Monday, August 27, 2012

Episcopal financial transparency

In a recent post, I discussed the lack of financial transparency in the Roman Catholic Church. A reader commented in response to that post about the lack of financial transparency within The Episcopal Church (TEC). I fully agree with her lament.

No good reason exists to keep TEC shrouded in mystery. Shadows invite, even encourage, wrongdoing. Dioceses should publish a full accounting of their income and expenses – with three exceptions. First, assistance provided to individuals is rightly aggregated into a single line item. Identifying the individual recipients of such aid demeans the recipients’ dignity and provides no essential information to donors or other interested parties. Annual audits can ensure that the funds do not benefit the wrong people.

Second, staff salaries and benefits are rightly aggregated – except for key employees. Donors and other interested parties do not have any legitimate need to know how much an office assistant or receptionist earns. Budget committees, managers, and auditors appropriately exercise oversight over such matters. Organizations with salary scales or wage guidelines will usefully publish that information.

However, financial reports should specify salaries and benefits for key employees, e.g., bishops, canons to the ordinary, etc. Making this information public helps to ensure that leaders do not manage the institution for personal benefit. I have served in key leadership positions where donors knew my pay. Although I’m an intensely private person, I knew of no other way to establish appropriate accountability and transparency. Conversely, religious organizations that have not followed this policy have too often experienced shattering scandals.

Finally, the diocese should report aggregated unrestricted gifts from individual persons without identifying the individual donors or the amount each gave. The diocese should identify donors and amounts of restricted gifts because the donor’s restrictions, when the diocese accepts the gift, impose a form of control on the diocese and its operations. Similarly, a diocese should identify any grants, loans, or other funds received from foundations, corporations, or other entities because acceptance of these funds almost always entails an obligation to spend the funds in a particular way or use them for a particular program.

These same principles apply to TEC, its provinces, and all of its congregations. Most people will ignore the financial reports. Some will read the reports and find the reports uninteresting or too difficult to understand. But making a full public reporting of ecclesiastical is an unavoidable essential step in establishing the transparency and accountability that God's people deserve. TEC and its constituent components have no “proprietary” or “trade” secrets to hide from the competition. We do have an obligation of full disclosure to our various stakeholders.


Anonymous said...

I wholeheartedly agree with two of your exceptions -- the first and the third -- and with your other key points on techniques for ensuring accountability. In particular, your rationale for why key employees' salaries should be disclosed, i.e. to "ensure that leaders do not manage the institution for personal benefit." Sadly, I know of churches where this has been the case, and most of the congregation didn't know they were for the most part lining the pockets of their priests and key lay staff with their pledges while the roof went on leaking the poor went on going hungry.

I have one quibble, however -- that lesser employees' salaries and benefits should be aggregated in reporting. What about situations where the abuse lies in robbing Peter, literally, to pay Paul? For example, a church which reports all lay staff -- from the highest executive to the lowliest secretary -- as one aggregate amount. The executive who makes a princely sum decides that certain lay staff do not deserve medical benefits or fund-matching retirement accounts, and divert those funds to their own paycheck and benefits, despite the fact that other employees who work the same amount of official hours DO receive those benefits. There is no oversight, because it's reported as one lump amount. The lowly worker, for fear of losing his job, keeps his mouth shut.

No... I think it all must be reported, clearly, and itemized, no exceptions. There is just too much room for abuse.

George Clifford said...

Hayley, your “quibble” raises a good point but I do not agree with your solution. If salaries and benefits for key employees are listed, omitting the key executive’s salary becomes glaringly obvious. Listing the number of employees allows rough computations of average income without unnecessarily intruding upon people’s privacy. Knowing what a particular sexton or secretary earns does not enhance financial accountability because people in those positions are not decision makers.

Anonymous said...

I guess that comes down to if a church agrees with us that their "key" salaries should be disclosed, and even what rises to a "key" position in the first place. In the example I was thinking of, all lay salaries were lumped together, and it was never disclosed who made benefits and who did not. Clergy were in a different pile, and individual salaries were never disclosed, not even of the most senior priest.

The hypothetical scenario we're circling would probably never happen -- If a staff wished to divert funds that were promised to a low-level hire to fund benefits to their own salaries or even to any other function, and not be forthcoming about it, it's highly unlikely they are disclosing much of anything, let alone "key" salaries.

Frankly, maybe I coming at this from entirely the wrong end of the spectrum. What bothers me about this scenario is that the individual church gets to decide who merits medical and fund-matching, and who does not. Perhaps TEC should have a policy that every employee over a certain number of hours -- say, full time by a reasonable definition -- should be paid benefits?

To me, it's not just an oversight/transparency issue. It also touches on questions of social justice, perhaps?

George Clifford said...

Hayley, The issue you raise about benefits is certainly an issue of social justice. All full-time employees, regardless of lay or ordained, deserve pension, healthcare, vacation, etc. Not paying benefits to lay persons is a form of exploitation.