Gospel for Asia and Compliance with the Evangelical Council for Financial Accountability’s Standards: The 2015 Letter

In K.P. Yohannan’s recent “exclusive personal response” to the fraud lawsuit settlement involving Gospel for Asia, Yohannan traces GFA’s problems to a “confidential letter from a financial standards association we were part of, and of which we were a charter member.” He said that the letter was put on social media to damage GFA. He added that a former staff member sent negative letters to donors.

Some of that is true and some is misleading. The letter Yohannan referred to came from the Evangelical Council for Financial Accountability and was given to me by Gayle Erwin, a former GFA board member who served on the board for 30 years. Erwin had resigned from GFA’s board because of multiple problems he saw at GFA. He wanted to correct GFA’s public statements and believed the donor public would only know the truth if they had information. Erwin’s motive was to inform donors and set the record straight. If informing donors damages GFA, then GFA should consider the implications of that.

Yohannan also said a former staff member sent negative letters. In fact, a group of former staff members approached GFA’s board many months in advance of any public revelations. Long before I published my first blog post about GFA, former staff members approached GFA’s board with 5 concerns which they hoped could be resolved without public disclosure. In this newest statement, Yohannan presented the situation with former staff as though he was surprised by it. He should not have been. The situation had been brewing for months before anything came to light. You can read the concerns and history of the situation at GFADiaspora.com.

K.P. Yohannan said that the allegations were false. However, the board member he assigned to look into the matter — Gayle Erwinfound evidence for all but one of the five concerns.  He later changed his view about the last concern and said he agreed with the former GFA staff on that point as well. Erwin also alleged in 2015 that Yohannan altered Erwin’s report to the GFA board to minimize the severity of Erwin’s findings. Those interested in comparing Yohannan’s statements now to former GFA board member Erwin’s documents and statements from 2015 can see them here. I also intend to post excerpts from Erwin’s report over the next several weeks.

For now, I want to respond to this part of Yohannan’s response:

Every year we evaluated our ministry and underwent an independent audit. In 2015, our governing board received a confidential letter from a financial standards association we were part of, and of which we were a charter member, pointing out that our accounting practices needed to better conform to the requirements set by that association. Despite the unique challenges our organization faces by supporting ministry in certain parts of the world, we immediately set out to comply with their request and hired a new auditing firm.

This paragraph appears to blame GFA’s former auditor Bland Garvey for the lack of adherence to ECFA’s financial standards. In fact, the ECFA didn’t specifically request that GFA change firms. The ECFA listed 17 items of concern; in two of them the ECFA listed problems with accounting practices. In one of them, GFA said they had already changed firms without a request from the ECFA. In fact, most of the matters related to financial practices within the control of GFA’s leadership.

To focus attention on matters of interest to the public which have been obscured by GFA’s response to the lawsuit, I am going to post segments of the ECFA compliance letter on the blog over the next month. Interested readers can read the entire letter by clicking this link. However, starting today, I will take each section in a post and highlight elements of what ECFA found. The reasons ECFA evicted charter member GFA weren’t limited to problems with the accounting firm. I will take them in order from the letter to K.P. Yohannan dated September 2, 2015:

The following is a summary of the most significant GFA compliance issues we reviewed:

1. Use of field-generated funds to satisfy designated foreign contributions. During our meeting on July 1, ECFA first learned that GFA and its field partners have engaged in a multi-year practice whereby field partners at least partially satisfied the designations on foreign contributions (primarily from U.S. donors, restricted for field use in India) by using locally generated field income (contributions from donors in India, profits from an India based rubber plantation, hospitals, etc.).

GFA staff indicated that the purpose of this practice was to retain foreign contributions in Indian Foreign Contribution (FC) accounts to earn a higher interest rate while expending locally generated funds that would not earn the higher interest rate. At this point, it is important to note that GFA disclaims that it exercises any control over field partners (see #10 below).

GFA staff also indicated that amounts in FC accounts would be used eventually for their original designation, as well, with the ultimate result that the purpose of the foreign contributions would be more than fulfilled.

To be clear, GFA solicited funds from donors, primarily gifts with donor restrictions, and transferred the funds to field partners in India, depositing them in FC accounts. While certain amounts were expended from the FC accounts in fulfillment of donor designations, significant amounts were retained in FC accounts over a period of years (see #2 below).

ECFA staff observed to GFA that it is not a normative practice to hold donor-restricted gifts and fulfill donor restrictions using other funds. Especially with respect to funds sent to international partners, it is extremely difficult for GFA to demonstrate that it has exercised appropriate control of the funds. Further, ECFA observed that this practice may not comply with ECFA Standard 7.2 because of the lack of clarity regarding the satisfaction of donor restrictions on gifts solicited by and given to GFA.

Our review of the board minutes did not indicate the GFA board had approved, or even been notified of, the practice of using field generated funds to satisfy restrictions on foreign contributions.

Subsequent to ECFA learning of this practice on July 1, GFA represented to ECFA that GFA’s field partners have ceased the practice of satisfying the designation on foreign contributions with field-generated funds.

GFA acknowledged using money from Indian for-profit ventures and Indian donors to fund activities which donors from the US thought they were funding. US funds were being placed in interest bearing accounts. One problem with this is that field partners might not use those foreign funds for the purposes designated. Some funds were held for many years while donors thought their donations had been spent to help evangelists or children. GFA couldn’t satisfy the ECFA that those funds had been used to satisfy donor intent. This was replicated in the fraud trial which led to the federal judge sanctioning GFA because they were unable to produce evidence about how the funds matched up with donor designations.

Next post: Excessive cash balances held in partner field accounts.

7 thoughts on “Gospel for Asia and Compliance with the Evangelical Council for Financial Accountability’s Standards: The 2015 Letter”

  1. One current board member – Garland Murphy – knows that some of the things in the recent personal response aren’t accurate or are lies of omission. As a board member, is he in any position to speak up publicly or report this misleading public response by Yohannan to the courts?

    1. As does mine: “After Mr. McCarrick, then the archbishop of Newark, left the room, Mr. Grein said he knelt before the pope and revealed, in the presence of several Vatican officials, that Mr. McCarrick had been sexually abusing him since childhood.

      “I told him I had been abused as a child by this man, and I need you to stop it,” said an emotional Mr. Grein, who is now 61. “He put both hands on my head, and told me he would pray for me.”

      No other action was taken, his lawsuit states.” – https://www.nytimes.com/2019/08/15/nyregion/child-sex-abuse-lawsuits.html

      These white-washed religious septic tanks continue to do little to nothing. In the long term I expect this whole “church” to literally go bankrupt as victims figure out it cannot continue without property. Everything wrong with KP’s little scam has been wrong with the RCC either now or even greater in the past. Who cares who kisses who if children still get molested and these snakes keep covering it up?

      1. Presumably, allegations against McCarrick are, or have been, the subject of legal proceedings – as indeed they should be, given the appalling nature of child sexual abuse.

        McCarrick is no longer a bishop, of course. His orders were ‘revoked’ earlier this year – quite rightly, in my view, given the seriousness of what he has done and is alleged to have done.

        (I would point out to anyone reading your comment that the pope to whom you refer is not Francis. We wouldn’t want anyone to get the wrong impression now, would we?! That said, there is certainly more to be done to address past crimes and prevent future ones …)

      2. I notice you have chosen to bring up the issue of (the covering up of) sexual abuse of minors (a horrible crime, to be sure), but I think we might just look at the general point behind my ‘reflex’ …

        One thing that Francis has done during his papacy (which, I would remind you, began long after the episode recounted in the NYT report you cited) is move decisively away from the tactic of using fear to coerce people into a particular religious position. There are numerous examples of this I could cite (“Who am I to judge?” is perhaps one of the best known). His work in this regard is welcomed by many (though not all) catholic Christians, by many like me (who are Christians outside the Roman Catholic Church) and by people of good will do not call themselves Christians. He understands that “Extra Ecclesiam Nulla Salus” does not mean that those outside the Church are not able to be saved.

        The proclamation of the Gospel is about showing forth God’s love (for everyone – not just an alleged portion of humanity ‘designed for salvation’), not engaging in psychological violence that promotes fear and crucifies the vulnerable.

  2. And the continuous lying B.S. continues. The narcissist king pin Yohannan will never stop this because that is the way narcissists operate. They have the same lying nature as their father. KP has surrounded himself with machs who will do and say about anything for a handful of rupees. At his age the news will come one day fairly soon that the criminal mastermind is dead. What good will all of this money do him then? Trying times are coming soon. These will bring danger to those still inside this particular personality cult.

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