the religious liberty and conscience rights of Catholic institutions. The framework developed has responded to the issues we identified that needed to be fixed.

We are pleased and grateful that the religious liberty and conscience protection needs of so many ministries that serve our country were appreciated enough that an early resolution of this issue was accomplished. The unity of Catholic organizations in addressing this concern was a sign of its importance.

This difference has at times been uncomfortable but it has helped our country sort through an issue that has been important throughout the history of our great democracy.

The Catholic Health Association remains committed to working with the Administration and others to fully implement the Affordable Care Act to extend comprehensive and quality health care to many who suffer today from the lack of it.

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The Catholic Health Association of the United States (CHA), founded in 1915, supports the Catholic health ministry's commitment to improve the health status of communities and create quality and compassionate health care that works for everyone. The Catholic health ministry is the nation's largest group of not-for-profit health systems and facilities that, along with their sponsoring organizations, employ more than 750,000 women and men who deliver services combining advanced technology with the Catholic caring tradition.

CHAUSA | Catholic Health Association is Very Pleased with Todays White House Resolution that Protects Religious Liberty and Conscience Rights

Birth Control Debate: Why Catholic Bishops Have Lost Their Grip on U.S. Politics -- and Their Flock - Yahoo! News

Although major Catholic groups like Catholic Charities and Catholic Health Services accepted that revision, the bishops are holding out for more. But their crusade to be exempted from the mandate is likely to fall short of its grail. If so, it's because Obama read the Catholic flock better than its shepherds did.

Click on the following for more details:  Birth Control Debate: Why Catholic Bishops Have Lost Their Grip on U.S. Politics -- and Their Flock - Yahoo! News

Obama announces compromise on contraceptive coverage by religious organizations

 

any charity with a religious objection to providing contraceptives would not have to pay for contraceptive services, Obama said. Instead, the insurance companies will have to reach out — and pay for — women to receive contraceptive services, like birth control or sterilization, if they choose.

Click on the following for more details:  http://www.pri.org/stories/politics-society/live-video-obama-expected-to-propose-compromise-on-contraceptive-coverage-8396.html

To view the short, six minute announcement by the President go to: 

http://www.chicagotribune.com/news/chi-obama-contraceptives-compromise-20120210,0,7473581.story

The Hawaii Compromise? White House to Announce Change In Birth Control Mandate | RH Reality Check

 

In 1999 Hawaii passed a law (which went into effect in 2000), that says as follows:

Hawaii Rev. Stat. § 432:1-604.5 and § 431:10A-116.6 (1999) direct that employer group health policies, contracts, plans or agreements must cease to exclude contraceptive services or supplies, including FDA-approved contraceptive drugs or devices to prevent unwanted pregnancy, and must not charge unusual co-payments or impose waiting requirements. (1999 Hawaii Sess. Laws. Act 267; SB 822)

Hawaii Rev. Stat. § 431:10A-116.7 (1999) defines a religious employer and states that such an employer may request a health insurance plan without coverage for contraceptive services and supplies. If so requested, the health insurer must provide a plan without such coverage.  Each religious employer that invokes this exemption must provide written notice to enrollees upon enrollment a list of services the employer refuses to cover and provide written information describing how an enrollee may access contraceptive services and supplies.  (1999 Hawaii Sess. Laws. Act 267; SB 822)

Click on the following for more details:  The Hawaii Compromise? White House to Announce Change In Birth Control Mandate | RH Reality Check

More details on which Catholic institutions are included and excluded

The appeal, which the bishops issued through an insert to parish bulletins nationwide Sunday, lambastes a Health and Human Services department rule “requiring rule requiring almost all private health plans to cover contraception and sterilization as ‘preventive services’ for women.”
“The rule includes a religious exemption so extremely narrow that it protects almost no one. It covers only a ‘religious employer’ that has the ‘inculcation of religious values” as its purpose, primarily employs and serves persons who share its religious tenets, and is a church organization under two narrow provisions of the tax code. A great many religious organizations — including Catholic colleges and universities, as well as hospitals and charitable institutions that serve the public — will be ineligible. Individuals and religiously affiliated health insurers will not qualify for the exemption."

The proposed religious exemption stipulates that a church organization is "not a religious employer if it (a) serves those who are not already members of the church, (b) fails to hire based on religion, or (c) does not restrict its charitable and missionary purposes to the inculcation of religious values," according to the bishops’ statement.

Read more on Newsmax.com: Bishops: Obamacare Rule Targets Catholics, Threatens Religious Freedom
Important:

How much of St. James’ Diocesan Stewardship (DSP) was pledged?

Below is the last numbers published in parish bulletin in beginning of November 2011.

 

A slightly larger number is obtained by using the numbers published in The Observer on November 4, 2011. (See Below)   St. James had one of the lowest Percentage of Parish Goal Pledged—55.4%.  That number (.554) times the parish goal of $103,313 equals $57,235.  Of course the remaining $46,078 becomes a debt to the diocese which the parish as a whole will have to pay along with the assessment for Boylan High School and the assessment for The Observer.

Click on the photocopy to enlarge.

St. Vincent’s gives an accounting of its non-monetary expenses

The following is taken from the bulletin for Sunday, November 22, 2011

What has St. Vincent de Paul done the last two years?

The following financial report is published in this Sunday’s (11-20-2011) bulletin.  Note all expenses are donations to area needy for each of these categories.  St. Vincent members personally pay all organizational expenses.

Catholic Charities to see cuts without contracts

Catholic Charities to see cuts without contracts

By Doug Finke

SPRINGFIELD – Catholic Charities for the Diocese of Springfield will lose half of its revenue if the state cancels its foster care and adoption contracts with the agency.

That's just one of the consequences outlined by executive director Steven Roach in court documents filed by Catholic Charities agencies associated with the Springfield, Peoria, Belleville and Joliet dioceses.

The agency employs about 190 people throughout the diocese. Losing the foster care and adoption services contracts would cause the agency to terminate "all or nearly all" of the 80 staff members working for those services. That includes caseworkers, case aides, therapists, counselors and managers, he said

Over the last five years, Catholic Charities has spent more than $1.4 million to buy and improve buildings and equipment throughout the diocese to continue its programs.

"While we may be able to recoup some of these costs, Catholic Charities will suffer substantial losses in any attempted 'fire sale' of those assets," Roach said in the documents.

Click on the following to read the entire article: http://www.nwherald.com/2011/09/20/catholic-charities-to-see-cuts-without-contracts/ayhygig/