You choose, we deliver
If you are interested in this story, you might be interested in others from The Journal Gazette. Go to www.journalgazette.net/newsletter and pick the subjects you care most about. We'll deliver your customized daily news report at 3 a.m. Fort Wayne time, right to your email.

In-Depth

Advertisement

Question: Where’s our cash?

Religious non-profits denounce ‘betrayal’

Clapp

– This much is certain: The money is gone, as is the non-profit group entrusted with it.

Nearly everything else – how much money was lost, where it went, and who’s at fault – is either in dispute or unknown.

At the center of it all is the Rev. Steven E. Clapp, 64, and the Fort Wayne non-profit he ran, Christian Community Inc. According to Clapp, the collapse of Christian Community is a financial tragedy, caused by poor financial management but certainly not misdeeds.

“In a very short period of time we had both a major donation and a major grant not come through,” Clapp told The Journal Gazette. “Those were the things that really did us in.”

Christian Community was the fiscal sponsor for two non-profit organizations: Religious Institute, in Connecticut, and Many Voices, in Washington, D.C.

Fiscal sponsor means those groups did not have tax-exempt status of their own. Instead, they depended on Christian Community to handle all their finances, including taking in donations to paying bills and staff.

Under that model, Christian Community would not normally be authorized to use those groups’ money for anything other than those groups’ own expenses. The total amount lost with Christian Community’s collapse could be $600,000.

The Rev. Debra Haffner, executive director of the Religious Institute, described the loss as a betrayal. She contends Christian Community disappeared with more than a half-million dollars belonging to her and her organization.

“The shock and the betrayal are beyond words,” Haffner wrote in her blog. She told the Unitarian Universalist publication UU World that Christian Community disappeared with $424,000 of the Religious Institute’s money, as well as a $100,000 loan from her and her husband. Religious Institute’s website says police in Westport, Conn., where the group is based, as well as Fort Wayne police, the Indiana attorney general and the FBI are investigating.

Clapp disputes the dollar amounts but said that because of the pending legal issues, he cannot offer proof or say more.

Many Voices also lost its money when Christian Community collapsed. The amount Many Voices lost is unknown, but the group’s website says the group is “in a heartbreaking financial position.” It is believed the group lost $75,000.

Clapp said Many Voices lost little but that he could not say more.

Christian Community received tax-exempt status from the IRS in 1991, and Clapp first became involved in 1993. The organization conducted research and published books and pamphlets for churches to help them better serve their congregations.

Much of its work centered on outreach and inclusiveness, as well as the healthy sexual attitudes in religion. Recent publications include “Taking a New Look: Why Congregations Need LGBT Members” and “Cell Phones, Dessert, and Faith,” which deals with spirituality and finance.

Since Christian Community was not authorized to spend the other groups’ money except for those groups’ expenses, it is unclear how the money – regardless of the financial condition of Christian Community – could be gone without malfeasance.

“We were left with $3,800 in a local bank account,” Haffner wrote of learning their entire year’s fundraising and all their savings were gone. “I don’t think I have words yet to describe the sense of betrayal and despair I felt or the horror of realizing that the Religious Institute might have to close immediately.”

Clapp says it was simply bad financial decisions, not criminal actions.

“There is a significant difference between, I’ll use the words ‘mismanagement’ and ‘incompetency’ – both of which I’m guilty of – and intentionally taking advantage of others or harming others,” Clapp said. “There was never any intention to betray.”

‘Can’t survive this’

On Feb. 21, Clapp contacted the Religious Institute and Many Voices by email to tell them that Christian Community, formed in 1990, was essentially bankrupt.

Clapp said poor financial decisions, the loss of a grant and a donation that was a fraction of what was expected meant that by the end of February the organization was broke.

“I finally just had to say, ‘We can’t survive this,’ ” Clapp said. “We’ve got to stop where we are. We’ve got to let staff people get other work. We’ve got to use our inventory and copyrights to see if we can’t get some financial return for people. We were running too close to the line anyway, and when we had those financial reversals, there was just no way to recover from it.”

On Feb. 22, the IRS mailed Christian Community notice that its tax-exempt status had been revoked, effective last May, for failing to file a tax return for three years in a row. Clapp said he got the letter several days later.

On Feb. 23, according to UU World, the Religious Institute’s Haffner sent an email to supporters saying, “The worst and unimaginable has happened – the fiscal agent for the Religious Institute has misused all of the Religious Institute’s monies and the Religious Institute now has a net worth of $14,000.”

Religious Institute officials declined to comment further on the matter but directed The Journal Gazette to the statements made to UU World, on their website and Haffner’s blog.

Christian Community had been Religious Institute’s fiscal sponsor since Religious Institute was formed in 2001. The institute now uses a Unitarian church as a fiscal sponsor.

Officials from Many Voices, which works for inclusion for lesbian, gay, bisexual and transgender people in Protestant churches, did not return calls or emails to the organization and board members.

Christian Community’s website, ChurchStuff.com, was taken down in late February.

Obscure practice

Most people outside of non-profits have never heard of fiscal sponsorship until the International Humanities Center collapsed this year. The IHC, based in the Los Angeles area, had been fiscal sponsor for about 200 small groups; Nonprofit Quarterly reported about $1 million is missing from IHC accounts.

Fiscal sponsorship works like this: For a fee, the fiscal sponsor handles all the front-office operations, letting the group concentrate on its mission. That means all the donations are collected and held by the sponsor, and the sponsor performs tasks such as paying bills, filing tax forms and handling insurance.

The San Francisco Study Center has been fiscal sponsor for hundreds of groups since 1975, and Executive Director Jeff Link said for many groups fiscal sponsorship makes the most sense.

“It’s absolutely the most efficient way, the most cost-effective way, to run an organization up to a certain size,” Link said.

Link said the most common fee – 10 percent – might sound high at first, but for a group with an annual budget of $500,000, it would be impossible to get the services of experienced bookkeepers, accountants, auditors and human resources staff needed for an organization of that size for $50,000 a year.

“They take care of all that front-office stuff,” he said.

But being a fiscal sponsor comes with responsibility.

While there would not be separate bank accounts for each project, Link said, there must be careful accounting.

“The funds the project raises go to the sponsor to be expended through the project’s authorization,” Link said. “You have to be careful, you have to be responsible – they are you, and you are them. You need to take a very conservative approach to it because it is not your money.”

Link said under that model, even if the fiscal sponsor were to fail financially, the projects’ monies should be safe and could be returned to them, because the sponsor is not authorized to spend those funds except when authorized by the project.

Clapp said that was “essentially” the model Christian Community used, but that he couldn’t, because of the pending legal issues, speak further about it. But he also said the model Christian Community used was more of a partnership, where Christian Community would pay projects’ bills even if the project didn’t have money to cover them at the time.

“We, at different times, would have carried them if there were things to be paid and their funds were low,” Clapp said.

And since it was a partnership, Clapp said, when the money was used to pay Christian Community expenses, they were really everyone’s expenses. Clapp said the money was used for Christian Community’s mission – a mission it shared with Religious Institute and Many Voices.

And now that money is gone.

“There’s no money sitting in a foreign bank account. I wish there were some money someplace, but there isn’t,” Clapp said. “There were no trips to Bermuda. No Mafia. There is no money that’s come to Christian Community that has been spent on anything other than Christian Community.

“There can be issues on mismanagement and where it was spent, but no money that has come into Christian Community has been spent on anything else.”

State investigation

When Nonprofit Quarterly first reported the International Humanities Center collapse Feb. 3, it raised a frightening point: Because the fiscal sponsor keeps all the books, including tracking how much money each project had received in donations, only the fiscal sponsor knows how much money is really missing.

Clapp contends the $524,000 reported by Religious Institute is not correct but refused to divulge what the correct amount might be.

There’s a lot of other information not divulged: Christian Community’s last tax return, covering 2007, says the group has three board members but does not list any officers except Clapp.

Clapp told The Journal Gazette that the group did have board members until the collapse but that he asked them to step down to shield them from blame that rightly belongs to him.

“At this point, I am Christian Community,” he said. The 2007 tax return said Clapp was paid $12,000 for his work; it is unknown what he has been paid since.

Clapp had been chairman of the Religious Coalition for Reproductive Choice and a board member of Planned Parenthood of Indiana. He resigned from both when Christian Community collapsed.

“I did not know what was going to happen with my reputation with this, and I did not want to harm those organizations,” he said.

Clapp would not name anyone who might have been responsible for the financial losses, for the failure to file tax returns or anything else. The state of Indiana dissolved the corporation in 2005 after it failed to file annual reports for three years, but it was reinstated two months later.

“I’ve been substantially let down by a couple of other people, but I’m the one that’s ultimately responsible, and I don’t want to say things that reflect negatively on others. The buck stops with me,” Clapp said. “I’m the one who’s ultimately responsible even if it’s someone else who failed to do the thing that should have been done.”

The Indiana Attorney General’s Office, which has some oversight of non-profits, is investigating. Spokeswoman Erin Reece said the agency has received two consumer complaints filed against Christian Community.

“Both complainants claim they made loans to the organization in the amounts of $75,000 and $100,000 with 10 percent interest charges,” Reece wrote in an email. “These consumers said they did not receive repayment and were later notified of Christian Community’s bankruptcy.”

Clapp said he understands Religious Institutes’ Haffner’s “aggressive” stance toward Christian Community and him and hopes it helps her raise money for her group even if it damages him in the process.

But he fears that it may damage the value of the copyrights and books Christian Community plans to sell in an effort to make Religious Institute and Many Voices financially whole.

“I’m heartsick,” Clapp said. “I’m heartsick about everything that has happened.”

dstockman@jg.net

Advertisement