Executive Committee Recommends Tighter Financial Controls

Executive Committee Recommends Tighter Financial Controls | Bob Allen

The SBC Executive Committee's offices are located in Nashville, Tenn.
The Southern Baptist Convention Executive Committee on Tuesday called on trustees of all SBC entities to exercise "fiscal responsibility" in setting compensation for top executives, while proposing sweeping policy revisions concerning financial reporting, executive perks and conflict of interest.

The recommendation comes in the wake of the April resignation of the head of the North American Mission Board, following a trustee investigation into questions of mismanagement raised by a Baptist newspaper.


NAMB trustees found no evidence that former president Bob Reccord did anything unethical, but said he created the appearance of a conflict of interest by shuffling lucrative contract work to a personal acquaintance and working in a side ministry while identified as CEO of the mission board.


The motion passed by the Executive Committee will come as a recommendation at the 2007 SBC annual meeting, scheduled June 12-13 in San Antonio, Texas. It doesn't mention any entity by name but requests trustees of all entity boards to "continue to be mindful of their duty of fiscal responsibility and good stewardship to the Lord and Southern Baptists, particularly in the areas of human resources and ministry expenses."


SBC entities don't reveal the salaries of top executives, and NAMB didn't disclose terms of Reccord's severance. Unlike most non-profit organizations, Southern Baptist agencies aren't required to report CEO salary information by filing an IRS 990 form, because for purposes of tax-exemption they are considered a church.


Ernest Hallmark, a messenger of Parkview Baptist Church in Arlington, Texas, made a motion at the SBC annual meeting in June asking the Executive Committee to "conduct an administrative expense analysis of all Southern Baptist agencies and institutions that receive support from the Cooperative Program."


Hallmark's motion, referred to the Executive Committee by convention policy, said the study should "examine the administrative budgets of entity presidential offices, including but not limited to the reimbursable expense accounts, travel expenses, housing and office expenses and the amount of Cooperative Program dollars spent, if any, to maintain the private residences and staff of those entity executives."


While declining to act on the specific requests of Hallmark's motion out of respect for the trustee process, the Executive Committee commended its "spirit and intent." One leader commenting in a subcommittee session under background reporting rules said the Executive Committee motion was in response to a perceived demand for greater accountability at this year's convention in Greensboro, N.C.


The motion approved by the Executive Committee was drafted by convention attorneys and staff. It calls for amending the SBC's business and financial plan to include annual audits that contain a statement signed by the CEO of CFO affirming "the books and accounts are accurate and complete to the best of the officer's knowledge, and that the officer believes the corporation's internal controls are adequate."


It also would require trustee boards to certify:


--"The expenses and perquisites of the president are not excessive and are in keeping with biblical stewardship, including every emolument and personal benefit of any kind (and specifically including housing, travel, automobile(s) and personal assistants) all valued at market rates."


--"All corporate expenses are reasonable and incurred to accomplish the entity's … mission statement …ministry assignments and any other responsibilities previously approved by the messengers of the Southern Baptist Convention and still in force."


--"All corporate expenses are incurred by the administration in a manner that reflect integrity and avoid appearances of impropriety while upholding a positive Christian witness to the convention and beyond."


The motion calls for business procedures to ensure that trustees oversee operations "in such a manner as will assure effective and ethical management."


"Disclosures of the entity's relationship with other entities, its activities, liabilities, commitments and results of operations should be accurate and complete and include all material information," the motion says.


While the motion says entities should not make any loans to trustees, it would allow for employees to receive certain types of loans, like to borrow down payment for a house, at discretion of trustees and after disclosure of relevant details.


"Employees and trustees should not appropriate for personal advantage any corporate property or business opportunities which should be enjoyed by the entity," it says.


C.J. Bordeaux, chairman of the Executive Committee's administrative subcommittee, said the recommendation was in part a response to the Hallmark motion, but also because research indicated those issues apparently haven't been studied by the Executive Committee for about 40 years.


While recent corporate scandals like Enron and the Baptist Foundation of Arizona have given high profile to executive graft by professing Christians, it isn't a new phenomenon.


Financial scandal nearly destroyed the Southern Baptist Convention in 1928, when the Home Mission Board (predecessor to NAMB) discovered that its trusted treasurer had embezzled more than $900,000 over a period of nine years, plunging the mission board into deep debt and undermining confidence in the then 3-year-old unified budget plan known as the Cooperative Program.


Legend holds that when asked what to tell Southern Baptists, HMB President J.B. Lawrence said, "Tell the truth, and trust the people," a line that became a watchword for the denominational press.


"We trust our agencies and our entities," said Bordeaux, senior pastor of Hillcrest Baptist Church in Monroe, N.C. He said the motion is a reminder to them that "they be mindful of their fiscal responsibilities."


Robert Parham of the Baptist Center for Ethics challenged the SBC Executive Committee to lead the way in modeling financial transparency.


"Discerning Southern Baptist laity will understand the SBC Executive Committee's action is an admission of the lack of fiscal responsibility, no genuine transparency and the abandonment of faithful biblical stewardship," Parham said. "When church members give sacrificially, they expect agency heads to live modest lifestyles, not those of the current SBC agency heads with Cooperative Program funded cars, first-class airline tickets, memberships in private clubs, four-star hotels, and salaries that provide for tailor-made suits and manicures."


"When agency trustees approve compensation packages at the levels of for-profit companies, they've long since left the carpenter who had no place to call home," Parham said. "Adopting new business procedures will accomplish little if trustees fail to exercise fiduciary responsibility and guard sacrificially given funds. If the SBC Executive Committee is serious, it should be the first to engage in public disclosure."


Parham said rank-and-file Southern Baptists should in particular thank bloggers and others for their efforts to advance "accountability and modesty."


"Regrettably, their efforts will fail for they will find themselves trying to reform a system that will fight real reforms and will engage in no meaningful changes," he said. "All religious bureaucracies by their every nature resist financial disclosure and accountability."


Bob Allen is managing editor of EthicsDaily.com.


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