85% of U.S. dioceses report embezzlements
Print Friendly VersionParishes and dioceses lack external and internal controls, report finds
By JOE FEUERHERD
Sacred Heart parishioners and residents of Bath, Pa., were shocked last month when Elizabeth Fields, mayor of the tiny borough, was charged with stealing about $10,000 from the church’s Sunday collections. Fields was secretly videotaped in the parish rectory as she allegedly altered the collection tally sheets so the funds she pocketed would not be seen as a shortfall.
The community’s stunned reaction is typical, say experts, but theft at the parish and diocesan level is hardly surprising. In fact, it’s the norm.
A whopping 85 percent of U.S. dioceses have detected embezzlement over the past five years, according to Villanova University researchers. “No question about it, it’s a large number,” said Charles Zech, director of the school’s Center for the Study of Church Management and coauthor of the 15-page paper, “Internal Financial Controls in the U.S. Catholic Church,” that details the findings. Supported by a grant from the Louisville Institute, Zech and Villanova accounting professor Robert West surveyed 174 diocesan chief financial officers. Seventy-eight responded.
The researchers don’t put a precise dollar figure on how much was embezzled, but the range indicates it’s significant. In 11 percent of the dioceses at least $500,000 was stolen over the last five years (meaning that a minimum of $4.3 million went missing) while one-third of the dioceses reported thefts of under $50,000. “You can only wonder about those [96] dioceses that didn’t respond to our survey,” said Zech.
Dishonest church employees and volunteers are the immediate cause, but the heart of the problem lies elsewhere, say the researchers.
“Unlike corporations which provide quarterly financial statements to the SEC and hold quarterly conference calls with outside analysts, the church is subject to almost no recurring outside financial scrutiny,” according to the report. Further, while “many dioceses provide parishioners with an annual financial and administrative newsletter, which provides a highly summarized view of the cash flows for the year and the results of social and spiritual programs offered by the diocese -- many other dioceses do neither.”
While external oversight of diocesan and parish finances is virtually nonexistent, internal checks are hardly any better. “Only 3 percent of the dioceses conducted an annual internal audit of their parishes,” while “21 percent of the dioceses indicated that they seldom or never audit their parishes.” When such reviews do occur, the researchers say, it’s frequently because a pastor or bookkeeper has ceased working in the parish.
Meanwhile, in more than 10 percent of the dioceses, the chief financial officer is responsible for hiring the external auditor, whose job it is to review the work of -- the chief financial officer. The bishop or the diocesan finance council should hire the external auditor, say the researchers. “It’s one of those controls that is so obvious that you wonder why it isn’t being done,” said Zech.
At the national level, theft and other irregularities are an issue for the U.S. Conference of Catholic Bishops’ Committee on Budget and Finance. That committee’s document on internal financial controls lists seven specific types of fraud to which parishes and dioceses are susceptible. Among them: lapping (where an employee defers the recording of cash receipts from one source and covers the shortage with receipts from another source); accounts payable fraud (where an employee falsifies payments to real vendors or creates phony vendor addresses to which checks are sent); kickbacks and outright theft.
The bishops’ committee described a typical case of embezzlement related to the Sunday collection.
“In this scenario, one person is responsible for counting the Sunday collection, making out the deposit ticket, taking the deposit to the bank, and recording amounts to parishioner records. This case is easy to detect and can be prevented by requiring a number of safeguards, including involvement of more than one individual in handling collections, dual counts and signatures evidencing concurrence of counts, segregation of the count procedures from deposit preparation, and recording of cash receipts.”
Bishops’ conference guidelines on financial issues provide a good basis for establishing internal controls, but they lack any enforcement mechanism. “The USCCB guidelines are just that -- guidelines,” said Zech and West. “Individual bishops can abide by them in whole or part, or reject them entirely.”
Corruption is a big issue, but so is competence, according to the diocesan financial officers surveyed. “Lack of expertise at the parish level” and “parish finances and controls” were cited as the two greatest risk factors by the diocesan financial officers. Such basic procedures as withholding payroll taxes from parish-employee paychecks frequently go undone according to diocesan financial officers, said Zech.
Zach and West offer nine specific recommendations to improve church internal financial controls. They include implementation of the bishops’ conference guidelines in every diocese, establishment of fraud policies in every diocese, annual internal parish audits supplemented by triannual external audits, quarterly meetings of diocesan financial councils, annual or more frequent submission of financial data by all parishes and high schools, and selection of the diocesan auditor “by someone other than the diocesan chief financial officer.”
Still, it seems unlikely that the recommendations will be universally accepted anytime soon. The report notes that “since churches rely on sacred belief systems, internal controls might be viewed as a secular concern and either inherently evil or at a minimum unnecessary in churches. In fact, it might be considered insulting to church workers and volunteers to even imply that internal financial controls are important.”
Said Zech, “Part of the problem in faith-based organizations is that we assume people are honest, so we don’t put in the controls that a business would put in. They just want to believe that [theft] won’t happen and they’re always stunned when it does happen.”
[Joe Feuerherd is NCR Washington correspondent. His e-mail address is jfeuerherd@ncronline.org.]
Link to Villanova study. The
Link to Villanova study.
The New York Times of 1.5.2007 provided a link to the report by West and Zech. Because newspaper links sometimes disappear or change within days, I urge those interested to read the PDF file now:
http://graphics8.nytimes.com/packages/pdf/national/CatholicChurchfinances.pdf
Veronica Nolan About 3 years
Veronica Nolan
About 3 years ago the pastor of my parish in Stamford, NY stole over $100,000. It was reported with trepidation by two parish employees to the priest in charge of personnel and an elaborate scheme to cover it up was devised. When I found out about it I wrote to the bishop, who answered my letter without denying that the theft had occurred. It is a very long story, but suffice to say that the offending priest was transferred to another parish, the truth was never told to the parish, and those of us who continued to insist that something was wrong are considered trouble makers. As of now there is an investigation under way, but we all know that the money belongs to the diocese as soon as it hits the collection basket, and if the diocese doesn't press charges, there is no "crime". Sad and terrible!
I can only confirm that this
I can only confirm that this is not new to me.
In 1975 at Saint Rose of Lima Parish in Littleton, NH, I was recuited to assist in counting the Weekly Collection. As we neared the completion of the task, the pastor, Rev. Stephen Scruton, would set aside anywhere from $30 to $50 into a cigar box that was kept in his office. At first I though it was for those private charitable works - helping those in need that might come to the door - but later found out that this was a slush fund for pizza, movies, going out to dinner, etc. This certainly save the pastor from using his own salary for these purposes. The collections continued to decline during his tenure.
Previous pastors had entrusted the duty to a family that I knew - they were neighbors - and nothing like this happened during their watch.
Casinos have some rather thorough means of watching how their monies are handled. Churches should learn from their example.
Any statistics on alienation
Any statistics on alienation of parish funds/property by the priests? I suspect not. In a case known to me in England a retiring pp cleared the presbytery of all usable furniture, although it belonged to the house and had been provided for the resident priest "for the time being." His successor inherited an all-but-empty shell. Protest was made to the Bishop, who murmured, "Oh, that's generally the case." Since our priests receive a rather small stipend, the parish had to re-furnish for the incomer at considerable expense.
Another example. In a parish fundraising lottery where the parish priest was one of the collectors for the weekly subscriptions, he slipped the monies into his pocket as he was handed them at the church door after Mass. In such circumstances it's imposs to remember who has contributed. When he retired and a lay lottery co-ordinator was appointed even though the participant numbers remained stable, the receipts suddenly grew . . .
We have in this area a strong diocesan oversight of parish finances; parishes are not allowed to maintain any bank account other than that approved and controlled by the Diocesan finance office. Unfortunately, the DFO takes a straight 8% cut for their "administration expenses" although the parish must do all the relevant paperwork! Furthermore diocesan "levies" are abstracted from the a/c before the parish can use the money. This can leave the coffers rather empty. Well, not much scope for embezzling parishioners!
Englishwoman
This article illustrates
This article illustrates once again the dangers of total autonomy. There have been many media articles recently about thefts by both lay(men/women)in the church as well as some very high spending priests and monsignors.
Yes, this could be a scandal, but bishops usually report financial crimes immediately and the culprit is punished. In the clergy abuse situation, they hide the culprits in one way or another so as not to "bring scandal on the church." This last quoted phrase means "we do not want to lose our income."
Thus, all Catholics are abused, in one way or another.
"We are the ones we have been waiting for." -- Hopi Nation, Oraibi, AZ
A few years ago I was
A few years ago I was working in a rectory when it was discovered that the secretary and the volunteer who counted the money together each Sunday were taking out 10% and keeping it secretly as a slush fund. The Rector found out about it when he needed some extra money for something and the secretary admitted having the fund. The two women involved didn't see it as theft, though that is what it was, they had the money secretly and excercised private discretion over its use. It's hard to imagine what kind of mental gymnastics they went through to justify doing this. Both persons considered themselves honest and good, but also that they knew better how the parish should be run than the Priest whose ultimate responsibility it was.
More than twenty years ago,
More than twenty years ago, if my memory is correct, NCR printed a letter from a priest complaining that the National Catholic Reporter seemed too interested in printing news reports of church embezzlements. The tone was, "Is that all you can do? Can't you write about what is hopeful and good?" Thereupon, I noticed a drop-off in such reports in NCR. Even though I have read NCR since the 1960's, I still find an excess of commentary and a lack of news reports. The "Abuse Tracker" on the website (courtesy of a woman in Worcester) now does a good job of collating daily stories on the topic of abuse. Ought we start a similar index of the embezzlement stories as they hit the secular press? I, for one am thinking of using Blogger to maintain such a reference list, as it might give some hint of whether the problem is exaggerated or not.
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Speaking of exaggeration, NCR's headline on the this above story requires close reading. If 85% of dioceses each report encountering one or more embezzlements over five years, it does not mean that 85% of parishes have suffered theft. Now, if we counted up the parishes in our diocese that do not provide meaningful annual financial reports, we might hit the 85% number.
Joe McMahon
ncr's abdication of the
ncr's abdication of the abuse tracker to bishopaccountability.org loudly echoes your point that theoretical theological commentary is the much more comfortable commodity in service to keeping ncr readers coming back for more...its just that when Jesus counciled 'turn the other cheek', He was probably not suggesting that when faced with harsh facts, we should turn our head away.
does ncr really serve itself and its readers by ignoring the ignominious realities which are irredeemably, radically and rapidly ripping apart the old church status quo of speak no evil?
from the perspective of secular journalism, the guiding principals to which the scribes of ncr make claims of devout allegiance, the large number of ncr outraged anti-war Iraqi body count editorials glaringly counterpoint the absence of running tallies for child abuse victims, child abuse settlements, priest criminal convictions and a whole range of very distasteful and hard to take news including the non-stop epidemic of embezzlement...while ncr shapes its product to preserve circulation does it also abdicate responsibility for keeping safe a future church?
when out of date status quo collides with unrelenting real time, right now reality...guess which wins pretty much every time
in celebration of Truth, we may need more access to the facts...
future church will rise from the flames of harsh reality long after the hopeful smoke of wishful theory has drifted away...and where will ncr be then?
Good comment. I've noticed
Good comment. I've noticed this same streamlining of "priorities". Must be hard to deal with in such a Church; a Catch-22! NCR has my sympathies, but hang in, Guys; we need you!
Excellent suggestion, Joe.
Excellent suggestion, Joe. Hope it is implemented.
"We are the ones we have been waiting for." -- Hopi Nation, Oraibi, AZ
Yes, I have begun a blog,
Yes, I have begun a blog, "Catholic missing money index," at http://www.rcmmindex.blogspot.com
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I thought I would have to wait a month or two for the first item to index, but a Chicago priest was in court today (January 2, 2007) pleading not guilty to charges of lifting $190,000 over eight years. The Archdiocese removed him from his pastorate some months ago.
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By February 5th, seven incidents had been logged, most of them a continuation of older cases.
This could be the next big
This could be the next big scandal that the Church faces.
Time Magazine for February
Time Magazine for February 26, 2007, has not yet reached my library, but an article titled "Pilfering Priests" has already shown up on Time's website at
http://www.time.com/time/magazine/article/0,9171,1590435,00.html
Much of the article is stale, but it is a jazzed-up narrative style that Time sports. It's worth reading.
Joe McMahon
For my own list of 2007 Catholic "missing money" incidents, see
http://rcmmindex.blogspot.com