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The Economist on the American Catholic Church's Finances

The Economist has posted an interesting story, reporting the results of its detailed investigation of Church finances in the U.S.. (HT Daily Intel) It does not paint a pretty picture. Here's a taste, but go read the whole thing:

The documents that have been disclosed reveal that some bishops in the bankrupt dioceses presented the diocesan funds of parishes, schools, hospitals and retirement accounts as separate when they were really simply book-keeping entries in the same pooled investment account. The diocese of San Diego, for instance, reported to the bankruptcy court that it had over 500 accounts. But these were merely entries in a Parish, School Diocese Loan Trust Account, maintained in a single bank account at Union Bank of California.Such pooling saves on administrative costs and allows dioceses to use a surplus in one area to cover shortfalls in another, often a legitimate course of action. But it has presented problems when it comes to working out which assets belong to whom in bankruptcy proceedings.The vast majority of parishes that commingled their funds with those dioceses now in bankruptcy lost all their investments. In some cases they were misled into believing that the money would be kept separate from the main diocesan funds, and thus safe in the event of bankruptcy. The judge in the Wilmington bankruptcy, Christopher Sontchi, said parishes that had suffered this fate had grounds to sue the diocese for breach of fiduciary duty. None hasbut that is hardly surprising, given that the bishop and the chancellor of the diocese sit on the five-member board of trustees of each parish.

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I can't say I am surprised. The first diocesan comptroller was Judas. That slam at diocesan comptrollers was pointed out to me by a diocesan comptroller. He also said that only invincible ignorance will keep pastors and bishops out of Hell for the way they handle money. He gave the example of the Peter's Pence, If half of that collection gets to Rome, he said he would be surprised. First the pastor takes his rake-off because he needs a new roof and, doncha know, it's all for the Lord anyway. Then the bishop takes his rakeoff to pay some bills because, doncha know, it's all for the Lord anyway. Peter gets the leftovers, literal pence.This description was given to me a long time ago. Since then, reforms have been put in place, and my impression is that the pastor is no longer in a position to grab as much money intended for other things. But, as The Economist found, money given to the diocese for cemeteries or scholarships still finds its way into other needs. Hardly any money has been given for payments to victims of abuse, but a lot of money for that purpose has come from someplace. The local ordinary remains above criticism from any but those who are above him.I reflect on the thought that a lifetime of contributions probably has been frittered away on things it wouldn't have gone to if there were accountabilty. I reflect on the thought that the things the Church does that make me proud are probably done almost entirely with tax dollars passed through the government, and now the church wants to fight the government about that. And I wonder, What kind of dummy am I:?

I don't know how we can expect anything different as long as the Church remains an autocracy. Autocracy cannot coexist with representation, checks and balances, accountability, transparency, and modern standards of justice. The structure of governance itself must be reconstituted from top to bottom. Yet the faithful aren't there yet - our sense of honor still tells us to support the institution. But I think this will change, once the nickel fully drops. Articles like this are great in that regard.it certainly does come down to a question of vincible ignoranceit's not like no one's ever heard of representation, checks and balances, accountability, transparency, and modern standards of justice. How much longer can we pretend there's not far better ways to run organizations?In his book The Honor Code: How Moral Revolutions Happen, Kwame Anthony Appiah explores what causes an about-face in attitudes on moral questions and what honor has to do with it. He says that moral revolutions happen when people in society change what they consider to be honorable. Collective shame, rather than moral argument alone, galvanizes people to act against practices that bring collective dishonor. In the past, the honor code of the faithful was to pay, pray, and obey. That no longer works. A wider honor code needs to be brought to bear to act against behaviors that bring contempt for the Church and her message.

Jeanne --Right on. I also think it's a question of what people consider "polite" and "respectful". Americans generally seem to think that all criticisms -- even justified ones that need to be made -- violate the rules of politeness and automatically show disrespect for what ought to be respected. Bishops, according to this primitive ethic, especially are to be "respected" simply because they are bishops. But it is their office that demands automatic respect, not their own characters. A bishop's character can be just as rotten as a lay person's. It isn't rude to say so.

A priest who look over a small inner-city parish which was run down told me this story. "The resigning old pastor [drinking] passed me three bank books at the dining room table.. each had about 100 grand.. FDIC only insures 100Gs an account he said.. .[at that time]..The b-----ds downtown don't know about it. The previous pastor gave me two and I put the third one together. You have a eye for fixing up places.. so do it' He did.. the secret parish accounts [17,000 parishes] could put a dent in the US national deficit?

"The vast majority of parishes that commingled their funds with those dioceses now in bankruptcy lost all their investments. "Evidence that victim lawsuits wound innocent parishioners.

"Evidence that victim lawsuits wound innocent parishioners." Not so innocent, for anyone who has any knowledge of how modern institutions are governed, which we all do. It's the price we pay for tolerating autocracy in an era that knows much better. Even today, after twenty years of the sexual abuse crisis, diocesan review boards, which were set up to eliminate sexual abuse, still have no control over the records and reports they see and cannot enforce their recommendations. According to the Dallas Charter, they can only "advise." The autocratic power of the bishops trumps all. And we put up with it, so we are not innocent.

Canon Law calls for each parish (and diocese?) to have a Finance Council. In accordance with Canon 537 of the code of Canon Law, it is the responsibility of the committee to aid the pastor in the administrative of parish goods possessing a consultative voice only and governed by norms determined by the adiocesan bishop. (#536.2)And therein lies the rub: "possessing a consultative voice only" and "governed by norms determined by the diocesan bishop."In other words: smoke and mirrors. You can be a consultative as you want, but if the pastor chooses to do whatever he damned well pleases, that is what will be done. In the archdiocese in which I was once on the FC, any expenditure of $10,000 or over needed concurrence by the FC. However, if that didn't happen the pastor simply went to the Abp and got his way.FC members serve at the selection and whim of the pastor. If you challenge him, you can be booted off. He can have as few or as many members as he wishes, and there are usually no firm criteria for backgrounds necessary for FC membership.As I said: smoke and mirrors.Once again, we are reminded that this church is not a democracy. He who controls the gold, rules.

The blog entry linked by Jim McCrea makes some good points about the very different financial perspectives of the Church and a Fortune 500 company. It also notes that financial reforms have been implemented but that more are needed. I certainly agree with that assessment. Perhaps the Church as an institution should administratively mimic the operation of one of its flagship components. Beyond its well-deserved reputation as a trustworthy international charitable organization, Catholic Relief Services is a model institution when it comes to its administrative focus (i.e., "CRS maintains strict standards of efficiency, accountability and transparency"), and its board of directors comprises both clergy (including some bishops) and Catholic laity who work cooperatively to maximize charitable relief efforts. It's hard to argue with CRS's bottom line: 94% of its revenues are spent directly on its charitable programs, with just 6% consumed as administrative overhead.

William, I agree. None of this stuff is rocket science. Catholic charities, health care services and colleges all run in ways much more accountable and transparent. It's only the Pastor-Bishop-Papacy part of the institution that's a couple of centuries behind the times, having maintained against all reason its European royal court style of governance. It does boggle the mind.

At their fall meeting in 2011 the U.S. bishops overwhelmingly approved a 3% increase of the annual funds from each diocese to the USCCB to support the work of the Ad Hoc Committee for Religious Liberty. (And I was not consulted!)

"Evidence that victim lawsuits wound innocent parishioners''No. it's evidence of epicopal misfeasance.Take it up with your bishop. Don't screw over the victims--again.

On the transparency of CRS, cited above by Jim McRae. I wonder how long that laudable transparency will continue (one could say the same thing about national Catholic Charities). The Tablet of London has published a couple of articles on changes in the structure and oversight of Caritas International, of which both CRS and CC are members, I believe. The author is Duncan MacLaren, a former Caritas Secretary-General, who warns that the agency's structures and independence are threatened by a new decree from Tarcisio Bertone, essentially overriding the rules set up by JPII in 2004, and strengthening the control of Cor Unum, the dicastery for charities. over CI, choosing its personnel, setting its salaries, and so forth. The railroading of the former head of Caritas, Lesley-Ann Knight (a woman, unfortunately, and therefore particularly vulnerable to attacks from the Roman male bureaucracy) is part of the story/.If you have access to the Tablet, it's in the May 24 issue.I have no idea whether MacLaren is right or not, but if he is it's a further example of Vatican centralization, financial and other. I've recently answered appeals from both CRS and CC turning them down because of these fears, and saying that my charitable giving will be slanted in other directions where I think (rightly or wrongly) that I can trust the agencies. Quite apart from whether the Economist is right or wrong, none of us in our right minds is apt to trust the Church, whether local or Roman, to be an efficient steward of its financial resources, particularly given the huge legal fees and damage settlements in the US and elsewhere, that have been required to pay the back wages of sin.Elsrwhere I see that CRS is under attack for having made grants to CARE, and CARE, it seems, provides the means of contra****ion to some of those it helps. CRS protests, no doubt quite rightly, that its grants were made for other purposes. That attack on CRS might make me change my mind and start giving to them again, as I have given in the past to the Campaign for Human Development when that has been attacked by the Right. CRS, from all I can make out, is a splendid organization. Too bad it can't be left to do its own work as it sees fit. And Catholic Charities gets the highest possible mark from Charity Navigator.

6% for parishes and pastoral work. 6%!No wonder things are going so badly.

When 6% goes to parishes, you have to question whether this organization is a "church" at all. It is, perhaps, a giant service corporation with a tiny component devoted to the sacraments.

Rita - as noted in the blog entry that Jim McCrea linked to, it's a mistake to think of the church as a single unit. That 6% goes to parishes and 57% goes to Catholic hospitals (does that include payments for services by and for non-Catholics, and Medicare and Medicaid reimbursements?) might just be a reflection of the ridiculous cost of providing health care.

Jim, yes, it's certainly a reflection of the ridiculous cost of health care. And I can well imagine that the hospitals founded by religious sisters on a shoe string and with their own free labor have become a big business in ways that were never foreseen. But I still say this imbalance is a problem. You know (I presume) how many worthy initiatives are stymied at the parish level for lack of funds. How many parishes would like to have a full time youth minister or a well qualified music director or a pastoral associate for RCIA, and they are held back by lack of money. The paucity of personnel holds back the potential of volunteers too, as there is nobody to organize and coordinate their good faith efforts. Catechist training is a dream in a lot of places, not a reality, again for lack of funds. Then people fault the parish for poor catechesis. Well? Follow the money. We're funding hospitals.

Michael Lewis says that The Economist is written by a bunch of young people pretending they're old people :-) Here's an article about it and how it's managed to prosper in these newspaper-killing days. http://nationalinterest.org/bookreview/voice-the-new-global-elite-7348?p...

6% for parishes and pastoral work. 6%! No wonder things are going so badly.Priorities, folks: priorities.If that 6% includes lots of new dresses and churchy geegaws that seem to crop up regularly (how much did the new lectionaries and other "updated" rubrical tomes cost?) then the 6% is even more meager than most of us realize.

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About the Author

Eduardo Moisés Peñalver is the Allan R. Tessler Dean of the Cornell Law School. He is the author of numerous books and articles on the subjects of property and land use law.