Care with the Blue: Joint Audit Committee

We are nearing the end of the Executive Council reports in this series on the Blue Book. Today we turn to the Joint Audit Committee.

Summary of the Report
The Joint Audit Committee reviews our financial statements, reporting at least once a year to the EC. This includes overseeing our financial reporting processes, our audit, and our system of internal financial controls. They are given the authority to discuss any issues of concern which may arise with staff and board members and also, with EC's approval, to hire independent investigators and firms.

We received unqualified opinions from our indecent auditing firm for both the 2015 and 2016 financial years. The Committee also revised the Audit Committee Charter, given recent changes to New York State Law. They also created an Request for Proposals (RfP) process to select an auditor for the coming triennium. After reviewing submissions from five firms, they recommended remaining with Grant Thornton, LLP, the current audit firm.

The Committee discussed the possibly addition of an internal auditor to our church staff, someone who could work indecently of the committee and review areas of concern or risk. Given the advice of Grant Thornton, the committee decided first to engage in an enterprise risk assessment to help identify in which areas an internal auditor might be needed.

They noted the need for a comprehensive policies and procedures manual, one that would codify the various policies and procedures adopted by EC and GC. They also joined with the Investment Committee in encouraging a decrease on the draw from the church endowments, though they acknowledge that current returns have been able to sustain the higher draws.

The committee also recommended the creation of succession plans for key positions, to enable a good transition when there is staff turnover. Finally, they recommended that the current structure and governance procedures of our staff be evaluated to ensure that decision are based upon the strategy and mission of the church.

Reactions to the Report
This might seem like a boring report, easy to skip over, but it is actually very important. After all, it was in the late nineties that our church was in the news because the treasurer, Ellen Cooke, embezzled over $2 million dollars (bonus trivia, the judge her sentenced her was President Trump's older sister, a respected jurist). One of the ways she had succeeded in her crime was maintaining exclusive control over the church books and audit reports.

The careful work this Committee does is, thus, essential and should continue to be vigorously supported by EC. I cannot speak for sure on whether an internal auditor would be a help to our church's financial controls—but I trust the advice of the firm we contract with. Creating a policies and procedures manual is something that is important to have done. As I said yesterday, I am less interested in a decrease to our endowment draw, but overall I have nothing but praise for the good work this Committee has done.

Note: You can click here for a list of all Blue Book Reports & Resolutions that have thus far been reviewed. 

Care with the Blue: Investment Committee

Today, I'll continue with the fifth (and final) Executive Council Committee report in my series on the Blue Book, the Executive Council Investment Committee.

Summary of the Report
The Investment Committee is given the authority of EC and the Board of Directors of the church with regard to the investment of church assets. They recommend investment objectives, ensure the wishes of donor-advised funds are being followed, and seek to keep the purchasing power of the funds (after inflation).

The current portfolio is roughly 2/3 (63%) weighted toward equities. The remaining third is roughly split between fixed income investments on one side and convertibles, hedge funds, and  real estate on the other side.

Our ten year return, after fees and expenses, has been 4.9%, which is pretty good given that it includes the results of the  2008-2009 economic downturn (by comparison, the ten year return of the ECF growth fund—which is pure equities—was 5.2%). Since inception of the current portfolio in 1993, the annualized net performance has been 8.1%—a pretty good record.

The 2015 GC, through resolution C045, requested that our church divest from fossil fuels. This was a tricky mandate for the Committee to receive because it is actually contrary to how our church has historically engaged the question of social investing. The committee notes that since the 1960s, "the long-standing position of The Episcopal Church of engagement rather than divestment." They also note that when we divest from companies, we no longer hold ownership and, thus, can no longer work to lobby companies for change as stockholders. They note that the formal strategy on responding to this request is attached to the report in the Blue Book... but I was unable to find that attachment.

The committee also explored the implications of the current spending rate from our endowments. Our investment policy allows a draw between 4% and 5%, but the budget is based on 5% and, once increased allocations from the floor of General Convention are included, the actual draw has been closer to 5.7%. The Committee believes, baed on the simulations they ran through Mercer, that this draw is not sustainable in the long-term and will result in an erosion of the church's assets. Thus, they are recommending a gradual reduction of that spending rate over the next triennium, bringing the draw back down to a more manageable 4.5%.

Reactions to the Report
As is generally the case in TEC, our investments continue to be well-managed, producing competitive returns and enabling significant ministry to take place.

I agree with the Committee's hesitancy with regard to fossil fuel divestment, both for the reasons they note but also for reasons I articulated in my earlier essay on the Committee on Corporate Social Responsibility. I wish they had more clearly attached the report on their implementation plan, though.

As to the spending rate, the larger rate has been to enable programs of mission and evangelism to take place (full disclosure, one of which is being funded at my own parish). While I agree that it is not a long-term smart policy to draw at the higher rate, from a fiduciary standpoint... I also believe we are at a particular moment in our life as a church. There is new energy and passion around evangelism which is making a real impact on the life of our church. I believe that a higher draw that is funding this work will, in the long-term, make our church MORE sustainable, not less. We may have a smaller portfolio, but we will have more vibrant congregations and (hopefully!) more members engaged in the work of the church.

So, I support returning to a more manageable draw, but I would like them to give it at least one, if not two, more trienniums so that we can fully fund this new season of church planting and evangelism and see what returns that work will wind up bringing to TEC.

Note: You can click here for a list of all Blue Book Reports & Resolutions that have thus far been reviewed. 

Care with the Blue: Economic Justice Loan Committee

We begin the week with the fourth Executive Council Committee report in my series on the Blue Book, the Executive Council Economic Justice Loan Committee.

Summary of the Report
This Committee was created by Executive Council in 2015 for overseeing assets GC and EC set aside for economic justice loans...

However, there was no actual report submitted. So that's all.

Reactions to the Report
Obviously, it is a little hard to react to a missing report. The Committee itself sounds interesting, finding ways to leverage assets to support economic well-being and empowering the powerless and the oppressed... I just wish I actually knew what they did in the triennium!

Thankfully, Google exists and I was able to find out a little bit more. For example, in January of 2017, it was reported that the Committee made five investments, totaling $1.4 million. The bottom of that report says more about what this Committee does, so I'll quote it.

The Economic Justice Loan Fund is an economic justice ministry through which the Episcopal Church part of its investment assets to provide capital for communities and groups that lack full and equal access to financial resources.  Loans have been made in the United States and internationally to support community economic development, affordable housing, job creation and other avenues of mission.  The Fund was created in 1998 by the Executive Council.  It combines two prior loan programs that had existed since 1988 and makes up to $7 million available. Loans are made to financial intermediaries, usually in amounts between $150,000 and $350,000, and usually for terms of three to five years.  Loan applicants do not have to be affiliated with the Episcopal Church; however, applicants and recipients must have the endorsement of their local Episcopal bishop.  Loans are not made to individuals or for individual projects.  

A proper report hopefully would have said more about the terms of the loans granted in the Triennium and how those loans affect the asset allocation and portfolio of the church. I hope that a fuller report will be made available to General Convention and the church at some point. To get a broader sense of their work, you can also read the report to General Convention in 2015 online here.

Note: You can click here for a list of all Blue Book Reports & Resolutions that have thus far been reviewed. 

Care with the Blue: Committee on Historically Black Colleges and Universities

As I wrap up the week, today's post in my series on the Blue Book looks at the Committee on Historically Black Colleges and Universities.

Summary of the Report
This committee was also created by EC in 2015, focused on how our church might better support our Historically Black Colleges and Universities (HBCUs). There are two remaining institutions in our church: St. Augustine's University in Raleigh, NC, and Voorhees College in Denmark, SC.

The committee notes that their calling together was fortuitous because both St. Augustine's and Voorhees were going through significant financial turmoil. Thus, the committee was able to ensure that EC actively supported these two institutions as they seemed to find firmer footing. One of our HBCUs, St. Paul's in Lawrenceville, VA, closed in 2012 and so the committee hopes that more active support with the two remaining institutions can keep that from happening again. Their report notes, "There are few historically black institutions more valuable to its community and the economics and culture of the larger society than Historically Black Colleges and Universities. Statistics show that approximately one half of all black college graduates are products of HBCUs."

Reaction to the Report
Given the work we are trying to engage in through racial reconciliation, it seems particularly important that the work this committee did be affirmed and that the next EC continue it on. Our church was able to have a significant impact in the life of these institutions in the past triennium—I hope that impact will continue and deepen.

Note: You can click here for a list of all Blue Book Reports & Resolutions that have thus far been reviewed. 

Care with the Blue: Committee on Corporate Social Responsibility

The series on the Blue Book now goes to the second committee report from Executive Council (EC), the report from the Committee on Corporate Social Responsibility.

Summary of the Report
This committee was created by EC in 2016 to research the social responsibility records of corporations whose stock is held by the Domestic and Foreign Missionary Society (DFMS—the formal, legal, name for TEC). They were further tasked both with developing shareholder resolutions on social justice and also researching resolutions proposed by other groups.

The committee worked with United/Continental and Marriott on training of staff to identify victims of human trafficking and also planned future dialogues with Delta Airlines and Swift Transportation. They withdrew a shareholder resolution to Chevron after that company published its own document on climate change and are monitoring progress with other companies whose businesses have an impact upon climate change. They engaged in dialogue with the CACI corporation on the question of diversity (specifically gender diversity) on their board. Through dialogue with Caterpillar Corporation, an employee was appointed to a new position on human rights, hopefully to oversee the participation of Caterpillar in actives associated with the occupation of the West Bank and Gaza. They are also looking at our participation with Motorola, Facebook, and PayPal which also have connections to the Occupation. When the committee discovered we held stock in at least five banks which had helped finance the Dakota Access Pipeline, they sought to get the banks to exert pressure in getting the pipeline rerouted.

The committee proposed one resolution (see below) and also a budget for a halftime position to oversee this work.

Reaction to the Report 
Admittedly, I am not naturally a tremendous fan of the social screening of investments. Though it can have a powerful effect in some cases, I always worry that it privileges one political perspective (usually liberal) over another one and it gets farther into the weeds of definite right and wrong without respect to differing opinions than is appropriate for a churchwide body in the Anglican tradition.

That sad, most of this I found unobjectionable. At the same time, I do not not see the need for this work to be staffed or ramped up in any way. Though some corporations should definitely be avoided due to the nature of their work... I personally think that list is probably rather small. The reality is that almost every corporation has aspects of its work that at least some Christians would find antithetical to the gospel of Christ. So, some corporations get unfairly singled out while others are ignored.

To wit, I think there are other more effective ways of engaging in social justice work in the church, ways that are more attentive to the diversity of political views that do exist in TEC (despite the imagination of many).

Reaction to the Resolution 
A047 Ethical Investments (full resolution here)
I'm not opposed to this resolution, but I have my reservations about this sort of work in general, as noted above. That said, my guess is that I'm in the minority on this one and so it will probably be approved.

Note: You can click here for a list of all Blue Book Reports & Resolutions that have thus far been reviewed. 

Care with the Blue: Committee on Anti-Racism

My series on the Blue Book now turns to the report from the first of the six regular Committees of Executive Council: the Committee on Anti-Racism.

Summary of the Report
This committee has existed since the late eighties, charged with providing assistance to dioceses, congregations, and agencies of TEC with regard to programs to combat racism. The scope of work for this committee expanded in 2015, when they were also charged to develop anti-racism work as a core component of Christian formation, begin collecting data on provincial anti-racism work, develop criteria for credentialing trainers in anti-racism programming, and monitor compliance of anti-racism legislation from General Convention.

The work of the Committee in this past triennium bears evidence to a refrain I'm beginning to sense is oft-repeated. General Convention charges that some sort of work be done but then there is no budget to do that work. The budget from the 2015 GC gave no programmatic resources to this Committee and so they struggled to meet their mandate. After one year, a key member resigned. Halfway through the triennium the chair became inactive, with a new chair not named until June of 2017. Over the course of the triennium, they had two face-to-face meetings, three meetings via phone and three via web conference.

The committee cited the House of Bishop's pastoral letter "The Sin of Racism: A Call to Covenant" as a theological basis for their work. Given what has happened in our country over these past few years, the Committee expresses their own belief that all clergy and laity need to move beyond "awareness-level" training and get "competency-level" training that would give them the skills and confidence to reconcile and heal the wounds of racism. They are currently working with the Forma Group to find ways to incorporate anti-racism training in all formation efforts across TEC.

Though the 2015 General Convention sought to create criteria and standards for credentialing trainers, the budget did not include the staff person that was support to track and record this. Thus, the oversight falls back upon diocesan level leaders—resulting in significant disparity in practice and effectiveness.

One of the true successes of the triennium has been the launch of the "Becoming Beloved Community" initiative, led by the Presiding Bishop and his staff. The hope is that this toolkit can provide a much needed boost in this work. Further, identifying the difference between awareness, competency, and mastery when it comes to Anti-Racism training (and what is needed to reach each stage), is a big step forward in this work.

Their report also includes a rather exhaustive list of activities on a province-by-province, and then diocese-by-diocese basis. This work demonstrates that our provinces and dioceses are taking General Convention's calls for anti-racism training seriously. It was pretty stunning (if somewhat overwhelming!) to read all that is being done around the church.

Also, despite not having a staff person to help find a way to credential anti-racism trainers, the committee did not give up. Instead, they designed an alternate process that could be accomplished without the benefit of a staff person overseeing the work.

The committee concluded their report with a recommendation for how their work should be continued in the triennium to come.

Reactions to the Report
If this is what they did with no budget, the devil should be terrified of what they would do with a real budget!

Seriously, if the past couple of years have taught us anything as a nation it is is that we are far from "done" with issues surrounding racism. The work that this Committee is doing is important and something the church needs to vigorously support.

We often assume that because the Episcopal Church is generally a more progressive denomination, that we must be better than others when it comes to racism. In my experience, this is far from the case. Though Episcopalians like to laud Jonathan Myrick Daniels and others who were active in the Civil Rights movement, scant attention is paid to the ways in which many Episcopalians supported discrimination and the many leaders of our church who were silent at that moment in our nation's history. Further, talk to the average person of color in TEC, and they will not find it difficult to tell you what racism looks like in our church.

It may be swaddled in white-guilt-do-gooder-notions, but racism is real. I know I was shocked in my own ministry by the racism I experienced at the parish and diocesan level when I sought to launch our Latino ministry initiative. Thankfully, through continued and insistent conversations roadblocks based upon racist ideas and approaches were overcome... but... wow. Yeah, this is a real thing in our church and it is not OK.

In many ways, I think that it is precisely the fact that we are more progressive as a denomination that makes this issue more difficult to tackle. Every Episcopalian thinks they are not the issue.

This is where I think the concept of unintentional bias has been the most helpful in my own continued formation in this area. And, to be honest, this is my one critique of this report. Absent an overarching program and narrative that is broadly shared, a survey of what is being done in our church reveals that many of the programs and approaches are steeped in methodology that contemporary leaders in issues of race and diversity would say are simply not effective.

As much as Becoming the Beloved Community is an important first step, it cannot be our final step as a church. I hope that in the next triennium the committee will be given a real budget that can enable it to develop standards and criteria that are based upon the best contemporary scholarship on issues of race and diversity.

Reaction to the Resolutions
A042 Proposed Name Change for EC Committee on Anti-Racism (full resolution here)
This should be an easy resolution to pass. The very name "anti-racism" ironically brings up all kinds of biases and prejudices in the minds of the hearer. It says that those who are undergoing the training are racist—which, though it may be true, calling people racist has been demonstrably shown to lessen the effectiveness of changing people's perspective. Further, as the committee notes, "opposition of racism and promotion of tolerance is not quite the same the God's call to reconciliation - returning to a right relationship with God calls our neighbor."

A043 Clarify and Update Mandate (full resolution here)
This resolution largely changes the language of the committee's mandate along the line of thinking as the name change (really, these two resolutions should be joined into one). Additionally, this resolution calls for changing the ideals for credentialing trainers given the experience and insight gained in the past triennium.

A044 Establishing an Anti-Racism/Racial Reconciliation Certification Framework: Building Capacity for Becoming Beloved Community (full resolution here)
Given the significant differences in approaches across the church, this resolution seeks to establish clear criteria for what should be seen as effective anti-racism training—noting that is different than just anti-racism programming. This should definitely be approved.

A045 Revision and Reminder of Anti-Racism Training Requirement (full resolution here)
This resolution provides a helpful revision to the requirements for anti-racism training, including how that training is carried out and tracked. It follows largely the insights of the report and should be approved.

A046 Host a Racial Reconciliation Awards Program (full resolution here)
Well, this is an interesting idea. The Committee would like there to be an annual awards ceremony that would "will recognize individuals and organizations for their Racial Reconciliation efforts.' In the explanation they assert, "It is well-known that people tend to exhibit behavior when they see examples. The Committee believes that the Church needs to showcase examples of successful racial reconciliation efforts. Awards programs are a proven way to provide such a showcase."

Given everything else we are trying to do, this particular program seems... not the best use of our time or energy. I doubt that having an annual awards ceremony would change many hearts and minds. I'm inclined not to approve this resolution.

Note: You can click here for a list of all Blue Book Reports & Resolutions that have thus far been reviewed. 

Care with the Blue: IARCA Covenant Committee

Following yesterday's underwhelming report from the bilateral committee that oversees the relationship between TEC and the Episcopal Church of Brazil, today's report from the IARCA Covenant Committee was much more heartening.

Summary of the Report
This committee oversees the relationship between TEC and the Anglican Church in Central America (Iglesia Anglicana de la Región Central de América). Once more, some context might help with this report.

This province of the Anglican Communion is comprised of five dioceses (Costa Rica, El Salvador, Guatemala, Nicaragua, and Panama), with four of those five being originally founded by TEC. Its existence is an outgrowth of the attempts for autonomy for Province IX dioceses, beginning in the mid-sixties. The goal was for autonomy to be reached by 1985 or 1988—but no one could achieve autonomy by then.

Mexico reached autonomy in 1995, with TEC creating a twenty-five year covenant of financial support (one that ends soon, unless changes are made—I don't know the current status of that situation). Three years later, in 1997, the above noted dioceses reached autonomy as the Anglican Church in Central America, with TEC creating a forty-year promise of financial support and the covenant overseen by this committee (that covenant it online here). The other areas of Province IX are no longer currently working towards autonomy but are, instead, a part of the Province IX  Sustainability Plan. (You can read some about that online here).

The Committee which oversees our relationship with the Anglican Church in Central America clearly worked pretty hard during the triennium. They learned about the history behind the autonomy movements in Mexico and Central America. They also discussed what would need to happen to revise the current Covenant with the IARCA. That work began in Guatemala in 2016 and though it could have been hampered by 2015 GC budget cuts, the group worked on finding a way forward that could enable the mutual flourishing of our provinces.

They note that we have learned much from twenty years of walking together and, now halfway through the covenant period, are hopeful that a revision of the covenant will strengthen the next decade of ministry together. The new Covenant will not be brought to GC 2018, so we will need to wait until 2021 to formally approve a new version of it.

Reaction to the Report
Though the situations are significantly different between Central America and Brazil, it is hard not to note the tremendous difference between this report and the last one. As far as I can tell from the report and my own research, it seems this relationship continues to function well and healthily. The ability of the Committee to overcome its own hurdles and get important work done is to be commended. I look forward to reading the revised Covenant when it is completed and hope our two provinces can continue to walk together faithfully.

Note: You can click here for a list of all Blue Book Reports & Resolutions that have thus far been reviewed.