The April 29, 2022 issue of the Warren Reporter, a newspaper affiliated with NJ.com, contained a very balanced article written by Ted Sherman about the investigation of clergy abuse of minors in the State of New Jersey. State officials created a task force in September 2018 to investigate the allegations against clergy dating back decades. We need not go into the details of the allegations here as they are well known already. Suffice it to say there have been only three prosecutions as a result of this task force and the promised final report on the matter has not materialized. As a result of such a small number of indictments, many have doubted a special grand jury to investigate this matter was even empaneled. We can only hope and pray the absence of prosecutions was the abuse was not as widespread as has been suspected or reported. We also hope church officials have taken their duty to protect minors make appropriate disclosures as seriously as they should.
As heinous as these crimes may be, I want to focus on another insidious aspect of this situation: the financial devastation such mismanagement has caused. NPR reported that by 2018 this scandal has already Catholic Church $3 billion. That total has continued to grow in the last four years. Recently, the Roman Catholic Diocese of Camden, like many other Catholic dioceses, was forced to declare bankruptcy because of the projected cost of litigation surrounding the abuse of minors by its clergy. The diocese recently announced the settlement of such lawsuits and the creation of an $87.5 million dollar fund to come into existence over the next four years to pay out survivors of such abuse. The source of these funds was not reported and the settlement must still be approved by the bankruptcy court.
With such vast sums of money being thrown around, the question arises: Is this why donors contribute to religious organizations? To fund such horrible management by its leaders? It is high time large religious organizations are required to file a Form 990 with the Internal Revenue Service. All charitable organizations except for religious organizations must file the Form 990 every year. Religious organizations are specifically exempted from this filing. While no one wants the federal government mucking around in Church affairs, the Form 990 contains information any contributor and/or member of the congregation would generally be interested in. This, form requires not only financial disclosures but also information about the adequacy of internal controls. As of right now, many religious organizations do not release financial information. Perhaps some sunshine on the matter would make those who run religious organizations a little more cautious when it comes to spending the hard earned donations of its members. For example, do members of the Diocese of Camden know a substantial amount of their donations over the next four years will probably be directed to this fund? Will the Diocese of Camden disclose where the funds will be coming from? We shall certainly see.
While there has been a lot of attention aimed at the abuse issue, financial frauds and scandals often “fly under the radar”. Again, we need not go into the details of such events as they are documented elsewhere, but my sense is these are but the tip of the iceberg, an opinion I formed being connected to the financial management of several religious and Not-For-Profit organizations. The lack of internal controls and the weak control environment can often be frightening. I hate to recommend this, but it is time for the government to compel financial disclosure from the larger religious organizations. As for the objection that this will be expensive, let me counter this by saying somewhat tongue in cheek that Rome wasn’t built in one day. Perhaps the reporting would only be required for any organization with gross receipts in excess of $1 million (or some other appropriate number). At the end of the day the cost incurred for preparing such a report will be more than made up for by the tighter financial controls religious organizations will have to put into place to make the proper reporting.