From the Worldwide Faith News archives www.wfn.org
Turbulent GAC Meeting Results in Calls For
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
"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
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
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
"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
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 PCUSA.NEWS@pcusa.org Web page: http://www.pcusa.org
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