BishopAccountability.org
	Behind Stained Glass By Keeping Its Financial Records in the Dark, the Boston Archdiocese Shows It Still Hasn’t Learned All the Lessons of the Scandal That Rocked It Three Years Ago By David S. Bernstein Boston Phoenix [Boston MA] January 21, 2005 IT HAS BEEN more than three years since the clergy-sexual-abuse scandal erupted in the Catholic Church, yet there are troubling signs that the powerful men of the Boston archdiocese still think the laity was outraged only by the acts of abuse. They can’t seem to get it into their heads that parishioners also were appalled by the secrecy, the obfuscation, the flat obstinacy with which diocesan leaders guarded the internal workings of the Church — and, not incidentally, what they do with the money collected each week at Sunday services. That’s money the parishes and the archdiocese desperately need, since contributions have declined as costs have risen in the wake of the abuse blow-up. It’s also money that parishioners here and nationally are still reluctant to hand over. And now the Church is finding that its financial murkiness is beginning to trouble the flock just as much as have the sexual shenanigans of its priests. In fact, when asked to name the greatest influence on their financial support of the Church in the past year, almost as many regular-Mass-attending Catholics now cite financial-accountability concerns as cite the sexual-abuse scandal. That’s according to a national survey released last week by Foundations and Donors Interested in Catholic Activities (FADICA), a consortium representing $200 million worth of Catholic philanthropy. FADICA also found, amazingly, that more Catholics now approve of their bishops’ handling of the abuse crisis (41 percent, up from 35 percent two years ago) than approve those same bishops’ handling of Church-finance accountability (38 percent, down from 46 percent). Large majorities in the survey want the Church to be more open and accountable with its finances. "I think the clergy-abuse scandal opened people’s eyes to how little they know about church operations," says Charles Zech, of the Center for the Study of Church Management, at Villanova University. "That’s going to linger on long after the scandal subsides." In theory, the United States Council of Catholic Bishops (USCCB) has addressed both issues. The measures it has taken on abuse, however, have been more open and substantive. An independent compliance audit by Gavin Group, a Boston auditing firm, of the USCCB’s Charter for the Protection of Children and Young People was able to report that "all bishops ... in the United States cooperated with the compliance audits" and "nearly every diocese and eparchy audited is compliant with most articles of the Charter." By comparison, the USCCB hasn’t even attempted to learn how many are complying with its new standards for financial reporting, adopted in 2002. "Anecdotally, I think that about one-third of the dioceses comply with the national norms," says Frank Butler, FADICA president. Even the USCCB’s own recent attempt to report the financial impact of the abuse scandal flopped, when as many as 40 percent of dioceses failed to provide data. "The underlying problems of secrecy, authoritarianism, and a lack of trust in the laity remain," says Steve Krueger, former executive director of Voice of the Faithful, which formed in the early months of the clergy-sexual-abuse scandal and, as one of its tactics, urged churchgoers to give the lay organization their weekly donations for temporary safekeeping. Financial accountability, Krueger says, is a bellwether that parishioners are using to measure the Church hierarchy’s ability to change. "That’s an issue that everybody can relate to. Everybody expects financial disclosure and accountability — it has become part of our society, for very good reason." "I think they need to provide more detail," says Peter Conley, pastor of Saint Jude’s in Norfolk. "I want to know, where did that money come from and where is it going, specifically." Archbishop Se?n P. O’Malley and David W. Smith, vice-chancellor for financial affairs, have publicly claimed that the Boston archdiocese is becoming an open book. "I am committed to financial transparency," O’Malley wrote in a letter circulated last November 13. He will soon announce an expansion of his finance council, which will spend the next few months formulating a strategic financial plan for the archdiocese, says spokesperson Kelly Lynch. But parishioners who are watching churches close, reading pleas for generosity, and hearing promises of where the money is and isn’t going, may still feel as if the Church is telling them, as Krueger puts it, "pray, pay, and obey." IF THE ABUSE scandal — and the $85 million victims settlement paid out so far — prompted skepticism, the reconfiguration of the diocese pushed the laity toward paranoia. Peter Borr?, chairman of the Council of Parishes, a group opposing the church closings, is one of many speculating that the archdiocese is actually worse off financially than it is letting on. They suspect O’Malley doesn’t want parishioners to know their donations are going to finance huge debts brought on by mismanagement and legal troubles. "Catholics wonder, how much of my money is in the pockets of tort lawyers?" says Butler. Others think the exact opposite — that the Church is crying poverty to solicit donations and justify selling property. "They say they’re broke, but I don’t believe it," says Dean Hoge, director of the Life Cycle Institute at the Catholic University of America, in Washington, DC. "What’s their definition of broke?" Krueger has similar suspicions, pointing to parishes on the chopping block that appear to be in good financial shape, with good buildings and high participation. Either way, O’Malley clearly underestimated the degree of skepticism his church-closings announcement would face; he eventually responded by creating a lay oversight committee to review the decisions. "In Boston, that was a classic of the wrong way of doing it, and it alienated people," says Zech. The oversight committee itself has hardly been more communicative, however. Co-chairs Sister Janet Eisner, president of Emmanuel College, and Peter Meade, executive vice-president of Blue Cross Blue Shield of Massachusetts, both declined to speak to the Phoenix for this article, as has been their practice generally with regard to the press since they began their work for the committee. One indication of how far the Boston archdiocese has left to go in its efforts toward transparency is that, more than six months after the end of the Church’s 2004 fiscal year (which ended June 30), outside observers are still straining to decipher the archdiocese’s finances. An audited financial statement, dated October 25, shows a $20 million loss in the Central Funds for the year — double the deficit O’Malley pointed to in his November 13 letter. The huge loss appears to stem from a dramatic increase in administrative costs. The statement was leaked to Borr? at the Council of Parishes, and was reported in the Boston Globe on December 23. Borr? has since provided a copy to the Phoenix. A source familiar with the archdiocese’s finances says the statement is authentic but erroneous; a variety of one-time costs associated with the sale of land in Brighton to Boston College were wrongly included as administrative costs. The archdiocese will post the final, corrected version on its Web site, with "substantial back-up and detail," Lynch says. We’ll see whether that satisfies parishioners, who thus far have been forced to learn of $11 million mistakes through leaked documents more than six months after the end of the fiscal year. One can hope that eventually the real state of the archdiocese’s finances will become plain. Based on the audited statements themselves, however, it does indeed seem to be in serious trouble, operating at roughly a $12 million annual deficit with no obvious way to make the red ink disappear. The annual appeal has dropped from a high of $17 million to about $10 million, although it appears to be rebounding. Many old buildings really are in need of significant repair — it would have cost $104 million just to bring them all to acceptable usability, the archdiocese claims. The archdiocese already has laid off a lot of workers; rid itself of costly functions, including its schools; and is providing virtually no assistance to parishes, other than emergency loans. There is little left to cut, and, they say, nothing left to sell. Assets have been severely depleted by the litigation, settlement, and insurance costs stemming from the abuse crisis. And pension and mortgage liabilities still loom, along with unknown amounts in outstanding claims from the abuse scandal. The trouble with this analysis is that it’s like reading tea leaves — which may not be entirely the archdiocese’s fault; it is trying to yank an aged, sprawling system into the 21st century. The market value of the archdiocese’s property is anyone’s guess — certainly many times more than the $10.8 million listed in the audit. "The assessed values are frankly not very meaningful" as indicators of market value, agrees Jim Belli, a broker with Codman Company, in Boston, who is listing four of the churches currently for sale. Then there are the generally unacceptable accounting principles of the parish priests — many of whom don’t own a computer, according to the archdiocese source — who do the bulk of the spending in the archdiocese, while keeping their budgets in incompatible and irregular fashion. But the archdiocese could be doing much more to help walk its faithful through all this, instead of leaving them guessing. The archdiocese has internal estimates of what it hopes to obtain for the properties on the market, the source confirms, but will not reveal them. There is no central plan to provide access to critical parish-operations data until the parishes are all standardized on QuickBooks financial software, scheduled for 2006. "That’s when you’ll see the true transparency," the source says. And the archdiocese has not given a full public accounting of its various small corporate entities that, it claims, do not affect the bottom line — a revolving-loan fund, an earmarked endowment fund, and insurance funds, for example. That leaves skeptical observers, like Krueger, to speculate that valuable property may be lurking in those veiled entities, of which he guesses there are at least 20. "It’s a house of cards in many ways," Saint Jude’s Conley says of the archdiocese’s corporate structure. EVANGELICAL PROTESTANTS faced a potential financial crisis a generation ago, when a series of scandals (think Jim Bakker and Jimmy Swaggart) led to widespread distrust. Donations dwindled, and Congress prepared to take action, Butler says, until the churches created their own watchdog group: the Evangelical Council for Financial Accountability. That group, with more than 1000 members today, created a "Donor’s Bill of Rights" and set standards, and now helps churches live up to those standards. Evangelical churches survived and thrived. The Catholic Church seems bent on self-correction. As a result, it too will be subjected to the threat of government oversight. Here in Massachusetts, State Senator Marian Walsh has introduced a bill that would force religious organizations to submit annual financial-disclosure documents to the attorney general, similar to those filed by other nonprofits in the state. She already has 40 co-sponsors, and hearings should be held this spring. "Who could be against that idea?" says Villanova’s Zech. "You wouldn’t give your money to any nonprofit unless you knew where the money was going. They should be doing this anyway." "We couldn’t find any rationale why a particular kind of nonprofit charity would be exempt from disclosure," says Walsh. The Massachusetts Council of Churches, however, has announced its opposition to the bill, saying it would unconstitutionally intrude on religious freedom. Attorney General Tom Reilly has declined to speak publicly about the issue, but individuals in his office say that Reilly tends to agree the bill would pose First Amendment issues. Walsh isn’t buying it — nor are those 40 other legislators who have signed on as co-sponsors. "I ask them, show me. Show me the case law. That’s when their alarm rings empty," Walsh says. Religious organizations are not exempt from every regulation, after all — they have to abide by fire-safety codes, for example. "We’re talking about tax law, not the quiet solitude of a person’s belief system," Walsh says. Her staff says two other states require some financial disclosure from religious organizations. And Walsh’s bill would allow the attorney general to exercise discretion; if certain questions on the existing form seem to push the envelope too far, Reilly could draw up a new form that excludes the offending section. "I’m not opposed to it," says Conley of Saint Jude’s. "I think they can iron out any difficulties with the First Amendment." The Boston archdiocese is considering what position, if any, to take on the legislation. What’s most remarkable about the bill, however, may be the very fact that it’s under serious discussion. "To have had this conversation 10 or 15 years ago might have been blasphemy," says Walsh. Today, it is merely prudent.