How increased financial transparency can rebuild trust in the SBC
Effective partnerships in Great Commission endeavors (church planting, missions, evangelism, etc.) can only be made possible if there is transparency between those who are cooperating. No transparency, no trust. No trust, no cooperation.
Sadly, the Southern Baptist Convention (SBC) is currently running a growing trust deficit across almost all of our Convention’s various cooperative efforts. Different factions within the Convention look askance at one another at every turn. The result is that the greatest missions and theological education partnership on the planet is now stuck in low gear. We can’t seem to get out of our own way and back on a mission to reach the nations for Christ because we do not trust one another.
I don’t pretend to have a silver bullet for restoring trust in the SBC across the board. But if I were Barney Fife and had one bullet to try, I’d load financial transparency into the chamber.
At its most basic level, the SBC is a financial partnership for missions and ministry. It’s a pot of money that we divide up and disperse to various entities to accomplish the Great Commission together.
It’s been a marvelous partnership for many decades. We’ve built the largest international missions-sending agency in history. We are both the theological and logistical leaders in taking the Gospel to unreached peoples and places around the world. We educate the majority of seminary students on the North American continent. And when natural disasters strike, rank-and-file Southern Baptists in yellow hats are among the first and best to put their boots on the ground to provide relief.
A lack of financial transparency threatens all of this, resulting in a degradation of trust. Churches will not place their resources—time, people, or money—into the hands of large organizations that they do not trust to steward those resources faithfully. Thus, our collective ability to fund and fuel our mission endeavors is increasingly hampered.
For example, in his report to the February meeting of the Executive Committee, interim president Jonathan Howe reported that 10,000 churches have disengaged from Cooperative Program giving over the last 15 years. The reasons for their disengagement are no doubt varied. But it’s safe to assume that lack of trust is a key factor in many churches opting out of the Cooperative Program. If this trend continues, our cooperative mission is in danger.
Because the SBC is a financial partnership, we stand to make the greatest gains in restoring trust with financial transparency.
This is why last June, at the Annual Meeting in New Orleans, I made a motion from the floor to amend our business and financial plan to require entities to disclose IRS Form 990-level financial information to our churches. The text of the motion reads:
“I move that THE BUSINESS AND FINANCIAL PLAN BE AMENDED AS FOLLOWS: Financial Reports, Paragraph 3 be added, to state: In addition to the foregoing, within six months of the close of each financial year, each Entity will publish information in the same detail, scope, and quality as would be required to be disclosed to the public in the informational Return of Organization Exempt From Income Tax, or Form 990, and all applicable schedules and attachments thereto, as if the Entity were required to file such return. An officer of the entity must attest that the information is true, accurate, and complete to the best of its knowledge. Unless otherwise provided, the Entity will use the definitions applicable by law, as if the entity were required to file the return. This does not require any Entity to file a 990 with the IRS or to disclose information that is not normally available to the public, such as Schedule B.”
Allow me to explain what this would do.
What is the IRS Form 990?
IRS Form 990 provides financial information about a non-profit organization to the public. It represents the bare minimum level of information that the federal government says donors and the public ought to know to evaluate a non-profit organization’s financial health, practices, and trustworthiness.
On Form 990, a non-profit organization discloses detailed financial information and describes its mission, significant activities, and governance. Organizations report their revenues, expenses, assets, liabilities, accomplishments, the number of employees, their three largest program services, top contractors, and select compensation information. Additionally, 990s require organizations to answer questions about policies related to conflicts of interest and, related, to disclose transactions with trustees and other interested persons.
Churches and their auxiliaries are not required to file the Form 990. However, some state Baptist institutions voluntarily file the return. For example, in my home state of South Carolina, three Baptist universities, our Baptist children’s home, and the state Baptist paper all file 990s. While I believe their level of transparency is commendable, I respect the right of entities not to file the form with the federal government. I support keeping the federal government’s tentacles out of our religious affairs. Therefore, my motion in New Orleans specifically stated that this amendment would not require any entity to file a 990 with the IRS.
While I do not believe the federal government has a right to the 990-level financial information of our entities, it should go without question that our churches deserve such information. Form 990 represents the bare minimum industry standard for non-profit financial disclosure. Why wouldn’t our churches expect the bare minimum at the very least? And why would our entities resist disclosing the bare minimum information to our churches—the very churches whose generous giving empowers these entities to pursue their part in our mission together?
In 1 Corinthians 5, the Apostle Paul marvels at the toleration of sin in the Corinthian church, saying there is sexual sin among them that is not even named among the pagans. Well, we have financial obscurity in the SBC that is not even named among the pagans. As it stands right now, Planned Parenthood is more financially transparent than the Southern Baptist Convention!
Such things should not be.
A Pastoral Motivation
My work as a pastor motivates my interest in financial transparency. I pastor a small church in South Carolina. Last spring, we celebrated our 110th anniversary. Our church has faithfully given to the Cooperative Program for most of these 110 years, and many of our current members have generously given to the Cooperative Program for five or more decades.
They deserve the confidence and courtesy of financial transparency and accountability.
It’s what we practice at our church. The chairman of our finance committee is 81 years old. He spends most of his days caring for his wife but still finds time and energy to continue serving our church as a deacon and chairman of our finance committee.
He keeps meticulous records. He has a folder with all sorts of financial information; any member who wants to see it is welcome to. He gives detailed reports on our finances at our regular members’ meetings. A copy of our church budget, including my salary, is available in the foyer of the sanctuary.
He knows we are spending God’s money, and he believes our church members have a right to know how we are spending it since we will all give an account to God for our church’s stewardship.
We should accept no less than this standard for the entities of our cooperating churches.
In 1914, our church’s original children’s Sunbeams chapter raised $19.92 for missions, and we’ve been generously supporting global missions ever since, giving to the Cooperative Program and the Annie Armstrong and Lottie Moon missions offerings. As a former IMB missionary, I’m well aware of the blessing of the Lottie Moon Christmas Offering, as it funded our seven years of ministry among unreached and unengaged people groups in Central Asia. The CP and LMCO allowed our focus to be on proclaiming Christ rather than fundraising. I don’t want to see our funding model for missionaries threatened because financial obscurity has worn trust thin.
Further, as I have conversations with prospective members, I’m noticing a stark increase in the number of prospective members who distrust SBC entities, even when they come from other denominational backgrounds. They do not want their tithe dollars going to the Cooperative Program because they do not trust our convention’s financial practices. They desire to join our church but are unwilling to contribute mission dollars where minimum standards for good governance and accountability are not practiced.
I assure them that they can designate their giving to stay within the church so they can tithe with a clean conscience. Not only does this cause our financial secretary much more work, but it also results in fewer funds that we can give to the Cooperative Program. And it’s not that these are stingy people. They are faithful and generous givers—when transparency and accountability earn their trust.
In other words, financial obscurity in the SBC is hurting us on the ground at the local church level, creating extra work to do and additional burdens to clear in persuading prospective members to join our ranks.
Where the Motion Stands Today
Unfortunately, messengers to the 2023 Annual Meeting were denied an opportunity to vote on the motion to amend the business and financial plan. Instead, the motion was referred to the Executive Committee. Though it was not an official agenda item for the September 2023 meeting, Committee on Convention Finances and Stewardship Development members gave initial consideration to the motion during that meeting, and entity heads were allowed to speak against it. However, no action was taken.
The finance committee invited me to speak to the motion during their February meeting in Nashville, which I happily accepted. For my five allotted minutes, I gave my best case for restoring trust through increased financial transparency and then answered a few questions. The committee then went into executive session, where they decided to wait until their June meeting, immediately before the Annual Meeting, before taking any action.
For the motion to move forward, the finance committee must recommend it to the full board of the Executive Committee, which would then have to vote to bring it before the messengers.
In other words, the motion may be killed in committee, and messengers denied the opportunity to vote on it. It is also possible that the committee recommends an alternative plan, one likely to make more accessible the information that is already available in the annual ministry reports.
However, the currently available information is insufficient and does not meet the minimum standard of the 990. Therefore, the Executive Committee should allow messengers to vote on this motion in Indianapolis.
My ask to them is simple and Baptistic: Allow this motion to come before the messengers in June. The Convention belongs to the churches, the churches do not belong to the Convention. If there is one body in the SBC that I still trust, it is the messengers. They deserve the right to have a say on such an important issue.
Answering Objections to Increased Financial Transparency
I appreciate the Executive Committee doing their due diligence before recommending that we amend our business and financial plan. As they deliberated, I heard several objections, none of which I found convincing. Below, I attempt to present the “Top 13” objections I have heard during this push for greater transparency, with a response to each.
Objection 1: It’s not right to disclose the salaries of all SBC employees.
Answer: The 990 does not require the disclosure of compensation for all employees but only for officers, trustees, directors, key employees, and the top five compensated employees. A key employee is defined as one who makes over $150,000, oversees ten percent of the budget, assets, or activities, and is one of the top 20 compensated individuals in the organization. Therefore, only the compensation of the highest-paid and most influential employees would be disclosed.
Objection 2: Disclosing salaries will put international missionaries in danger.
Answer: Given the above answer, it is very unlikely that any field missionary’s compensation would ever be eligible for disclosure. However, as a former IMB missionary in a Muslim nation, I am particularly sensitive to such security concerns. I would welcome an amendment to redact any active field missionaries’ names from the report. Likewise, I would welcome an amendment to redact the names of any IMB pay entities from the contractors’ disclosure. No one wants to put our missionaries in harm’s way.
Objection 3: Disclosing salaries will make seminaries vulnerable to professor poaching.
Answer: Again, not all employee compensation is disclosed. It is doubtful that the Greek professor’s salary will rise to reportable levels. Further, 990 disclosures have not hurt state Baptist universities that file them with the IRS and are made public, nor has it hurt the many other non-SBC seminaries that file them.
Objection 4: Why is it necessary to disclose even the top salaries? Won’t this provide information that critics can use against entities they don’t like?
Answer: I begrudge no one for making a fair salary. A laborer is worthy of his wages, and one who leads a large organization makes a large salary. But when tithe dollars pay that salary, it also makes intuitive sense to me that part of earning that large salary is having it disclosed. The motivation for 990-level compensation disclosure is not, as the cynic might suggest, simply to use it as a cudgel against one entity or another. Rather, it is a basic tool of accountability and good governance. Executive compensation is one of the main ways to evaluate trustee boards, which is entirely in the purview of the messengers who appoint them. We simply ask for the basic, minimum tools to ensure healthy trustee governance.
Objection 5: The business and financial plan already requires entities to provide salary scales to any SBC church member who requests it.
Answer: This is true. However, the information given is insufficient, as it is only a salary range for various levels of employment and is only for the base salary, not total compensation. Further, not all entities respond to salary requests. Some fellow pastors and I recently requested salary scales for each entity. Three entities replied promptly, one a few weeks later, and the rest have yet to reply or provide the requested information. One salary scale we received even had the disclaimer that “upper and lower ends do not represent current actuals.” These salary scales are insufficient and unhelpful.
Objection 6: We should just trust the trustee system. Financial oversight is why we have trustees!
Answer: The 990 is designed to help churches and faithful SBC lay members evaluate trustee boards. Trust in our trustee system is waning, and we need some accountability to messengers to restore it. Too often, trustees become brand influencers to the churches on behalf of the entity rather than exercising meaningful oversight of the entity on behalf of the churches. The incentive structures encourage making the entity look good no matter what, which de-incentivizes transparency, accountability, and asking hard questions.
For example, Southwestern Seminary, with a full board of trustees, engaged in deficit spending to the tune of $6 million per year for twenty years. They spent $120 million that they didn’t have! So, either the trustees didn’t know or didn’t care. Regardless, it took two presidents getting fired for Southern Baptists to find out about the dire financial straits of the once-largest seminary in the world. This demonstrates that our trustee system needs reform.
Further, trustee boards are structured so that the six-member executive committees wield most of the power. Often, regular trustees not on the executive committees do not have access to the most pertinent financial information.
Yes, we have trustees and want them to do their jobs. However, Southern Baptists need better tools to evaluate the trustee boards they are responsible for appointing.
Objection 7: A 990 would not have helped the situation at Southwestern.
Answer: Even organizations that file 990s can mismanage funds; therefore, the 990 is not a cure-all. But it does not follow that since it can’t do everything that it can’t do anything. Operating with more light would have helped cultivate a culture of accountability, and evaluating executive compensation compared to the program financials could have helped messengers know everything was not going well.
Objection 8: We already do audits.
Answer: I am grateful that our entities are audited. However, an audit is insufficient for transparency by its very nature. An audit simply tells you if the receipts add up. But it does not tell you where the money came from, where it went, and how it aligns with the organization’s mission. We get part of the audited financials, but never the full audit, or the auditor’s recommendations. 990s, on the other hand, help donors assess whether the board is overseeing management and the mission.
Objection 9: All the information is already available.
Answer: No, it’s not. Some of the information found in the 990 is available in ministry and annual reports. However, those reports do not include executive compensation, top contractors, transactions with trustees and interested persons, or conflict of interest statements. The reports do include program-level financials, but not in the same detail as the 990. For example, the 990 requires disclosure of legal fees, which greatly interests Southern Baptists in our current context.
Objection 10: It would be too time-consuming and expensive for entities to disclose the 990-level information.
Answer: I’ve spoken with non-profit directors who file 990s, and the consensus is that for any organization already doing corporate financials and audits, as our entities are doing, filling out the 990 is not very much additional work. The information is already there. Further, the above objection is that sufficient information is already available. But then, the same people turn around and object that the 990 is too work-intensive and expensive. Those two things cannot be true at the same time. We may be exempt from the law to file the 990 with the IRS, but we are not exempt from the logical law of non-contradiction. Yet, this is the precise argument that one entity head made within a span of two minutes at the Executive Committee meeting in February.
Objection 11: 990-level disclosure makes it more likely that the federal government will require our entities to file the actual 990 with the IRS.
Answer: No, it doesn’t. Current law exempts our entities from filing with the IRS. The legal test is not the quality or quantity of information that entities voluntarily disclose but their relationship to the Southern Baptist Convention.
Objection 12: What about keeping donor information private?
Answer: This motion explicitly excludes all information on the 990 that is not normally made public, such as Schedule B, which is the list of donors. This motion rightly respects the interests of donor privacy.
Objection 13: Doesn’t this motion foster distrust? Aren’t you just accusing people of misdeeds?
Answer: No, quite the opposite. We already have distrust. If anything, this amendment to our business plan would give entities the opportunity to put to rest any unfounded accusations about their finances. In other words, if there is no impropriety, then that will be made apparent. Those making false allegations will be silenced, and trust will be restored among Southern Baptists of goodwill. Of course, if it reveals impropriety, then that will allow repentance, restitution, and correction, restoring trust among Southern Baptists of goodwill. The only thing that will not restore trust is continuing to operate in the shadows.
Several years ago, the Executive Committee weighed whether to waive attorney-client privilege. A popular argument then was this: If there’s nothing to hide, waive privilege and open the records. Ultimately, they did. Seeing that many of those same members of the Executive Committee who found that argument persuasive then are still serving now and will vote on what action to take with this motion, I offer the same argument: If there is nothing to hide, open the books, disclose the 990-level information, and put suspicions to rest.
Walking in the Light
Let me close with a pastoral exhortation: Walk in the light as He is in the light (1 John 1:7). Have no fellowship with the unfruitful works of darkness, but rather expose them (Eph 5:11). Shun the appearance of evil (1 Thess 5:22). Remember that it is by God’s mercy that the SBC has its ministry, and therefore let us renounce secret and shameful ways (2 Cor 4:1-2). In administering offering gifts, may we take pains to do what is right, not only in the sight of the Lord but also in the sight of man (2 Cor 8:19-21).
In recent years, it’s been often said that the world is watching. This is true, and Southern Baptists should set the pace for financial transparency and accountability for the watching world. We should be so far above board that we put secular organizations to shame. Instead, we lag behind them.
But more important than the world watching is the fact that Christ is watching. Will we honor Him, not only with the stewardship of His money and resources given by His Church, but in how we treat, inform, and report back to His Church who sent the resources?
Christ is watching. He knows where every penny came from and where every penny is spent. Nothing is secret that will not be revealed, nor anything hidden that will not be known and come to light (Luke 8:17). It would be far better to bring our finances into the light now that we may honor what is good and correct what is wrong, thus honoring Christ—who sees every detail of every financial transaction in the SBC.
The time for financial transparency is now. The time to restore trust is now. Because the time to win the world to Jesus is now.
Pray with me that the Executive Committee will have the wisdom and courage to do what is right and bring this motion before messengers for a vote in Indianapolis.
