Begging for Alms

By Jennifer Haselberger
Canonical Consultation
April 12, 2015

http://canonicalconsultation.com/blog.html

Last week pastors of parishes in the Archdiocese of Saint Paul and Minneapolis began to receive letters aimed at addressing the decline in giving to the yearly Archdiocesan fundraising initiative known as the 'Catholic Services Appeal'.  The letters, from the Appeal Foundation, include a 'performance report' for each parish which, in the case of every one that I have seen, means an unflattering comparison between parish-wide giving last year and this. Also included is a list of names of the parishioners who gave last year but have not given to the current appeal. The pastors who are receiving these letters are being asked to personally contact those individuals and request their participation in the 2015 CSA. 

I suspect that the number of pastors who will actually do this will be low. Most would know, as one would hope the 'Catholic Services Appeal Foundation' also knows, that those who are not contributing are doing so for reasons that will not be rectified by a phone call from the pastor. 

Unfortunately, these letters were sent out during the same week that the Archdiocese requested bankruptcy Judge Robert Kressel permit it to pay its attorneys on a more frequent basis. According to the Star Tribune, the Archdiocese's attorneys, who are earning approximately $473 an hour, are currently being paid on a quarterly basis. The Archdiocese argued in court that paying its attorneys every 120 days 'imposes an undue burden,' that could be reduced if it was permitted to make payments every 60 days. Judge Kressel disagreed, stating 'I do not see the burden,' and the motion was denied.


Perhaps even more interestingly, the letters went out during the same week that more information became available about the New York Attorney General's investigation into the financial management of the non-profit Cooper Union for the Advancement of Science and Art. The investigation, which the New York Times is heralding as a 'ringing alarm for nonprofit boards across the country long accustomed to minimal scrutiny or accountability', came about after the school, which was founded by philanthropist Peter Cooper to be 'open and free to all', began charging tuition in order to avoid financial ruin.


The Cooper Union investigation was undertaken in an attempt to prevent the insolvency of its endowment, which includes the iconic Chrysler Building. As the New York Times reports, the Cooper Union investigation is part of a larger strategy by New York Attorney General Eric Schneiderman, who is hoping to get ahead of potential crises in the state's nonprofits by 'stress testing' those that show signs of potential trouble, such as large operating deficits and excessive spending rates on endowments. The Times quoted James Sheehan, head of the Attorney General's Office’s charities bureau as saying, 'Once an organization is in trouble, donors don’t want to give money and people don’t want to join the board. We want people to anticipate these issues before they become disasters.'


The motivation for this state intervention is in part a realization of the role that non-profits play in the economy (The Times credits non-profits with 9.2% of all wages and salaries in the United States in 2010). And, Attorney Generals have jurisdiction over non-profits because of their exemption from state taxes and because it is the responsibility of AGs to represent the interests of donors who otherwise lack the means to enforce the terms of their bequests. 


The Times article notes that while the Schneiderman investigation is unique, that is not because such investigations aren't warranted on a larger scale. According to Sheehan, while criminal misbehavior perpetrated by non-profit board members is not common, breeches of fiduciary duty occur more frequently. Speaking again to The Times, Sheehan said that board members of non-profits are most often 'people who are generous donors who support the mission of the institution.' The downsides to appointing these individuals to board positions, in Mr. Sheehan's opinion, is that 'there’s a culture of politeness and respect, and they support the chief executive. Most chief executives don’t want board members to ask tough questions. This is especially true when you have a charismatic leader.'


Charismatic leadership aside, much of what Sheehan claims has been visibly evident in the board compositions of the Archdiocese of Saint Paul and Minneapolis and its many associated entities (including the newly formed 'independent' CSA Foundation, conveniently led by the brother-in-law of the Auxiliary Bishop), a fact that certainly has some responsibility for the current financial crisis. I am not certain that Minnesota's non-profit statute, like New York’s, permits our attorney general to seek sweeping remedies to mismanagement, such as putting an institution into receivership, ousting its managers and/or board members or even forcing dissolution of the organization. It is also unclear whether such remedies would apply to religious corporations, which enjoy additional protection from government interference under the First Amendment. Still, the Cooper Union investigation raises interesting possibilities for those who are seeking more transparency and vigilance in church governance, and may open the door for individual donors to seek the assistance of our Attorney General if they feel that their donations have been or are being misused.