Throughout the Missouri Baptist Convention’s six-year legal battle against five Baptist agencies, convention leaders frequently promised that no Cooperative Program money would be used to fund the lawsuits. However, an analysis of the MBC’s audit reports indicates that more than $1.5 million dollars of CP money—given by MBC churches to sustain various ministries and missions efforts—has likely been spent on the legal fight.
“To date, no CP money has been used to fund the MBC lawsuits,” MBC Executive Director David Tolliver said in an e-mail to EthicsDaily.com March 25. He added that saying the MBC has used CP money on the lawsuits is “not true” and “a lie.”
EthicsDaily.com’s five-month investigation suggests otherwise.
Since 2002, the MBC has been in and out of court, attempting to bring five agencies back under its governance: The Baptist Home, Missouri Baptist University, the Missouri Baptist Foundation, Word & Way and Windermere Baptist Conference Center.
A recent decision by the Western District Court of Appeals in Missouri casts doubt over the future of the MBC’s fight to keep those former agencies from officially ending their partnership. A unanimous appellate court decision of Feb. 3 upheld a circuit court ruling that the trustees of Windermere Baptist Conference Center acted lawfully when they changed their trustee selection process.
As the convention determines the future of its efforts, a look back through MBC leaders’ statements and the convention’s financial records shows the MBC has used a variety of methods to meet ongoing legal costs. With every proposal has come at least a short-term promise to avoid using CP dollars.
The MBC’s Legal Task Force stated, in its report at the 2008 MBC annual meeting on Oct. 28, that “to date no Cooperative Program dollars have been used to fund the lawsuits.” This claim has remained a significant part of the public debate concerning the MBC’s legal action since its inception.
EthicsDaily.com conducted an analysis of the MBC’s audit reports—the most complete financial data publicly available—to determine the accuracy of the claim that no CP money had been used. These reports can be retrieved by a member of an MBC church who makes a written request to the MBC. Although the information is incomplete, the audit reports from 2002 through 2007 suggest that a significant amount of CP money has actually been spent on the legal efforts against the quintet that removed the MBC’s ability to elect trustees.
Part of the difficulty in tracking the actual legal spending is that a variety of funding sources have been used, and MBC leaders have not provided full details about the legal spending.
“Asking about the source of funds to pay legal costs is a red herring,” Randy Comer told EthicsDaily.com in an e-mail. Comer heads the MBC’s Agency Restoration Group (the new name of the Legal Task Force). He also said that although the MBC had not used CP money for the lawsuit, he would support such a proposal and believed most MBC messengers would as well.
EthicsDaily.com sought comment from MBC President Bruce McCoy and Controller Jay Hughes, but they referred questions to Tolliver.
The LTF reported at the 2008 annual meeting that total MBC spending on the lawsuit was approximately $4 million. An analysis of the audits offers a similar number, with more than $4 million being spent from 2002 through 2007. About $1.5 million came from the MBC’s insurance company, and more than $1 million has come from a mortgage on the MBC’s building.
Looking deeper into specific sources of funding reveals a long line of confusing decisions, the latest of which came last year when the MBC executive board approved a “bridge loan” from its budget to cover legal fees. Tolliver, who was then the interim executive director, said, “Any monies taken out of reserves to pay for legal expenses will be returned to reserves promptly. … Therefore, CP dollars are not being spent for the lawsuits.”
Tolliver reportedly told the executive board that “gifts from individuals and churches to the Agency Restoration Fund over the next 12 months will secure enough funding to pay back the loan, provided the fund continues to receive $17,000 to 18,000 per month.” However, the size of the loan was not reported. Initial reports in April 2008 suggested that $140,000 was needed, but Tolliver stated in October 2008 that they owed themselves more than $200,000.
Despite the assertion that CP dollars are not being spent, it is hard to view a loan from the convention’s own budget any other way, even a loan that the MBC intends to repay immediately. If the loan came from the executive board’s budget, then it would be CP money. The lack of clear details on the loan highlights a need for greater specificity and transparency.
Many questions about the loan remain. How much of the $17,000 to $18,000 needed monthly would simply reflect or maintain regular giving to the Agency Restoration Fund, and how much would be considered the extra required to pay back the loan? What was the exact size of the loan and what happens if the fund does not receive enough gifts? How then would Missouri Baptist churches be expected to view the use of CP dollars?
An examination of past funding efforts raises other questions.
Initially, the lawsuit was funded, as minutes from the 2002 annual convention meeting show, from the convention’s “Strategic Initiatives Fund.” The SIF was funded by CP money returned by the Southern Baptist Convention’s Annuity Board (now known as GuideStone Financial Resources) because of overpayment. Although this money did not come from the current year CP giving, it did begin as CP contributions. An analysis of the audits suggests that more than $1 million from the SIF was spent on the lawsuits during 2002 and 2003. Tolliver said in his e-mail to EthicsDaily.com that the SIF had been “depleted to cover legal expenses.”
In the fall of 2003, MBC messengers overwhelmingly voted in favor of creating the Agency Restoration Fund to finance the lawsuit because the SIF was nearly depleted. At the 2003 meeting, messengers also approved a $1 million line of credit to finance the lawsuit, with the principal and interest payments from the loan to be reimbursed through gifts from ARF and any money recouped from the five defendants.
At that time, The Pathway, which is published by the Missouri Baptist Convention, reported that “four to six” unidentified congregations had pledged to back the fund. In 2005, this line of credit on the MBC’s building was extended to $1.5 million. The MBC has been attempting to sell the building since 2004.
An analysis of the audit reports suggests that the interest payments on the building loan came out of the debt retirement interest section of the CP budget rather than ARF. Annual interest payments for the loan from 2004 through 2007 totaled more than $200,000. Annual amounts ranged from nearly $20,000 to more than $68,000. The interest payment amount for 2008 is not yet available.
“The MBC is making interest only payments to the bank—those payments are made from funds provided through the ARF,” Tolliver said in his e-mail to EthicsDaily.com. His assertion cannot be substantiated from audit reports because the payment is shown as coming from a section of the CP budget, and the accounting for ARF does not itemize payments.
Minutes from the same 2003 convention, in which motions on the ARF and line of credit were approved, detail some messengers’ concern that, if the MBC failed to recover money from the agencies or if contributions failed to meet expenses, ministry funds might be touched. At that time, however, The Pathway reported that the ARF “as approved by the messengers, stipulates that no 2004 Cooperative Program funds will be used for legal expenses.” If the interest payments did in fact come from the CP budget as the audits suggest, then nearly $20,000 of the 2004 CP funds were in fact used for legal expenses.
A mere six months later, in April 2004, The Pathway reported the executive board would bring a motion before state convention messengers allowing CP dollars to be used “in anticipation of the day when the five will be legally restored” and to “provide immediate funding for the continuing legal effort to restore the agencies.”
MBC pastors again expressed serious concerns about tying their gifts to the ongoing lawsuits. Both The Pathway and Word & Way reported a variety of objections: fears that such action would drive people away from the CP; lawsuit fatigue; and concerns about the validity of lawsuits between believers, grounded in the words of 1 Corinthians 6.
Echoing and perhaps amplifying these sentiments, Word & Way Editor Bill Webb wrote, “To go from ‘No CP for legal fees!’ to ‘Maybe it’s okay’ just a year later suggests some may be leading others down a slippery slope that will continue to erode the wonderful ministries that we have undergirded in Missouri, our nation and the world.”
Webb also wondered if the motion might be “a hard sell,” noting that, in the first quarter of 2004, only about $4,000 had been contributed to the ARF.
“The grassroots tends to follow the examples of the leaders,” wrote Webb. “First-quarter receipts suggest that neither Executive Board members nor their churches have gotten behind the ARF effort. That absence of commitment will likely not be lost on people in the pews, no matter how urgent the appeal or how much pressure is applied.”
In July 2004, the MBC executive board decided against using CP dollars, trusting instead that ARF monies and church giving would satisfy legal costs. That decision, however, was accompanied by this statement in The Pathway: “The board did, however, reserve the right to use CP funds if necessary.” That declaration is consistent with Tolliver’s assertion in the 2004 annual book of reports that the board, though not expecting to use CP reserve funds for legal fees, was permitted to use them as it deemed necessary.
Audits of MBC finances show the ARF ended both 2004 and 2005 in the red. In 2004, ARF spending exceeded receipts by $104,141; in 2005, the fund ended $62,739 in the hole. Did the MBC balance its budget at the end of both years and, if so, how? Is it possible that the MBC loaned itself CP money? The balances for ARF raise further questions about the lack of transparency concerning legal spending.
In December 2007, The Pathway reported that the Audit/Finance Group “was given a request for a recommendation of up to $250,000 for the Legal Defense Fund to cover potential legal expenses through April.” The Pathway report did not specify where the money would come from. Normally, special requests are drawn from the reserve fund that is part of the CP budget. Did the money come from the CP reserve fund, or was there another funding source? Also, how much money was actually transferred to pay legal expenses?
In his e-mail to EthicsDaily.com, Tolliver asserted that the lawsuit had been funded from four sources: SIF, ARF, the settlement from the insurance credit, and the line of credit that uses the building as collateral. He did not mention either the December 2007 request for funds or the April 2008 bridge loan.
As the MBC leads its churches into another round of appeals, many questions remain about its legal spending.
Aarik Danielsen is a freelance news writer pursuing a master’s degree in journalism at the University of Missouri.