Parishes are bad at managing finances

church-finance

(Note: This article on management (mismanagement?) of church financige in the US is very much applicable to the Indian Church, feels CCVs Isaac Gomes, who has written several articles on installing Parish Finance Committee (PFC) in each parish in India – a mandate of Vatican II which is being flagrantly violated with the CBCI looking the other way.  This eye-opening article appeared in the US Catholic, one of the best Catholic Newsletters in the USA).

 

If parishes adopt an open, transparent, and accountable financial process, maybe parishioners will contribute more.

By Charles Zech, Director of Villanova’s Center for Church Management and Business Ethics. His most recent books are Parish Finance: Best Practices in Church Management (Paulist Press, 2016) and Catholic Parishes in the 21st Century (Oxford University Press, 2016), both co-authored.

Please take the survey that follows this essay. 

Catholic parishes and dioceses in the United States face a financial scandal: Embezzlement occurs at an alarming frequency.

In 2007 my Villanova University colleague Robert West and I conducted a study of diocesan financial practices, including incidences of embezzlement. We surveyed diocesan chief financial officers and found that 85 percent of the reporting dioceses had experienced embezzlement within the last few years, many more than once.

Our study was conducted nearly 10 years ago, but the problem has not subsided. Over the last few years Catholics across the United States have been able to pick up their newspapers and read about priests and employees stealing from their parishes. Like the Michigan priest—pastor of the same parish for 30 years–who was convicted of stealing $573,000, which he used to fund risky stock market investments and his habit of alcohol abuse; the Philadelphia Archdiocese CFO who embezzled nearly a million dollars from the archdiocese to feed her gambling habit; the New York Archdiocese employee who embezzled nearly a million dollars to purchase additions to her expensive doll collection; the Florida monsignor who was accused of stealing as much as $8 million over his 40 years as pastor, which he used to purchase real estate and take expensive vacations with his mistress; or the California mother who stole $438,000 in scrip from a Catholic school fundraising account to pay for expensive clothes and Catholic school tuition.

Embezzlers typically steal money to feed addiction or financial need. The temptation to embezzle funds comes from the combination of need and opportunity. Are Catholic priests and parish staff more dishonest than individuals working in the private or government sectors? Probably not. Do they have more addictions that need to be fed? Probably not. Do they have more opportunity to steal? In most cases the answer is yes.

Catholic dioceses and parishes are notoriously careless with their internal financial controls. The bottom line is, they’re simply too trusting. Too many parish finance councils are nothing more than rubber-stamp bodies, approving whatever the pastor or parish business manager puts in front of them. In a study I conducted, I found that more than 40 percent of parish finance councils surveyed viewed their ability to review financial statements—from balance sheets to investment results—to be insufficient. No one thinks that a priest or lay person would steal from the church, so routine internal financial controls are either missing or lax.

To its credit, the U.S. Conference of Catholic Bishops (USCCB) has addressed this issue. In 1995 the Committee on Budget and Finance of the USCCB (then known as the National Conference of Catholic Bishops (NCCB) and the U.S. Catholic Conference (USCC)) issued “Diocesan Internal Controls: A Framework,” a document that lays out best practices for handling diocesan finances. The document also makes clear that most of its recommendations can be applied at the parish level as well.

However, the document does not prevent financial mismanagement. Like other USCCB documents, it only contains recommendations, not mandates. Bishops and priests are free to follow them or not. Even when official diocesan policy is to follow the recommendations, their implementation at the parish level can be hit or miss. In my research I found that only two out of three parish finance councils followed the guidelines issued by the diocese.

So, what can parishes do to protect parishioners’ contributions and ensure the transparency of their finances?

Rotate collection counting teams. An opportunity for theft arises when the same people count the collection week after week. It’s not unusual for a parish to employ a regular team that counts the collection every Sunday. I conducted a survey that showed that in 5 percent of the parishes studied, only one person counted the weekend collection. In another 40 percent of parishes, the same team counted the collection each weekend. Rotating teams of collection counters, with no team containing individuals related by blood or marriage, is the best practice for parishes.
(CCV's Isaac adds:  During a seminar at Seva Kendra, Kolkata on Laity Sunday two years ago, one very senior priest was very candid about loopholes of church collection system.  He emphasized that collections made on Sunday masses should not be left to be counted on Monday, the next day.  Even this one-day gap might  tempt a parish priest to take some money out of the collection for his and his blood relations' needs.  He even gave a case study where a parish priest who used to handle big construction and other mega projects, siphoned off money from church collection to finance his brother's marriage and related needs! According to him all this happened due to the time gap in Sunday collection and its accounting).

Divide duties. Believe it or not, in some parishes, once the collection has been counted, one individual is responsible for depositing the collection, writing all of the checks, and reconciling the bank statements, usually without any checks or balances. Parishes should segment these tasks so that no one person performs all of these steps. Parish fundraisers should follow this model as well.

Limit the number of parish checking (Cheque) accounts. In order to control spending, parishes should limit the number of parish checking accounts. Not every parish organization needs their own checking account. Does the school need its own checking account? Yes. Does a national fraternal organization like the Knights of Columbus need its own checking account? Probably, yes. How about the choir? Probably not. A line item in the parish budget should be sufficient.

Limit the number of individuals who have check (Cheque) signing authority. If parishes limit who has the authority to sign checks, they will be better able to control the disbursement of funds.

Require multiple signers for large checks (Cheques). I conducted a survey that showed that in two-thirds of the parishes responding, only one person was authorized to sign checks, no matter how large. That gives one person too much responsibility, especially when a lot of money is involved. Parishes should require more than one signature for large checks, which for most parishes means anything over $500.

Require supporting documentation for every check (Cheque). Checks should not be issued without supporting documentation, like receipts for purchases, including for those parishioners who are seeking reimbursement for an expense that they incurred on behalf of the parish. Staff and parishioners may push back on this policy if it hasn’t been required before, but hopefully once they see that it is applied to everyone equally, they will become more accepting.

Utilize electronic transfers. Parishes should encourage parishioners to contribute money through electronic transfers, which eliminate much of the handling of cash. Through electronic transfers, parishes receive contributions even when parishioners are on vacation, sick, or otherwise unable to attend Mass. Donating electronically also makes parishioners’ weekly contributions less dependent on how much is in their checking account that week. My studies show that when a parish household starts contributing electronically, their annual contributions increase by 30 percent.

Administer audits. Dioceses should administer annual random audits of their parishes to ensure their finances are being used in the correct way. The survey of diocesan CFO’s mentioned above revealed that only 3 percent of the dioceses audited their parishes annually, while 21 percent indicated that they seldom or never audit their parishes.

Implementing better financial practices will be met with some resistance, which is why it’s important to have frequent discussions within diocese and parishes about how these practices are intended to protect parishes and parishioners from false accusations.

One of the best defence mechanisms against embezzlement is an open, transparent, and accountable financial process. Potential embezzlers who view the system as transparent and accountable are less likely to steal. However, parishioners must insist on financial transparency and accountability at all levels, including at both the parish and the diocese. A good parish finance council is a pastor’s best friend.

Unfortunately, too many bishops and priests fail to acknowledge the importance of open and transparent finances. What they need to recognize is that parishioners will contribute more if they know how their funds are being spent.

I give presentations about proper internal financial controls to groups around the country. During my presentations I provide some examples of poor controls and their results. Inevitably, afterward I’ll be surrounded by attendees who all have the same message: You think your examples were bad? Wait until I tell you about what happened in my parish!

How is your parish doing?

Sounding Boards are one person's take on a many-sided subject and do not necessarily reflect the opinions of U.S. Catholic, its editors, or the Claretians.

Image: Pexels

 

Top of Form

1. I have a good idea of how my parish is doing financially.

 Agree

 Disagree

2. I trust the priest in my parish not to steal money from us.

 Agree

 Disagree

3. My parish has experienced embezzlement.

 Agree

 Disagree

4. People steal money from their parishes because the church is too trusting.

 Agree

 Disagree

5. If someone is stealing money from the church, they probably really need it.

 Agree

 Disagree

6. My parish has a finance council with rotating leadership.

 Agree

 Disagree

7. The finance council at my parish is honest and transparent with our parish finances.

 Agree

 Disagree

8. Parishes should encourage parishioners to contribute money through electronic transfers to avoid embezzlement.

 Agree

 Disagree

9. At my parish, one person (or group of people) does the collection and money counting every week.

 Agree

 Disagree

10. My parish rotates its collection counting team.

 Agree

 Disagree

11. Bishops and priests in my diocese fail to acknowledge the importance of open and transparent finances.

 Agree

 Disagree

12. Dioceses need to do a better job monitoring parish-level finances.

 Agree

 Disagree

13. To stay transparent about finances, parishes should

14. My parish counts weekly collections by

15. My parish finance council

16. In order for my parish’s groups to make purchases or get reimbursed, they must

17. Diocese can help ensure parishes are managing their finances correctly by

18. I think churches have experienced increased embezzlement in recent years because

General comments:

Name (first and last, please):

City and state: *

Do we have permission to use your name when we publish the results of the survey? *

 Yes. Go ahead and use my name.

 No. Please do not use my name anywhere.

Would you like to receive the USCatholic.org weekly e-Bulletin? *

 Yes. (Please include your email address.)

 No, thanks.

 I already receive it.

My email address is:

I am a print subscriber. *

 Yes

 No

CAPTCHA

Verification

 

 

What code is in the image? *

 

Enter the characters shown in the image.

Bottom of Form

 

Comments

comments

You may also like...

9 Responses

  1. Kirit Macwan says:

    Mon, Nov 7, 2016

    As Pope Francis has said, bring awareness and awakening  at grass root level. After prolonged pondering, i started Jagrut Catholic in vernacular language, Gujarati. Initially, there was dislike. But now people are reading with interest. Waiting for the issue. Paying subscription. Giving donations. Discussing in groups about what is written.

    Priests are also forwarding JC to one another.They discuss among themselves. Afraid of their names being appeared in JC. Bishops are scared and so on.
    Process is slow. But it's working.
    To change the system is very difficult. Culture can not be changed over night.

    Way back in 1982, I had brought stay against display of OM, Swastik in the Church from Civil Court, Ahmedabad. There were tremors in the Church. But now new generation of priests are not in favour of idolatry and castiesm introduced by Spanish Jesuits in the the local Church.

    God has given me knowledge and courage. I am fighting against evils in Church. That's my mission
     Now people and even clergy appreciate and support me.

     Its long drawn battle but i am patient and hopeful
    Thanks.

    Kirit 

  2. Chhotebhai says:

    On Mon, Nov 7, 2016 at 2:51 PM, Allan de Noronha <> wrote:

    One can fight an enemy – the outsider, the "other". One cannot apply the same yardstick to one's own family. Hence we need a balance of both assertion and dialogue. 

    As for scandals – be they financial or sexual, we may "know" about them, but to bring the perpetrator to book one would require hard evidence that would be maintainable in a court of law. That is not so easy to come by.

    Most of the failings in the church are that of omissions rather than commissions. How does one prove an act of omission?
     

    Also those who make suggestions should be the first to implement them.

     

    chhotebhai

  3. Elvis Vaz says:

    On Mon, Nov 7, 2016 at 12:43 PM, 

    Dear Isaac,

    All this is being repeatedly spoken, written and discussed.. and we, time and again talk about sex, the rampant corruption and the insensitivity of the Priests, Bishops and Cardinals towards the Laity. There is hardly a Catholic that will disagree with all this. But what is baffling is that for decades, we, the faithfuls just take it lying down. I have yet to see the stalwarts/ leaders of our community garner support and build a nationwide programme to force and ensure that the custodians of the faith take corrective actions, regulate and increase the faith and specially so when we NOW have a Pope that will turn his ears towards India if such a thing does happen. 

     

    Are we not just empowering them to go ahead and do more of these things by shooting from a distance. Why are we shy to expose our bad side to the world. Why are we scared of the RSS & BJP or any other organisation taking advantage?? What is the reason that we have yet to produce a leader who can organise a movement that will bring all these bad practices under control??

     

    I am happy that people are voicing these concerns and am thankful for a platform like this one and I would love to see that all that is said here reaches every catholic home.

     

    Elvis Vaz

  4. Kirit Mahida says:

    07.11.2016

    Dear All.

    For years we have tried to coax the church, to collaborate in corrective action but drawn blank. I believe  first in cooperation and collaboration, second in conciliation but if that fails third stage is confrontation, be it open or no holds barred. We the people of God have to say enough is enough. Let us not sing the song put out bu the Church about RSS and BJP. those guys and their think tanks know much more about the Church and going – ons within. Let us not fool our selves or allow Church through its various mechanisms to fool us anymore. Stop shying away and start talking the language they understand. Pope Francis is revolutionary and down to earth human in his approach, such a time may not come in the history of Church again. The  situation is either act now or perish, and if later happens no one but we laity are to blame our self and none else. While I am it let me state that i have more than three and half decades of work experience with the Church. I am form diocese of Ahmadabad. Over the years I have interacted with the Church on various issues. I am speaking from hard core experience. The diocese employees of the Church in my places are the most exploited and under paid lot at times even below the minimum wages. Soon I shall come up with my interaction with my Bishop. Hollow sermons from pulpit on Justice and Empowerment are sickening when you reflect on the reality. When I come on the air on wage justice issue I only hope that right mined people among you will come forward to support. I am not seeking anything for myself. I also herewith permit any of these readers to put my views on other digital platform only condition is, it must be without alteration/ amendment or dilution.

    Thank you and best wishes.

    Kirit Mahida

    Anand, Gujarat.    

  5. almayasabdam says:

    From: Allan de Noronha
    Sent: Tuesday, November 1, 2016 7:39 PM
    To: isaac gomes
    Subject: Re: Parish Finance Management

    Please do forward to your bishop. Money is a touchy matter because any questioning implies distrust. Maybe we could start the practice of immediately counting the collection and announcing it. We should also ask for receipts for all donations and Mass stipends. We can always start somewhere no matter how small a step is.

    Chhotebhai

  6. almayasabdam says:

    On 1 Nov 2016 18:50, "isaac gomes" wrote:

    So true Chhotebhai.

    What are the possible solutions?

    Do you think I should forward this article to our Archbishop?

    Regards

    Isaac

  7. almayasabdam says:

    From: Joseph Uday Rodrick 
    Sent: Tuesday, November 1, 2016 7:10 PM
    To: isaac gomes
    Subject: Re: Parishes Finance Management

    Dear Isaac,

    1.  In North America, checking accounts are like savings account of individuals or current account of institutions / companies. Within the same parish, there are several units like Schools under the parish or Knights of Columbus or Choir or Poor People's grant or building loan reduction etc. Parishes operate several bank accounts for each of these units and the news article talks about reducing these accounts to absolutely needed one.

    2. Line item is the accounting head like property tax, printing & stationary, office supplies etc. Budget can be devised for each of the individual account like choir etc and controlled in the financial /statements / reports. Lesser the number of bank accounts, better the management of cash.

    3. Cheque is known as Check in the USA. So, the article talks about cheque signing authority to introduce more than one signatory for high value cheques.

    Let me know if you need further clarification.

    With regards

    Joseph Uday Rodrick

     

  8. almayasabdam says:

    From: Allan de Noronha
    Sent: Tuesday, November 1, 2016 1:56 PM
    To: isaac gomes

    Subject: Re: Parish Finance Management

    As far as my knowledge goes the provisions of Canon Law for the management of the Temporal Goods of the church are observed more in their breach. 

    The U.S. study under reference shows that the embezzlement is not restricted to the clergy but also involves lay assistants, who may be lackeys of the clergy. It is sickening, and our bishops have neither guts nor gumption.

    Chhotebhai

     

     

  9. almayasabdam says:

    From: Joseph Uday Rodrick 
    Sent: Tuesday, November 1, 2016 7:01 PM
    To: isaac gomes
    Subject: Re: Parish Finance Management

    Dear Isaac,

    The whole thing of transparency centres round your attitude towards it. The day, the priests and churches and its custodians, understand the importance of transparency and do not look for their personal gains, things will change. Till then, we will keep shouting and try our best to bring changes to the attitude of our church. The priests, bishops and clergymen think the church is owned by them and based on this understanding, they exercise their rights to the church property, be it movable or immovable in nature. Let our Lord bring some sense to these corrupt and stubborn people.

    With regards

    Joseph Uday Rodrick

Leave a Reply

Your email address will not be published. Required fields are marked *

9 + twelve =