How to tell it’s Annual Catholic Appeal Time

How to tell it’s Annual Catholic Appeal Time February 3, 2019;

This post has been updated since its original publication to reflect analysis of the Pastoral Center annual report.

This weekend, in lieu of a homily, we listened to a recording by Cardinal Cupich telling us how very much he cared about victims of sexual abuse and how very saddened he was at all the bad things that had happened and how very hard he was going to work to fix everything.  (I cannot find a link to a transcript.)  It was a very “message: I care” sort of speech, given in that soothing, man-of-God manner of speaking that may or may not be his natural tone of voice vs. something deliberately adopted, and the ostensible impetus for it was to update Chicago Catholics on the upcoming worldwide meeting of bishops on the topic during which Cupich has a major leadership role.

But it clearly wasn’t.  There were no specifics, no updates, just the same statements we’ve heard from him plenty of times before.

In other news, the Annual Catholic Appeal is almost here.  The archdiocese has already sent out donation requests to everyone on their mailing list.  Two weekends from now, we’ll be hearing our pastors preach about how we should donate, and three weekends from now, we’ll listen to Cupich’s recorded voice, followed by a request to fill out pledge cards in the pew.

Cupich must take us for fools if he thinks we won’t connect the dots.  They’re worried that Catholics unhappy with what he’s up to will choose not to donate — and, so far as I understand, the way the Archdiocese of Chicago runs things, the Appeal is genuinely voluntary, as parishes are held harmless if they don’t reach their goal, and are just incentivized to promote the appeal because money in excess of the goal is refunded to the parish.

And I wish he’d just come out and say, “I know you think I care more about my own personal power and my political causes than I do the spiritual well-being of Chicago Catholics, but please don’t hold that against us as we ask for your money.”  Instead, the “note of gratitude from Cardinal Cupich” in the brochure in the mail says that he understands “that this last year was not without challenges.”

And it’s a really crummy brochure, or, at least, it’s bland and unhelpful.  It reports that 60% of the $17 million goes to parishes — but they count in the total those above-goal rebates, which seems a bit like cheating.  Of the 29% in “archdiocesan ministries,” how much is the centralized sort of administrative and other assistance that we expect happens, like the deacon formation program, the centralized administration of employee benefit programs and what-not, and how much is the Cardinal’s own office, political causes, and the like?  And why would this cost 7% ($1,190,000) in fundraising expenses?  – That’s a lot of printing, postage, and “processing” (of the returned pledge cards, I guess).

As it happens, some of these questions, at least, can be answered by looking at the most recent annual report of the Pastoral Center as well as the general archdiocese annual report.  The Pastoral Center is the umbrella category for all the centralized spending in the archdiocese, everything from parish shared services to the cardinal’s expenses to the Food Service program (hot lunch for participating schools).  So now I’ll put on my Forbes Contributor hat and — well, I won’t actuary-splain, but do my best to understand what they’re up to and invite readers who have more knowledge to share it.

First of all, some categories of Pastoral Center revenue and expenses are a wash.  They report $45.8 million in revenue for Food Service, and $45.9 million in Food Service expenses.  There is no subsidy for kids’ school lunches, and it’s fully paid for by school families and the federal school lunch program.  They report $6.7 million in publications revenue, and $6.2 million in publications expense, which I take to mean that the archdiocesan newspaper pays for itself, and makes a slight profit, in terms of subscription fees, whether paid for by individuals or by parishes.  They report $105.6 million in parish assessments for insurance, and $96.2 million for the “insurance and retirement benefits program,” and based on later text in the report, these two items are paired, that is, the coverage for employee benefits (e.g., health insurance), property/casualty insurance, retirement benefits, and the like.

Incidentally, the repeated claim of the Archdiocese is that no “regular” donations are used to settle claims related to priests’ misconduct, and that instead they are selling vacant land and other properties is not particularly visible here.  I suppose it’s the whole “money is fungible” issue.  They state (page 11 of the report) that in 2017 they settled claims of $40.1 million, in 2016 claims of $16.1 million.  Subsequent to the June 30, 2017 fiscal year-end, but prior to the publishing of the report, they settled a further $9.9 million.  These numbers don’t seem to gel with the reported “insurance” expense line item, coming in at less than the parish assessments and less in 2017 than 2016.  Am I missing something?  Are these covered by a liability insurance policy?  (Wouldn’t they have blown through that coverage long ago?)  Not reported on the income statement at all?  Accrued and reserved for in prior reporting periods in the form of estimates of future payouts?  As it is, the balance sheet only reports $7.4 million in undeveloped real estate (plus $21.9 million in property of closed parishes), but $133.7 million in liabilities for expected future insurance claims, which means the line of “we’re going to pay for everything from our vacant lots” is, at least, no longer true – perhaps they’ve sold most of these already.

Here’s another “it’s a wash” line item that was a bit of a surprise to me:  the seminaries are listed as having an expense of $13.8 million in income, $12.6 million in expense.  I get that dioceses who don’t operate their own seminaries and send their priests-in-training here, pay tuition (it’s $39,000 for the total cost of attendance according to the website) but I would nonetheless have expected that there’d be a significant outlay of money for archdiocesan students, as well as diaconal candidates.  Do they charge tuition, have each student collect as much government financial aid as possible, and then provide a “scholarship” for the rest which they record as an expense in a circular fashion?

Oh, and the To Teach Who Christ Is (TTWCI) capital campaign took in $17.9 million ($14.3 million of that temporarily restricted) and had expenses of $15.5 million.  This looks worse than it is because the bulk of the income does directly to the parishes, and the expenses include not just fundraising expenses ($5.2 million) but also distributions to other programs.

Finally, they report $15.4 million in investment return “designated for current operations” and $7.8 million in interest income from loans to parishes, but this is balanced out by the $15.3 million in “provision for uncollectible loans and operating receivables” and the interest expense of $10.1 million.

One final item:  The Pastoral Center reports expenses of $56.4 million, but they report revenues of $21.7 million for “Pastoral Center services.”  I’ll be honest, this is a bit of a head-scratcher.  Are they charging parishes fees for the services they provide?  Is the catechist formation they pat themselves on the back for in their brochure something that volunteers (or their parishes) pay a fee to participate in?

So that leaves the key income sources and expenses:

Parishes paid assessments to the tune of $25.2 million, or a net of $18.3 after subtracting out grants back to poorer parishes, and Catholic Cemeteries (that is, families of the deceased purchasing gravesites) paid an assessment of a flat $5 million.

The Annual Catholic Appeal took in a net $9.1 million after expenses (and parish “rebates”).

The “self-supporting” entities had a net profit of $10.9 million (mostly the excess of the parish assessments for insurance relative to the actual expenses).

There were $3.8 million in other contributions, and $6.0 million in other income.

The net expenses for the Pastoral Center totaled $34.7 million.

Other expenses totaled $5.2 million.

And they reported financial-type expenses of 11.7 million in net, including investment income, interest expense, “provision for uncollectible loans and operating receivables,” and depreciation and accretion.

They also report their spending expressed in terms of “functional expense” categories:

Here they report $16.6 million in “ministerial services” and $45.0 million in “management and general expense” (excluding depreciation).  In addition, they report $9.6 million in fundraising expenses in addition to that associated with the ACA and the TTWCI.  (Let’s hope the money they collect from these development efforts goes directly into some other funds rather than being a waste of time.)

Oh, and they report net contributions in last year’s Annual Catholic Appeal of $17.1 million, and $5,776 in “parish rebates and debt relief.”  Are these effectively the same thing — that is, parishes who exceed their goal (which is set at 6% of offertory income) are given cash rebates unless they’re behind on their loans from the archdiocese?  In any case, there’s an additional item of “uncollectible pledge provision expense” of $1.0 million which isn’t entirely clear to me (do the “contributions” include money pledged but not paid, and then the never-actually-paid pledges are subtracted out?).  In any case, netting this bit out gets a fundraising expense of 8% — but only if you count the “rebates” as part of the overall revenue, that is, if you figure that Catholics make their ACA donations out of a bucket of money that would otherwise have gone into their parishes’ offering baskets, then the numbers look worse, with a fundraising expense of 12.3%.

So what does all this mean?  I have questions.

What sort of spending is encompassed in “management and other expense”?

What is the “revenue” that the Pastoral Center reports?  Do they charge for their services?

How does the $45 million in “management and general expense” split out?  How much is the cardinal’s (office’s) expenses? Other staff?  That’s a lot of money, especially compared to the piddly “ministerial services.”

Oh, and nowhere in this report is any indicator of what the parish assessment looks like.   If you assume that the appeal actually takes in 90% of the parish-specific goals, then based on the reported assessments, maybe the parishes might be sending over 13% of their offering basket intake to the archdiocese.  But that’s just a guess.

And, finally, the Annual Catholic Appeal website provide a specific breakdown of where the money goes: 1.4 million to parish life programs; $0.6 million to religious education programs for youth, college students and adults; $1.0 million to continuing education programs; $0.5 million for “human dignity and solidarity” including immigration, prison ministry, and Peace & Justice Initiatives; $0.3 million for parish transformation programs; and $0.4 million for family ministries, including marriage prep, marriage support, and family ministry. This totals $4.7 million and is in addition to the rebates and direct grants to schools.

Does this mean that the archdiocese truly segregates its funds, that the Appeal is the sole source of funding for these services, and that, absent that, these programs would not exist, or that these funds truly and meaningfully provide additional funds to these groups that would not exist absent the appeal?

Does withholding a contribution that you’d otherwise have made imperil your parish, if they’re counting on the rebate, or imperil these programs (yeah, I might not feel too bad about the pro-immigration activism or the undefined Peace & Justice Initiatives losing their funding), but not make a dent in Cardinal Cupich’s personal spending because that comes from the fixed parish assessments or elsewhere in the budget?

Or, despite the claims otherwise, is everything comingled, and the Appeal just another source of funding the expected revenues from which are budgeted into the overall spending plan for the year?

There’s no transparency here.

In fact, the more I type, the more irritated I am, and the more tempted I am to go beyond just ignoring the pitch and instead writing a letter back that I’m withholding the donation both because of Cupich’s behavior (exactly how many more Sundays is he going to intrude on mass with self-serving letters/statements?) and the lack of transparency around all of this.

What about you?  Will you donate?  Or does  your diocese just collect as much money as it wants via the assessments without bothering with an equivalent appeal?  And do you have any idea how much your diocese takes?


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