Reacting to what it said was an increasingly negative legal climate surrounding charities, the nonprofit Presbyterian Church (USA) Foundation has begun shifting the bulk of its $1.5 billion financial services operations into entities regulated as commercial businesses.
The shift commenced on January 2, with the blessing of the Internal Revenue Service, when the foundation formed apparently the nation’s first charity-owned, federally chartered trust company. The venture will administer charitable trusts for churches and other religious bodies, invest the assets in stocks and bonds, and monitor record-keeping and disclosure requirements.
Two other subsidiaries—a federally regulated mutual fund company and a state-regulated insurance company that will issue charitable gift annuities—are in the works as well.
“If I could find a less onerous way ..., I would,” foundation chief executive Larry D. Carr, the architect of the strategy, told the Chronicle of Philanthropy recently. “We don’t think it’s possible.”
Before changing course, the foundation secured a private IRS ruling allowing it to offer financial services to a variety of religious organizations, not only Presbyterian. However, the agreement with the IRS sets a 30 percent limit on nonchurch operations and a 10 percent limit on non-Presbyterian bodies.
The goal, Carr said, is not to generate profits but provide investment management to groups without such capabilities—and to do so more cheaply than commercial firms. Self-management, he said, saved his own foundation $30 to 40 million a year.
“We provide a lot of planned giving services directly to theological schools of the Presbyterian Church,” he said. “Two Presbyterian seminaries have essentially turned over to us the planned giving support for their whole development effort. San Francisco is one and we do all of Columbia’s back-office planned giving work too. We’re not doing development work for either of them—they both have full-time development operations.”
Carr came to the foundation in 1993 from the insurance industry and a year later began working on the restructuring. Like trust departments of major commercial banks, the New Covenant Trust Company will be regulated by the Comptroller of the Currency and will pay taxes. Carr said he does not expect those taxes to be significant.
However, the real goal is to insulate the foundation from new restrictions on charities and make it easier to comply with laws that often vary by state and sometimes by city or town.
The expense of the restructuring, including taxes on the trust company’s assets, is negligible compared with the cost of dealing with nonprofit regulations and gains from greater efficiency. Carr estimated those savings at more than $500,000 annually.
While regulatory compliance for nonprofit groups is already a problem, Carr said the future looks worse, due to a variety of factors, among them a number of recent high-profile fraud cases.
Likely, therefore, are tough new accounting standards, which Carr said he backs for charities if they are “reasonable and responsible.” But trying to anticipate the direction of state and federal regulations while running a billion-dollar financial institution is difficult. Better to operate under well-established commercial business laws, where “we know what those rules are,” he said.
The Vatican has rejected the appointment of the Reverend William J. Rewak, 64, as president of Jesuit School of Theology in Berkeley, California. He is the second proposed president of JSTB in recent years to get a Vatican thumbs-down. Rewak, who retired in June from the presidency of Spring Hill College, Mobile, Alabama, had been serving in the post on an acting basis since September, after the Reverend Howland Sanks resigned to return to teaching. Vatican approval of presidential and rectoral appointments is necessary at those few U.S. schools of theology that are authorized to grant pontifical degrees.
The denial came from the Vatican Congregation on Education and was sent to the Reverend Hans Kolvenbach, superior general of the Society of Jesus in Rome. Issues about married clergy, ordination of women, and the teaching of theology were cited, apparently tied to an article Rewak wrote in the 1970s.
After his rejection Rewak left on sabbatical. Serving as acting president is the Reverend John Baldovin, a faculty member whom the Vatican previously rejected as president. The Vatican a few years ago also rejected the election of the Reverend Edward Glynn to the presidency of Weston Jesuit School of Theology. He was at the time provincial superior of the Jesuits’ Maryland Province.
Changes at the Top
Historian R. William Franklin was elected dean of the Berkeley Divinity School at Yale and took office in January. Franklin will also serve as associate dean of the Yale Divinity School and adjunct professor of church history. Franklin, associate dean of the General Theological Seminary since 1993, was among the finalists for the position of president of that seminary. He explained his decision to accept the Berkeley invitation to the General community by citing the rare opportunity that the moving of Berkeley to new quarters offers to redesign the space to be used for theological education for the twenty-first century. Franklin, who holds a Ph.D. from Harvard University, is the second lay person in the history of the Episcopal church to be a seminary dean. Donn F. Morgan, president and dean of the Church Divinity School of the Pacific, Berkeley, California, also is unordained.
Franklin succeeds the Very Reverend Philip Turner, who had been dean since 1991. Turner will move to Austin, Texas, where he plans to spend much of his time writing.
The Reverend Dennis M. Campbell has been named headmaster of Woodberry Forest School, a college preparatory school for boys in Madison County, Virginia. The school has an endowment of over $100 million. In June Campbell resigned as dean of Duke University Divinity School in June after fifteen years in the post. Under his leadership, the school’s endowment quadrupled, admissions increased, and the faculty became more diverse. Campbell holds a B.A. from Yale and a Ph.D. in religion from Duke.
Dr. J. Bradley Wigger, a graduate of the Princeton Theological Seminary, was named director of the newly formed Center for Congregation and Family Ministries at Louisville Presbyterian Theological Seminary. The mission of the center is “to strengthen the church’s ability to support families and their capacity of nurture the life of faith.”
The Reverend Kevin Rhoades is the new rector of Mount St. Mary’s Seminary in Emmitsburg, Maryland. Rhoades came from the diocese of Harrisburg, Pennsylvania. In July his predecessor, Monsignor Kenneth Roeltgen, became pastor of St. Stephen Martyr parish in Washington, D.C.
Does Grace Show?
“Grace has symptoms. If one does not have the symptoms, does one have the condition?” ask John and Sylvia Ronsvalle in their new report The State of Church Giving through 1995. They found that church members gave a smaller portion of their incomes to their churches in 1995 than in 1994. Actual church giving on a per member basis increased, but member incomes increased at a much faster rate. In 1968 giving represented 3.1 percent of members’ income; by 1995, it had decreased to 2.5 percent. The report also considers the theological implications of the giving trends, reviewing the writings of Martin Luther and John Calvin and their testimony that good works testify to the presence of faith.
When giving patterns in eight evangelical and eight mainline Protestant denominations were compared, giving was found to be higher in the evangelical Protestant denominations, but there was a steeper decline in their giving patterns from 1968 to 1995. Although evangelical denominations increased in membership during these years, the average contribution of their members declined from 6.1 percent of income in 1968 to 4.1 percent in 1995. In the mainline denominations, the average total contribution was 3.3 percent of income in 1968 and 2.9 percent in 1995.
Luce Foundation Gift
Wake Forest University’s new School of Divinity has been awarded a grant of $150,000 by the Henry R. Luce Foundation to develop a series of multidisciplinary courses that will provide students with skills to meet changing congregational needs. “The development of these multidisciplinary courses is our effort to relate the divinity school to the broader university and draw on the superb faculties of the undergraduate college and the professional schools,” said Bill J. Leonard, the school’s dean. “It is a return to Baptist-based theological education in a university context.”
The Wake Forest school is one of a number of Baptist-oriented schools independent of the Southern Baptist Convention that have been established since biblical inerrantists took control of the convention and its agencies, including the six official Southern Baptist theological schools. “We’re pleased to support Wake Forest in this important new initiative,” said John Cook, president of the Luce Foundation.
The School of Divinity, founded in 1996, will formally open in autumn 1999 with thirty to forty students, expanding to 150 in three years. It has completed the first phase of renovations for the new seminary and raised more that $10 million in contributions or pledges toward a $15 million fund-raising goal.
New Era Sentence
Andrew Cunningham, the accountant who helped John G. Bennett, Jr. in his scheme to defraud hundreds of charities and donors through his Foundation for New Era Philanthropy, was sentenced to thirty months in federal prison, fined $1,000, and ordered to perform fifty hours of community service. His term was shorter than it might have been because he had cooperated in the government’s investigation of Bennett and pleaded guilty to charges against him. Bennett was sentenced last fall to twelve years in prison (see In Trust, Autumn 1997, page 24).