wfn.org | GAC and Foundation Reach Agreement on Handling of Restriced Funds

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23 May 1996 
 
 
 
96197     GAC and Foundation Reach Agreement on Handling 
                        of Restriced Funds 
 
                          by Alexa Smith 
 
LOUISVILLE, Ky.--An agreement hailed as the beginning of the end of the 
feud between the Presbyterian Church (U.S.A.) Foundation and the General 
Assembly Council (GAC) was unanimously approved this week by the executive 
committees of both bodies. 
 
     Coming after months of highly publicized acrimony, the agreement 
reaffirms the two entities' traditionally separate but related mission 
funding responsibilites.  It also puts more specific systems into place to 
monitor management and disbursement of General Assembly restricted funds. 
Such systems were only vaguely described in the documents that laid the 
groundwork for Presbyterian reunion in 1983. 
 
     Members of the press were excluded from the approximately seven-hour 
closed meeting in Chicago May 16 that led to compromises from both 
negotiating teams.  The Presbyterian News Service is protesting the 
decision to close the meeting to the General Assembly Council Executive 
Committee.  
 
     The agreement reached in Chicago places enormous emphasis on joint 
development of a data base to research, manage and monitor endowment and 
other restricted funds held by the Foundation to pay for General Assembly 
mission. 
 
 
 
     "It's not that somebody won or somebody lost ... We discussed how 
things are supposed to be," Foundation President Larry Carr told the 
Presbyterian News Service. He said it is now the two entities' 
responsibility to "everyone and to the church to communicate as fully in 
our agreement as we did in our disagreement." 
 
     The agreement specifies that: 
 
           the GAC is "the responsible body for mission allocation 
decisions" and that when there 
          are questions or uncertainties about the "proper use or nature of 
the [donor] restriction," 
          the Foundation Gift Compliance Staff has the final say. 
          the Foundation has a "non-delegable fiduciary responsibility 
regarding compliance with 
          donor instructions in the use of General Assembly restricted 
funds." The Foundation is 
          also withdrawing its proposal to the Assembly to allow it to 
distribute accumulated 
          restricted funds through middle governing bodies because the GAC 
is "the responsible 
          body for mission allocation decisions." 
 
     "My sense is trust has been restored ... both personal and corporate," 
GAC Chair the Rev. D.  William McIvor of Spokane, Wash., told the 
Presbyterian News Service.  McIvor said reaffirming "what we already know" 
was part of that process and the other part was putting systems into place 
allowing GAC and Foundation representatives to cooperate increasingly in 
funding decisions. 
      
     Those systems -- which still need refining -- are generally laid out 
in a joint Foundation/GAC report to the General Assembly that came out of 
the Chicago meeting.  Both entities agreed to withdraw the more 
confrontational recommendations each had earlier prepared for the General 
Assembly. 
 
     The new agreement calls for: 
      
          validation by GAC financial staff that disbursements requested by 
"mission decision 
          makers" are in compliance with donor restrictions before 
disbursements are made.  This 
          means, according to the denomination's chief financial officer 
G.A. "Pat" Goff, revising 
          the process for documenting compliance and creating a process to 
better link Corporate 
          and Administrative Services (CAS) and the Foundation. 
          required reporting of the actual use of restricted funds by 
recipients, since, Goff said, 
          that is done less formally now. 
          creation of a joint Foundation/GAC team to computerize and code 
each restricted fund 
          for its appropriate use (Comprehensive Analysis of Restricted 
Endowments or 
          C.A.R.E.).  The Foundation currently supplies the denomination 
with what Carr 
          describes as "highly-summarized" statements. 
          consultation between the Foundation Gift Compliance staff and CAS 
staff to define 
          parameters for proper use of the funds whenever there are 
questions.  According to Carr, 
          consultation now occurs most often when a gift is first received. 
          establishment of a joint process to review questions about prior 
expenditures from 
          General Assembly restricted funds, rather than the current system 
of two parallel but 
          isolated processes.  If there is no joint determination, the 
Foundation board of trustees 
          is to make the final decision; and, if funds need to be 
replenished because of improper 
          use, a process will be put into place to do so. 
 
     "We've done our best in the past," said Carr, commenting on the 
upcoming reliance on computer tracking and coding of funds.  New computer 
technologies, he said, are enabling staff to more quickly and efficiently 
categorize and file information to better research, manage and monitor use 
of restricted funds. 
 
     GAC Executive Director the Rev. James D. Brown told the Presbyterian 
News Service that much of the dispute between the Foundation and the GAC 
stems from documents written at reunion that were too vague to provide much 
of a "pattern for daily living."  In Chicago and in conversations between 
himself and Carr prior to the Chicago meeting, Brown said, "We figured out 
in some detail how to make it work. 
 
     "Its been a long time coming.  And we are both humbled and grateful." 
 
     Carr agrees with that assessment.  Speaking of the Chicago meeting, he 
told the Presbyterian News Service, "We both came to -- for the first time 
-- a real clear understanding of how our related but distinct roles can be 
carried out in a constructive way." 
 
     Audits and overtures spawned by the dispute are still proceeding. 
 
      A GAC-commissioned audit -- requested by the Foundation -- to 
determine if CAS is following appropriate internal procedures in the 
disbursement of restricted funds is due May 30.  The Foundation -- will 
review a sampling of GAC disbursements to test compliance with donor 
instructions. 
 
     In the debate about accumulating reserves, Carr points out that both 
the Synod of the Sun and the Synod of Living Waters are overturing the 
General Assembly to allow the Foundation to make geographic-specific 
endowments for administration by synods and presbyteries -- a stance the 
Foundation took in its earlier report to the Assembly.  The GAC has also 
set up a plan, he added, to lower the accumulated balance by the year 
2,000. 
 
     When asked about damaged trust among givers in the wider church 
because of bitterness expressed in this very public feud, McIvor answered, 
"It's hard to measure what damage has been done. And it's hard to measure 
how improvements are made.  In general, we have to indicate that trust has 
been restored and then act on that basis. 
 
     "It's already beginning to happen," McIvor said. "We have to begin 
acting on the positive place we've reached.  That may not solve it for 
everyone out there.  It's also incumbent upon individuals and governing 
bodies [not] to harken back to the past .... If it is a new day, they have 
to acknowledge it themselves." 

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