Stewardship of Financial Resources

As good stewards, we responsibly and ethically care for the people and things entrusted to us. In this session we will dive deep into how the Church manages its financial resources. We will explore financial best practices and benchmarks — including training in both — and address standardized and more regular financial reporting and benchmarks. We will discuss how to establish long-term financial stability as well as how to leverage and strengthen the Church’s assets.

Speakers were Elizabeth Jensen, CFO of Roman Catholic Diocese of Orange, Matthew Manion, Faculty Director of the Center for Church Management at Villanova University, and Jim Perry, Co-Founder of Madison Dearborn Partners. The moderator was Patrick Markey, Managing Partner at Leadership Roundtable.

What are the top three changes needed now within the Church to ensure ethical financial practices? How can the wider Church support and promote the recommendations of the Coalition on Ethical Financial Management in the Church, the joint effort of national organizations to create a unified response to the financial crisis in the Church?

The need for competent stewardship of financial resources is more important than ever as parishes and dioceses navigate a post-pandemic reality. Moderator Patrick Markey, managing partner at Leadership Roundtable, began with a summary of how the 2020 Catholic Partnership Summit led Leadership Roundtable to convene financial leaders from across the country in developing the Coalition for Ethical Financial Management in the Church. Three priorities grew from this work:

• Strengthening diocesan financial councils with a special focus on finance chairs
• Determining, disseminating, and supporting best financial practices
• Creating an online platform to collect and publish financial benchmarks and performance indicators.

Not long after the 2020 Catholic Partnership Summit, “a new reality struck,” as Markey described it.

“The pandemic, political and social unrest, the closure of churches, and the halting of operations led Church leaders to focus on financial sustainability and exposed financial practices that were outdated or vulnerable,” he said, and pointed to the vision of Pope Francis as a source of inspiration. “As Pope Francis continues to tell us throughout this crisis, we can emerge from it better or worse, we can recognize where we have fallen short and set a course for improvement, also in the area of financial management.”

A New Reality

Matthew Manion, Director of the Center for Church Management at Villanova University, noted that while the Church has made significant progress in fostering greater accountability and financial transparency, challenges remain that are exacerbated by the “pandemic. He cited a 2006 study from his Center that found 85 percent of dioceses had a case of embezzlement in a 5-year span. There are now better financial controls and oversight in many dioceses, Manion said, but “the Covid pandemic has brought back this risk and there are tons of people in our churches who are experiencing economic pressure now and the stress of dealing with the pandemic.”

A study Manion directed with a colleague, conducted in the three months after pandemic lockdowns began in March of 2020, analyzed Covid’s impact on parish collections. On average, collections were down 7 percent across 177 parishes studied. One in five parishes faced significant declines of 50 percent or more. But 16 percent of parishes experienced an increase in collections. Manion noted that the difference in those successful parishes was not determined by size, location, or whether they had a parish school. Parishes that adjusted quickly, became creative, and demonstrated what Pope Francis would call a “missionary impulse,” he said, flourished.

“It’s an example of accountability where people voted with their dollars, whether consciously or not, and held leaders accountable in ways that I think is exciting to the mission of the Church,” he said.

Transparency and Accountability

Manion cited the axiom “what gets measured, gets managed” in referencing a scorecard from Voice of the Faithful that evaluates financial transparency in dioceses. Over the past four years, the average score for transparency has improved for all dioceses, and five dioceses had a perfect score last year.

“Financial transparency leads to greater generosity from the People of God,” he said, citing research that shows people are more likely to give when they trust organizations are accountable and transparent.

Manion emphasized that while financial transparency is crucial, it’s also not sufficient.

“Many of our people don’t know how to read financial reports. There is a real need to take the next step from transparency if we want to promote co-responsibility and help make better connections between the numbers, and the dollars, and the mission of the Church, and our impact on the world,” he said.

Manion drew from the Gospels to emphasize his point: “Proper stewardship of our financial resources in ways that are accountable, transparent, and co-responsible are a lot like the good seed in the Parable of the Sower. When we do it right it produces fruit for the mission of the Church.”

Ministering through Financial Management

Elizabeth Jensen, Chief Financial Officer for the Diocese of Orange, provided a diocesan perspective on stewarding finances during these challenging times. When the pandemic began, a focus on cash-flow forecasting quickly became a priority. The diocese created a database for weekly parish collection figures. The bishop’s leadership team started meeting daily instead of monthly. She acknowledged there is often tension between pastoral ministry and the responsibility to ensure the diocese is on sound financial ground. Jensen sees this as a false divide.

“Financial management is a ministry,” Jensen said. “The ability to receive, grow and steward financial resources enables our clergy to help those in need,” “maintain our parishes and schools, and to focus on faith formation and evangelization.”

Hiring competent leaders with financial expertise is critical to creating a culture of accountability and transparency. But Jensen observed that in hiring for key positions or in contract agreements with vendors “relationships within the Church sometimes take priority over making good decisions.” Jensen cited this as one reason why financial councils should have conflict-of-interest statements.

Jim Perry, founder of the financial firm Madison Dearborn Partners and member of Leadership Roundtable’s board of directors, shared his experiences serving on the finance council in the Archdiocese of Chicago. Church finance leaders often have “to do unpopular but necessary things,” he said, in order to ensure the solvency, stability, and growth of their diocese.

“We have an Archbishop who is comfortable delegating responsibility to capable leaders,” Perry said. “Our financial council serves more than ever before as a sort of board of directors, not narrowly scoped to oversee financial management and reporting. The Cardinal reserves all decision rights, but his team knows to treat the council as it would a board in a for-profit situation. Members are encouraged to ask tough questions and take leadership on commitments that delve more deeply into all key diocesan functions.”

“Perry sees value in the fact that finance council members are drawn not only from the field of finance, but also from the sectors of technology, change management, human resources, and marketing.

Perry describes Chicago, like many dioceses, as a “turnaround project.” After examining various trends in the archdiocese, the finance team determined that its solvency could be in jeopardy. Now after two years of planning, the archdiocese is halfway through a consolidation of parishes and a renewal program tied to an upcoming fundraising campaign.

The finance council is also “getting creative on partnering and politics,” Perry said. The archdiocese recently entered into an operating agreement with the Big Shoulders Fund, which gives the nonprofit organization more responsibility over Catholic schools” “in the city’s poorest urban areas. In addition, Cardinal Blase Cupich, Archbishop of Chicago, and other archdiocesan leaders continue to lobby for a tuition- tax credit program for low-income families. Perry said this year the archdiocese will receive about $20 million in funds from the tuition-tax credit program, a critical source of revenue that helps to keep students in the city’s Catholic schools.

For dioceses to fulfill their mission of evangelization they have to be trusted by the people they serve. Ethical stewardship of all the resources entrusted to a diocese is crucial for establishing a basis for trust. The presentations and table discussions during this Summit session, offered concrete ways for dioceses and parishes to earn the trust urgently needed to carry out their mission with vigor.

RECOMMENDATIONS: Stewardship of Financial Resources

ALIGN MISSION AND RESOURCES

• Conduct an analysis of the gap between the stated values and the allocation of resources in parishes and dioceses, and identify steps to maximize consistency between values and use of resources
• Manage the Church’s real estate to ensure its use consistently aligns with the mission of the Church
• Assign priests and pastors so that their talents are matched with the needs and culture of a parish
• Communicate openly how the parish or diocese is supporting the mission of the Church through financial stewardship
• Implement a process based on standardized criteria for successful pastoral leadership for evaluating ordained and lay parish leaders and collecting feedback from the parish community and staff.

ESTABLISH STANDARDS, ACCOUNTABILITY, AND REPORTING PRACTICES

• Develop accurate position descriptions for parish and diocesan staff and volunteers to maintain consistency between the individual’s skills and the requirements of their position
• Publish and make accessible annual financial statements
• Adopt a pastoral planning process to include as many people as possible in the discernment of parish or diocesan goals and priorities
• Draft budgets based on the established goals and priorities of the parish or diocese
• Base budget decisions on the mission and goals of the Church to ensure that priorities and goals are funded
• Require conflict of interest disclosure for all finance council members and anyone who has fiscal decision-making.

EQUIPPING PEOPLE FOR FISCAL STEWARDSHIP

• Hire qualified and committed professionals for the management of parish and diocesan administrations
• Offer ongoing training and competitive salaries and benefits to attract and retain highly-competent personnel
• Empower diocesan and parish finance councils to examine financial statements, accounting practices, real estate transactions, risk management, and human resource management to ensure compliance with ethical practices
• Promote networking opportunities for dioceses to share best practices for fiscal management, transparency, and ethical practices, and encourage all dioceses to participate.

This piece was originally published in the 2021 Catholic Summit Report