There’s a new acronym in evangelical Christendom: ECFA, or the Evangelical Council for Financial Accountability. And it may spell greater openness on the part of evangelical agencies in their financial dealings with the public.
The primary purpose of ECFA, as put forth at an organizational meeting in Chicago last month, is “to promote voluntary financial disclosure among evangelical agencies.” Potential ECFA members must comply with seven uniform standards of financial disclosure, including an annual outside audit that would be made available upon request. Member agencies will be able to display their ECFA “seal of approval” in fund raising and promotional efforts.
Seventy-five persons attended the formative meeting last month who, according to ECFA organizers, represented over 1,100 Christian charities with a combined annual income approaching $1 billion. (Actually, about thirty-five organizations were represented at the meeting, but many of them were umbrella groups, such as the National Religious Broadcasters, which has almost 800 affiliate members of its own.)
The organizers had driven or flown to Chicago, to a hotel near O’Hare International Airport, where, during a four-hour meeting, they adopted with only slight revision articles of incorporation and financial standards that had been drafted earlier by a study committee. The uniform standards of financial disclosure, which ECFA organizers said could later be “elaborated on or added to,” were:
• An annual audit by a public accounting firm performed in accordance with generally accepted auditing standards … financial statements prepared in accordance with generally accepted accounting principles.
• Audited financial statements made available upon request.
• An audit committee composed of nonemployees that is established by the governing board of the organization.
• An active, responsible governing board, a majority of whom are nonemployees, that meets at least semiannually and has policy-making authority.
• The organization must carry on its business with the highest standards of integrity and avoid conflicts of interest.
• A clearly defined statement of faith, consistent with the evangelical Christian perspective.
• Programs and activities that are consistent with the stated purposes and objectives of the organization … that donated funds be applied for the purpose for which they were raised.
ECFA’s formation culminated almost two years of planning, begun and carried through primarily by George Wilson, executive vice-president of the Billy Graham Evangelistic Association (BGEA), and by Stanley Mooneyham, president of World Vision. The two men were motivated to act partly by their opposition to government regulation of finances of religious and charitable organizations. They and other evangelical leaders particularly opposed the so-called HR 41, which died last fall in Congress. The bill, as sponsored by California Congressman Charles H. Wilson, would have required, among other things, that charitable organizations state at the point of solicitation that percentage of their contributions going for fund raising and over-Mooneyham head costs. (Jan. 13, 1978, issue, p. 44)
At a press conference, Wilson and Mooneyham denied that ECFA’s formation was “a direct response” to possible government intervention. But Mooneyham declared that ECFA shows that “we have taken steps toward self-policing.” He opposed government regulation, noting that the government often “does a far less effective job than the private sector” in money handling—using the scandal-ridden General Services Administration as one example. Wilson added that government intervention would create potential “constitutional conflicts regarding separation of church and state.”
What part of a donor’s dollar is spent for fund raising overhead costs and what part goes for the solicited purpose? That question, which is being asked with greater frequency by evangelicals and watchdog agencies of charitable groups, was not addressed specifically in the ECFA financial standards. The matter concerns ECFA, but they believe that fund raising costs should not be measured or limited by percentages—for instance, a maximum of 25 percent of income for fund raising and overhead. They say that overhead costs vary according to the organization.
ECFA organizers explain that a new organization requires greater amounts of money for fund raising in order to build name recognition and promote its cause. They also say it is sometimes hard to determine the difference between “fund raising” and “educational” programs, when a group presents itself to the public.
John Daniels, an audit manager with Price Waterhouse in Chicago, which prepares the annual audit for Greater Europe Mission and TEAM, said that definitions of what constitutes fund raising sometimes vary from one organization to another. He added that it is sometimes hard to determine the difference between “program services” and “support services”: “for example, when a mission appointee goes around giving talks in churches, this is partly for his own training (program services) and partly for fund raising (support services).”
(The American Institute for Certified Public Accountants issued a tentative statement of position last December on “accounting principles and reporting practices” for nonprofit religious organizations, said Daniels, that asks for disclosure of fund raising expenses in annual audits.)
ECFA was incorporated in Minnesota, so that lawyers of the Minneapolis-based BGEA could be utilized to facilitate the incorporation process. Wilson said that ECFA offices probably will be located in Washington, D.C., and that it will be about a year before the organization “takes hold.” A search is under way for an executive director, whose proposed duties would include monitoring of legislative activities of federal and state regulatory bodies, interacting with government officials to avoid and resist unnecessary regulations, and promoting financial disclosure among evangelical groups.
Named as chairman of a temporary board of directors was Ted Engstrom of World Vision. Other board members, who were elected at the Chicago meeting, were: Joel Aarsvold, BGEA; Jerry Bridges, the Navigators; Richard Capin, Capin & Krause accounting firm; Brandt Gustavson, Moody Bible Institute; Gordon Loux, Prison Fellowship; Stan Long, Tom Skinner Associates; Lloyd Olson, Campus Crusade for Christ; and Eldon Howard, Sudan Interior Mission. Wilson and Mooneyham are ex officio board members.
At a first annual meeting in September a permanent set of bylaws will be adopted and a permanent board of directors will be elected.
