Where to start? Untangling governance, transparency and finances in the PC(USA)

electrical outlet overloadThe Presbyterian Mission Agency has been rocked in recent months by a trifecta of investigations and a lot of criticism involving the 1001 New Worshiping Communities program, the Special Offerings 2015 advertising campaign and overspending for the last Presbyterian Youth Triennium. That’s leading some to ask harder systemic questions about why so many problems are emerging at the top levels of the Presbyterian Church (U.S.A).

“This is a symptom of a much bigger problem,” Fritz Gutwein, who is co-director of Presbyterian Peace Fellowship and was managing editor of Alban Institute’s Congregations magazine, wrote in a Facebook conversation. “Changing the artwork  (of the Special Offerings campaign) will fix this incident but not the broken system that allowed it to happen. Too many large mistakes are happening out of an instinct to survive. It may be time to let a lot things we hold dear go so something new can emerge.”

What’s not working? No doubt, Presbyterians privately have all kinds of theories – and no shortage of people they’re willing to blame. It’s a difficult issue to raise – in part, because complicated problems rarely have simple answers. The PC(USA) also is a connectional church – the General Assembly often is referred to as the denomination’s family reunion – and there is a deep desire among many Presbyterians to be part of building something up, particularly at a time when the denomination is stressed by finances, departures and declining numbers, rather than contribute to tearing something down.

Presbyterians desperately want the news about their denomination to be good – to reflect the faithfulness they see exhibited week after week in their local congregations. They believe there is much to celebrate in PC(USA) ministry, in creativity, in Presbyterians caring for the pains of the world.

At the same time, however, the frustrations run deep. As many have learned, not discussing or acknowledging a problem rarely makes it miraculously disappear. And the recent difficulties in the PC(USA) have reached to the very top levels – resulting in an erosion of trust and significant expenses to a denomination where dollars are in short supply.

In January, for example, an open letter signed by more than 350 Presbyterians called for “a more thorough and transparent accounting of what went wrong that the Special Offerings Office ignored the legitimate concerns of advocacy and advisory committees, as well as staff members from other ministry areas, that lead to these detrimental and costly consequences.” The PC(USA) problems drew headlines from across the country.

Linda Valentine
Linda Valentine

What’s at stake here? In the hallways, among trusted colleagues and increasingly on social media, people are raising public concerns. What is the role of the Presbyterian Mission Agency Board? What kind of leadership has Linda Valentine, executive director of the Presbyterian Mission Agency, provided? What are the fair and necessary questions to ask?

Is the denomination living up to its core values of being collaborative, accountable, responsive and excellent?

“That might be the common thread – transparency and accountability,” said former General Assembly moderator Neal Presa, now associate pastor of Village Community Presbyterian Church in Rancho Santa Fe, California.

“We need some real visible accountability and openness, transparency, all these wonderful words that we’ve been throwing back and forth,” said Allison Seed, a teaching elder who is a former chair of what’s now the Presbyterian Mission Agency Board and is currently a regional representative for the Board of Pensions. “We also probably need some people . . . on the mission agency board who speak out.”

This spring, the Presbyterian Mission Agency Board will begin working with Valentine and her staff to shape the PC(USA)’s mission work plan and budget for 2017-2020. The PC(USA)’s membership declines continue – the denomination has lost more than 300 congregations over the last two years and membership dropped to 1.76 million in 2013, the last year for which statistics are available (from 1.84 million in 2012).

As membership declines, so does giving. Valentine has said repeatedly that as unrestricted revenues dry up, new funding sources have to be found or some mission work will be discontinued.

All of this makes for challenging times. Here are some key issues facing Presbyterian leaders in the months ahead.

1001 New Worshiping Communities
Presbyterians will be watching closely for the results of an investigation of four employees involved with the 1001 New Worshiping Communities program. An internal investigation has found that four employees from the PC(USA)’s national staff were involved in an unauthorized plan in which funds were channeled from the PC(USA) to a separate independent corporation set up in California, known as the Presbyterian Centers for New Church Innovation Inc., or PCNCI. The $100,000 has been recovered, and Valentine has written that “these actions were not for personal gain, but rather in support of the new worshiping community ministry.”

The four – Roger Dermody, the PC(USA)’s deputy executive director for mission; Eric Hoey, director of the Evangelism and Church Growth Ministry area; Philip Lotspeich, coordinator of the 1001 program; and Craig S. Williams, mission catalyst for the West for Presbyinnovate – were found to have committed ethics violations, and have been on paid leave since Nov. 15 as an investigation into what happened proceeds.

At the request of the Presbyterian Mission Agency Board’s executive committee, a lawyer from Charlotte, North Carolina, Mark Calloway of the firm Alston and Bird, was hired to investigate what happened and is expected to report in closed session at the board’s meeting on April 15. It’s not been revealed how much the investigation or the paid leaves have cost the PC(USA).

One subject under debate: What should be the role of the elected Presbyterian Mission Agency Board in governing the denomination’s infrastructure? When the board last met in September, it devoted a full day to discussion of board governance issues – including questions of how to provide guidance and leadership to the PC(USA)’s national staff without micromanaging unnecessarily.

The elected board is smaller now; roughly half of its members are new. Among questions the board expects to discuss during its April meeting in small groups: What is it like for you as a member of the board in this challenging time? What’s the role of the board and board members? How can the board build trust in the church?

Among the questions being asked across the church (particularly after the One Great Hour of Sharing advertising campaign was pulled for being racially insensitive, even after some tried to warn about that during the consultation process) are these: Who has power and voice in the PC(USA) leadership? Is there enough accountability and trust? What is the culture of the PMA national staff’s work environment – and does that culture reflect the values of the PC(USA)?

Board members sometimes feel constrained in what they can publicly discuss – they feel compelled to honor the confidentiality of the board’s closed-door discussions in sensitive cases involving personnel decisions, the sale of property or potential litigation.

That’s where part of the difficulty comes in: How is transparency and accountability demonstrated in a connectional church when controversial matters are being discussed behind closed doors and information is released via news releases that some have later criticized for not providing enough information?

One example: The board is scheduled to meet again April 15-17 in Louisville. At that meeting, the board is expected to receive a report from Calloway, the Charlotte lawyer, regarding the 1001 investigation.

The board has added an extra day to its Louisville meeting to make space for the conversation, and several hours are scheduled on the board’s docket for April 15 for a closed-door consideration of Calloway’s report, which the executive committee will consider in closed sessions on April 8 and 10. There does not, however, appear to be any time scheduled on the April 15-17 agenda for a public discussion by the board of the 1001 issue.

In fairness, the full board may not know until that meeting what Calloway has to say – and there may be decisions to make about dismissals or disciplinary actions, reorganizations of the program or other sensitive decisions.

At some point, presumably, information will be released publicly regarding the 1001 investigation. The board leadership may speak or choose not to. Sometimes information is released through the Presbyterian News Service – although increasingly many stories bearing that label are written by the denomination’s communicators, responsible for public relations work rather than independent journalism.

And then – whatever happens – Presbyterians around the church will respond. This is where trust and transparency become factors – whether people trust that the best decisions were made for the right reasons. At the General Assembly, there’s usually more opportunity to see the sausage getting made – for better or worse.

In this case, Presbyterians know that the board’s executive committee called for the investigation. What more they will know – including the cost, details of the investigation, the politics and behind-the-scenes negotiations that take place in any organization – will play out in some way as decisions are made and information released. When that happens, trust – of the board and of the PMA leadership – will be key, along with people’s sense of whether there was, indeed, actual transparency and integrity in the process.

Those in charge need to “share enough that we feel like we are getting an honest reflection of what happened,” said Bruce Reyes-Chow, a former General Assembly moderator and a pastor, author and consultant from San Francisco. “There’s been too much spin” involving the recent controversies. After any closed meeting, “share the minutes widely enough that people can read them. Right now, they share them just enough that they can’t be found.”

Work will begin soon to shape the denomination’s mission budget for 2017 to 2020. Valentine recently told the board’s executive committee in a conference call that the board likely will be asked to approve a Strategy Advisory Group in April to help guide that process.

Typically, however, the written budget information presented to the board and to the General Assembly contains broad overviews of the budgets for various mission areas – but often not details or an explanation of what the budget trends means. For example, an audit review found that costs for the 2013 Youth Triennium exceeded the budget by nearly $600,000 (more than 29 percent over the $2 million budget) – but those details were not highlighted in the budget reports publicly distributed at the board’s September meeting. Nor has any report from those responsible for organizing the Triennium been made public – giving their reasons for why things happened as they did.

Earline Williams
Earline Williams

Another example: A preliminary year-end financial report for 2014 (with figures still subject to audit) states that gifts and bequests came in more than $1.3 million under budget (61 percent) for 2014 – at $834,000 instead of the $2.1 million budgeted, and below the 2013 levels of gifts and bequests by nearly $2.8 million. The report also states that extra commitment opportunity giving came in 17.7 percent less than budgeted – at $7.48 million instead of the budgeted $9.1 million, with giving falling short of projections for international health, international mission and mission personnel. In a conference call on March 27 with members of the board’s finance and audit committees, the PC(USA)’s chief financial officer, Earline Williams, did not say why those categories of giving came in under budget or how these amounts connect with the PC(USA)’s fundraising efforts.

Some finance and audit committee members have begun asking for more information. In the March 27 conference call, for example, they asked questions about why expenses for policy administration and board support came in 21 percent over budget in 2014; how much is being spent on legal fees; and about “functional allocation of expenses” – in other words, how PMA charges the various ministry areas for shared expenses.

“I know functional allocation of expenses is an art,” said Ellen Pearre Cason, a member of the audit committee. “There is a lot of leeway you have to give.”

Williams and her staff provided answers to some questions, and in some cases board members said they would wait for more information and try to continue the conversation later.

While these conversations are ongoing, a bottom line question seems to be: Is the financial information the board is given detailed enough? If more were known, would there be more hard questions to ask?

Special Offerings
That preliminary year-end report for 2014 states that the PC(USA)’s four Special Offerings all produced less revenue in 2014 than had been budgeted for the year – with overall giving down more than 11 percent. The Christmas Joy offering fell short by 14.2 percent; One Great Hour of Sharing by 10.4 percent; and the Pentecost Offering by 17.4 percent. The Peacemaking Offering is being shifted into a new Peace and Global Witness Offering – combined, those two produced an increase of 4.86 percent.

During a March 4 conference call with the board’s executive committee, Valentine said she thinks the rate of declining in giving to Special Offerings is slowing down, even though the declines continue. From 2009 to 2014, Special Offerings receipts fell from just under $14.5 million to $11.67 million in 2014, according to the preliminary unaudited figures. “We’re not just sitting idly by and watching these trends go by,” Valentine said. “We’re trying our darnedest to engage the church in support of these offerings.”

One factor in the Special Offerings controversy – and possibly the Triennium overspending as well – was the decision to outsource certain functions to outside vendors. That’s an approach the PC(USA) has turned to regularly in recent years – in part, a response to downsizing of the denomination’s national staff. A marketing firm from Indianapolis, xiik, designed the One Great Hour of Sharing advertising campaign that later was pulled and reconfigured at an additional cost to the PC(USA) of $65,000.

Outside firms also have been used to help design the PC(USA)’s website – a website which has received criticism for being difficult to navigate and is being redesigned again. An audit committee report on overspending for the 2014 Youth Triennium found that PC(USA) policies were bypassed when certain tasks were outsourced.

Among the questions such situations raise: When should work be outsourced and when should it be done in-house by PC(USA) staff? Has the outsourcing produced cost savings? How are PC(USA) values communicated when outside firms are used? What’s working well and not so well with PC(USA) outsourcing initiatives?

The PC(USA) has expanded its fundraising staff – investing money in trying to cultivate relationships with major donors in the hopes of bringing in more money to a denomination whose membership has dropped and whose mission budget has slid from more than $93 million in 2010 to $75.4 million this year. Little information has been made publicly available, however, as to how much the denomination is spending on fundraising and how much those efforts are bringing in – essentially, what’s the bang for the buck?

Williams has said that the fruits of the fundraising investments likely won’t be seen until 2017. The success of fundraising will have a direct impact on how much the PC(USA) has available to spend on its ministry work – for example, on supporting mission co-workers for Presbyterian World Mission.

Chad Herring, chair of the board’s finance committee and a minister from Missouri, has warned that unless new sources of revenue are found, the PC(USA) could reach the minimum required level of unrestricted reserve funds by the end of 2016. When funds are tight and  budget adjustments needed, the denomination no longer would have those reserves to tap.

In the March 27 conference call, PC(USA) controller Denise Hampton reported that the PC(USA)’s reserves in the Presbyterian Mission Program Fund at the end of 2014 sit at about $1 million over the required minimum.

Projections suggest those numbers may drop even further. According to figures presented at the board’s September 2014 meeting, the Presbyterian Mission Program Fund reserve is expected to drop to just over $6.1 million by Dec. 31, 2016. For 2014, the mandated minimum reserve requirement was $5.94 million. Unless more money comes in, by the end of 2016, those reserves will no longer be available to meet operational needs.

The board’s finance committee has set aside time on its April 15 agenda to discuss the reserves. “It’s a big part of our future,” said finance committee member Ken Godshall.

Response from leadership
The Outlook asked Valentine to comment briefly about what she would say to the PC(USA) that she’s learned from the recent troubles. Her responses:

  • What is the one thing you would say to the PC(USA) that you have learned from these situations? “Each of these incidents had very different circumstances. They do not indicate widespread systemic issues as we successfully manage hundreds of programs. They do underscore the importance of internal collaboration to ensure faithfulness to mission and stewardship.”
  • What’s the most important takeaway for you as we move forward? We are trying to do too much. We need to focus on what we can do best and what the church most needs and will support.”

Marilyn Gamm, chair of the Presbyterian Mission Agency Board and a pastor from Wisconsin, also was asked by the Outlook for comment. Her response:

  • Marilyn Gamm
    Marilyn Gamm

    “What I’ve learned from these three very different Presbyterian Mission Agency situations is that at every level we constantly need to be asking ourselves what is God’s mission for us, and how can we best steward the resources God has entrusted to us?  After the audit committee reports raising up concerns about the PCNCI, Inc. and the Presbyterian Triennium, and the backlash over the pulled One Great Hour of Sharing offering promotional materials, it’s tempting to focus on the problems identified and assume they are representative of bigger problems in the Presbyterian Mission Agency.   While as the PMA Board, we take very seriously the problems identified in each of these situations, the Presbyterian Mission Agency in so, so many ways continues to further God’s mission of inspiring, equipping, and connecting Jesus Christ’s disciples in our 21st century world.”