From the Worldwide Faith News archives

Turbulent GAC Meeting Results in Calls For

Date 04 May 1996 18:50:09


96088       Turbulent GAC Meeting Results in Calls For 
                    CAS and Foundation Audits 
                          by Alexa Smith 
LOUISVILLE, Ky.--An independent audit of how the denomination receives, 
invests and spends restricted funds has been authorized by the General 
Assembly Council (GAC) as a partial answer to longtime questions raised by 
the Presbyterian Church (U.S.A.) Foundation about how well the church 
complies with the wishes of its donors. 
     Barely a quorum was present for the subdued vote on one of the last 
items considered by the Council Feb. 25.  The Council's action followed 
three days of meetings between Corporate and Administrative Services (CAS) 
and the Foundation that were not without rancorous asides and argument. 
     In fact, the tone of the Council meeting prompted reprimands from both 
the denomination's stated clerk, the Rev. James E. Andrews, and its 
moderator, Marj Carpenter.  And when business ended, another work group was 
authorized to try to breach the impasse between CAS and the Foundation. 
Council chair the Rev. D. William McIvor of Spokane is to appoint the work 
group this week. 
     In other Council action, a conflict-resolution specialist was 
authorized to mediate the dispute between the Presbyterian Publishing 
Corporation and the Congregational Ministries Division over how 
denominational curriculum is produced and marketed. 
     "As long as there is jealousy and quarreling among you, you behave as 
worldly humans ... not as God's servants," said Andrews in a report to the 
GAC that drew him a standing ovation.  "Christian unity is one of the 
greatest emphases of our confession, and our Corinthians study involves us 
in unity at the basic level of the relationship of individuals.  The rules 
are strict. 
     "It seems to me we are breaking all of them," he said. 
     What remains to be seen is whether another work group will not only be 
able to solve issues around the audit, but also be able to move the 
Foundation and CAS to come to some agreement over which entity has 
authority over what and who. 
      The latter is a tougher negotiation because it isn't just about money 
but about organizational structure and how the parties involved interpret 
their authority. 
                   The structural disagreement 
     "It's the whole issue of authority," said the Rev. Robert Martz of 
Mesa, Ariz., who is the Foundation's liaison to the GAC.  He believes that 
the Council's action to include the Foundation in its audit supercedes the 
GAC's authority and creates unnecessary expense since the Foundation's 
finances are not under question. 
      "Is the Foundation an independent fiduciary agent ... or is it a 
subordinate group under the control and direction of the GAC?  Those are 
the two interpretations of the deliverance documents [papers drafted at 
reunion merging the two denominations' investment bodies] ..." 
      Martz characterized CAS's internal audit to the GAC as both 
technically "inadequate" and using "very poor judgment." But he later told 
the Presbyterian News Service that the deeper problem is "a breakdown in 
communication and it's a very painful struggle." 
     Foundation trustees and staff argue that they answer only to the 
General Assembly because complete autonomy is necessary to protect the 
Foundation's assets.  But they also believe the Foundation has the 
prerogative to secure an audit of CAS as part of the Foundation's oversight 
responsibility to donors since CAS disperses the money. 
     McIvor agrees that the dispute is mostly about "turf."  "No one's 
accusing anyone of misusing funds or saying that dollars have disappeared," 
he told the Presbyterian News Service.  "But it is a disagreement about 
turf ... about who has responsibility or authority or power to do what." 
     GAC members and staff argue that, though the Foundation has 
responsibility for investing donors' money, dispersement of those dollars 
is the responsibility of the GAC through CAS.  That work is governed by the 
council's budget process -- a system that sometimes slows the flow of money 
from the Foundation to qualified mission projects. 
     The crunch comes when the Foundation's responsibility to see that 
donors' desires are met collides with the GAC's responsibility to 
coordinate the flow of mission dollars. 
                     The fiscal disagreement 
     CAS Committee chair Duane Black of Yucaipa, Calif., was stunned by 
Martz' remarks during the GAC plenary, even though Foundation 
representatives disagreed with CAS in committee.  From Black's perspective, 
CAS did take action to answer concerns the Foundation has been raising by: 
       paying for an external audit and negotiating its scope jointly with 
the Foundation 
       formulating a plan -- through the Office of the Executive Director 
-- to release about $28 million in accumulated restricted funds between 
1995 and 2000. 
     "They'll be right there with us," said Black of the joint work group, 
pointing out that the Foundation's critique had to do with internal 
auditing and accumulating unspent funds.  "They're not auditing us.  We're 
not auditing them. ... We're going to sit down and work with them.  We're 
not resistant to an external audit." 
     During the plenary, Goff told Council members he understands the 
Foundation's dilemma: If restricted gifts accumulate over time, donors may 
ask for them back or choose not to give more. 
     "We're therefore looking for ways to bring that balance down," he 
said, adding that CAS is bound by the denomination's budgeting process to 
hold money until it fits into a specific operating budget.  Further, he 
told the Presbyterian News Service, some mission is simply slowed down by 
circumstance; for instance, it's unwise to construct buildings in a war 
zone, even if dollars were designated for that use before the violence. 
     Foundation chair James Bellatti of Stillwater, Okla., says it's that 
"shadow of doubt" that trustees want to lift for donors whose money sits 
accumulating interest.  He said he thinks it's "great" that the GAC is 
taking a look at expending those resources. 
      But Foundation trustees want to trace more carefully how judgments 
are made to release money to recipients, Bellatti said, because both 
trustees and staff question how money was spent in three of 17 accounts in 
a recent random internal audit.  As an example, he referred to the Navajo 
Ganado mission monies that were spent to repair a roof on a Navajo college 
not located in Ganado, Ariz. 
     Audit Committee member Ellen Pearre Cason, a certified public 
accountant in New York City, told the GAC that an alternative use committee 
makes the evaluation when it is "no longer possible" to follow donors' 
explicit instructions or when those instructions become ambiguous, as in 
the Ganado situation, where the Navajo population has declined.  Larger 
changes, she said, require permission of civil courts. 
     Black is quick to attest to CAS's competence and says that instances 
where donor's wishes have not been carried out are "very rare," though he 
acknowledged it has happened in the past. 
     Cason told the Presbyterian News Service she thinks the GAC and the 
Foundation may need to "work together" to develop guidelines on such 
judgment calls, but it is the GAC's responsibility to implement the 
              Disagreements about the disagreements 
     Surveying the complex structural issues and the communication 
breakdown between those charged with solving the problems, Bellatti said 
simply, "One of those things that shouldn't happen has happened." 
     The reasons why it happens vary depending on who answers the question. 
Some say it is a personality conflict between leaders.  Others say it is 
differing work styles in the two organizations. Some say imprecise language 
in post-reunion documents will need to be rewritten in order to clarify who 
does what. 
     "Poor communications among church bodies and between the church and 
the press have resulted in the perception of a crisis in the management of 
restricted funds held by the church, where I believe there is none," said 
Cason. "However, church members and donors are entitled to the highest 
level of assurance that these funds are being approporiately managed for 
the mission of the PC (USA). 
     "The GAC and Foundation audit committees have taken action to provide 
that assurance." 
     Part of the problem, she says, may stem from two different ways of 
approaching work.  "I believe the Foundation comes from a culture that 
expects executive decisions, expeditious implementation and quick results," 
Cason said, "and that the GAC comes from a culture that expects development 
of consensus, ownership of implementation and phased-in results. 
     "These cultural differences appear not to have been respectfully 
     "We've gotta keep trying," Bellatti told the Presbyterian News 
Service.  " ... The church is bigger than all of us." 

For more information contact Presbyterian News Service
  Presbyterian Church (U.S.A.), Louisville, KY 40202
  phone 502-569-5504            fax 502-569-8073  
  E-mail   Web page: 


Browse month . . . Browse month (sort by Source) . . . Advanced Search & Browse . . . WFN Home