Archdiocese releases sweeping financial information

By Michael Paulson
Globe Staff / April 19, 2006
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Saying that "our programs and ministries are at risk,'' Cardinal Sean P. O'Malley this morning released more than 1,000 pages of financial data about the Archdiocese of Boston in an attempt to put to rest persistent questions about the church's finances and organization.

O'Malley, at an 11 a.m. news conference at St. John's Seminary, said declining revenues as a result of the clergy sexual abuse crisis have placed the region's largest religious denomination in jeopardy, but he expressed confidence in the archdiocese's ability to balance its budget by cutting programs and improving fundraising. "Together....we will find the way forward,'' he said.

"The revenue numbers reflect the painful experience of our recent past, the anger over the sexual abuse crisis and the closing of parishes,'' he said in a letter to the region's Catholics. "These numbers are one response of a wounded community, an expression of deep hurt and a measure of our need to remain focused on the long process of healing that lies ahead.''

The archbishop plans to reduce the number of cabinet secretaries and reorganize the archdiocesan administration in an effort to balance the budget by fiscal 2008.

The reports are fairly grim in tone. "The central administration of the archdiocese is not sustainable in its current form,'' says one document. "While we do have liquidity, we have little left to sell, and we are faced with substantial obligations. In spite of reductions in force of 19 percent since the beginning of the abuse crisis, our central administration, in an effort to maintain services at pre-crisis levels, has operated with deficits in each year.''

O'Malley's aides said they believe the disclosures are the most detailed ever made by a Catholic diocese in the nation, and fulfill O'Malley's repeated promises to introduce "transparency" about church finances.

He has promised to make the disclosures annually.

At the news conference, O'Malley released audited financial statements for the last two church fiscal years, covering a period from July 1, 2003 through June 30, 2005, as well as a report assessing the church's overall financial condition, which O'Malley has claimed is poor.

O'Malley also released a detailed explanation of how much the church has spent throughout history on costs related to sexual abuse by clergy, and where that money came from.

And O'Malley released an explanation of the church's complex financial structure, as well as audited financial statements about many of the organizations controlled by or associated with the archdiocese.

Some of the data is already publicly available, but is being presented in a more simplified and consolidated fashion; other information has not previously been disclosed by the archdiocese.

According to the report on sexual abuse settlements and related costs, the archdiocese spent a total of $150.8 million through June 30, 2005 on abuse-related costs, of which $127.4 million was for settlements.

The archdiocese insisted in the report that it has not used parish funds, archdiocesan development funds, or funds from parish closings to fund abuse-related costs, but instead have used real estate sales such as that of a portion of the Brighton headquarters, insurance settlements, donations made to help fund therapy for victims, and money from the archdiocese's own insurance fund.

The archdiocese promised to provide annual reports about abuse-related expenditures in the future.

"The enormity of the financial costs resulting from the sexual abuse of children by clergy is a reflection of the devastating breach of trust experienced by survivors and the Catholic community at large,'' the report says.

"It is the hope of the archdiocese that this and future financial reports will be one building block among many toward rebuilding a foundation for trust.''

Catholic dioceses nationally tend to be far less open about their finances than many Protestant churches, but have been under pressure from a variety of interest groups and donors to do a better job explaining how they spend the money given to the church by lay Catholics through collection baskets, bequests, and development campaigns.

Earlier this year, largely thanks to lobbying by Protestants and other non-Catholic religious denominations, the Legislature defeated a proposal, spearheaded by Catholic lawmakers unhappy with the archdiocese, to enact a civil law requiring churches disclose their finances and real estate holdings.

O'Malley committed himself to financial transparency in 2004, about a year after he was installed as archbishop of Boston, as he attempted to build public support for a reconfiguration effort that would result in the closing of 62 out of 357 parishes.

"Some people think that reconfiguration will mean a great surplus of money for the archdiocese,'' O'Malley said in a letter to area Catholics on Nov. 13, 2004. "Unfortunately, this is not true. I have asked the finance council to work on a strategic plan for the archdiocese which I shall share with you. I am committed to financial transparency and to using our human and financial resources for the mission of the church.''

Then, on Oct. 21, 2005, O'Malley issued another letter, detailing his financial transparency pledge, and promising to release the data by the end of the first quarter of 2006.

The archdiocese missed that deadline by 19 days, a delay, the archdiocese says, that was caused by the decision of the Vatican to elevate O'Malley to cardinal, which necessitated his travelling to Rome in late March, and then by the arrival of Holy Week.

O'Malley has repeatedly said that he sees the release of financial information as one way to rebuild trust that was damaged by the clergy abuse scandal.

In the 2005 letter, O'Malley explained his plan to release financial data by saying, "This commitment was motivated out of respect for people of the archdiocese as donors and members of our church and to demonstrate to the general public that the archdiocese is fulfilling its fiduciary responsibilities.''