Proposal to charge fee on restricted giving tabled in wake of considerable criticism

So, to give him more time, the committee voted to table action on the administrative fee proposal until its next meeting in February.

Before that vote, however, the proposal to begin charging an administrative fee of up to 5 percent on restricted gifts to the PC(USA) – money that individuals and congregations give with the requirement that it be spent on particular programs – was kicking up a storm. Some folks said that if Presbyterians are charged an administrative fee on designated gifts, they will see that as a breach of trust and will simply bypass the denomination and give the money directly, and outside of the PC(USA) structure, to the mission projects they support.

Some of the concern came from the seminaries, concerned that the Theological Education Fund would take a hit if the new administrative fee were imposed.

Louis Weeks, president of Union Seminary and Presbyterian School of Christian Education in Richmond, told the committee that more than 14 percent of the money congregations give the Theological Education Fund money already goes to cover administrative and promotional costs, and if another five percent were tacked on, “it’ll be 20 cents on the dollar . . . and I don’t know any seminary that spends twenty cents to raise one dollar. That’s seen as bad stewardship.”

At least two of the three validated mission support groups – Presbyterian Frontier Fellowship and the Medical Benevolence Foundation, both of which work in covenant agreement with the General Assembly Council and raise money for mission projects around the world – raised strong concerns as well.

David Hackett, executive director of the Presbyterian Frontier Fellowship, told the committee that reaction of his board members to the proposal was “extreme,” with one saying, “This kind of action would be suicidal to mission funding” and another saying, “If this passes, it would drive another nail into the coffin of mission funding.”

Hackett wrote a letter to Detterick calling the proposal “an appalling and draconian step” and stating that “a cursory inquiry of our board members involved in frontier mission-funding churches and organizations reveals that something near a million dollars would be diverted from donation to and through the PC(USA) if this proposal is implemented – and that represents just a portion of the funds we anticipate would be rerouted.”

And behind the scenes, some presbytery leaders are weighing in, complaining that presbyteries and congregations weren’t consulted enough before Detterick and the staff leadership team proposed the idea.

Detterick and his staff have argued that imposing an administrative fee of up to 5 percent on restricted funds is necessary, starting with the 2005 budget, because an increasing percentage of giving to the PC(USA) is coming from restricted dollars and the unrestricted part of the budget is having to bear too much of the load of paying for things such as insurance and accounting and legal services for the denomination. Today, 70 percent of the denomination’s budget is restricted – only about $36 million of the $128 million budget comes in unrestricted money.

By imposing a 5 percent fee on restricted funds collected, the denomination could save about $1.4 million a year in unrestricted funds – money that could be used to keep funding programs that rely on unrestricted funds and might otherwise have to be cut. The denomination could be facing a shortfall of as much as $4 million in revenues in the unrestricted budget for the two year period of 2005 and 2006, the council’s executive committee was told earlier this week.

Detterick also said, however, that he was only asking the council at this meeting to consider approving the concept of such a fee, not actually to impose it. And he told the Mission Support Services Committee that he found the comments he’d received from Hackett and others to be helpful, because they not only told him what they didn’t like about the idea, they offered to work with him to try to find a better way, and “I think that gets us to a place where we haven’t been for a long time.”

Detterick said the original proposal “was not intended to be something that closes the door,” but “is clearly perceived as a door-closer.” He said he wants to work with those who don’t like the proposal to try to find a “win-win solution that we would bring back together. I realize there’s a risk to that” – that they won’t come up with an answer by the council’s next meeting, in February. But “I think it’s worth risking failure to find a solution,” Detterick said.

One possibility, Hackett suggested to the committee, might be to set up a special fund for administrative costs for the denomination – and to explain why it’s needed and encourage congregations to contribute directly to that.

Much of the concern about what Detterick had proposed focused on whether the 5 percent administrative fee could cause some Presbyterians to route their donations outside of the PC(USA) or to stop giving altogether.

David Dawson, executive presbyter of Shenago Presbytery in Pennsylvania, said in a telephone interview before the committee’s vote that “this is a very serious step” being proposed, and “the ramifications could be extraordinary,” particularly for congregations and individuals who regularly give money to the PC(USA) through Extra Commitment Opportunities, or specifically-designated funds through which donors can target their contributions for particular programs, such as supporting work in a particular country or providing disaster relief after a hurricane.

For example, Shenango Presbytery has a partnership with churches in Sudan, and congregations in that presbytery currently give about $130,000 a year through Extra Commitment Opportunities to support work in Sudan. If a 5 percent administrative fee were imposed, “they will send money directly to the churches in Sudan,” Dawson said. “They won’t lose six or eight thousand dollars by sending the money through Louisville,” where the PC(USA) has its headquarters. “And it would be hard to argue with them about that.”

Jack Rogers, a former General Assembly moderator, said in an interview that he got an e-mail from the president of San Francisco Seminary, Phil Butin, urging Rogers to bring to the council’s attention the concern of the seminary presidents “that such a move could be hurtful to the One Percent Plan” – another name for the Theological Education Fund, the funding mechanism through which congregations give money to support Presbyterian seminaries.

The Theological Education Fund, which the General Assembly established in 1986, is the only source of undesignated giving to PC(USA) seminaries; it’s not a special offering, but a means by which congregations financially support the seminaries. Already, the Theological Education Fund pays a .7 percent administrative fee from the money it receives to the denomination and also pays for promotional and office staff support. And the Committee on Theological Education has stated that no more money should be taken from the fund than already is being extracted, said Dottie Hedgepeth, the PC(USA)’s associate director for theological education.

Weeks, of Union Seminary, told the committee that in 1986 the General Assembly made a covenant with the 10 Presbyterian seminaries – that the seminaries would promise to be faithful to the theology and polity of the church and to follow the direction of the General Assembly, and the assembly would support the seminaries. The PC(USA) supports its seminaries at significantly lower levels than do other mainline denominations and the seminaries already are experiencing painful budget cuts, Weeks said – and adding a 5 percent administrative fee would only erode that support further.

“I see us fulfilling the promise we made in 1986,” Weeks told the committee. “We are keeping our promise. And we ask the General Assembly to keep its commitment, which was made less than 2 decades ago.”
Bruce Hendrickson, chair of the Mission Support Services Committee, challenged Weeks – saying the assembly is still funding the seminaries through the Theological Education Fund, but never promised to do it at a particular level.

And Weeks countered that Presbyterians “are absolutely the most generous of American Christians” in their financial giving. “The question is whether a tax at the General Assembly level is going to enhance that generosity or detract from it . . . We think it will detract from the generosity of people toward theological education.”

Rogers, in the interview, said “I’ve been on both sides” – he understands the need to collect administrative fees, but also the concern that imposing an administrative fee could cause people to give less. “I see the need for it, the question is how to do it,” said Rogers, who was moderator of the 213th General Assembly. “The question is how to do it in such a way that it is not hurtful to fundraising of programs in place.”

Some also say there hasn’t been enough conversation with presbyteries or other groups about what’s being proposed.

Hackett wrote that the scope of the consultations “has been miniscule” – the report given to the council states that focus groups were held in six cities, and three presbytery executives were interviewed over the phone and one sent written comments.

Byron Nelson, associate presbyter for mission with Sierra Mission Partnership, wrote to the council that “the proposal to add on an administrative fee of any kind to certain designated giving would send such a message of desperation and be perceived as a veiled attempt to mess with congregational mission giving, that it would all surely backfire” and would “guarantee a backlash from churches, even from pastors and churches fully supportive” of the denomination.

Nelson wrote that “this is not the stuff to be decided by surveys and interviews with executives (in presbyteries). At the very least, we need to hear from more pastors!”

And Daniel L. Force, executive director of the Medical Benevolence Foundation, said more discussion is needed with the validated mission support groups. His organization already applies a 5 percent administrative fee to some money it collects, “as a cost of raising the money” – something that’s stated up-front regularly in the organization’s newsletter.

If the denomination imposed a fee as well, Medical Benevolence Foundation would have to “explore sending the money directly ourselves to the partners” in other countries. “I don’t want to do that, that’s the last thing I want to do,” but it might be necessary, Force said.

If, for example, someone gave to help a nursing school the Medical Benevolence is helping to build in Haiti, the Benevolence Foundation would take 5 percent, the Episcopal Diocese of Haiti typically takes 10 percent, and if the PC(USA) subtracted another 5 percent, then 20 percent of the money would be gone, Force said.

Asked if it’s not reasonable for the PC(USA) to charge for administrative fees when so many other organizations, including his own, are doing the same thing, Force replied that “the problem is tapping the same donor.”

The Benevolence Foundation raises money for PC(USA) mission work – with the denomination’s support, it goes out to congregations and asks people to give money. The Foundation is already charging a 5 percent fee to those donations – so the same gift shouldn’t be assessed twice, Force said.

There remains, however, for the PC(USA) the question of how to balance a budget when so much of the giving is restricted. “Some things have to go away, folks,” said Joey Bailey, the denomination’s chief financial officer, in explaining that the denomination can’t keep doing all it has been doing, plus what each General Assembly adds. And the trend toward more restricted giving has “a huge impact on how we pay our bills, and we have to solve that somehow,” Bailey said.

Bailey told the committee that “Presbyterians are telling us exactly how to spend the donations in such a high percentage that funding those other things that aren’t restricted is a problem.”

Council member Frank Adams of Florida asked how congregations that give money without restrictions feel about this – about having so much of their donations used to pay administrative expenses.