Evangelical Council for Financial Accountability Reviewing Gospel for Asia

This morning Christian Today’s Mark Woods reports that the Evangelical Council for Financial Accountability is reviewing Gospel for Asia.
Woods takes note of the controversy surrounding GFA and says that the review is expected to last until October. At that time, GFA will provide answers to “outstanding questions.”
Woods and Christian Today have provided some good coverage of this matter while everybody else appears to be sitting on their hands. Perhaps they are waiting for the review results as well.
Waiting for the completion of a review to answer basic questions is puzzling and troubling. One basic question relates to the claim that $58.5 million dollars was sent to Gospel for Asia in India during the calendar year 2013. However, during that same span of time, GFA in India only reported receiving around $6 million from GFA in the U.S.  I cannot understand why GFA must wait until ECFA completes a review to address that discrepancy.
Furthermore, the 2013 audit says does not tell donors about the funds sent to Believers’ Church and two other Indian NGOs. Why not? And then there is the 2013 Canadian funds ($15 million CAD) which are not listed as being received in India despite the fact that GFA in Canada told the Canadian government those donations were being sent to India. Why does GFA need to wait until October to answer donor questions such as those asked by long-time supporter Pastor Bruce Morrison?
GFA president says he doesn’t sit on the Indian boards of GFA and Believers’ Church. Legal documents filed by GFA and BC in India say he does. Why do we need to wait until October for K.P. Yohannan to explain that discrepancy? Will Indian documents change by October?
Back room discussions continue…
 
 

Gospel for Asia's 2014 Audit is Late

Member organizations with of the Evangelical Council for Financial Accountability with are supposed to file renewal documents each year. When those documents are due depends on when the fiscal year ends.

The renewal information is due by January 31 if your fiscal year ended on April 1 through September 30.
The renewal information is due by July 31 if your fiscal year ended on October 1 through March 31.

Gospel for Asia in the U.S. operates on a calendar year schedule so their renewal was due July 31. As a part of the renewal, an audited financial statement is required. However, I have learned that GFA’s audited statement for 2014 is not complete. Those who inquire about the 2014 audited statement are getting this reply:

Currently, we do not have 2014 finance reports ready yet, as our auditors are in the process of auditing GFA’s 2014 year.

This means that GFA’s renewal is incomplete. However, not to worry, the ECFA gives member organizations an automatic two-month extension.

Financial Statements Policy

Current members should submit financial statements with the Annual Membership Renewal (AMR) by the due date. However, occasionally members are unable to supply the financial statements on a timely basis for a variety of reasons. ECFA will evaluate the reason for the delay, balancing a desire to help an organization through a possibly difficult situation not of its own making, and the necessity of maintaining standards to protect the integrity of ECFA, through the timely submission of information.
Policy

  1. Financial statements.Financial statements should accompany the AMR when it is due. (This provides the member a minimum of four months from the end of their fiscal year end to obtain the required financial statements.)
  2. Two-month extension.If all other AMR materials are submitted on time, an automatic two-month extension to submit the financial statements will be granted.
  3. Additional extensions.Members unable to meet the two-month extended deadline will generally be granted an additional two-month extension if the extension does not exceed 12 months from the end of the fiscal year. A request for this extension must include an explanation of the status of the audit, the reason for the delay, and the expected date of completion.

However, renewals can still be processed and that seal can still be displayed as long as the fees are paid.

Our financial statements are not complete. What should we do? Although your financial statements are due along with your renewal formif they are not available,  complete the renewal form without them (we understand the financial section of the renewal form will be incomplete). You will be asked to provide an approximate date the financials will be available and also to estimate your total cash contribution in order to estimate your membership fee. Once financials are finalized, please forward a copy to ECFA or to href=”mailto:AMR@ecfa.org”>renewal@ecfa.org. We will complete the financial section and refund or invoice for any payment difference. If the financials are complete but the Form 990 is not, please submit the renewal form and financials and send the Form 990 when complete.

Last year, the audited statement was dated June 13, 2014.
Regular readers can probably guess about why the audit is late.
While I appreciate that the ECFA’s audit requirement puts some pressure on an organization to disclose important information, at the same time, I believe the ECFA should flag those organizations which have not turned in the documentation. If donors rely on ECFA, they won’t know that after months of not answering legitimate questions, GFA hasn’t turned in an audited statement of their 2014 finances, even though GFA has had over 7 months to do so.

How Does Gospel for Asia Exercise Discretion and Control of U.S. Tax-Exempt Contributions Given to Asia?

Other than to operate the School of Discipleship, Gospel for Asia in Texas appears to exist to collect donations and send them to various countries in Asia where locals carry out various charitable and religious activities. The foreign donations are wired (or smuggled) to NGOs in India and other nations in Asia. According to GFA’s 2013 audit financial statement nearly $60.1 million dollars were wired to five GFA related parties in India, Myanmar, Nepal, Sri Lanka, and Bangladesh. See below:
RelatedPartyGFAAudit2013
In addition, we know that GFA also sent money to Believers’ Church, Last Hour Ministry, and Love India Ministry, three NGOs registered with the Indian government. For some reason, these transactions were not disclosed in the 2013 audit as related party transactions, even though K.P. Yohannan is involved with those organizations. These contributions claimed by GFA to the related parties is a substantial part of what GFA takes in from American donors. As I have pointed out before, a substantial amount of this money does not show up on reports of foreign contributions which are required to be filed with the Indian government (see below).
These facts might be of some consequence if the IRS decides to look into GFA’s operations. In June of this year, the Evangelical Council for Financial Accountability posted the following advice for member organizations. As I read it, this advice and the IRS decision has relevance to GFA.

Earlier this year the IRS stripped the tax-exempt status of an unnamed “American Friends of” organization because more than a substantial part of the organization’s activities did not further its exempt purpose. However, the IRS stated that even if its ruling would be overturned on appeal, contributions to the organization would nonetheless not be deductible because the organization failed to exercise sufficient control and discretion over its funds.
“American Friends of” organizations support the exempt purposes of foreign organizations by raising financial support for them in the United States. Donations to an “American Friends of” organization are generally deductible, but only if the organization can prove it exercises sufficient control and discretion over the donated funds to ensure that the funds are being used to further the exempt purposes of the organization. In other words, to maintain deductibility of donations, an “American Friends of” organization must be more than a conduit; rather, it must exercise full control and discretion over where its funds are distributed and how they are used.
In the recent ruling, there were two key factors identified by the IRS in determining that the organization was acting as a conduit between donors in the United States and the foreign organization. First, the organization did not maintain contemporaneous substantiation that it exercised control and discretion of its funds as outlined in Revenue Rulings 63-252 and 66-79. Second, the organization could not prove that it funded specific projects which it reviewed in advance; rather, the evidence showed that disbursements were made for the general operating expenses of the foreign organization.
This ruling is a reminder of the importance of keeping detailed, contemporaneous records to substantiate how an organization exercises control and discretion over its funds, particularly when disbursements are made to organizations to which deductible contributions cannot be made directly (which includes many foreign exempt organizations). For additional details, the IRS ruling can be accessed via this link.

The link leads to a redacted IRS determination regarding tax exempt status of an unnamed organization with most operation in a foreign country. The conclusion wasIRS ruling conduitIs GFA-India (and the other countries) a related party or is GFA-United States doing business in India as GFA-India? I may not be asking this precisely but the point of the question is to wonder out loud if GFA leaders in America are in charge of how American contributions are spent in India. The FC-6 reports filed by GFA-India, Believers’ Church, Last Hour Ministry and Love India Ministry indicate that funds are spent for salaries and other operating costs, as was the case with the unnamed charity which was investigated by the IRS. A fair question for GFA is: Who is exercising “discretion and control” of the funds sent to GFA-India, Believers’ Church, Love India Ministry and Last Hour Ministry?
In this context, it is concerning that Believers’ Church, Love India Ministry and Last Hour Ministry are not mentioned in the audit, nor is it clear that GFA-US even claims “discretion and control” of funds sent to these groups. For instance, according to GFA’s website, Believers’ Church and GFA have no “legal binding” relationship:
believers church legal GFA
How then can GFA-US have “discretion and control” of the funds donated to GFA but given by GFA to Believers’ Church?  Perhaps that is why BC builds hospitals and schools and runs a micro-finance lending organization and in Myanmar even sponsors a soccer team.
It is troubling that millions of dollars of donor money are unaccounted for in India. Recall that Canadian pastor Bruce Morrison received no answers when he asked GFA leaders why $43.5 million of American and Canadian donations was not reported in India.  Morrison’s findings mirror mine and those of auditor Jason Watkins who examined public records of 2013 GFA spending:
2013 pie chart spending
Watkins found more funds missing ($48 v. Morrison’s $43.5 million) because he also examined records from the UK and Australia.
Since these funds are unaccounted for in India, then how can GFA-US make a case that it is exercising appropriate “discretion and control?” If GFA does have “discretion and control” over these tax-exempt funds, then why does GFA fail to answers questions from the public and donors about where the money goes?
Add these question to the growing list.
 

Gospel for Asia's Auditor Retains Attorney for Some Reason

This is getting interesting.
On Tuesday afternoon, I contacted Bland Garvey, the accounting firm which did Gospel for Asia’s 2013 audit. I wanted to know if BG had been retained to do GFA’s 2014 audit and perhaps learn why the audit is not out yet. As I understand it, GFA has to turn in an audited financial statement by July 31 to the Evangelical Council for Financial Accountability as a part of the requirements for membership. GFA is a charter member of ECFA. GFA has been referring to the organization’s membership in ECFA as a means of deflecting questions unaccounted for funds and so it is probably important to protect that membership.
When I called BG, I was referred to attorney Gary Kessler. I called and wrote Attorney Kessler with the following questions:

Is Bland Garvey doing the 2014 audit for Gospel for Asia? If not, why not?
If so, will BG correct the misstatements from the 2013 audit that GFA-US only gave money to GFA India and several other GFAs in Asia when in fact GFA-US also gave money to three other NGOs?
The amount of money GFA said they donated to GFA-India is millions more than what GFA-India reported to the Indian govt. Will BG mention this discrepancy?
Last years audit was complete by June 13; this years is much later. If BG is doing the audit then why has this audit been delayed.

He wrote back with the following:

Mr. Throckmorton,
Applicable law prevents a CPA from communicating the information you requested. I advise you to contact Gospel For Asia and obtain the information you seek.
Thank you.
Gary

I wrote back asking for citation of TX law that forbids BG from acknowledging their auditing relationship with GFA and asked if he was representing BG in any litigation. He wrote back to say:

Please contact Gospel for Asia for any information you desire regarding the organization. I will not be responding to any more of your requests.
Thank you.
Gary

And so Mr. Kessler joined a growing list of people from Texas who don’t want to talk to me.
Having looked at the CPA law, I can understand why BG cannot address all of my questions. However, just telling me that they are doing GFA’s audit isn’t as clear cut to me. According to TX law, if BG has told the anyone in the public that GFA is an audit client, then they are not required to withhold information. See this clause:

The provisions contained in subsection (a) of this section do not prohibit the disclosure of information already made public, including information disclosed to others not having a confidential communications relationship with the client or authorized representative of the client.

I already know BG did the 2013 audit so I know there was a relationship. And it is possible that others not now affiliated with GFA know if BG is auditing the books. This should be known soon enough because that audit should be available to the public if GFA wants to remain a member of ECFA. That is, of course, unless ECFA gives GFA a pass. Hopefully, then we will know if GFA corrects the misstatements in the 2013 audit.
What puzzles me is why BG didn’t just tell me that but instead referred me to an attorney who in turn referred me to GFA.
 

C'mon Gospel for Asia, Let's Talk

On May 7, 2015 Gospel for Asia’s Chief Operating Officer David Carroll told me he would no longer answer any more of my questions. Leading up to that email was my question about why funds given and reported outside of India didn’t show up in Indian records. Specifically at that time, I asked about the funds (15 million Canadian dollars) declared in Canada as being sent to India in 2013 but never reported as being contributed from a foreign source as required by Indian law (I later wrote about that discrepancy). My email from May 5 was as follows:

David – I have reviewed some information available to Canadians regarding charities. In the year most recently available, filings with the Canadian govt. show 15million to India.
In the same year in India, govt forms show nothing came in from Canada.
Can you account for this discrepancy? I intend to write about this tomorrow afternoon.
Thank you, Warren

On May 6, Carroll wrote back:

Good morning, Mr. Throckmorton,
The Canadian funds were combined with U.S. funds by our auditor in India for various accounting reasons. There is no requirement that they be reported separately.
Thank you.
David

That same day, I wrote back with follow up questions and a request for information.

David – Can you provide contact information for your auditor in India? This combination of funds appears to be in violation of Canadian law, and possibly Indian law, according to my sources. I would like to understand the auditor’s rationale for believing there is no rationale for these sources to be reported separately.
Thanks, Warren

On May 7, Carroll cut off contact.

Warren,
No, Gospel for Asia has not violated the law.
When you first contacted us, I mentioned that we would not be able to respond to every question you put before us. Now, with the increased volume and frequency of your questions, it has become clear that this back and forth has become a distraction from our mission work. For this reason, this will be my final response. We understand that you will continue to explore issues around Gospel for Asia and continue to be fed accusations from former employees, and we accept that.
We continue to remain accountable to all applicable laws and regulations, to the Evangelical Council for Financial Accountability and to independent auditors.
Sincerely,
David

In my post on the Canadian funds, I made sure GFA’s position was included. I would have included more if GFA had provided it. Instead I got my hand smacked and was sent to time out.
I have written GFA several times since then. I have addressed correspondence to Carroll, John Beers, and K.P. Yohannan. I have sent some of the emails to the Evangelical Council for Financial Accountability. No answers.
In light of my efforts to get answers from GFA, imagine my surprise when I heard from former donors that GFA is saying they tried to work with me but have been advised by their financial consultants (?) not to talk to me. I wrote David Carroll yesterday to ask him if GFA reps are telling donors that GFA tried to work with me. Apparently still taking his financial consultants’ advise, there has been no reply.
GFA, according to several former donors, you are telling them that the reason you can’t disclose answers to the question posed here is because I am asking about funds going to high risk areas for persecution.  We both know that isn’t a plausible answer since no identities or activities would be disclosed by answers to the questions I have asked.
GFA, if you are telling donors that you have tried to work with me, please stop. We both know better. I am willing to look at any new information you provide. You know it isn’t just me asking these questions. Pastors are asking, donors are asking, staff are asking, former staff are asking. If you really want to work with me, you have my contact information.
The following issues would be a good start:

Will the Evangelical Council for Financial Accountability Hold Gospel for Asia Accountable?

I am not betting on it.
CashThe Calvary Chapel Senior Pastors Conference ended yesterday with no public statements from anyone within the Calvary Chapel movement about Gospel for Asia. GFA exhibited at the conference but left their table unmanned much of the time according to sources there. Several pastors, speaking on condition of anonymity, told me that their church would soon drop support for GFA due to GFA’s public silence about various financial, personnel and leadership concerns.
Several sources have told me that GFA is holding up their membership in the Evangelical Council for Financial Accountability as proof that no real problems exist. Furthermore, GFA insiders have told me that ECFA executives have reviewed GFA’s finances and is privately expressing confidence in GFA. ECFA leaders have ignored my requests for clarification or explanation about the missing money, money carrying to India, etc.
Mars Hill Church similarly pointed to ECFA membership as an indication that funds were being used properly. Even as the church did that, Mars Hill made changes to their procedures to come more into compliance with ECFA guidelines. What I learned about ECFA via the Mars Hill experience and then later through ECFA’s handling of Faith Christian Church is that donors cannot count on ECFA to disclose problems with members.
Now ECFA membership is being used by GFA to avoid explanations of multiple concerns raised by around 100 former employees, former donors, and bloggers. In my opinion, ECFA is now responsible for whatever problems GFA manifests. Here again is a summary of issues that GFA and ECFA have ignored.

Millions of dollars are unaccounted for and GFA has not given any reasons or explanations. Now GFA is claiming that ECFA has seen the books and has given the all-clear.
Since GFA won’t be accountable, I publicly call on ECFA to provide information relevant to list of concerns listed above.
 

Gospel for Asia Reveals Financial Information on Evangelical Council for Financial Accountability Page

In a major departure from past practice, Gospel for Asia changed their ECFA page to include their U.S. financial information. Citing security concerns, GFA has declined to reveal this information on the web, but instead required interested parties to request it by mail. Up until now, the ECFA has allowed charter member GFA to be exempt from usual practice.
ECFA page old
Now the page looks like this:
ECFA page new
 
In a prior post, I noted that GFA sent $58 million to India but the FC-6 forms there show only a little over $6 million received from the U.S. Perhaps, GFA is moving toward more transparency. If so, the organization still has a long way to go to explain this discrepancy, as well as the money exporting to India, and discrepancies in the Bridge of Hope program reporting. Clearly, the organization is raising massive amounts of cash but has yet to explain why so much is sitting in Indian banks.
Given this change, perhaps the ECFA has been in talks with GFA and is privately working to bring GFA into compliance with ECFA guidelines. If this is true, don’t expect ECFA to alert the donating public. If the ECFA and GFA don’t see things the same way, my guess is that GFA will quietly give up their membership with no explanation.

ECFA Will Not Release Faith Christian Church Investigation Results

This post is a follow up to the resignation of Faith Christian Church from the Evangelical Council for Financial Accountability. I reported early in April that FCC resigned from the ECFA. FCC was being investigated by the ECFA for possible violations of ECFA guidelines. Numerous former members had described the extreme pressure to give 10% or more of their income to the church along with other problems at the church.
Even though the FCC resigned while under investigation, the ECFA does not plan to say anything further about the findings of the investigation. According to an April 9 email from John C. Van Drunen to former FCC member Rachel Mullis, the ECFA will only “cite their resignation” on their website. Writing to Mullis, Van Drunen said:
Thanks for your follow-up.  Since they have resigned there is not anything further we are able to say other than to cite their resignation.  Regarding follow-up with the former members, I have sent an update this afternoon to each person who responded to thank them similarly for their assistance and to give them the same update.
Thank you,
John

John C. Van Drunen
Executive Vice President

Mullis told me that she felt “disappointed” by the ECFA decision not to alert the public in some manner about the problems at FCC. She added that she felt like FCC got a “‘get out of jail free’ card.”
This is another example of how the ECFA’s decisions do not serve donors or the public. All that a prospective donor would know about FCC from the ECFA is that FCC resigned. The ECFA should have a category of resignation that indicates that an organization resigned while under investigation.

Under Investigation, Faith Christian Church Resigns from the ECFA

FaithCC picFaith Christian Church has voluntarily resigned membership from the Evangelical Council for Financial Accountability.
The ECFA was in the middle of an investigation of the church’s compliance with ECFA’s guidelines. By resigning, the church can escape that process.
I have asked the ECFA if they plan to issue a report and will report any response I receive.
If the past is a guide, I am not optimistic that the ECFA will publicly comment.

ECFA Statement: Faith Christian Church Still Under Investigation

The Washington Post’s Susan Svrluga posted a statement from the Evangelical Council for Financial Accountability about their ongoing examination of Faith Christian Church.

ECFA evaluates and accredits ministry organizations, including churches, only with regard to their compliance with our Seven Standards of Responsible Stewardship. Occasionally we are presented with complaints or accusations about a member organization and while we do not automatically dismiss such concerns, the scope of our investigative authority and purview is, according to our bylaws, necessarily limited to issues directly related to these seven standards. With regard to Faith Christian Church, we are working to ascertain if, in fact, any complaint expressed from former church members falls within the scope of our seven standards.

As I reported recently, ECFA executive vice president John C. Van Drunen has interviewed at least one former member of Faith Christian Church and expressed an intention to interview those who signed a letter of concern to the ECFA.  Given what I have heard from former members, it seems inconceivable that the ECFA would find Faith Christian Church in compliance.
For instance, the first standard of responsible stewardship ends with this statement:

Summary. A member’s commitment to the evangelical Christian faith is the cornerstone of ECFA membership. The word “evangelical” connotes more than mere subscription to a doctrinal statement. It includes commitment to an ethical and moral lifestyle that seeks to conform to a biblical norm. It is the lifestyle envisioned in  ECFA’s own statement of faith: “We believe in the present ministry of the Holy Spirit, by whose indwelling the Christian is enabled to live agodly life” (emphasis added).

Both Christians and secular society often do not distinguish between financial and non-financial issues. A moral scandal would be just as devastating as a financial scandal to the credibility of the organization.

Faith Christian Church has been accused of encouraging the abuse of infants. Multiple remorseful parents and witnesses have come forward with public statements to this effect. If the ECFA is not investigating this aspect of the situation, then they are not adhering to the spirit of this guideline.  There is no universe where the child rearing practices described by former members should be tolerated in an ECFA member church.

In the eyes of many Mars Hill Church former members, the ECFA’s reputation was tarnished by their lack of transparency surrounding financial and leadership issues at the former mega-church. How the ECFA handles this situation will be  a major test of their credibility.