Editor’s Note: This is the fifth article in a seven-part series examining issues surrounding the current legal battle between the Missouri Baptist Convention and five related entities. This story examines monetary issues.
For the past three years, the combined resources of the Missouri Baptist Foundation, Missouri Baptist University, Windermere Baptist Conference Center, The Baptist Home and Word&Way has been estimated as low as $100 million and as high as $250 million.
When trustees for The Baptist Home changed the institution’s charter in 2000 to allow the board to elect its own members, MBC leaders began to question whether the entity could be trusted with its assets. After the other four took the same action, the MBC argued that because the convention supported the institutions with Cooperative Program funding, the convention should elect each entity’s trustees.
By order of its articles of incorporation, the MBC will not fund institutions “whose property and funds are not safeguarded to the Baptist denomination.” However, until last year, the convention contributed CP funds to William Jewell College, which always had elected its own trustees. The MBC currently contributes to the Freeway Foundation, even though it does not have a say in trustee selection.
After the other four boards took similar action to become self-electing, the convention charged that trustees had “stolen” the institutions from Missouri Baptists. On Aug. 13, 2002, the convention and six churches filed legal action to seek to regain the right to elect trustees for the five.
Agency assets
How much are the institutions worth? An exact figure is difficult to determine, partly because of changes in accounting practices over the years and partly because attorneys have discouraged the entities and the MBC from releasing financial information. The MBC used the $200 million figure in its legal task force report at the 2003 annual meeting.
— The Foundation: In its 2004 annual report, the Foundation released its balance sheet for 2002 and 2003. The institution listed $123,876,089 in total assets for 2003 with $119,951,162 as total liabilities. MBF president James Smith emphasized that most of both figures represents money that does not belong to the Foundation. Rather the funds are held in trust for donors and are to be used for ministry purposes. Net assets of $3,924,927 represent a more accurate picture of funds available for Foundation use.
— Missouri Baptist University: MBU president Alton Lacey released limited information to Word&Way about the institution’s assets and liabilities for the past five years. He noted that two accounting changes have affected the way the university’s bottom line is reported — scholarships are now separated from the revenue line item, and endowment gains and losses must be included. In the past, endowment gains did not have to be included on the bottom line.
In 2003, MBU listed $25,188,047 in total assets and $12,717,992 in liabilities for net assets of $12,470,055 for the year.
— Word&Way: Word&Way operated as part of the Executive Board staff until 2001 when it became an MBC-related agency. Messengers to the 2000 MBC annual meeting approved that status for the news journal and Windermere. The news journal’s 2003 audit reflects almost $163,459 in unrestricted net assets for the year. Total assets were listed at slightly more than $211,802, with total liabilities of close to $48,344.
— The Baptist Home: On advice of attorneys, both The Home and Windermere officials have not released current financial information about their respective entities. The most recent available report of The Baptist Home’s assets and liabilities is the 1999 audit statement that appears in the MBC’s 2000 Annual Book of Statistics.
That year, net assets for all funds stood at $32,888,814. Of the total, $22,444,024 was listed as operating funds, $10,116,705 as plant funds that included the land, buildings and equipment for The Home’s three campuses, and endowment funds of $328,085. The report noted that some assets are held in trust by the Missouri Baptist Foundation. The Home only has access to the income from them. The report did not list assets and liabilities for The Home’s own foundation.
— Windermere: Because Windermere and Word&Way did not become institutions until Jan. 1, 2001, the two entities did not have audit statements for 2000 to be included in the 2001 Book of Statistics. The entities were not allowed to report in the 2002 Book of Statistics, which would have included audit statements for 2001. On advice of legal counsel, Windermere would not release audits for 2001-03 to Word&Way.
The facility includes about 1,300 acres and several buildings. The addition of Lake View Lodge in 2002 increased Windermere’s capacity to 1,250 guests. In the fall that year, the center began construction on a $19.5 million expansion project. Plans halted when the funding source unraveled. Phase I of the project was restarted after Windermere was able to secure a loan of about $18 million in August 2003. The first phase, completed this summer, included accommodations for about 500 additional guests.
Cooperative Program
The convention contends that it should be allowed to elect the institutions’ trustees because it has contributed Cooperative Program funds to the five in the past. Messengers to the 2001 annual meeting voted to escrow CP funds earmarked for the five in 2002. Then at the 2002 annual session, messengers approved a 2003 budget that excluded the five entities. In 2003, the convention reallocated escrowed funds to other MBC-related institutions and ministries.
Missouri Mission Offering funds earmarked for The Baptist Home and MBU also were escrowed in 2002, and the two institutions were taken out of the state offering budget in 2003.
— The Foundation: In 2001, the last year the entities received CP funds, Cooperative Program gifts accounted for 13 percent of the Foundation’s operating budget. The entity reported that CP funded five percent of its budget in 2002, which reflected CP funds granted for the end of 2001.
According to Smith, CP was to have provided 100 percent of the Foundation’s operating support. “But it never did,” he said. “But part of our mission is to support ministry…. The goal has been to reduce support from CP and to increase giving to CP causes. In 2004, we are on track to give more to CP than before.”
Smith said the Foundation has given $4.6 million to Cooperative Program causes since 1946. As of mid-year, the Foundation had given $1.684 million to CP causes since the MBC began escrowing funds and subsequently defunded the agency.
Smith said the net cumulative return on the Foundation’s efforts on behalf of Baptist causes has been almost $2,104 for every $1 received from CP funding. “It’s been amazing what God has done,” he said.
— Missouri Baptist University: The university received seven percent, or $958,969, of its 2000-2001 budget from CP funds. The 2001-02 budget included four percent, or $555,258, which reflected CP monies granted from July 1-Dec. 30, 2001.
Lacey noted that all Cooperative Program money was used for institutional scholarships for students attending the university. The convention requested the arrangement when it began granting CP funding.
Despite no longer receiving Cooperative Program funds, the university has been able to increase the amount given in scholarships. The institution granted $3,979,072 in scholarships for the 2002-03 school year.
— The Baptist Home: President Larry Johnson said that CP accounted for less than five percent of The Baptist Home’s budget. He also pointed out that all CP funds were used to cover costs of caring for residents who could not afford The Home’s services.
“Every penny went for benevolence,” he said. “For every dollar received in Cooperative Program money, we had to raise three just to cover benevolence. We are providing more benevolence now than ever.”
— Word&Way: The news journal had historically relied on Cooperative Program funding for up to 48 percent of its operating budget. Webb noted that in 2001, CP gifts, an estimated $446,625, made up about 46 percent of the budget.
Word&Way also received financial assistance in the form of convention-paid subscriptions to pastors, associational directors of missions, and other church and convention leaders. CP funds were used for operating expenses.
Fundraising
All entities except Word&Way say they have not approached funding differently than in the past.
MBU, Windermere and The Home have relied primarily on donor gifts and capital campaigns for building improvements and new construction. The Foundation continues to offer services to potential clients. Individual gifts and program cost recovery funds accounted for 98 percent of the Foundation’s budget in 2003.
Johnson said The Home does not solicit churches for funding, but does continue to approach individuals as it has done in the past. It also includes resident needs in its newsletter.
Word&Way began fundraising activities, primarily through its subscribers, once it lost convention funding.
Legal fees
No accurate estimate of the amount the convention has spent on its legal pursuit of the five entities is available since Word&Way no longer has access to the MBC’s quarterly financial reports.
As of April, the MBC had spent at least $1 million-plus in legal fees. According to the March financial report, the last report to which Word&Way had access, the convention had apparently borrowed $505,151 — $225,151 by Dec. 31, 2003, and $280,000 in the first quarter of 2004 — from a $1 million line of credit authorized in 2003.
No accurate estimate of the entities’ legal costs is available, either, because attorneys for the five have advised against releasing the information. However, at least a percentage of each institution’s legal fees is being covered by their individual insurance carriers.
The next article will examine insurance issues.
Additional links to the entire series:
Beyond Rhetoric, Part 1: Overview
Beyond Rhetoric, Part 2: Theology
Beyond Rhetoric, Part 3: Politics
Beyond Rhetoric, Part 4: Accountability
Beyond Rhetoric, Part 5: Assets
Beyond Rhetoric, Part 6: Insurance
Beyond Rhetoric, Part 7: Reconciliation
