DECEMBER 16, 2002

BUSINESS
Religious groups face bankruptcy, financial straits

It doesn't take a high-profile scandal to shake the financial foundations of religious groups. A sagging economy, bad investments and declining donations mean that many religious organizations are facing financial hardship, and sometimes, bankruptcy. In 1999, the Baptist Foundation of Arizona collapsed in what became the largest non-profit bankruptcy in U.S. history, costing investors close to $600 million. Indictments still are being handed up. The same year, many predicted the National Council of Churches of Christ - which has since balanced its budget - would succumb to bankruptcy because of its $4 million deficit.

Bankruptcy can force a religious organization to liquidate assets such as donated land, open closely held financial files, and risk losing the trust of members and supporters. Is the Catholic diocese in your area facing potentially debilitating abuse claims? Are other religious organizations in financial straits? What do members and supporters say they should do? Will proposed changes to national bankruptcy laws make it harder or easier for financially strapped nonprofits?

Why it matters
As the economy continues to struggle, companies and individuals are cutting back on contributions to religious organizations. Many groups that invested in the stock market are also struggling with falling stock values. As a result, a growing number of religious organizations may find themselves in increasingly difficult financial straits in the coming months.

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National sources

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• Samuel Gerdano is executive director of the American Bankruptcy Institute in Alexandria, Va., and can provide information on bankruptcies among non-profits. Contact 703-739-0800, sgerdano@abiworld.org.
• Dean Hoge is professor of sociology at Catholic University of America in Washington, D.C. He has extensively studied financial contributions to churches. Contact 202-319-5999, 301-589-4407, HOGE@CUA.EDU.
• Virginia Hodgkinson is research professor of public policy at the Center for Voluntary Organizations and Service at the Georgetown University Public Policy Institute in Washington, D.C. She has conducted research on congregational finances. Contact 202-687-0514, hodgkinv@georgetown.edu.
• Several centers of International Society of Krishna Consciousness have filed for bankrupty because of a $400 million lawsuit alleging abuse at Krishna schools in India and the United States. Contact Anuttama Dasa of ISKON Communications at 818-299-9707. Here is a list of Hare Krishna centers in the United States.
• Sylvia Ronsvalle is executive vice president of Champaign, Ill.-based Empty Tomb, a nonprofit research firm that studies donations throughout all U.S. Christian denominations. Contact, 217-356-2262, execvp@emptytomb.org.
• Rabbi Moshe Edelman is director of leadership development for the United Synagogue of Conservative Judaism in New York City, an association of 800 Conservative congregations in North America. The group's leadership development program provides training in finances for leaders of synagogues. Contact Lois Goldrich, 212-533-7800 ext. 2601, goldrich@uscj.org.
• Southern Baptist Foundation in Nashville, Tenn., is one of the largest religious foundations in the country. Contact Hollis E. Johnson, 615-254-8823, hjohnson@sbc.net.
• The Council on American-Islamic Relations in Washington, D.C., has released a report on the state of mosques in the United States. The report includes information on the financial status of American mosques. Contact Ibrahim Hooper, 202-488-8787, 202-489-5108, cair1@ix.netcom.com.
• Kenneth Korotky is the chief financial officer of the United States Council of Catholic Bishops. He can provide financial information on the American Catholic Church. Contact the Office of Communications, 202-541-3200.
• Elenie Huszagh is president of the National Council of Churches of Christ, a national ecumenical body that has faced the threat of bankruptcy in 1999, when its budget deficit was $4 million. It has since balanced its budget. She is a lawyer who has specialized in bankruptcy. Contact 212-870-2227.

Background
• Read about proposed changes in bankruptcy laws.
• The Anglican Church of Canada just reached a deal with the Canadian government that helped it avoid filing for bankruptcy because of sexual abuse claims. See a Nov. 21, 2002, Episcopal News Service article.
• August 2, 2002 Boston Globe article on the Boston Archdiocese's early consideration of bankruptcy.
• December 1, 2002 Boston Globe article first detailing plans by the Boston Archdiocese to possibly file for bankruptcy.
• December 2, 2002 Boston Globe article on how talk of bankruptcy is impacting settlement negotiations with abuse victims.
• December 3, 2002 Boston Globe article on how a bankruptcy filing by the Boston Archdiocese would affect its insurance companies handling of abuse settlements.
• December 5, 2002 New York Times article on the Boston Archdiocese considering filing for Chapter 11 bankruptcy protection.
• November 18, 1999 Phoenix New Times article on the financial turmoil at the Baptist Foundation of Arizona.
• June 5, 2002 press release from the Arizona Attorney General's office on a settlement reached in the Baptist Foundation of Arizona collapse.
• February 7, 2002 Associated Press article in the Minneapolis Star Tribune on Hare Krishnas declaring bankruptcy.
• April 15, 2002 Business Week article on the American Catholic Church's financial problems.
• March 28, 2002 Christian Science Monitor article on the financial toll of the sex scandals on the American Catholic Church.