posted on: Thursday, March 27, 2008

Need for Religious Conversion
By Gary Snyder

We have seen it with nonprofits. We’ve seen it with foundations. And now we see it with religious organizations and no religion can plead innocent.

A little over a year ago, a survey by researchers at Villanova University had found that 85 percent of Roman Catholic dioceses that responded had discovered embezzlement of church money in the last five years, with 11 percent reporting that more than $500,000 had been stolen. A truly startling statistic!

A few religious leadership organizations have called on their followers to adhere to “best practices”. Needless to say their pleas have been left on dead ears, with untold numbers of religious related organizations getting into trouble.

Churches, church auxiliaries and other religious affiliated institutions enjoy special protections. Just as other nonprofits, religious organizations are exempt from paying taxes, but are still obligated to abide by tax laws regarding accurate accounting, executive compensation, insider dealings, but unlike virtually all other charities, are not required to file IRS Form 990. This Form is a snapshot of the organizations finances and the single most illuminating document available for the publics’ scrutiny.

The amount of abuse is staggering and growing. In the latest count—from 1998-2001—religion related misdeeds totaled $2 billion, up from $450 million for the previous 5 years. A lot of hands caught in the proverbial cookie jar.

In Cleveland a former dioceses employee is accused of stealing $17.5 million over an eight-year period. Across Lake Erie another fraud was brewing at a Catholic Church (MI) where a secretary was stealing over $1 million over a decade and until recently all eyes were on the Priest.

At Crossroads Christian Church a congregant stole $50 million from pastors and church-goes alike. At Daystar Assembly of God Church (AL), church leaders swindled the church membership resulting in the loss of the church.
Possibly the largest scam perpetrated on a congregation was the Baptist Foundation (AZ) where about 11,000 trusting parishioners and others, principally seniors, were defrauded of more than $550 million.

But in too many instances, the religious leadership is, in fact, treating themselves to the offerings. At St Vincent’s Ferrer Church, the priest had “off of the books” personal investments of over $3 million. Forensic accountants estimate that, in reality; over $8.6 million was pilfered. At St. Joseph Catholic Academy (NJ) the pastor stole $600,000 from raffle money.

The stories continue…with all seeking to repair almost irreparable reputations in what is a seemingly crisis-ridden religious sector.

Just as the Internal Revenue Service has “advised” other tax-exempt organizations such as foundations and other nonprofits, it has put religious associations on notice that such abuses will not be tolerated. Within the last year, the IRS sent out a strongly worded letter reminding religious organizations---of all denominations---that they should be mindful of its strict guidelines. Some have abused their tax-exempt privilege and are currently under investigation.

There apparently aren’t any internal controls in place. There needs to be more transparency. A beginning step in facing this massive problem may be politically not palatable. Open up the books. Control the coffers. List the salary and benefits for key employees. List the top employees and their compensation. Note any relationship between board members, employees and contracts awarded.

Just a first step, but lawmakers must have the political will and let the sunshine in.




Gary R. Snyder is the author of Nonprofits: On the Brink. He is a frequent lecturer and author of articles in numerous publications and blogs. His email is http://gary.r.snyder@gmail.com; website: www.garyrsnyder.com, phone: 248.324.3700.