Why is ECFA certifying churches without requiring the same public disclosure as non-churches?

ECFA 1

The fact that the Evangelical Council for Financial Accountability (ECFA) approves churches as easily as it does other 501(c)3 groups should be a matter of grave concern to the evangelical church that the ECFA serves.

If the ECFA is going to maintain its integrity it will have to change its method of approving churches.

While I totally understand and agree with the position that churches should not be regulated by the government in any way or required by the government to be burdened with the same disclosure requirements as other 501(c)3 not for profit organizations, I do not understand the why and the how behind the ability of the ECFA to actually certify churches without requiring at least the same information that is available to the public on a standard I-990 form.

The argument, with which I strongly agree, that the government has no business regulating the church in any capacity because of the first amendment, should not mean that Christian groups like ECFA should not regulate or require information from the churches it certifies.

The freedom we are afforded here in the United Stated to keep the government out of our religious lives is a right, not a privilege. It therefore carries a risk that we as American citizens are willing to bear. That risk is that a certain number of charlatans will use this right to exploit people, especially their donors.

We are willing to bear this risk because this risk is a smaller risk than the risk of allowing the government to regulate how we exercise our religion. So we as citizens are left to navigate the risks without government intrusion.

Scoundrels and charlatans therefore have less to dodge as they are able to hide behind the first amendment as they try to get away with hoodwinking people to give money to support their “church” or special “Fund” in a manner that they may not get away with if they were not a church.

As we all know, such charlatans are able to have audited books every year, yet still hide basic information from the people that support them. Audits report numbers broadly, not specifically, so that a donor or church member cannot see specific expenditures, especially the salaries of the top dogs or whether a particular “fund” has been spent as promoted.

This is what frustrates many members and donors to Mars Hill Church.

Historically, Mars Hill Church has said they have open books, which meant a member could get a copy of the audited financial statements. To get more information risks the donor or member being branded as a troublemaker, unless of course that member is a large donor, in which case more information is carefully parsed out.

In the last two years Mars Hill Church, as its income and its executive salaries has soared, has now added the fact that they are certified by the ECFA and are therefore meeting the ECFA standards of accountability and transparency. This is intended to assure donors that Mars Hill Church adheres to the highest of ethical and biblical standards.

ECFA, by its very title, is telling members and donors that Mars Hill Church is being biblical in its transparency and accountability.

The problem is that a normal non-church 501(c)3 has to provide a lot of basic  information via the government-required I-990 form while a church does not. In so doing a lot more information is available to the ECFA when certifying a non-church. There is a substantial amount of information that the ECFA has as it considers certifying a non-church 501(c)3. As a result the ECFA’s approval is helpful and meaningful. Most Christian 501(c)3’s desire this approval.

Thus the ECFA has earned a good reputation as it let donors know that the total information provided to it via the audited financial statements, the I-990, and the statements from the organization is quantitatively sufficient to warrant the ECFA’s blessing.

But the ECFA, some two or so years ago, decided to add churches to the type of organizations that it would certify. Yet despite the fact that information that is available to both the ECFA and the general public for most 501(c)3’s is not available in the case of churches unless a particular church chooses to make the information public, the ECFA failed to require much higher level of standard to ensure that donors were protected and informed.

This begs two questions. The first is why churches need the ECFA approval in the first place, and the second is why the ECFA is so actively pursuing churches to certify.

Churches ought to walk in the light. There should be no secrets or even the ability to hide information from members. So why would a church decide that it needs to be certified by the ECFA unless it has become a church driven by the need to broaden its donor base?

Surely a church with open transparency would hardly benefit from the ECFA seal of approval. If a church were not open with their books, as increasingly independent mega-churches seem to be, then a seal of approval from the ECFA would be a sure way to seem transparent, whether a church was or not.

From the ECFA’s perspective, adding churches without requiring at the very least the type of information that a standard I-990 would provide would be an easy source of revenue for the ECFA. Under the current requirements, church do not have to do much more than provide an audited set of financial statements, plus an assurance that they use some matrix in determining executive salaries.

So churches that are notorious for stubbornly refusing to be open to its members, such as Mark Driscoll’s Mars Hill Church, Steve Furtick’s Elevation Church in Charlotte, and James MacDonald’s Harvest Bible Chapel in Chicago can have minimum transparency, hidden executive salaries where the pastors live in million dollars homes, and yet also have the ECFA approval.

Basic information that non-church 501(c)3 organizations are required to provide via the I-990 form can easily be hidden by a church wishing to keep such information private.

Executive salaries over $100,000 per year are required to be disclosed for all non-church 501(c)3’s on the I-990 form. Certain specific expenditures are required to be disclosed, as well as disproportionate sources of income. The ECFA, as well as a curious donor or potential donor can find out a lot of basic information as he or she evaluates the organization.

In the case of churches certified by the ECFA, however, such basic transparency is not required and therefore easily avoided. The ECFA knows this, yet they fail to address the flaws in their certification process that allow accountability and transparency to accompany such certification.

Even the ECFA does not know basic information such as the executive salaries of the churches they certify.

Churches like Mars Hill Church may choose to pay the top dogs through a third party rather than out of the normal payroll accounts of the church. Like many corporations, they will outsource that function to a company that charges a single amount for all the top dogs. In this way even the accountants within the church will not necessarily know the specific salaries of the top earners within the church.

How it would work, as an example, would be as follows. For the sake of example let us use the rumored earnings that have been bantered around within Mars Hill Church circles. Many have suggested that Mark Driscoll earns about $1,200,000 per year and his two co executives Dave Bruskas and the recently departed Sutton Turner each earned about $400,000 per year. Rather than pay them directly from the same payroll account as the other employees, Mars Hill Church could pay them using an outsource payroll company, who then merely bills Mars Hill Church $2,000,000 over the year, plus their fees. So the bookkeepers would get a monthly bill for executive salaries of about $170,000.00 per month.

Even those doing the bookkeeping would have no idea who earns what, so the executives are protected from busybodies and naysayers (perhaps a good thing) but they are also able to hide specific earnings from everybody, even the auditors or the ECFA (not so good).

The ECFA knows that churches therefore are able to avoid transparency, yet they are aggressively signing up churches without addressing the reality that by doing so without requiring the same disclosure that the I-990 requires of all other 501(c)3 groups, they are rendering their certification meaningless.

Surely the ECFA knew this would need to be addressed. The fact that they have either willfully moved forward despite this obvious outcome, or have been blindsided by this reality, both show that perhaps it is the ECFA that needs to be scrutinized for letting the donor down by either its choice or its lack of wisdom.

Both reasons are highly problematic should cause grave concern to the evangelical church that the ECFA serves.

Advertisements

2 thoughts on “Why is ECFA certifying churches without requiring the same public disclosure as non-churches?

  1. Reblogged this on When Church Hurts and commented:
    For those who have suffered for asking about finances and questioned your church’s unwillingness to fully disclose their financial records with the argument that they have been approved by the ECFA. My former church falls in this category.

  2. Good to see someone else is thinking this way. I saw the ECFA statements for Mars Hill and Harvest, and knowing what I do about Harvest–that MacDonald hides his compensation from his own elders–I was stunned that the ECFA was more lax than the board at Enron or Tyco.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s