Church Leaders Call for Accountability in Handling of Funds : Donations: Stricter self-regulation will stave off outside scrutiny, officials say. Religious institutions take in more than $50 billion a year.

In February, officials of the Episcopal Church disclosed that Ellen Cooke, a pastor’s wife and the denomination’s former national treasurer, was under investigation for misusing church money.

In September, the chief financial officer of the Roman Catholic Diocese of Buffalo emerged from prison, where he had spent 32 months for embezzling nearly $1.5 million from the church treasury.

In 1989, the pastor’s wife at a Minnesota Protestant congregation was sentenced to two years in jail for stealing $100,000 from the church, where she served as bookkeeper.

Who is minding God’s store?

It’s a question as old as the church itself, dating from the story in the Gospel of John about Judas Iscariot, who pilfered from the common purse that Jesus and his disciples set aside for the poor.

With U.S. religious institutions taking in nearly $50 billion in donations a year, church leaders and experts in the nonprofit sector are demanding greater financial accountability among churches and denominational offices.

Otherwise, they say, outside scrutiny may come--perhaps even from the government, despite the Constitution’s guarantees of church-state separation.

“From my point of view it is a very legitimate concern of government that nonprofit organizations and religious organizations be run well,” said Stephen Schultz, chief financial officer of the Baptist General Conference, which claims 134,000 members in more than 800 congregations nationwide. “I believe that if we do not self-regulate, then we can fully expect that the government will (regulate us).”

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Some critics say it is foolish to wait for religious bodies to do a better job of policing themselves. They want local congregations and denominational bodies to open their books to public scrutiny, just as charitable institutions and some para-church ministries in specialized work are required to do.

“My feeling is that if an organization is dealing on the level, it should have nothing to hide,” said Peter Hall, a research scientist and expert on nonprofit organizations at Yale University’s Institution for Social and Policy Studies. “Even if churches are tax-exempt, they should still have to report their finances, just as a matter of good citizenship.”

Religious bodies employ a tremendously wide range of fiscal management practices, ranging from the records-in-a-shoebox type overseen by a single individual, to sophisticated, computerized operations managed by boards of directors skilled in high finance.

But fiscal mismanagement seems to play no favorites, and the strongest critics see a need to go beyond in-house oversight, no matter how sophisticated it might be.

“You’d think that after the Jim and Tammy Bakker scandal that people would wise up, that everybody should be accountable, disclose how they’re using the public’s charitable dollars,” said Daniel Borochoff, president of the American Institute of Philanthropy in St. Louis, an agency that tracks philanthropic groups and rates them.

“It’s our position that you’re asking for things like this to happen by not having these churches be accountable.”

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Others argue that it would be next to impossible to override the federal guarantees of church-state separation and allow government auditing of church financial records.

“I think the outcry among religious groups would be so loud and sustained it would be difficult politically to happen,” said Brent Walker, attorney for the Baptist Joint Committee on Public Affairs, which represents eight Baptist groups in public policy matters and is a strong advocate of church-state separation.

Experts in nonprofit institutions say there are several steps--short of submitting their records to public or government inspection--that congregations and denominational bodies can take to prevent fiscal disaster.

Independent audits should be undertaken regularly, the experts say.

Church officials should appoint a board of directors that is unafraid to ask tough questions and demand good answers--not always an easy task when a bishop, priest or pastor is on the staff.

“Boards need to really pay attention to their duties and not get cowed by being nice . . . to the executive, the bishop, whoever it is who’s in charge,” said Eleanor Brilliant, a professor at the Rutgers School of Social Work and author of a book on the United Way of America, whose former president was recently convicted of stealing more than $600,000 from the group.

And finally, it is important to delegate financial responsibility to a variety of individuals--to avoid the temptations and opportunities that can arise when one person has total control.