Parishes & Schools Closing ... Where's the Money?
PART 2 Catholic Foundation's Tax Filings Raise Questions
Recap of Part I
In January 2022, when St. Louis Archbishop Mitchell T. Rozanski announced All Things New, a radical plan to close or reorganize 178 parishes and schools, he probably wasn’t expecting much pushback.
Philadelphia-based Catholic Leadership Institute (CLI) had engineered comparable plans, under different but similarly catchy titles, in dioceses all over the country and hardly a whimper was heard.
But not in St. Louis — the most Catholic city in the state and historically known as the Rome of the West.
Originally, following CLI’s blueprint, Rozanski proposed closing 78 of his 178 parishes. The idea of shuttering close to 50 percent of the archdiocese’s parishes stunned the city and surrounding area. Almost immediately, an energetic group of Catholics formed to help parishes fight for their existence.
It was in that context parishioners started to ask, “Didn’t we just raise $110 million for schools and parishes? So why are we now closing them?”
They were referring to the Beyond Sunday campaign, a $100 million fundraising effort launched in 2015, spearheaded by the newly minted Roman Catholic Foundation of Eastern Missouri (RCFEM) and completed in 2017.
Catholics had been eager to help their parishes and schools. The campaign exceeded its goal of $100 million, raising a total of $110 million. But in less than five years, a new archbishop arrived announcing a historic number of parishes and schools would be closed.
St. Louis Catholics were angry. “What happened to the $110 million?” If it weren’t for All Things New, probably no one would have asked.
The Numbers Just Don’t Add Up
The $110 million raised in the Beyond Sunday campaign was to be divided: 40 percent to participating parishes and 60 percent to scholarships and schools, minus $5 million for fundraising costs. Essentially, $40 million for parishes and $60 million for scholarships, schools and education endowment.
Even if every penny Roman Catholic Foundation of Eastern Missouri received from its inception in June 2013 through 2022 were allocated to Beyond Sunday, the organization’s annual tax filings do not show contributions totaling $110 million. In those nine years, RCFEM received contributions and grants totally $86,016,235, approximately $24 million short of the goal it publicly claim to have reached.
Contributions and grants (IRS Form 990, Part I, line 8)
2014 $ 7,958,252
2015 $18,521,735
2016 $24,281,759
2017 $10,808,374
2018 $ 5,428,324
2019 $ 3,122,083
2020 $ 6,772,356
2021 $ 6,103,576
2022 $ 3,019,776
TOTAL $86,016,235
Assuming there might be an explanation for the discrepancy, Trust But Verify asked Scott Welz, RCFEM’s Vice President and CFO, for further clarification and received no response.
Since it is unlikely every dollar contributed between 2014 and 2022 was allocated to Beyond Sunday then the actual amount of funds available for parishes and schools is in question.
RCFEM’s 2022 Annual Report further complicates the picture. It too suggests the foundation came very close to reaching the $100 million goal and has expended or accounted for that amount.
Consider the following published figures that account for total Beyond Sunday distributions through 2022. Scholarships at $16.5 million can be corroborated with the 990s; $33 million for endowment also appears to be accurate but has troubling features; and school grants are definitely in the ball park.
The big question centers on $44.3 million for parishes.
Let’s examine each of these spending areas individually.
Parishes $44.3 million
Scholarships $16.5 million
School Grants $ 3.1 million
Endowment $33 million
TOTAL $96.9 million
Education Endowment -- $33 Million
RCFEM’s report of $33 million for education endowment may be close to accurate, but you have to piece it together. The 2022 Annual Report says the foundation has $54 million under management. That figure aligns with its quarterly investment report for December 2022. The Annual Report also says 60 percent of assets under management are restricted for the education endowment which confirms the $33 million.
The Beyond Sunday funds for education should be segregated in a restricted fund, and its earnings separately accounted for. Donors to the fund should be able to know precisely how much is in the fund at the end of any given year, how much the fund earned and how much is allocated for distribution.
From the outset, Foundation officials told St. Louis Catholics a portion of the Beyond Sunday Funds would be set aside for endowment, many may not have fully understood what that meant. Did they understand that from 2022 onward, only about $1.15 million would be available for scholarships and schools?
If RCFEM’s endowment policy is like most other institutions, a 7 percent return on investment (ROI) was projected. At that rate, a $33 million endowment will produce $2.3 million in income. But typically, boards elect to spend only half that amount and use the other half to pay investment fees and add to the endowment corpus for fund growth.
If RCFEM follows that model, it is likely, going forward, RCFEM will distribute only slightly more than $1 million for scholarships and school grants in the future. Yes, the amount will grow incrementally year by year, but it can only provide substantive help if more people contribute to that specific endowment. This year’s annual report may document the numbers more straightforwardly.
Scholarships and School Grants – $19.6 Million
Roman Catholic Foundation of Eastern Missouri’s 2022 Annual report also tells the community it has, to date, distributed $16.5 million for scholarships and $3.1 million in school grants. If 60 percent of the $100 million ($60 million) raised goes to scholarships and schools with $33 set aside for endowment, then $27 million should have been spent for scholarships and schools, not $19.6 million.
Of all the Beyond Sunday numbers provided, the one that clearly lines up with the 990s is scholarships.
This information about the amount given each year for scholarships and grants to schools is easily found in Schedule I of IRS Form 990.
RCFEM stopped giving money to schools or education improvement in 2020, perhaps in anticipation of All Things New and school closures.
Parishes -- $44.3 Million
RCFEM’s 2022 Annual Report tells the community it has spent a total of $96.9 million in support of parishes, scholarships, schools, and endowment. Removing $33 million for endowment leaves RCFEM claiming $63.9 million in grants for schools, scholarships and parishes.
According to RCFEM’s 990s, total grants paid from 2014 to 2022 only total $31.5 million. What’s not documented in the 990s is spending on parishes.
The answer may lie buried in the liability section of the 990 where significant sums of money can be found documented in Part X, line 21 “Escrow or custodial account liability.” Between 2014 and 2022, $136 million passed through this escrow account.
Year Part X, line 21
2014 $ 255,000
2015 $11,871,857
2016 $32,619,701
2017 $31,231,097
2018 $22,004,949
2019 $15,421,430
2020 $10,691,046
2021 $ 6,838167
2022 $ 4,960,897
TOTAL $136 million
Organizations are required to explain these funds in Schedule D. RCFEM gave this explanation: “Fundraising efforts are assisted by local parishes, schools, and ministries. As a result of this assistance certain amounts are provided to those local parishes, schools, and ministries as designated by the donor.”
It appears RCFEM is not taking credit for raising these funds, instead saying parishes, schools, and ministries raised the money and temporarily parked it with the foundation who then returned the funds to these organizations “as designated by the donor.”
Did the Archdiocese accept those charitable gifts and then transfer them to the Foundation’s escrow account? Is this another infamous example of a diocese wanting to shelter money from lawsuits?
Donors to the Beyond Sunday fund will know what organization accepted their gift(s). They would have received a gift receipt from the institution accepting the money. If the gift receipt wasn’t from Roman Catholic Foundation of Eastern Missouri, what charitable organization provided it?
There may be a sound financial reason for these circuitous arrangements; but given the questions being raised about closed parishes and the money associated with them, that reason should probably be explained. Unfortunately, Scott Welz was unwilling to answer most of the questions Trust But Verify posed, specifically refusing to provide information about how much money went to which parishes.
Here are tax returns the Roman Catholic Foundation of Eastern Missouri has filed with the Internal Revenue Service in 2015, 2016, 2017, 2018, 2019, 2020, 2021, and 2022.
Donors are increasingly sophisticated in their giving, while simultaneously less trusting of the nonprofit sector. Organizations would be wise, as closely as possible, to have their publicly reported numbers track with numbers found in their 990s. When potential donors are forced to get out their calculators, it’s not a good sign.
Finally, it is useful to once again point out, even though they should have, none of these questions probably would have been raised were it not for the timing of All Things New within a few years of this historic fundraising effort.
Please submit corrections. Trust But Verify is happy to acknowledge errors.