Lending Money: Part 1

Today is the fall meeting of the Presbyteral Council, and we pray that the Holy Spirit is present at the meeting and that our Open Letter can be the topic of a fruitful discussion.  Tonight is also the Priests Appreciation Dinner in Boston, and we also pray for its success in raising money for an important cause—the Clergy Retirement Fund. You can still shout out” appreciation for a priest here.

For the first time yesterday, in our updated Open Letter, we mentioned a $26 million loan made by the archdiocese to the Catholic Schools campaign that appears to be at some risk of not being repaid in its entirety.  Today we go into a little more detail about that and invite your open dialogue about it.

The anonymous bloggers here at Boston Catholic Insider do not know much about raising money, so we have high respect for those who have been successful raising money.  The Campaign for Catholic Schools, under the leadership of Jack Connors, embarked on an ambitious plan in 2005 to revitalize Catholic schools in Boston. Older parish schools would be closed or consolidated into new regional “academies.” The major fundraising part of the campaign was called the 2010 Initiative, and on March 7, 2008, they announced plans to raise $70 million for completed and new projects.  About two years later, on May 12, 2010 they announced they had raised $48.5 million of the $70 million needed to complete the Pope John Paul II Academy in Dorchester, which consolidated seven parish schools into a regional academy.  They also said the Campaign had secured almost $58.8 million of the nearly $85 million needed to finish all the projects it has planned, including school consolidation and revitalization in Brockton, Gloucester, and South Boston.   Problem is that we are nearing the end of 2010, donors are tapped-out, and the campaign appears to still be about $20 million short of their goal.  Where does the money come from?

The answer appears to be a loan made in the 2009 fiscal year.  If you look at page 16 in the 2009 annual report, you will see an increase in loans receivable of $19.6 million to the campaign for construction and start-up expenses at Pope John Paul II Academy in Dorchester and Trinity Catholic in Brockton, and if you look at page 45, you will see $26 million loaned to the campaign, of which $1.5 million was already paid back by June 30, 2009.  (Note: in our original post we interpreted this as a $20 million loan, but later realized it was $26 million).

We are told that Jack Connors promised Cardinal O’Malley that he would build a new, state of the art Catholic school in Boston.  Cardinal O’Malley is on record as being an advocate for Catholic schools so it sounds like it could be a win/win. This was apparently a selling point to the Cardinal in allowing Connors on the Finance Council, plus there existed the glimmer of hope that he might help raise money to balance the books too.  When the 2010 Initiative was announced in 2005, there was no reason to assume the powerbroker would not deliver.  By coincidence, even then, conversations had begun about selling Caritas, and friends of Jack (Chair of Partners, who might have his eye on Caritas in the future as documented elsewhere in this blog) such as Fr. Bryan Hehir just might have coincidentally helped bend the ear of the Cardinal and pave the way for Jack to be back on board in good graces.

The first phase, the Brockton school consolidation, went forward before enough money could be raised. We are told that the original idea was to secure some or most of the funding by selling off the real estate of the closed schools.  We wonder what kind of understandable resistance may have been raised from the pastors whose parishes “owned” the properties, since under canon law, under the theory of subsidiarity, the pastor has the right to determine the disposition of the patrimony allocated to his parish. If anyone knows what the canon lawyers said about this and the extent of their involvement and approval, drop us a dime, would you?

We will get to Dorchester and the construction work led by John Fish, CEO of Suffolk Construction in our next installment.  Any one know if it was a open-bid process, or a no-bid sweetheart deal for the contracts on school reconstruction, new contruction, and demolition?   What was the process that led to the loan of some $26 million, primarily to one Catholic school in Dorchester?   Had the archdiocese discussed or decided a year prior to sell its campus to BC because it needed the cash?   Where did the money come from to pay for that expensive construction up-front?    Might Parish Reconfiguration funds have been used to finance this, on the expectation that the money raised by Kathleen Driscoll (former Hill Holliday executive with Jack) and the Catholic Schools Campaign would go toward repaying the costs of Dorchester and other locations?  Has the construction expense already been incurred against the projected $70 million cost, thereby leaving a $22 million shortfall and thereby meaning the schools cannot repay some significant portion of the $26 million loan?  What is the guarantee that the Archdiocese will be 100% paid back for this initiative?  What happens if the money ends up never being raised?  If you know the answers to any of these questions, feel free to post them in the comments.  Stay tuned tomorrow for the next episode of Lending Money…

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5 Responses to Lending Money: Part 1

  1. Angry Parish Council Member says:

    Am I to understand that my parish is being hit-up for the Catholic Appeal and 18% of our collections to fund the central administration, while the archdiocese throws $20 million away to rebuild schools in an area that is not even all that highly populated with Catholics any more? Couldn’t that $20 million have been used to shore-up the Clergy Retirement Fund instead of hitting-up parishes for $5K tables at the fancy dinner tonight?

  2. Parish Council Member in IFRM parish says:

    Fact Check: It’s 10% of the collections for those without parish schools (5% for parishes with schools). Catholic Appeal (about 8%) is separate.

    See here: http://www.bostoncatholic.org/modelimplementation.aspx?pid=17856

    Your parish IS being hit up to support the work of the Archdiocese. Happens in every diocese in the world. That’s the universal church at work – we support missions and ministries beyond the borders of our parish. If THAT is what you don’t like, you should become protestant.

    However, it’s a fair question to say WHAT IS OUR 10% TAX GOING TO? Are our Catholic Appeal contributions being wisely spent? Who is holding those that spend the money accountable for being good stewards?

    The spending of seventy million on one elementary school seems crazy – even worse when it’s in an area that not many families cannot afford even 20% of the tuition to keep the school operating. It’s the Catholic equivalent of the new Newton North High School (two hundred million!).

    How much of those resources going to the Dorchester school could have and would have gone to other important work of the Church? Why did the Cardinal and his advisors choose THIS project as the main fundraising campaign of the Archdiocese for the last several years? Think how much worse the Newton scandal would be if there weren’t enough kids to inhabit the school? That is likely the situation that the Dorchester school will find itself in in 5-10 years.

    If the Finance Council approved this loan, who is holding them accountable? At a minimum, they should explain why they thought this was something worthy of the twenty million dollar loan and what guarantees they required. Did they apply the same rules that they apply to parish campaigns or were different rules granted because one of them (Mr. Connors) was leading this effort?

  3. No Name Priest says:

    Parish Council Member: you wrote, “Your parish IS being hit up to support the work of the Archdiocese. Happens in every diocese in the world. That’s the universal church at work – we support missions and ministries beyond the borders of our parish. If THAT is what you don’t like, you should become protestant.” Really???

    First of all, that last sentence is tremendously inappropriate, not to mention uncharitable and incorrect. Protestants also support “good works” outside the boundaries of their own territory – many might say that some of their denominations embody the missionary spirit more than we do!

    But the greater wrong is your misidentification of the previous writer’s complaint. Everybody who’s ever been to Mass knows that we take up collections for foreign missions – and literally dozens of other good causes each year. It’s disingenuous of you to imply that the writer objects to helping others outside his/her own parish.

    What the writer is complaining about is the NEW approach to achieving financial support for the central administration, a new approach that has had to come into being because of the tremendous decline in contributions to the “Catholic Appeal” (formerly the “Cardinal’s Appeal”). People had begun to limit or eliminate their contributions to the Appeal and divert them instead to their local parish, having the sense that the parish would utilize them more appropriately and efficiently.

    But this NEW approach – in which the central administration now skims 18% (or 13%) of the parish’s revenue off the top in order to stave off the possibility of later low returns in the Catholic Appeal – has been foisted upon parishes without much public notice. THAT the writer was surprised about it tells you something about the backdoor way it was introduced.

    As to the propping up of “Catholic” schools in the inner city, areas in which the Catholic population has been continuously decreasing over the past decades – this has been an unquestioned (and unquestionable) component of the Archdiocese’s “commitment to social justice” for as long as this priest can remember.

    While I and many brother priests have questioned the intelligence of spending precious resources to provide alternatives to public education (i.e. “safe” school environments) for predominantly non-Catholic families in the inner cities, the social justice and political correctness gurus on Lake Street (and now Brooks Drive) have insisted upon it. Questioning the purpose of “Catholic” education (that is, whether it is for transmitting the faith or for providing safe alternative schooling for non-Catholics) has become a shibboleth for Church leadership.

    To be fair, the leadership of the local Church is reacting to the real powers in Boston (the liberal media) who fail to revile the Church only for her “good works” that don’t involve messy things like faith. It is understandable, then, especially in the face of the negative publicity we’ve received of late, that pouring scarce money into schools that primarily employ and educate non-Catholics would be seen as a better investment than rescuing the clergy or lay benefit/pension funds. After all, using those funds to take care of clergy and lay workers wouldn’t give the Church any positive publicity at all!

  4. [...] you have not read our post from yesterday about the Catholic Schools Campaign, please read Lending Money: Part 1.  Here is the $20 million problem in a nutshell.  A decision was made to spend $70 or 71 million [...]

  5. [...] For new readers or those not following the past few posts, you may find our recent Lending Money Part 1, Lending Money Part 2, and Archdiocesan Accounting/”Fuzzy Math” posts useful background for our [...]

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