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by Parker T. Williamson
Cleveland, Ohio, November 1999
Sinking $764,500 into its “50th Anniversary Fete,” the National Council of Churches (NCC) tried to be jovial. But the mood here proved more somber than celebratory.
Scrambling to meet a $4 million budget deficit with less than $2 million in unrestricted reserves, council members pinned their hopes on two salvation scenarios: member churches might bail them out, and they might lay claim to funds that were given for other purposes.
The first solution resembles one drowning swimmer trying to save another. Mainline denominations—seven of them supply 90 percent of the NCC’s unrestricted income—have suffered massive membership losses. “When these churches catch a cold,” said outgoing NCC General Secretary Joan Brown Campbell in a speech to the NCC General Assembly, “the NCC gets pneumonia!”
The relationship has proven to be reciprocal. In a moment of candor, Campbell admitted that the denominations’ support for the NCC may actually have caused their decline. “These churches mourn their loss of influence,” she said. “But this loss was for good reason . . . because they have taken seriously the ecumenical movement.”
Campbell’s diagnosis reveals the pattern: NCC ideologies have been promoted by supporting church bureaucracies, resulting in a weakness that enervates not only their own ministries but also their capacity to support the NCC. While signs of congregational renewal abound, this does not come as good news to the NCC, because churches that are finding new life in Scripture show scant interest in funding the NCC’s political agenda.
Early in its history, the NCC developed two programs. One was dedicated to politics—essentially the creation of an ecclesiastical auxiliary for left-wing Democrats. Propelled by civil rights sentiments, the NCC promoted protests, sit-ins, lockouts, campus takeovers, media events, boycotts, shareholders’ resolutions, marches, demonstrations, sanctions, and a Washington office to coordinate similar activities by leaders of its member denominations.
Tapping Restricted Funds
In addition to politics, the NCC established a program of humanitarian aid and disaster relief. Labeled “Church World Service” (CWS), this ministry won enthusiastic grass roots support, and its income—much of it from popular fundraising “CROP Walks”—has grown exponentially. In the year 2000, for example, the NCC anticipates non-CWS income (mostly contributions from denominations) to be $6,514,641, but it expects a whopping $61,600,000 to pour into CWS.
On January 1, 1999, the NCC listed assets of $24,183,563, but $22,679,972 of these assets were restricted for CWS ministries. NCC officials acknowledge that these funds were contributed to CWS for humanitarian aid and relief, but they also insist that because CWS is a subsidiary of the NCC, all of the funds belong to the NCC.
The NCC executive board announced in November that it intends to take $1.4 million from CWS to help plug the $4 million hole in its 1999 budget. CWS officials say that matter is “under negotiation,” but they privately acknowledge that under the present arrangement, if the NCC insists on taking the money, there is little that CWS can do about it.
The Burned Churches “Hoax”
Diverting donor-designated money is not new to the NCC. Its Burned Churches Fund, for example, has become a major windfall for the deficit-ridden organization. Launched in 1996, the NCC’s Burned Churches Campaign aroused public compassion by suggesting that resurgent racism in the South was resulting in an epidemic of arsons committed against black churches. By the end of 1996, almost $9.1 million in cash and $3.4 million in donated building materials had poured into NCC coffers. According to a Wall Street Journal report, that was almost three times the amount needed to rebuild every black church that had been burned, whatever the cause of the fire.
In 1996, Wall Street Journal writer Michael Fumento debunked the NCC’s resurgent racism theory. Citing discoveries by President Clinton’s National Church Arson Task Force, Fumento reported that one-third of these churches were burned by African-American arsonists and that many others caught fire from faulty wiring and other non-forensic causes. Fumento concluded, “This supposed epidemic of hatred is a myth, probably a deliberate hoax. There is not good evidence of any increase in black church burnings. There is, however, compelling evidence that a single activist group has taken the media and the nation on a wild ride.”
$2.6 Million Missing
The NCC says that it spent $6,403,483 rebuilding burned black churches. Add the $3.4 million that it says it distributed in the form of construction materials and you come up with a total disbursement of $9,803,483. But the NCC’s November 1999 financial report shows that only $12,335 remains in the Burned Churches Fund. That leaves $2,684,182 unaccounted for.
What happened to the money? A November report to the NCC General Assembly isn’t saying, and apparently NCC officials are not required to do so. Rev. Margaret Thomas, NCC treasurer, told the Presbyterian Layman that it was never the NCC’s intention to spend the entire amount rebuilding burned churches. She said it was legitimate for the NCC to transfer the money into “justice and reconciliation” activities. And since the NCC regards everything it does as a “justice” activity, the possibilities of tapping the Burned Churches Fund are virtually unlimited.
Audit “Not Required”
To his credit, someone in the NCC has been asking questions about the Burned Churches Fund. An official report from the Administration and Finance Committee to the NCC’s executive board contained two notable paragraphs. The report stated that although the committee had at first thought a special audit of the Burned Churches Fund was “not required,” it now felt differently, because an independent consulting firm was “unable to reconcile” its calculations with Burned Churches Fund reports.
But when Margaret Thomas met with the NCC executive board on November 10, she told the group that these paragraphs had been inserted into the report by “an unauthorized staff person without my knowledge,” and she asked the executive board to disregard them. The executive board acceded to Thomas’s request and says it is sticking to its earlier decision that a special audit of the Burned Churches Fund is “not required.”
“Material Weaknesses” Found
There is one audit that cannot be avoided, however. The NCC is required to undergo an annual independent audit of its entire operation. That audit has been conducted, but members of the NCC General Assembly were not shown the report (some complain that they can’t even obtain NCC financial statements). Audit fragments have leaked from executive board meetings, however, and they reveal serious deficiencies.
Audits from 1998 and 1997 contained “management letters” specifying NCC departures from generally accepted accounting practices. Independent auditors flagged “reportable conditions rising to the level of material weaknesses.” “Material weakness” is accounting language for inadequate internal controls that may allow material errors or fraud to occur and not be readily detected.
Among the irregularities cited are:
• Transactions were not properly monitored and reviewed before being
entered into the accounting system, resulting in erroneous recording in the
• Accounting records maintained at the council’s New York office were not reconciled with financial records and reports submitted by satellite/field offices.
• Cash account balances in the control accounting unit were not reconciled with cash balances in the sub-accounting units.
The 1998 management letter also noted that deficiencies identified in the 1997 audit had not been corrected. Continuing irregularities included:
• Advances made without sufficient documentation
• Undocumented American Express charges
• Delays in the preparation of bank reconciliation statements
Other cited irregularities included:
• Controls that prevent and detect incorrect changes or additions to
the existing chart of accounts were inadequate.
• Disbursements were not properly approved or adequately documented.
• The audit trail for recording cash receipts transactions was not apparent, and supervisory controls on the processing of cash receipts were not strictly enforced.
• The functional allocation of expenses, including allocation of indirect costs, was not adequately supported.
Courage versus Efficiency
In her final speech to the NCC General Assembly, retiring General Secretary Joan Campbell brushed aside growing criticism of her staff’s accounting practices. “You are right that I value courage and imagination more than caution and efficiency,” she said.
But Campbell’s rhetoric has not silenced her critics. Representatives of the United Methodist Church, for example, announced that their denomination has suspended payment on the balance of its 1999 pledge ($342,919) and will take no action to implement a $700,000 commitment to the NCC’s deficit bailout fund until questions regarding the organization’s financial management practices are answered.
Negotiating the Future
A transition plan for the year 2000 proposes to terminate 35 staff positions and make substantial cuts in the NCC program. But this will amount to little more than plugging a leaking dike if denominational support continues to wane.
Gaining rapid momentum is a deal privately advocated by some CWS officials. They say they might go along with an NCC bailout this year (including a one-time transfer of $1.4 million from CWS) in return for a full-scale NCC reorganization that permanently separates NCC and CWS operations and ensures CWS of its financial autonomy.
But will NCC negotiators agree to such a deal? They may not have a choice. NCC politics has never been popular in the pews of its supporting churches, and denominational officials often showcase CWS to justify keeping the NCC in their budgets. CWS is clearly carrying the NCC, and if an open contest were to develop between the two entities, the NCC would lose.
Promises made by denominational officials suggest that the NCC may be bailed out of its 1999 deficit, but if giving CWS its financial autonomy is part of the deal, then the NCC’s future prospects are bleak. Unable to tap CWS funds, it would be almost wholly dependent on denominational bureaucracies that are, themselves, struggling to survive. And if CWS and NCC funds are separated, member churches will no longer be forced to pay for politics when their primary desire is to fund humanitarian relief. They can bypass the NCC altogether.
“We shall overcome,” sang a graying gathering of past-tense personalities during the NCC’s birthday celebration. The song lacked luster, appearing more reminiscent than purposeful. Having prospered for a season, this movement is being overcome by new realities. It’s twilight time for the NCC.
Parker T. Williamson is the Executive Editor of the Presbyterian Lay Committee Publications. He is the author of Standing Firm: Reclaiming Christian Faith in Times of Controversy.