Wednesday, October 3, 2018

Lack of Transparency Hinders Grace Episcopal Stewardship

There’s a great article on ECF Vital Practices this month about the importance of financial transparency to these success of churches. The article, found here, also illustrates why Grace Episcopal Church is in serious financial and spiritual trouble.

In the article, the author correctly notes that the vestry legally is responsible for establishing and supervising internal controls; the rector, vicar, or priest in charge is responsible for implementing those policies. 

The challenge for Grace church is that the church not only has next to no internal controls, but there is no vestry overnight of Bob Malm’s role in the church. None. Nada. Zip.

To make matters worse, Bob actively resists any supervision. Indeed, if you push his too hard, Bob will trot out the comment, “I’ve tried reaching out to you, but the anger and criticism continues. So you can either decide to be happy, or resign your positions....” You get the drill. But true to form, that overlooks the reality that Bob reports to the vestry, not the other way around, and he has no legitimate business trying to push people out of the church.

Nor is there any meaningful financial transparency. Line item detail for budgets and financials is conspicuously absent, and vestry members are asked to take Bob Malm’s word on the results of the annual pseudo-audit. In addition, details of compensation arrangements are kept secret from vestry members—which in one case, resulted in Richard Newman being overpaid, and being forced to repay the overage. (Not that he is over-compensated, by any measure.) So much for transparency.

And, of course, there is the more than a decade of absolute bedlam in the s***hole that was the parish administrator’s office. Hoards of paper, disorder, chaos, and facially obvious errors in financial reporting, not to mention repeated issues with the church’s bank deposits. Yet Bob Malm, compensated at a level consistent with many Episcopal bishops, adamantly refused to address these issues for years.

Then we come to the ugly matter of Bob’s bonus. Leaving aside the fact that bonuses should be reserved for employees who, at a minimum, meet job requirements, the $100,000 lump sum was negotiated not even by the executive committee, but by the senior warden and treasurer, and largely presented to the rest of the vestry as a fait accompli.  Indeed, the only argument came from one vestry member who wanted to write off the other $100K. Talk about throwing good money after bad!

In short, transparency, accountability, strategic planning and adherence to church canons are all in desperately short supply at Grace Church. So, this fall, as members think about their pledges for the coming year, I encourage them to ask tough questions like:
  • How do I know my money will be used appropriately?
  • Why didn’t we save the money for the HVAC work, instead of now talking about borrowing it?
  • When was the last time Bob Malm had a meaningful performance review, including being held accountable for his actions undertaken as rector?
  • Do I understand how my money is being used?
  • Why aren’t the budget and financial reports made publicly available?
  • Why can’t I see a copy of the “audit?”
  • Are internal controls adequate, and how do I know they are being followed?
  • What does it mean for the vestry to act as a fiduciary?
  • Why has the church experienced so many issues with its financial reporting over the years, and how do I know that these issues are really resolved?
  • How did Bob Malm manage to unilaterally get into a conflict with former church members? Was the vestry involved in the decision to remove Mike and Eric from church membership roles? Or did I find out about that after the fact? And what does this situation tell me about internal controls and decision making at Grace Church?
  • When independent third parties, like commenters at The Wartburg Watch, say things like, “That is one seriously toxic church you have, Eric,” why do they say that, and what might this be telling me about governance at the church?
Until these questions are answered, I encourage church members to withhold their funds. Members have a right to transparency, accountability, and Christian conduct by Bob Malm, the vestry, and church staff, and so far they are getting damned little of any of these items.