Imagine you’re fabulously wealthy. Not just a millionaire, but Marjorie Merriwether Post-type wealthy. Yachts, Russian art, lavish homes — they’re all yours.
In a situation like that, no one can blame you if you don’t know exactly what you own. After all, investment portfolios shift by the minute, thanks to automated trading. And if you have multiple homes and have professional asset managers, you may not readily know all the details. (Although I’d be prepared to bet that Ms. Post, a savvy businessperson, had a pretty good idea what she owned.)
Now, imagine that you’ve got a decent income, a few million a year. But you have a lot of expenses, and your revenue has been falling for years. You’d probably be watching closely, and know down to the last dollar what your assets are, right?
My hope is that the answer to the latter is yes.
But when it comes to the Episcopal Diocese of Virginia, the response to the second question is a resounding no. Indeed, even now, after years of decline, the diocese has annual revenue of more than $5 million. Yet it has no idea what it owns, where those assets are, or the terms and conditions for use of those assets.
According to a recent executive board report to the upcoming diocesan convention, the Task Force on Diocesan Assets is working with the treasurer and historiographer “to identify the number, amount, origin, and directions for use or other restrictions for our assets.”
That’s right. The Episcopal Diocese of Virginia has no idea what it owns.
Right about now, you’re probably asking, “So what?”
But the fact that the diocese doesn’t know what it owns raises myriad other questions, none of them good. These include:
- How can the annual diocesan audit (I’m assuming there is one, per the canons, but it’s not published, so who knows?) be accurate when no one know what to audit?
- If the diocese doesn’t know what it owns, how can we know that assets haven’t been stolen or misused?
- Why doesn’t the diocese get with the times and publish a real, line-item budget, versus the current blended budget that gives so little information that issues like this cannot be identified?
- Why does the diocese not recognize that transparency is not just the right thing to do, it encourages giving?
- If the diocese doesn’t know what donor restrictions exist, how is it complying with those restrictions?
- Are diocesan accounting practices really so bad that it doesn’t track donor restrictions? Normally, a church simply sends a thank you letter and records the donor restriction in a log book. In the case of large trust funds and other major investments, this information typically would be included in the financial audit. Nor should this be a big deal—if someone gives you a big donation, you take the time to show respect for the donor by acknowledging the gift, and ensuring you can comply with any restrictions or requests.
- Why is this even an issue 227 years into things? It’s not like the diocese is a start-up. It’s had more than two centuries to put in place best practices.
- Why is this information buried deep within the diocesan reports? How about actually telling us is going on in the diocese?
- Why has this situation been allowed to reach this state? I get being a few months behind on the books, but this situation suggests that the mess has been going on for years.
- Given the number of lawyers involved in the diocese, including Brad Davenport, JP Causey, and others, how did this happen? Surely one of them has explained to diocesan staff that the diocese has a fiduciary obligation over these assets.
- What does this tell us about the diocese’s internal controls? The answer is clear—there is a near-total breakdown of internal controls and processes. Not good.
The Larger Context
While this situation is alarming, in many ways it should come as no surprise.
After all, the diocese faces troubles of its own making on multiple fronts, including ethically, operationally, and even theologically. Whether it’s the diocese’s willingness to ignore its own canons, its mercurial approach towards clergy discipline, its lack of transparency, or its decision to shut down programs to prevent sexual misconduct, bad decisions and questionable ethics are more the norm that the exception for the diocese.
Indeed, one need only look to racial reconciliation to realize just how clueless the denomination is. This issue has been lingering around for decades, and the Episcopal Church only now decides to take it seriously?
As many of the applicants for positions within the diocese note, the next ten years will be pivotal for the diocese. But given the current state of affairs, the direction of the pivot may well not be good.