How come you never post this sort of stuff, Ivanhoe? Hmm?
January 5, 2007
Embezzlement Is Found in Many Catholic Dioceses
By LAURIE GOODSTEIN and STEPHANIE STROM
A survey by researchers at Villanova University has 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.
The Catholic Church has some of the most rigorous financial guidelines of any denomination, specialists in church ethics said, but the survey found that the guidelines were often ignored in parishes. And when no one is looking, the cash that goes into the collection plate does not always get deposited into the church’s bank account.
“As a faith-based organization, we place a lot of trust in our folks,” said Chuck Zech, a co-author of the study and director of the Center for the Study of Church Management at Villanova.
“We think if you work for a church — you’re a volunteer or a priest — the last thing on your mind is to do something dishonest,” Mr. Zech said. “But people are people, and there’s a lot of temptation there, and with the cash-based aspect of how churches operate, it’s pretty easy.”
Specialists in church ethics said they believed this was the first study to assess the extent of embezzlement in a denomination.
Officials at the United States Conference of Catholic Bishops said they had seen the study, which was released just before Christmas and was first reported in the National Catholic Reporter, and were considering ways that parishes could tighten their financial controls.
“The Villanova study does not come as a surprise,” said Bishop Dennis M. Schnurr, treasurer of the bishops’ conference. “This is something that the bishops in this country have been looking at for some time. They are aware of a need to look for mechanisms that can assist parishes in accountability and transparency.”
Mr. Zech and his co-author, Robert West, a professor of accounting at Villanova, did not set out to look for embezzlement. They were conducting a study of internal financial controls in Catholic dioceses and sent a battery of questions to chief financial officers in the nation’s 174 Catholic dioceses; 78 responded. Mr. Zech said he was surprised that so many dioceses had detected embezzlement. In 93 percent of those cases, police reports were filed.
He said the survey did not ask who stole the church money. But it did ask who detected the theft, and found that it was most often the parish priest, followed by the bookkeeper, an internal auditor or the parish finance council.
In October alone, three large cases of embezzlement surfaced, including one in Delray Beach, Fla., where two priests spent $8.6 million on trips to Las Vegas, dental work, property taxes and other expenses over four decades.
In the survey, 29 percent of the dioceses reported thefts of less than $50,000.
Most denominations have had cases of embezzlement, sometimes by top officials. In June, the Presbyterian Church U.S.A. fired its second-ranking financial officer, Judy Golliher, after she admitted stealing money that church officials put at more than $132,000.
Many nonprofit organizations that accept cash donations experience theft, and churches are particularly vulnerable, said John C. Knapp, director of the Southern Institute for Business and Professional Ethics, at Georgia State University in Atlanta.
“Churches have a tendency to be in denial about the potential for this conduct in their midst,” Mr. Knapp said. “When ethics seminars or ethics codes are proposed in churches, they are often met with resistance from people who say, ‘Why in the world would we need this? After all, this is the church.’ Whereas in business, people readily recognize that this sort of thing can happen.”
The Salvation Army is widely considered exemplary among nonprofits in handling cash collections. The red buckets in which bell ringers collect donations are covered and locked, and all buckets must be returned to a central location, where at least two people count the number and type of bills, coins and checks, said Major George Hood, the charity’s national spokesman.
The money must be deposited in the bank within 24 hours, and different people reconcile the initial tallies with bank records, Major Hood said.
In the Catholic Church, parishes and high schools handle many cash transactions, making them vulnerable to theft, the Villanova report notes.
Canon law requires each parish to have a finance council to provide oversight. But Bishop Schnurr, who heads the diocese in Duluth, Minn., said there were no standards for how finance council members were chosen or whether they should have any expertise in accounting or finance.
Only 3 percent of the dioceses said they annually conducted an internal audit of their parishes, and 21 percent said they seldom or never audited parishes, the survey found.
This lack of scrutiny is at the core of the problem, said Francis J. Butler, president of Foundations and Donors Interested in Catholic Activities, a nonprofit organization independent of the church.
“You’re taking a lot of risk,” Mr. Butler said, “and these days the church cannot afford to take these kinds of risks.”
Bishop Schnurr said the study’s findings on lack of parish oversight contradicted his experience. But both he and Kenneth W. Korotky, chief financial officer for the bishops’ conference, said a committee could soon consider writing guidelines for the composition of parish finance councils and how often dioceses should audit parishes.
But they cautioned that the bishops’ conference could not make guidelines mandatory, because each bishop was in charge of administering his own diocese.
Jack B. Siegel, a tax lawyer and expert on nonprofit management who has commented on church fraud on his blog, charitygovernance.com, said he kept a tally of church frauds and was surprised by how many occurred at Catholic churches.
“I got interested because I thought, wait, I’ve heard a lot about pedophilia, why aren’t I hearing about these financial problems,” Mr. Siegel said.
He said he was impressed with the guidelines that the bishops’ conference and other Catholic organizations have offered.
But he said, “How those standards and guidelines get put into practice is what really matters.”