By Brian Fraga - OSV Newsweekly, 9/9/2012
When a dollar is dropped into the collection basket at Mass, a Catholic wants it to be used responsibly, in a manner consistent with the collection’s aims.
Catholics want to know their money will really be used to replace the church roof, cover the parish heating bill, pay for works of mercy and evangelization, and help retired priests in their final years.
However, over the last several years, information has emerged — often in bankruptcy proceedings — to indicate that some Church leaders — lay and clerical — in the United States have mismanaged money, misrepresented diocesan assets in court cases and raided priests’ pension accounts to pay for sex abuse settlements, among other financial irregularities.
An Aug. 18 story in The Economist, a British weekly news magazine, sought to analyze the state of Church finances in the United States, which the magazine described as being in a “holy mess” because of sloppy or incompetent fiscal management and underhanded accounting tactics enabled by a lack of transparency.
The Economist added: “The financial mismanagement and questionable business practices would have seen widespread resignations at the top of any other public institution.”
Jason Berry, an independent journalist who investigated ecclesial financial mismanagement in his book, “Render Unto Rome: The Secret Life of Money in the Catholic Church” (Broadway, $16), told Our Sunday Visitor that The Economist analysis was “well-researched and quite intelligent.”
“When you do not have transparency in accounting practices, the system is prone to abuse, and that’s the kind of system we have,” said Berry, whose book details incidents that include parish Sunday collections being skimmed at alarming rates and dioceses closing vibrant parishes to later sell their assets to pay for sex abuse settlements.
However, others take issue with the Economist’s presentation of an institution marred by widespread fiscal malfeasance.
Sister Mary Ann Walsh, spokeswoman for the U.S. Conference of Catholic Bishops, said she was “bent out shape” with the article, which she said was “filled with errors” and made “all kinds of claims without data to back them up.”
“There are truths in what the author is writing, but he’s wrapped them in innuendo and error,” Sister Walsh told OSV. She said that the nation’s bishops have in recent years made correct accounting practices a priority, and have called for diocesan and parish finance councils to have members with backgrounds in finance.
Mark Gray, a research associate at Georgetown University’s Center for Applied Research in the Apostolate, said the Economist displayed a misunderstanding of the Catholic Church in speaking of it as a monolithic entity or a multinational corporation run by a CEO, i.e., the pope. Gray said the magazine does not “get” that the Church’s institutions are “incredibly decentralized,” and operate as individual entities under the pastoral umbrella of the Church.
“And most people working in the Church are not embezzling funds,” Gray told OSV. “They’re good people doing their best, in parish settings where it’s not always easy to hire financial professionals.”
The backdrop for the Economist story, and similar media commentary on Church finances, is the fact that American dioceses have had to pay around $3 billion in clergy sex abuse settlements over the last 15 years. Since 2004, eight dioceses in the United States have declared bankruptcy, and several more are being pushed to the brink as victim lawsuits continue to wind their way through the courts.
The settlements have resulted in a “liquidity crisis” for the Church, which the Economist suggests has Church officials resorting to questionable accounting tactics.
For example, some dioceses have reportedly dipped into priests’ pension funds to cover settlements and other losses. In Boston, under the former archbishop, Cardinal Bernard Law, the archdiocese did not contribute anything to its clergy retirement fund from 1986 to 2002, although parishioners had donated between $70 million to $90 million for that purpose, according to The Economist, which also reported that retirement funds in the Diocese of Wilmington, Del., were mostly wiped out when the diocese settled sex abuse claims of $77 million in February 2011.
The National Federation of Priests Councils also estimates that 75 percent to 80 percent of clergy pension plans in the United States are underfunded.
The Economist also reports that plaintiffs’ lawyers have raised questions about financial transfers in dioceses threatened by bankruptcy. In court documents, those attorneys suggest that dioceses move monies to and from parish accounts and other financial instruments to shield them in bankruptcy cases. In the Diocese of San Diego, a court-ordered independent report found that some priests removed cash from diocesan accounts and stored the funds in safes in their rectories to keep them out of plaintiffs’ hands.
Part of the problem, Berry said, is the “enormous leeway” bishops have in managing diocesan finances.
“When you have that kind of power, it does not lend itself to the sort of regulatory process that we would bring to bear to the governor of a state, or the mayor of a city,” Berry said.
The Economist also makes several estimates — using unnamed sources, public records and court documents — of the Church’s overall wealth in the United States, which the magazine says is difficult to do because of “an overwhelming lack of openness when it comes to Church finances.”
The magazine estimated that the Church and its affiliated institutions spend around $170 billion a year, and that the American Church accounts for as much as 60 percent of the universal Church’s wealth. Citing anecdotal evidence that American Catholics on average give about $10 a week, the magazine estimated the annual offertory income to be around $13 billion, and claimed that Catholic parish giving has declined in the past decade.
Berry said that the evidence shows that a lot of money goes through Church coffers, and that real financial reforms, especially transparency, are needed to keep the system above board.
“The issue to me is not to estimate the value of the Church because it’s impossible, frankly, to put a net worth on the Catholic Church,” Berry said. “The issue is how the money is managed, and if Catholics who contribute are being treated fairly by those who accept their money and use it.”
But Gray said data actually shows that parish donations have increased since 2000, and added that the magazine overestimates the annual offertory by $4.6 billion, almost 50 percent, because it assumes that individuals, and not households, give an average of $10 a week.
Gray said the errors are rooted in a poor understanding of the data and a lack of information. He said the Church does not have a mechanism to collect financial figures from every single Catholic entity in the United States, and he said even having that mechanism probably still would not prevent, reduce or deter illegal or abusive activity, just as it fails to do in the corporate world.
“In general, the Economist is promoting an idea that bishops and priests need to be CEO’s with MBA’s, but that’s not what their job is,” Gray said. “The Church is not Walmart. Some non-Catholics think the Church is magnificently wealthy and that somewhere there is a large vault filled with gold. It doesn’t exist, but only in people’s minds.”
Brian Fraga writes from Texas.
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