"Lavish lifestyles," including ownership of private jets and extravagant homes. Salaries in the millions of dollars. Boards of directors that abdicate their responsibilities for ensuring appropriate governance.

All these are anathema in the charitable world. But they are especially abhorrent when the charity involved is a religious organization. And it was claims of such irregularities among some ministries that led to the formation of the Commission on Accountability and Policy for Religious Organizations, which began its work this spring.

 Senator Charles Grassley of Iowa

Back in November 2007, U.S. Senator Charles Grassley of Iowa, then the ranking Republican on the Senate Finance Committee, started calling attention to "generous salaries and housing allowances and amenities such as private jets and Rolls Royces" that some televangelists were enjoying, and he asked for responses from six ministries that had been identified as likely culprits in this culture of excess. Grassley's staff said they believed a "small minority" of media-based ministries were outliers in this regard, but that the situation raised major tax policy issues among the entire faith-based community.

Four of the six ministries did not respond sufficiently to satisfy Grassley, prompting him to turn to the Evangelical Council for Financial Accountability (ECFA) for help. ECFA, a national accreditation organization that sets standards for financial transparency and compliance, was founded in 1979 in the aftermath of questionable fundraising in the religious community. Since then it has focused on providing prospective donors "an objective assessment of the financial integrity of Christian organizations desiring their support."

ECFA says its current membership stands at about 1,500 Christian ministries, denominations, churches, educational institutions, and other groups. Members must comply with Seven Standards for Responsible Stewardship, aimed at transparency, accuracy, full disclosure, conflict of interest, and best practices in fundraising. Board oversight is key to compliance.

Fifteen members were named to the commission, chaired by Michael Batts, a certified public accountant in Orlando who is an ECFA board member. ECFA president Dan Busby also serves on the commission. The group held its first meeting this spring and plans to meet quarterly for up to three years.

Busby said the commission was not given a strict timeline for its work by Senator Grassley but that it will make periodic reports to the senator, the ECFA board, and the public. The ECFA website (www.ecfa.org) includes detailed information on the activities of the commission.

According to ECFA, the issues to be considered by the commission include:

  • Whether religious organizations should be required to file Form 990, the annual tax return required of other nonprofits.
  • Limits on clergy housing allowances.
  • Clarification of tax rules about "love offerings."
  • Repeal or modification of the current prohibition against political campaign intervention by churches.
  • Penalties for "excess benefit transactions" such as salaries.
  • Repeal of restrictions on IRS audits of church leaders.
  • Disallowing current legal protections for asserting the "reasonableness" of a nonprofit leader's compensation.

Panels will be formed to research and analyze these issues, and public opinion will be sought from religious and nonprofit sector spokespersons.

The commission's work will closely pattern that of a previous group - the Panel on the Nonprofit Sector - that was formed in 2004 in response to a similar request from Senator Grassley. That panel, managed by the charity umbrella group Independent Sector, provided guidance on appropriate regulation of the entire nonprofit sector after a series of scandals raised questions of ethics and accountability among charities and foundations. ECFA was represented on the panel by its then-president, Paul Nelson; current ECFA president Busby also has conferred with Independent Sector leadership on the processes used in compiling the panel's report to the Senate Finance Committee.

The earlier panel's recommendations were instrumental in strengthening governance of charities - new information requests now included on the Form 990 had their origins in the panel's report, for example.

And most nonprofit experts think that the earlier panel's recommendations managed to avoid overregulation of nonprofit organizations. In fact, Senator Grassley said that strong and appropriate self-regulation was the goal for the previous panel, and he echoed that when he asked ECFA to establish the new Commission on Accountability and Policy for Religious Organizations.

"The challenge is to encourage good governance and best practices and so preserve confidence in the tax-exempt sector without imposing regulations that inhibit religious freedom or are functionally ineffective," Senator Grassley said.

ECFA's Busby said the organization "is honored and humbled to be asked by Senator Grassley to lead the independent effort to obtain input from the religious and nonprofit community on these issues." He continued, "It is our hope, as well as the senator's, that solutions will be found without the need for burdensome legislation that creates excessive entanglement between the church and the government."

A stacked deck or broad input?

Even before it held its first meeting, the Commission on Accountability and Policy for Religious Organizations came under criticism. The Secular Coalition for America protested that the commission membership consists only of evangelical Christian leaders and that it should include members with other views of religious life and influence.

"Stacking this so-called ‘independent' commission with people representing only one narrow religious viewpoint is entirely inappropriate," said Sean Faircloth, executive director of the coalition.

Bonnie Cousens, executive director of the Society for Humanistic Judaism, and David Silverman, president of American Atheists, had similar objections to the commission's membership. "It's bad enough that scores of religious leaders in this country continually abuse our tax codes to line their own pockets," Silverman said. "Now we're allowing some of these same people to monopolize the only opportunity given to examine church financials and expose the malfeasance we all know exists. The conflict of interest is obvious."

Dan Busby of the Evangelical Council for Financial Accountability (ECFA), which is administering the commission's work, said that "many other religious and nonprofit organizations (will be) significantly involved" through advisory panels of experts who will study the issues and report back to the commission. Appointments to the panels will show "the breadth of the input" to the commission from nonevangelical sources, he told the Chronicle of Philanthropy.

Michael Batts, a former chair of the ECFA board, is chairing the commission, and ECFA President Dan Busby is a member. Other members are:

  • Luis Cortés, founder, Esperanza, Philadelphia, Pennsylvania
  • Mark Davis, chief financial officer, Calvary Chapel, Fort Lauderdale, Florida
  • Stephen Douglass, president, Campus Crusade for Christ, Orlando, Florida
  • Richard Hammar, general counsel, Assemblies of God, Springfield, Missouri
  • Mark Holbrook, president and CEO, Evangelical Christian Credit Union, Brea, California, and current board chair of ECFA
  • Joel Hunter, senior pastor, Northland, A Church Distributed, Longwood, Florida
  • Lauren Libby, president, TWR (formerly Trans World Radio), Cary, North Carolina
  • Jo Anne Lyon, general superintendent, The Wesleyan Church, Indianapolis
  • Mark Rutland, president, Oral Roberts University, Tulsa, Oklahoma
  • William Townes Jr., vice president of convention finance, Southern Baptist Convention Executive Committee
  • Kenneth Ulmer, senior pastor-teacher, Faithful Central Bible Church, Inglewood, California
  • Dolphus Weary, president, Rural Education and Leadership Christian Foundation, Jackson, Mississippi
  • David Wills, president, National Christian Foundation, Alpharetta, Georgia
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