Former Staff at Gospel for Asia Speak Out About GFA's Response to ECFA

On October 2, the board of the Evangelical Council for Financial Accountability voted to terminate the membership of Gospel for Asia due to multiple violations of ECFA standards. This board action came after an ECFA investigation into GFA’s financial dealings, integrity and public statements. Yesterday, GFA responded to ECFA.
In that response, GFA leaders claimed they have corrected the problems found by ECFA but presented no specific actions they have taken. It is also not clear if the letter came from the GFA board or senior leaders (K.P. Yohannan, David Carroll, John Beers, and Danny Yohannan).
Today, two former GFA staff have responded to GFA.* I asked several former staff to comment about GFA’s statement. I wanted to know if the former leaders at the mission organization believed the statement was credible and/or represented a positive change.
Cody Carnine was formerly Co-Director of Development at GFA and managed the construction of the new headquarters. He was not impressed by GFA’s reply to ECFA. According to Carnine, the statement did not reflect a change of heart. He said:

Sponsors and donors have also been misled by GFA. But instead of apologizing and asking forgiveness from the ECFA and the supporting donor base of GFA, we get talking points and spin from GFA. Those that have sacrificially given and prayed for the work of GFA are entitled to straight answers. One way of doing this would be for GFA to release the detailed report from the ECFA showing in concrete example after example where GFA has not been in compliance with the basic Biblical principles of the ECFA for the last 30 plus years since the incorporation of Gospel For Asia. 

Carnine’s challenge to GFA is to release the results of ECFA’s investigation. It would be a helpful step for GFA to do this. I would add that an explanation of why the violations were allowed to occur should accompany the report. GFA went for months saying everything was fine. They criticized the former staff and disregarded my reporting. Now we learn that ECFA has come to similar conclusions. GFA has a lot of fences to mend and much to explain.
Travis Helm told me that his reaction is to be skeptical. Helm was a senior leader and Co-Director of Development with responsibility for church relations. Having left GFA several months ago, he doesn’t have trust in GFA’s senior leadership. Helm said,

GFA top leaders have betrayed the trust of the faithful and loyal service of me and my family as well as other former staff. It doesn’t stop there. The betrayal extends to the donors who have sacrificially given and prayed for years. The negative and damaging effects are real and for some the wounds may be chronic. Please stop the posturing and spiritually abusive behaviors. 

In the coming days, I call on GFA leaders (where is K.P. Yohannan?) to release the ECFA report and provide specific answers in response to multiple outstanding questions.
*More may be added to this post as staff respond on the record. Others have replied as well but did not want their name to be used.

Gospel for Asia Responds to ECFA but Fails to Address Troubling Questions

Earlier this evening, Gospel for Asia leadership posted a response to the Evangelical Council for Financial Accountability after the ECFA voted on October 2nd to terminate GFA’s membership.
The statement:

Our Response — ECFA

October 5, 2015

For more than 30 years, Gospel for Asia Inc. has been a member of Evangelical Council for Financial Accountability (ECFA). Gospel for Asia values and respects both the high standards of ECFA and the good advice they have given us.

This past year GFA had four extensive meetings with ECFA representatives about fiduciary matters. Although there were no findings of money missing, ECFA felt that some of our procedures and practices did not line up with their Seven Standards of Responsible Stewardship. GFA was grateful for ECFA’s input and put into practice every suggestion that was mentioned in these meetings. We were not always in agreement with ECFA’s conclusions, but were glad to continue in our relationship and make the adjustments that they advised.

Nevertheless, on October 2, 2015 the ECFA Board of Directors terminated our long-time membership. Although this is disappointing, Gospel for Asia accepts the decision with regret and sadness.

Our greatest concern is for our friends and donors who deserve an explanation as to why this cancellation happened. This will be given in due time through our regular communication channels. In the meantime, we thank our supporters for not jumping to conclusions until those explanations have been made and for continuing to cover us with their prayers.

The expansion of any organization is always filled with growth pains, and we look at these issues questioned by ECFA as a time to learn and grow, increasing our understanding in areas where we have been unintentionally negligent. While we will be working to improve our reporting of financial matters to donors, we will always be cautious about disclosing anything that may jeopardize the safety of ministry partners working in areas hostile to the Gospel. We continually look to the Lord for His wisdom and guidance in often complicated international financial and political environments. We believe that much of the conversation we have had with ECFA has indeed been part of the Lord showing us the way and how to walk in it. We are truly grateful for this part of our journey in learning how to better serve our Lord Jesus, our donors and sponsors, and our field partners as we go forward.

Gospel for Asia Leadership

Yes, GFA, your friends and donors deserve an explanation. Instead, GFA has again delayed and deflected donors with promises but no substance.

Essentially, GFA is claiming they did everything ECFA asked but ECFA dropped them anyway. Given that ECFA has no recent history of dropping organizations where leaders seek compliance after a period of non-compliance (e.g., Mars Hill Church), this is not a credible response and does nothing to inspire confidence in their stewardship.

World Magazine: Gospel for Asia Admits Some Lack of Disclosure; Hopes to Regain ECFA Membership

World magazine’s Warren Smith has an article out today which provides some additional information regarding the Evangelical Council for Financial Accountability’s termination of Gospel for Asia’s ECFA membership.
According to Smith’s reporting, the lack of disclosure surrounding the $40+ million headquarters was key. As I first reported here, GFA failed to disclose the $19.8 million transfer of cash from Believers’ Church to help complete GFA’s new Wills Point, TX headquarters.  This cash was not reported as a related party transaction but as an anonymous donation. GFA’s leaders told staff that the organization would not borrow money for the construction but in fact did borrow money from a U.S. bank in 2014 and then took money which Believers’ Church borrowed from an undisclosed source in India.
GFA’s CFO David Carroll said ECFA changes had been made and hopes to regain membership. I will have more to say about this in coming posts.
According to World, Ministry Watch’s Rusty Leonard has advised donors to halt all donations to GFA due to the extent of the problems.
Look for another article on this news from Christianity Today. Spokespeople for the magazine disclosed via multiple channels that an article is coming.

Gospel for Asia Adds Board Members

According to a former staffer in a position to know, Gospel for Asia added Frances Chan (Crazy Love), David Mains (Chapel of the Air), and Damian Kyle (Calvary Chapel – Modesto) to their governing board.
The addition of these men makes GFA’s silence all the more troubling. It seems fair to call these men into accountability for the questions which GFA has refused to answer about their financial and other dealings.
These new members join founder and CEO K.P. Yohannan, his son Danny, his wife Gisela, Chuck Zink, Gayle Erwin, Robert Felder and Skip Heitzig as board members.

Gospel for Asia and Evangelical Council for Financial Accountability's Standard 4

ecfa sealYesterday, I wrote that Gospel for Asia may be in conflict with IRS guidelines regarding granting U.S. tax exempt donations to foreign entities. Today, I want to compare publicly available information about GFA to the Evangelical Council for Financial Accountability’s Guideline Four. In this post, I am specifically interested in the ECFA requirements for members who send money to foreign organizations and affiliates.
ECFA members are required to adhere to the following guidelines:

International grant-making.  U.S. tax law does not prohibit the making of grants by a U.S. tax-exempt organization to recipients in other countries if they further the U.S. organization’s tax-exempt purposes. However, the IRS has articulated some parameters as to when contributions may or may not be deductible for tax purposes, if they are made to a U.S. charity and subsequently distributed in the form of a grant to a foreign recipient.
The reason for IRS scrutiny of such grants is because only donations to a U.S. tax-exempt organization are deductible as charitable contributions. Contributions by a U.S. taxpayer to a foreign organization are not tax-deductible.
A U.S. charity may not act merely as a conduit of funds for a foreign recipient. This would result in treating these indirect contributions to a foreign organization as tax-deductible contributions, something that would not be allowed if the funds were made directly to the foreign entity.
However, if a grant is made by a U.S. charity to further its exempt purposes, and if the grant funds are clearly under the control and discretion of the U.S. charity rather than the donor, it is unlikely that the IRS will challenge the deductibility of the gift.

The issue of “discretion and control” is what I raised yesterday. GFA-US did not disclose millions of dollars of U.S. donor money given to Believers’ Church, Love India Ministry and Last Hour Ministry in the 2013 annual audit. Instead, GFA-US claimed that $58.5 million went to GFA-India. However, GFA-India only disclosed $6.5 million in donations from the United States. Even if donations from GFA-US to the other three NGOs were listed in the 2013 audit, $30.5 million dollars still went unreported in India in 2013 (see this article for the breakdown).

The real donees for about $28 million dollars from U.S. donors are Believers’ Church, Love India Ministry and Last Hour Ministry. According to GFA-US, Believers’ Church is a separate organization legally. Recently, David Carroll told Christian Today:

GFA’s Chief Operating Officer David Carroll told Christian Today that it was important to understand that GFA India and Believers Church were separate entities from Gospel for Asia USA.

Carroll said that the Indian GFA and Believers’ Church are responsible for dispersing the funds:

“Though Gospel for Asia India and Believers Church is responsible for dispersing the funds, they know the requests of the donors for the specific designations the money was given for and they are fastidious about documenting the disbursement of donor funds. The donations go where they have been designated.”

It may be true that the donations go where the donors want, but then again they may not. GFA has given the public reasons to question. David Carroll wants us to take his word that GFA-India and Believers’ Church spend the money in keeping with donor intent. However, when auditor Jason Watkins, pastor and former donor Bruce Morrison, and I analysed the public reports of GFA-India’s and Believers’ Church’s spending in India, we couldn’t find millions of dollars GFA-US said was sent to India. The reports of what was received in India don’t match the claims of giving in the U.S. In response to questions about the discrepancy, GFA has been silent. Furthermore, an Indian tax court recently wrote that GFA used funds for reasons not in keeping with the intended purpose. Without a plausible accounting of millions of donor dollars, why should the donor public believe that GFA-India and BC are spending the funds they do report in keeping with donor intent?

The guidelines continue:

Organizations may seek professional counsel concerning operations that result in grants to foreign recipients. Various rulings and tax cases stipulate certain characteristics in evaluating whether grants to foreign recipients are proper, exempt-purpose expenditures of the U.S. charity and, therefore, if any supporting gifts actually are deductible by donors of those funds.

Impact of international operations on the financial statements.  It is important for organizations to properly control, adequately account for, responsibly audit, and fully disclose in their financial statements the nature and scope of their operations, both within the U.S. and internationally. Organizations and their auditors should consider the impact of worldwide operations on the scope of the audit, and the financial statements should report on all organizational assets, liabilities, revenue, and expenses.

This guideline is not being met. The 2012 and 2013 audits do not disclose funds given to Believers’ Church, Love India Ministry and Last Hour Ministry. The amount claimed to be given to GFA-India by GFA-US comes nowhere close to matching up with what is reported in India. Furthermore, GFA’s audit doesn’t include $14 million USD given by Canadians, supposedly to India, but not reported in India. According to GFA’s COO David Carroll, Canadian funds are lumped in with the U.S. funds and reported together. However, that makes the discrepancy $14 million greater since GFA-India does not report a penny coming from Canada.

The publicly available audit provided by GFA does not fully disclose their operations within the U.S. and internationally. This has been true for years and yet GFA has used the ECFA seal of approval to claim financial health and integrity. As recently as June 10, the ECFA told Christian Today:

Regarding apparent financial discrepancies, it said: “There are certain foreign NGOs that include ‘Gospel for Asia’ in their name. The data of those NGOs is not consolidated with that of Gospel for Asia (US) for financial statements purposes.”

Why not? ECFA’s guideline four certainly appears to require consolidated reports.

It [ECFA] concluded: “Gospel for Asia is in full compliance with ECFA in requiring our members to provide a copy of its current financial statements upon written request and other disclosures as the law may require. The organisation has gone beyond what the law requires by submitting to ECFA’s accreditation process.”

Is GFA-US (and ECFA) really going to claim that these GFA NGOs are not part of their international operations? If so, then how can GFA-US claim that they exercise “discretion and control” over the donations given by U.S. tax payers? If GFA-India and Believers’ Church are so autonomous that they are not part of ECFA-required financial reporting, then how can U.S. donors be confident that GFA-US has sufficient “discretion and control” to make sure those dollars are going where donors specify?  This question is especially relevant since the reports filed by the Indian recipients of U.S. donations to GFA don’t match what GFA claims they send to India.

Back to the guidelines:

To be “unqualified” or “clean,” an independent auditor’s report must reflect no restriction on the scope of the audit.

The reach of an organization extends to activities conducted under its control (internationally) when expenditures are made to further its exempt purposes to compensate workers, pay business expenses, provide benevolence to the poor and needy, or to make exempt-purpose grants.

These “exempt purposes” are among the purposes reported in India for funds sent by GFA in Texas.

The guidelines continue:

In order for financial statements to be in conformity with generally accepted accounting principles (GAAP), they must accurately portray the full range of the organization’s operations internationally.

A review of GFA’s 2012 and 2013 audits makes it clear that GFA is in violation of this statement. The financial status of the Indian affiliate (what GFA-India is called in the 2013 financial statement) is not reported, nor are donations to Believers’ Church, Love India Ministry and Last Hour Ministry reported in the audit. I should add that the funds smurfed to India via student groups illegally carrying money to India without being declared in the United States is not referred to in the 2012 and 2013 audits.

Guideline 4 continues:

The FASB Accounting Standards Codification 958-205 (Topic 205, “Presentation of Financial Statements”) sets forth that such statements must focus on the organization as a whole, including its total assets, liabilities, net assets, revenue, expenses, and changes in net assets. In addition, ASC-810 (Topic 810, “Consolidation”) helps guide a reporting organization as to when it must consolidate another not-for-profit organization in which it has a controlling financial interest.

Significant granting activities should be properly disclosed in an organization’s financial statements, including a description of the nature and purpose of the grants and the grant administration policies.

I think $20.6 million to Believers’ Church, $3.6 million to Last Hour Ministry and $3.6 million to Love India Ministry would have to be considered “significant granting activity.” These are not disclosed in the financial audit done by Bland Garvey; and yet ECFA declares GFA to be in compliance.

Guideline 4 continues:

Grant administration policies should be well-developed and approved by the governing board, while adaptable to a wide range of circumstances. The following are possible controls and accountability measures:

  1. Written progress reports
  2. Required accounting or financial statements
  3. Required internal or independent audits and inspections
  4. On-site program inspections by grantor personnel
  5. Retaining discretion as to when funds will be remitted based on administration policies and grant agreements, including the policy and practice of refusing conditional or earmarked gifts that create an obligation to remit the funds immediately
  6. Adequate oversight (supervision) and review (program evaluation) or compliance with administration policies by the governing board and/or the organization’s independent auditors

Conformity with applicable laws and regulations.  Standard 4 establishes the guideline that ECFA accredited organizations shall use resources in conformity with applicable laws and regulations. The standard provides a caveat that biblical mandates may be taken into account when considering conformity with laws and regulations. In select situations, an accredited organization may feel compelled to take actions that are in conflict with certain laws, i.e., with respect to religious freedoms and carrying out the Great Commission.

The ECFA requires the board and auditors to maintain oversight sufficient to insure that the organizations policies are being carried out. The public doesn’t know why millions of dollars don’t show up in Indian reports. However, it is known and now admitted that GFA violated its own policies regarding cash transfers to India via smuggling cash via students. GFA claims to only send money to foreign destinations via bank wire. For some undisclosed period of time an undisclosed sum of cash was sent to India without declaring the cash to U.S. or India customs. ECFA and GFA want all of that to go away by saying they won’t do it again.
What donors should understand is that GFA was a member in good standing the entire time they violated their own and ECFA’s standards. They remain a member in good standing with no consequences at all to that standing.
For ECFA purposes only, the last section may give GFA some wiggle room to keep secrets about reporting funds received in India. If GFA-India isn’t reporting all of the income that GFA-US claims is going there (we already know an Indian court has asserted that all the funds are not being used for the intended purposes), this would be a violation of Indian law. The lack of reporting of Canada as a source of $14 million USD appears to be a violation of Indian law. GFA might claim that the lack of reporting was due to protecting missionaries in some way. This seems to be the GFA response line but I have heard no plausible explanation about how non-disclosure of some funds but not others protects anyone’s safety.
 

Gospel for Asia Still Suing Google and Facebook Even Though K.P. Yohannan Claimed Victory in 2012

A comment at the Phoenix Preacher blog tipped me off to the following story.
In December 2012, Gospel for Asia CEO, K.P. Yohannan, wrote an article trumpeting what Yohannan said was a positive verdict in a lawsuit filed in the Delhi High Court.* Here is how Yohannan described the case and circumstances leading up to it.

A Verdict that Vindicated

Although we never discussed this publicly until now, I have wondered if some of our friends like you might have become confused by this negative media. But what could we do? The Lord knew our hearts, and it would be up to Him to defend us. So we sought Him. We prayed. We fasted. And slowly, step by step the Lord went before us.

At first, we had no idea that all the false information out there was originating from one source or what we could do about it. Gradually, we were able to understand what was happening, and last year, we learned that we could appeal to the government of India and to the High Court in Delhi to look into these cyber attacks on us—which we did. Then, during this last year, various governmental departments investigated Gospel for Asia’s activity in detail to see if any of these accusations were true.

I am grateful to the Lord that what was meant for evil, God used for good. After studying us, these departments determined that we were one of the most upright groups in the country, truly improving the nation. The High Court thus issued a verdict, directing networking sites to remove and stop uploading any false information about Gospel for Asia and our various ministries. In addition, the High Court also had those who posted this misinformation arrested and the material they uploaded removed.

God Came to Our Rescue

I thank God for His grace, mercy and answer to our prayers. He came to our rescue and defended us.
Because you have been with us on this journey, I wanted to let you know what has transpired and give you the opportunity to hear the truth from us, especially if any of this misinformation ever caused doubt in your mind. Below are some links to articles about the verdict from the Indian High Court in Delhi.
http://www.indianexpress.com/news/hc-notice-to-google-facebook-on-churchs-plea/1037044/
http://www.business-standard.com/generalnews/news/hc-notice-to-google-facebookchurchs-plea/84729/

That’s Not What the Articles Say
Yohannan’s description makes it appear that the Delhi High Court issued a verdict in 2012 which led to removal of articles from the Internet and the arrest of perpetrators of defamation. However, the articles Yohannan provided contradict his story. Both links lead to stories which describe a lawsuit filed by GFA and Believers’ Church against Google, Facebook and some unnamed other defendants. The first one is dated November 27, 2012 and says:

The Delhi High Court today sought the replies of various social networking sites including Google and Facebook to a plea for removal of “defamatory and derogatory” articles against a church and an NGO from their sites.

Issuing notice to M/s Google India Pvt Ltd, its subsidiaries – You Tube, Blogger, Blogspot.in and also to Facebook, Justice Valmiki Mehta sought their replies by January 7, next year.

The court issued the notice on a joint plea of Gospel for Asia (a city-based NGO) and Believers Church, which alleged that “there are several malicious contents with intent to defame and destroy the reputation of entire organisation (church) including it founder Metropolitan Bishop Dr K P Yohannan and Rev Fr Daniel Varghese, Diocesan Secretary of the church.”

“Certain persons with vested interest are continuously trying to malign the reputation of the organisation by uploading defamatory contents on internet.

“The Google and other intermediaries are liable to restrict these contents as per Section 79 (3)(a) of the Information Technology Act since,” said the complaint filed through counsel Deepak Prakash.

The civil suit also cited the statements of former presidents A P J Abdul Kalam and Pratibha Devi Singh Patil appreciating the work of the organisation and claimed that “different government agencies verified and appreciated the work of the organisation on different occasions and stated that there is no negative remark about them from any corner.”

The plea claimed that the organisation is serving in more than 13 countries with its charity missions reaching lakhs of poor and downtrodden people and improving their standard of living which also means to earn a good life.

“It is carrying out welfare and development activities all over India. It implements projects especially in remote and rural areas and city slums, by its nation building project and providing adequate possibilities to down-trodden and needy to become healthy, productive and functional citizen of this country irrespective of caste, creed and gender,” the plea said.

GFA lauded themselves in their plea to the court, but there was no verdict given in the case. Instead, the judge gave Google, Facebook and others until January, 2013 to answer the suit: “Justice Valmiki Mehta sought their replies by January 7, next year.” According to this article, there was no verdict. The defendants were given a chance to answer, and initially those responses were due after Yohannan wrote his article.  The second article provides the same information and nothing about a verdict. 
This case was also covered at the time by Christian Today in an article published November 30, 2012. In all three articles, it is very clear that no verdict had been given by the court. In fact, the first action by GFA and BC against Google and Facebook was filed on November 21, 2012 in the Delhi High Court.
The Case is Still Active
The most recent development in the case was filed today.  In other words, this case that K.P. Yohannan said was God rescuing GFA with a “verdict that vindicated” has not been settled as of today. The next action in the case is slated for December 7, 2015.

IN THE HIGH COURT OF DELHI AT NEW DELHI +
CS(OS) 3297/2012
GOSPEL FOR ASIA & OTHERS
….. Plaintiffs Through Mr. Deepak Prakash, Advocate
versus GOOGLE INC & OTHERS
….. Defendant Through Mr. Angad Singh Dugal, Advocate for defendant no.1 Mr. Akhil Anand and Ms. Richa Srivastava, Advocates for defendant no.4
CORAM:
SH. ANIL KUMAR SISODIA (DHJS), JOINT REGISTRAR (JUDICIAL) O R D E R
30.07.2015
IA No. 22211/2014
Defendants have not filed reply to the application, except defendant no.4, despite last and final opportunity given on the last date of hearing. In these facts and circumstances, the opportunity to file by other defendants stands closed.
Put up for arguments on the application on 7th December, 2015.
ANIL KUMAR SISODIA (DHJS) JOINT REGISTRAR (JUDICIAL)
JULY 30, 2015 savita

It appears that Google did not file a reply to the plaintiffs. Facebook did file one.  I have contacted GFA’s lawyer, Google’s and Facebook’s lawyer and Google’s and Facebook’s press contacts about the case with no answers as yet. UPDATE 7/31 – I reached Angad Singh Dugal, advocate for Google in the case. He confirmed that the case is still active and added that Google has filed a reply in defense.
What is clear is from the court record (you can see everything available on the Delhi High Court website) is that this case has been continued, dragging on for nearly three years, and no verdict has been rendered.
Is K.P. Yohannan unaware of these facts? Or is this story like his denial of followers kissing his ring?
In any case, Yohannan’s faulty narrative about this case provides another reason why GFA should become more transparent and address pastors’ and donors’ questions about cash smuggling, unaccounted for funds, and numerous others concerns.
 
 
 
*High Courts in India appear to be like our federal District Courts. This case was filed in the Delhi High Court.

Indian Tax Court on Gospel for Asia and Believers' Church: "Substantial Income" Not Used for Intended Purposes

In 2014, an Indian tax court considered a claim against Gospel for Asia and Believers’ Church. According to a court filing dated December 12, 2014, Gospel for Asia and Believers Church spent more of their income than allowed on purposes not related to the reason they were formed. Doing so made that income taxable. Gospel for Asia and Believers’ Church together appealed the assessment of tax, saying that the use of the funds were given to related organizations which had charitable purposes. The court found that funds were still being used for unintended purposes and remanded the matter back to the tax assessor. I have been unable to find any documentation of how much GFA and BC had to pay or if the matter has been resolved.
You can read the whole thing at this Indian site where public records are archived. I have pulled out the relevant portions below:

Shri M Anil Kumar, the ld.DR submitted that both the assessees are registered as charitable trust u/s 12AA of the Act. During the year under consideration, the assessing officer found that both the assessees have given loan to other trusts from the unutilised portion of the income which exceeded more than 15%. Referring to section 13(1)(d)(i) of the Act, the ld.DR submitted that the assessee trust invested its funds in the form/mode otherwise than prescribed in section 11(5) of the Act. Therefore, according to the ld.DR, there was violation of section 11(2) r.w.s. 13(2)(d) of the Act. According to the ld.DR, the assessee is not entitled for any exemption.

Assessees refer to Believers’ Church and Gospel for Asia. Both are registered as charitable trusts. Both groups had income during the 2010-2011 tax year and loaned more than the allowed 15% to other charitable trusts related to GFA and BC. Originally, the tax assessor considered those loans improper investments which meant that the income invested was not exempted from tax. The original complaint of the tax assessor was eventually set aside in favor of another interpretation by the tax court and remanded back to the tax assessor for reassessment of tax.
GFA and BC had the following interpretation of tax law. The “ld.representative for the assessee” refers to GFA’s and BC’s representative.

On the contrary, Shri Venkitachalam, the ld.representative for the assessee submitted that both the assessees advanced funds to other registered trusts which have similar objects. According to the ld.representative, the assessee advanced funds to BCMET for construction of hospital building. BCMET is also a registered trust u/s 12AA of the Act. The ld.representative further submitted that Carmel Education Trust also a registered charitable trust u/s 12A of the Act was given funds by the assessee to carry out their charitable activities. According to the ld.representative, when the funds were advanced to other similarly placed charitable trusts, amounts to application of income; therefore, the provisions of section 11(2) are not applicable. The ld.representative further submitted that advancing money to similarly placed charitable trusts does not amount to investment or deposit. Therefore, there is no violation of section 11(5) of the Act also.

GFA and BC “advanced funds” to related trusts, one involved in building Believers Church Medical College Hospital and the other an educational trust which operates various schools. I don’t know for certain, but it sounds like the educational trust was given funds to help fund operating expenses. The BC’s hospital was given money for construction of the state of the art facility. Thus, BC and GFA took income on donor money and used it to fund the hospital and engineering school.
The court considered both sides and concluded that “substantial income” of GFA and BC was not used for “the purposes for which they were formed.”

We have considered the rival submissions on either side and also perused the material available on record. It is not in dispute that substantial income of the assessee trust was not used by both the assessees for the purposes for which they were formed. (emphasis added)

The court said there is no question that GFA and BC misused the funds. The main question was about how to treat those funds for tax purposes. After going through an evaluation of Indian law relating to the facts of the case, the court ruled as follows:

Therefore, in view of the latest development of law with effect from 01-04-2003 if the income is paid or credited to another trust or institution even though they are registered u/s 12AA or approved u/s 10(23C) of the Act, the same has to be treated as income of the assessee.

bcmch
Believers’ Church Hospital and Medical College

Since GFA and BC loaned/advanced more than allowed by law, that income has to be treated as income of the two organizations. The court then sent the matter back to the tax assessor to figure out what GFA and BC owed.
I can’t find any additional cases or appeals so the matter might still be active. I asked GFA what happened in the case but, as usual, received no answers.
Donors have questions but all they are getting are assurances that their donations are going for the purposes intended. This case provides one more basis to question that claim.
This case adds one more item to the growing list of concerns about GFA’s financial affairs.

Francis Chan Joins Gospel for Asia Board Meeting Today; Is He Still Skeptical?

Last week, I publicly asked pastor Francis Chan for some answers regarding Gospel for Asia, a ministry he has endorsed. Today, I learned from a source at GFA that GFA’s board is meeting in Wills Point today with Francis Chan in attendance. It is not clear if Chan is there as a new board member, as has been rumored, or if he is there to be skeptical and ask questions. In any case, this heightens expectations that perhaps GFA leaders might break their silence. 

If Chan does join the board, that might help to address concerns but not just by joining. The expectation is that he would use his position on the board to create a culture of transparency. If he doesn’t do that, the impatience of donors and the public will grow.

As a summary, here are some concerns for GFA.

While these are not the only problems, getting some information about them would be a good start.