Avoiding the Next Tsunami
Some have suggested that the next wave of scandal in the Church will be financial. Based on news reports and personal observations, it seems to me the wave has already arrived. The only question remaining is whether it will be a tsunami or something less devastating. It would be best for the Church to act soon to stem this tide, at once respecting the culture of the Church as well as implementing sound business practices.
Theft and embezzlement from Church organizations has become surprisingly common in recent years. Every so often every priest hears about how an usher was caught dipping into the collection. But when the clergy or religious are involved in theft, the news travels quickly:
The former Catholic priest who embezzled money from two Louisa County churches will spend five years in prison. Despite recommendations for less time from Rodney Rodis' defense attorney, as well as from federal prosecutors, Judge Richard L. Williams sentenced the 51-year-old to 63 months in prison, with credit for time served. He was also ordered to pay about $590,000 to the Catholic diocese of Virginia [sic] (The Free Lance-Star, February 22, 2008, Fredericksburg, VA).
Since original sin is an equal opportunity employer, nuns as well as priests can be caught with their illicit fingers in the till. Anyone who has prepared for marriage in the Catholic Church in recent decades will be familiar with the FOCCUS marriage preparation program, a program that Sister Barbara Markey helped develop:
A 71-year-old nun who co-wrote a popular marriage-preparation program was arrested on charges of improperly spending more than $300,000 on casinos, gifts and air travel. Sister Barbara Markey, N.D., Ph.D., who was fired in January as director of the Omaha archdiocese's family life office, turned herself in Wednesday and was released on her own recognizance. According to the arrest warrant, an audit found that Markey spent $307,545 for her own use or without documentation. Some of the money was spent on cash advances, casinos, gifts and airfare, the audit said (Boston.com, June 29, 2006).
The purpose of this essay is to encourage discussion, including possible disagreement, in seeking creative approaches to the increasingly complex administration of parish finances and the temporal goods of a parish.
In general, is it important or necessary for Catholic priests to have a business education in order to effectively administer and control modern parish finances? Do priests need to know how to use computerized financial spreadsheets? More generally, is it appropriate for the priestly vocation, a calling from God, to be thus "professionalized"? Should business and finance be taught in seminaries? Should parishes or dioceses pay for advanced business school programs? How else might pastors address the need to have better financial and "human resource" controls in place?
A Brief History
The question of the administration of the Church's goods extends from the first years of the Church. The first bishops, the apostles, found themselves distracted by charitable and administrative demands and obtained help:
Now in these days when the disciples were increasing in number, the Hellenists murmured against the Hebrews because their widows were neglected in the daily distribution. And the Twelve summoned the body of the disciples and said, "It is not right that we should give up preaching the word of God to serve tables. Therefore, brethren, pick out from among you seven men of good repute, full of the Spirit and of wisdom, whom we may appoint to this duty. But we will devote ourselves to prayer and to the ministry of the word." And what they said pleased the whole multitude, and they chose Stephen, a man full of faith and of the Holy Spirit, and Philip, and Proch'orus, and Nica'nor, and Ti'mon, and Par'menas, and Nicola'us, a proselyte of Antioch. These they set before the apostles, and they prayed and laid their hands upon them (Acts 6:1-6).
Therefore, since deacons are numbered among the ordained clergy — in fact, every priest is ordained first a deacon — parish administration is not, historically speaking, alien to Holy Orders. It is part of the duty as "king" (i.e., governing the church) in the "priest, prophet, and king" commission. But questions of extent remain.
Until the early 20th century, the Catholic Church in America functioned as "mission territory." Churches were small. Immigrants built their churches and were proud of their handiwork. Communities tended to be small and cohesive. People walked to their workplaces as well as their churches. In some dioceses, almost every parish had a school. Religious sisters taught in the schools and tuition was low and affordable to every family. Money for the parish was generally tight because money was tight for the average parishioner.
In some of the heavily Catholic cities, even non-Catholics identified themselves as residents of Catholic parishes. (Reportedly, this continues to be true, to some extent, in the Archdiocese of Philadelphia.) Pastors generally knew the members of their parish by name. It was not unusual to see a pastor assigned to a particular parish for most of his priestly life.
In those days, money on deposit in the checking account and the ability to pay bills on time were sufficient indication that a parish was "financially viable." There were few parish "employees" as such; most of the help came in the form of volunteers. Even the parish secretary might have been a part-time volunteer. Religious sisters taught in the schools. A principal who did not also teach a class was unusual.
With tight money, there was little risk of financial impropriety. Pinching pennies was the norm. Using the backsides of stationery, for example, and turning classroom lights out during bright daylight hours were everyday frugalities. Checkbooks were established for every parish entity and funded by donations as necessary. (These patterns can still be occasionally observed even as large sums of money are spent on the maintenance of parish church and school "bricks and mortar.")
By the 21st century, the "business face" of the Church had substantially evolved with the demographic changes of America — chiefly the shift in population to cities and suburbs. While relatively small parishes remain the rule in many rural sections of the country, this shift in population — coupled with the decline in the number of priests relative to the number of Catholics — gave rise to the phenomenon of "mega parishes."
For purposes here, a "mega parish" is a parish with an annual budget of $1 million or more and/or a parish with over 2,000 families. A bishop usually assigns two or more priests to a mega parish, but in some dioceses, one priest may be all that is available. Considering the size of a mega parish, it has become increasingly difficult for a pastor to get to know his people. With assignment terms of, for example, six years, knowing or even meeting every parishioner becomes nearly impossible.
This and the transience and anonymity of populations in major metropolitan areas such as Northern Virginia have caused the parish to become, in some ways, less of a "sacramental family" and more of a "sacramental business." (The imperative of reversing this unhappy trend must remain a topic for future discussion.)
The rise of secularization resulted in plummeting vocations to the priesthood and teaching religious orders. Mass attendance dropped precipitously. Churches were closed and consolidated. The movement was in the direction of fewer, much larger parishes with fewer priests. Individual parish collections expanded. So did parish and school expenses for surviving parishes — or the mega parishes that resulted from demographic shifts.
In schools, the laity filled the void left by the collapse of religious orders. But lay teachers were employees and questions arose concerning salary, health benefits, and other business requirements to accommodate "professional" teachers. Even costs of the "employment" of religious sisters skyrocketed because of health insurance as well as increases in convent expenses. The need evolved to hire maintenance help, full-time secretaries, evening office help, religious education directors, professional musicians, etc. The expansion of the payroll required an increased attention to personnel management, payroll withholdings, and social security taxes, as well as quarterly and annual tax reports.
Ideally, as parishes grew in terms of income, staffing, and payroll, the pastor would deftly delegate the finances to knowledgeable laymen who implemented appropriate financial controls and were attentive to cost control as well. But more often in reality the pastor simply gave the checkbook to the parish secretary and asked her (yes, the secretary was usually a woman) to make the weekly deposits and write the checks. With luck, there were formal monthly bank reconciliation procedures. But frequently the review of the monthly bank accounts was informal and not documented or appropriately reviewed, and protection against financial misfeasance or malfeasance depended upon "trusted employees" or volunteers.
In many mega parishes, as defined above, the main financial "book" remains the manual checkbook. At the end of the fiscal year, there is often a paper chase to shoehorn the details of the checkbook into a diocesan report. (Anyone familiar with the requirements of the IRS would shudder to think of how the payroll reports are prepared at many parishes and schools.)
Then too, with the increase in parish size, comes increased opportunity for a serious breakdown of financial control. Oversight of parish collections becomes far more critical. A quick Internet search reveals the frequency of theft by "trusted" ushers and volunteer money counters who have lone access to the cash and checks of a parish collection. Priests also have been guilty of theft, made easy by lax controls over large collections and easy access to the checkbook.
Attitudes of Priests
Most priests do not get particularly excited over talk about policies and procedures, audits and flow charts. Despite the considerable value in these matters, particularly for larger churches and apostolates, there is a trade-off. If a pastor gets too caught up in administrative details, he can lose sight of his primary purpose — seeking the salvation of souls. Then too, the type of people who enjoy working out procedures and audits are often temperamentally indisposed to see the big picture. But the big picture — the pastor's responsibility for the salvation of the souls of his people — must always remain in focus and at the fore.
Theologically, priests are trained in the Catholic principle of social justice called "subsidiarity." Subsidiarity holds, loosely, that the activities serving the common good should be performed by social entities closest to the questions and problems at hand. Hence, priests traditionally dislike the real or perceived interference of the chancery (the "central administrative office") in the management of their parishes and schools. (To a large extent, the right of a pastor to run his parish according to the principle of subsidiarity has been reinforced by canon law.)
Standard business practices promulgated by the chancery often meet with resentment in the parishes. (Some years ago, a prominent elderly pastor, now deceased, insisted that priests should not allow the chancery direct computer access to parish books. It turned out that during this time, his parish secretary/bookkeeper had embezzled more than $100,000.)
Further, a chancery does not have the leverage available to secular institutions to insist upon compliance with diocesan administrative regulations. Banks, for example, may require audited financial statements before a loan is made to a company or an individual. But the chancery has only the threat of displeasure on the part of the bishop. In some cases, such a threat is very effective, but chancery threats are not always taken seriously.
It is not likely that an otherwise successful pastor would be removed for failing to comply with mundane administrative requirements, much less disciplined for non-compliance with the far more draconian penalty of suspension. Exceptions to the rule are gross violations of the spending limits permitted by a bishop or unauthorized spending and contracts that result in large potential liabilities to the Church (a recipe for a swift and certain chancery response!). This laissez-faire chancery/parish relationship explains, to a large extent, the slow-as-molasses overall improvements in the parish financial controls of many Catholic dioceses.
But an opposite concern that looms for many pastors is the increasing tendency for chanceries to become micromanagers of parishes. They see this as an aspect of the growing bureaucratization of the Church that creates a tension between the role of the priest as spiritual father and his role as parish administrative bureaucrat. Although it may be reduced to a subject of humor, great care needs to be taken to ensure that the role of the chancery remains one of "offering support and assistance" rather than regulation. If this is ignored, parish families will cease to be families and will become clusters of corporate franchises, with the chancery as the corporate headquarters.
There is a decided dark side to the bureaucratization of the Church in recent decades that has affected the mission of the Church and the definition of the ministry of priests and religious. In sum, it might be defined as a tendency toward the "clericalization of the laity" and the "laicization of the clergy."
As parishes expand and the number of priests declines, there is a great temptation to downplay the priest's sacramental role and to accent his managerial functions. Instead of defining himself as the primary teacher of the faith and mediator of Christ in the celebration of the sacraments, he defines himself as the "enabler in lay ministry." Instead of preparing parishioners for the sacraments (conducting baptism classes, marriage preparation, etc.) and visiting the sick, he organizes teams of the "lay ministers" for the jobs.
Hence, the definition of a "good priest" is a man who knows how to delegate his sacramental duties to the laity and is a great parish administrator and fundraiser. Conversely, the definition of a "good Catholic" narrows to include only those who "do ministry" rather than those who bring Christ to their homes and workplaces as virtuous parents and employees. But anyone who has studied the documents of the Second Vatican Council realizes that this is exactly the opposite of the Church's intention. It is critical to the mission of the Church not to disassociate priestly ministry from a priest's personal administering of the sacraments.
Theology aside, priests come with all sorts of abilities and attitudes. But it is fair to suggest that most priests do not have the inclination for or the interest in tending to the details of parish finances. In most parishes, this responsibility is delegated to laymen. In addition, according to Church law, every parish needs to have a finance committee or council in place to advise the pastor. (It is important to note that the finance committee is appointed by the pastor and, by Church law, has no authority other than that of an advisory body.)
One type of priest is the overly pious one whose attitude is, "God does not really need my administrative attention." This priest does not take a direct interest in parish finances, lives frugally, and is completely trustworthy, but does not have a clue as to the merits of cost control. His assumption that "God will provide" often means that other entities (such as the central diocesan chancery coffers) will bail his parish out in case of a crunch. Little attention is given to questions of serious cost control (e.g., considering the long-term financial implications of building a parish hall or gymnasium or monitoring teacher-to-student ratios).
The "God will provide" pastor may even experience a very large increase in parish and school payroll expenses without even considering that waste is the probable cause. If his parish has the financial resources of a mega parish, it may take years before the waste is detected. Priests need to be reasonably attentive to the administrative details of the parish, but this is not to suggest that the opposite extreme is desirable: the priest who considers himself a businessman first and a pastor second, if at all.
Other priests might be placed under the category of "control freaks." Financial control freak priests usually know just enough of bookkeeping to make them curious about the details of everyday operations, but ignorant enough to needlessly disrupt the work of their assistants. A parish bookkeeper might be reasonably competent, but the financial control freak priest frequently intervenes and undoes the good work.
It seems that control freak priests are relatively few compared to the number of those who are only interested in whether there is enough money in the checkbook. Although few in number, control freaks can be the most difficult for lay assistants to deal with.
Then there are the "old-line pastors" who are quite good at managing the bricks and mortar of a parish. They often are able to keep the collections up by responding well to parishioners, or at least avoiding the "hot buttons" (right or wrong) that alienate them. But old-line pastors usually do not have the attention span for the details of parish administration. The details of accounting are "beneath" them. Besides, they believe, secretaries should be able to perform the basic duties of bookkeeping: make deposits and write checks. However, it is quite possible that if a loyal but marginally competent secretary is placed in charge of the bookkeeping in a mega parish, there may be serious financial breakdowns and IRS payroll problems as a result of entangled accounting procedures.
The psychology of the relationship of a pastor to his bookkeeper and finance committee usually remains a part of the "Catholic culture" and all that the term implies, good and bad. No pastor wants or should be required to endure a staff that endlessly questions his routine financial decisions — at least not on a micro level — nor does the staff generally have that right.
On the other hand, because of the trust people place in priests, significant financial decisions sometimes may not be adequately questioned, even when experienced financial professionals sit on the financial committee. For example, when it is necessary to assist a parishioner in need, a significant expenditure might be made on the authority of the pastor alone without regard to generally accepted documentation and approval requirements, thus leaving open the possible appearance of impropriety. Such gaps in the consulting process may open the door to malfeasance on the part of the pastor and others. Most cases of financial fraud, as any good auditor knows, are the result of access and opportunity. Therefore, some positive helpful questioning is always in order — as a good secretary-bookkeeper and a good faithful finance council would do.
Possible Solutions
The Church is in the "business" of the salvation of souls. But administering parish finances and the temporal goods of the Church is not unworthy of a priest who is wholeheartedly dedicated to that mission. Just as fathers in families are required to be attentive to the financial needs of their wives and children, pastors need to be attentive to the financial needs of their parishes.
In our day, the financial needs of a parish have become increasingly complex for the reasons indicated above. The recipe for meeting those needs is also a bit complicated, but not out of reach. Here are some initial thoughts on changing attitudes and cultivating a culture of financial control within a parish.
Minimum Guidelines
In terms of the financial administration of the parish, a pastor at minimum should be attentive to the guidelines from the chancery or accounting professionals on questions of financial control and internal accounting control. If the details are confusing, intimidating at first glance, or seemingly inaccessible, the pastor can eliminate most of the common control failures by ensuring three key procedural items:
- Physical control over parish collections up to the bank deposit, including basic failsafe accounting procedures for parish collections and accounts;
- Monthly reconciliation of bank accounts with independent review, preferably by the pastor himself, but certainly not the bookkeeper alone; and,
- The pastor's respect for and reliance on the parish finance committee (see below).
Incorporating these three items would significantly reduce the opportunities for financial malfeasance and provide a foundation for future improvements to financial control. These do not just protect parishes from pilferage; they also protect the individuals involved from suspicion (including other priests in residence who might unjustly share in "guilt by association").
Reliance on Lay Expertise
Parish finance committees need to be actively engaged in the parish and with the pastor, especially in those cases where the pastor is least interested in money matters. Pastors should choose not necessarily the wealthiest people in the parish or the "big picture" business executives, but people who can bring the information and expertise to run things efficiently.
Parishes usually have sufficient numbers of people in the pews with financial talent who would be willing to lend a hand. At least one or two members of the committee should be willing and able to dissect and explain the parish financial accounting system to the pastor and, as necessary, the parish at large. Certified public accountants are particularly trained in this regard. A pastor should be eager and grateful for his help, particularly if a CPA has good communication skills. Someone experienced in bank account reconciliations, such as a bank clerk, would also make an excellent member of a finance committee. Financial accounting control (including the preparation of parish budgets) is costly, but potentially far more costly in terms of dollars and morale when there are failures.
Finance committee members, however, often report that they do not adequately understand their roles. Dioceses would do well to hold periodic evening workshops for members of finance committees for this purpose.
A Diocesan Whistleblower Hotline
Some dioceses have established phone hotlines run by outside independent agencies for the purpose of receiving and processing anonymous calls reporting real or perceived financial irregularities in parishes. Although this has been successful in a few circumstances, a "snitch hotline" seems to violate Catholic sensibilities. If a chancery cannot be relied on to properly investigate allegations received from the laity, the problems of financial irregularity will be the least of the Church's problems.
Many disagree, suggesting that chanceries, in recent decades, are notorious for failing to respond to the concerns of the laity. The issue can be very frustrating in view of the possible presence of an "old boys' network" of priests that extends into the chancery.
Seminary Preparation
Although there remains considerable resistance to some form of "parish administration" class in the seminary, it would be useful if such an introductory class was truly practical and "hands on." Training in the use of a computer spreadsheet would prove to be quite useful. But the training should be in conjunction with a practical parish bookkeeping practice set. (I developed a program that I have yet to introduce, but I think it would be extremely useful if taken seriously by seminary authorities or demanded by diocesan bishops in the training of their future priests.)
Seminaries could eliminate some courses (in "sensitivity training," and "enabling ministry" for a start) and institute a practical parish administration course. A priest should at least realize the benefits of financial analysis, even if he is not going to do it himself.
Advanced Business Education
Some universities are offering master's in business administration programs for priests, an idea that is perhaps worth pursuing on a limited basis. Bishops generally are not equipped to judge whether a pastor is competent in the administration of parish finances. The laity may be able to judge weaknesses in administration, but may lack the perspective that comes with the pressures of the clerical state.
Priests specially trained in administration would not only be able to "speak the language" of a fellow priest and pastor of souls, but would be able to judge whether a particular priest is truly capable of fulfilling his duties as the primary parish administrator. If not, they would presumably be able to assist him in seeking the necessary help from the laity. Because it would benefit the diocese as a whole, funding for such advanced training should be on a diocesan level rather than on the parish level. Further, the number of priests so trained would be limited, depending upon the size and needs of the diocese.
Basic Bookkeeping
The advantages of priests' voluntarily enrolling in basic bookkeeping classes in vocational or technical schools perhaps should be considered as a remedy for the failure in seminary education, although no diocese seems to have encouraged this. The cost to a parish would probably be low, but basic bookkeeping and financial control techniques would certainly be taught. The disadvantage is that the average priest might lose patience with an immersion in the drudgery of practice bookkeeping. (There is a good reason why accountants have job security.) But this seems a far more practical plan than paying a priest's MBA tuition. There is a caveat, however: he also may learn just enough to consider himself an "expert" — that is, just enough to be dangerous.
Standardization, Budget Criteria and Planning
As a foundation to preparation of the annual parish budget, there may be a need for the Church to establish useful criteria to measure the "efficiency" of parish church and school operations — as well as chancery activities! This promises to be controversial because the mission of the Church cannot, perhaps, be conveniently reduced to mere "efficiency." But thoughtful measurements of financial activity against certain criteria would tend to increase the accountability of priests and bishops and provide a reasonable basis for budget preparation.
For example, the "cost per student" in schools should be, to some extent, comparable and predictable. Maintenance costs per square foot of plant could be monitored. Even the average daily cost of "food and entertainment" and "household expenses" by assigned priests should be of interest. Parishes typically calculate average contribution by parishioner, but extending a periodic "ratio analysis" to parish and school expenses would probably meet with considerable resistance. In view of how difficult it is to convince pastors of the need for independent bank account reconciliations, success in cultivating interest in this area would probably require a sea change in attitudes.
The chancery should also institute standardized accounting/reporting categories so that diocesan financial analysts can make apples-to-apples comparisons and notice if something is out of whack. In addition, this should help parishes with budgeting, since it would be possible to start making generalizations about, say, the operating costs of a school.
Finally, there should be some sort of feedback mechanism to make sure that long-term planning is not ignored. For example, how can you ensure that the pastor — or, equally good, his finance committee — recognizes the need to replace the roof before the leaks begin? As with any business, a lot of money is squandered on emergency repairs that routine maintenance performed according to a preventive maintenance schedule could have avoided.
Periodic Disclosure and Concluding Thoughts
Periodic disclosure of financial reports has become generally accepted and generally expected as a matter of good stewardship.
The pastor should always remember that his mission is the salvation of souls, and he should not be distracted too much by the business side of the parish. Like the businessman with a great product, he should concentrate on the basics and let the accountants work out the financial details. But he may need to be trained to recognize that accountants and managers may help him do his work better. He should listen to them — even be anxious to receive their advice.
But it seems axiomatic that the less likely a pastor is to ask for this advice on his own initiative, the more likely he would be to benefit from it. And if the priest thinks he is a natural-born financial genius who does not need expert advice, he is probably dangerous and should be constrained by a system that will minimize the damage.
In any case the deficiencies in effectively managing and controlling the temporal goods of the parish have increased in recent decades and will increase in the years to come. The causes of the deficiencies, of course, are varied and need the continuing attention of priests and bishops.
If the preceding gives a sense of "threading a needle," the point is made. Tackling the challenges associated with managing the temporal goods of the Church without doing violence to the Church's central mission will not be easy as a matter of practice. These observations and suggestions for improving the administration and control over the temporal goods of a parish are intended to be provocative, but certainly not definitive.
Fr. Jerry J. Pokorsky is a priest of the Diocese of Arlington and was ordained in 1990. Before ordination, he became a certified public accountant after receiving a Bachelor of Science degree in business administration in 1976. He recently spent three years on loan to the Diocese of Lincoln as the diocesan finance officer. He invites comments and criticisms about this article to be sent to him at [email protected].
This item 8294 digitally provided courtesy of CatholicCulture.org
