“To the best of my knowledge the financial problems at EBM are not the result of theft, embezzlement... resulting in the disappearance of cash”

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Jim's picture

  • Misuse of restricted funds: "Mission boards such as EBM have a primary responsibility to receive designated donations and issue receipts. Accountants track each missionary’s money as “temporarily restricted net assets.” ... But according to EBM’s financial statements and the outside consultant’s report, these restricted funds have been depleted without being disbursed for their intended purpose."
  • Unaudited books: "The agency has not been audited since Dec. 31, 2008"

At the very least you have mismanagement bordering on stupidity and what some would call criminal behavior.

Jonathan Charles's picture

Jim Peet wrote:
  • Misuse of restricted funds: "Mission boards such as EBM have a primary responsibility to receive designated donations and issue receipts. Accountants track each missionary’s money as “temporarily restricted net assets.” ... But according to EBM’s financial statements and the outside consultant’s report, these restricted funds have been depleted without being disbursed for their intended purpose."
  • Unaudited books: "The agency has not been audited since Dec. 31, 2008"

At the very least you have mismanagement bordering on stupidity and what some would call criminal behavior.

Ditto.

It seems (and I know all the facts aren't known) but after they got their 8% from missionaires, that they began to dip into the restricted funds to make ends meet. Perhaps this was something that was supposed to be a temporary fix, but as the missions' financial picture worsened, the "borrowing" got worse and worse. Eventually the hole got big enough that someone with some sanity decided they needed to stop digging. When this first started, why didn't the mission immediately began to slash its budget? Did they fear that the cuts that would need to be made would render them unable to service their missionaries as their missionaries expected? Well that's where they ended up.

Jonathan Charles's picture

FROM BERACHA FOUNDATION WEB SITE:

MAINEVILLE, Ohio, August 29, 2011 /Christian Newswire/ -- It is with great sadness that we at the Beracha Foundation have learned of Evangelical Baptist Mission's decision to file bankruptcy. Our prayers go out to all the missionaries, their families, supporters and churches who are impacted by this decision.

As the situation continues to unfold, we would like to clarify some statements which have been made regarding the relationship between the Beracha Foundation and EBM, particularly concerning lawsuits filed against Beracha by EBM leadership.

To understand the recent news, one must understand that the current issues leading to the bankruptcy of EBM started long before its relationship with Beracha. Unfortunately the lawsuit brought by EBM leadership against Beracha--and the demand of Federal Law that Beracha defend itself through a countersuit--has clouded the real issues.

After many months of compelling testimony and evidence showing that EBM leadership was wrong to have damaged Beracha's reputation by filing suit, EBM leadership dropped their suit and asked to open a discourse toward mediation. The EBM Board even issued a signed apology addressing this matter. In later meetings it was admitted by board members that EBM's problems started as early as 2001. Remorse was expressed by the Chairman of the Board for having purchased a large facility without the financial means to adequately provide for EBM's future. Statements of regret for not holding its President and Treasurer accountable for their actions were also expressed.

jimfrank's picture

This is a common problem with smaller churches: "See the bill, pay the bill." The church has barely enough money to continue operations. Over the years people give to the Memorial Fund, the Deacon Fund, the Youth Fund, and so on. The money is dutifully deposited into the church checking account and sits there. Over time, though, expenses mount to the point where more money is going out than coming in. This is commonly called a "cash flow" problem.

Let's say that a church member dies. Her family decides to ask the mourners, "In lieu of flowers, please donate to Evangelical Baptist Missions." Several people write checks marked "EBM," and the church treasurer deposits them into the church account intending to write one check to EBM. But the next week bills arrive from the gas company, the power company, the phone company, for insurance and workmans comp, and, of course, the pastor's salary. After the treasurer writes all of these checks the church checkbook is now in the hundreds of dollars instead of thousands. The treasurer decides not to write a check to EBM. The donations to EBM are quickly forgotten because another round of utility bills arrives a month later, and then the money disappears.

Is this malfeasance? Maybe in a good lawyer could prove it in a court of law. It it neglegence? Yes, in a technical sense. But what is is really? Panic. The treasurer intended to pay the donation but was unwilling to empty the checking account at one time. After all, you don't know what will happen next week.

This may well be what happened to Evangelical Baptist Missions, though on a larger scale. Was EBM audited on a regular basis? Probably not. Did the board of directors have a person with a financial background? I can't say, but many of these organizations are led by pastors and former missionaries. After all, it's a mission. Very few pastors and missionaries truly understand money other than "See the bill, pay the bill."

It is said that seventy churches per week close in the United States. Many churches close because the financial base becomes so small that they can no longer pay the bills. Perhaps a scenario such as this is what really happened to Evangelical Baptist Missions.

jimfrank's picture

Yes, I saw that and thank you for pointing it out. This mission agency had cash flow problems that dated back perhaps ten years. I wonder if they made a regular practice of hiring an outside agency to audit their books.

Jonathan Charles's picture

I know of a board situation of a Christian ministry that let the ministry get behind in sending in taxes withheld to the IRS. When they got behind about 5 quarters, the IRS put a lien on the building. The ministry put out a plea for help and got the taxes paid and has stayed current since.

The problem with that ministry is that the board members went along with whatever the chairman of the board (also the day-to-day head of the ministry) wanted. The COB was not attempting to be dishonest. He honestly believed that things would get better in the future and they'd get out of the hole they had dug. Before the IRS contacted the school, the board changed (I became a board member) and new board members began to express serious alarm about the situation. After the bill was paid, the by-laws were changed in order to force the ministry to pay tax bills on time and when they cannot, to make a decision to close rather than to start digging a hole you think you will get out of.

Anyway, my point is that a board can enable poor leadership. But, I know from experience, when you get into board meetings and don't go along, you get looked upon as divisive and fleshly.

Edit: Fixed wording