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The Roman Catholic Archdiocese of Boston is considering filing for Chapter 11 bankruptcy protection in the face of 450 lawsuits by people who say they were sexually abused by priests. Other spiritual organizations, notably some Hare Krishna centers, have filed for bankruptcy for similar reasons, and in 1997 the Vatican gave the Diocese of Dallas permission to file for bankruptcy because of abuse claims, although it never did so. Meanwhile, a sagging economy, bad investments and declining donations mean that many religious organizations are facing financial hardship, and sometimes, bankruptcy. Bankruptcy poses special challenges for religious groups, which may be forced to liquidate assets such as donated land, open closely held financial files, and risk losing the trust of members and supporters.

It doesn’t take a high-profile scandal to shake the financial foundations of religious groups. A sagging economy, bad investments and declining donations mean that many religious organizations are facing financial hardship, and sometimes, bankruptcy. In 1999, the Baptist Foundation of Arizona collapsed in what became the largest non-profit bankruptcy in U.S. history, costing investors close to $600 million. Indictments still are being handed up. The same year, many predicted the National Council of Churches of Christ – which has since balanced its budget – would succumb to bankruptcy because of its $4 million deficit.

Bankruptcy can force a religious organization to liquidate assets such as donated land, open closely held financial files, and risk losing the trust of members and supporters. Is the Catholic diocese in your area facing potentially debilitating abuse claims? Are other religious organizations in financial straits? What do members and supporters say they should do? Will proposed changes to national bankruptcy laws make it harder or easier for financially strapped nonprofits?

Why it matters

As the economy continues to struggle, companies and individuals are cutting back on contributions to religious organizations. Many groups that invested in the stock market are also struggling with falling stock values. As a result, a growing number of religious organizations may find themselves in increasingly difficult financial straits in the coming months.

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National sources

• Samuel Gerdano is executive director of the American Bankruptcy Institute in Alexandria, Va., and can provide information on bankruptcies among non-profits. Contact 703-739-0800,sgerdano@abiworld.org.

• Dean Hoge is professor of sociology at Catholic University of America in Washington, D.C. He has extensively studied financial contributions to churches. Contact 202-319-5999, 301-589-4407, HOGE@CUA.EDU.

• Virginia Hodgkinson is research professor of public policy at the Center for Voluntary Organizations and Service at the Georgetown University Public Policy Institute in Washington, D.C. She has conducted research on congregational finances. Contact 202-687-0514, hodgkinv@georgetown.edu.

• Several centers of International Society of Krishna Consciousness have filed for bankrupty because of a $400 million lawsuit alleging abuse at Krishna schools in India and the United States. Contact Anuttama Dasa of ISKON Communications at 818-299-9707. Here is a list of Hare Krishna centers in the United States.

• Sylvia Ronsvalle is executive vice president of Champaign, Ill.-based Empty Tomb, a nonprofit research firm that studies donations throughout all U.S. Christian denominations. Contact, 217-356-2262, execvp@emptytomb.org.

• Rabbi Moshe Edelman is director of leadership development for the United Synagogue of Conservative Judaism in New York City, an association of 800 Conservative congregations in North America. The group’s leadership development program provides training in finances for leaders of synagogues. Contact Lois Goldrich, 212-533-7800 ext. 2601, goldrich@uscj.org.

• Southern Baptist Foundation in Nashville, Tenn., is one of the largest religious foundations in the country. Contact Hollis E. Johnson, 615-254-8823, hjohnson@sbc.net.

• The Council on American-Islamic Relations in Washington, D.C., has released a report on the state of mosques in the United States. The report includes information on the financial status of American mosques. Contact Ibrahim Hooper, 202-488-8787, 202-489-5108, cair1@ix.netcom.com.

• Kenneth Korotky is the chief financial officer of the United States Council of Catholic Bishops. He can provide financial information on the American Catholic Church. Contact the Office of Communications, 202-541-3200.

• Elenie Huszagh is president of the National Council of Churches of Christ, a national ecumenical body that has faced the threat of bankruptcy in 1999, when its budget deficit was $4 million. It has since balanced its budget. She is a lawyer who has specialized in bankruptcy. Contact 212-870-2227.

Background

• Read about proposed changes in bankruptcy laws.

• The Anglican Church of Canada just reached a deal with the Canadian government that helped it avoid filing for bankruptcy because of sexual abuse claims. See a Nov. 21, 2002, Episcopal News Service article.

• August 2, 2002 Boston Globe article on the Boston Archdiocese’s early consideration of bankruptcy.

• December 1, 2002 Boston Globe article first detailing plans by the Boston Archdiocese to possibly file for bankruptcy.

• December 2, 2002 Boston Globe article on how talk of bankruptcy is impacting settlement negotiations with abuse victims.

• December 3, 2002 Boston Globe article on how a bankruptcy filing by the Boston Archdiocese would affect its insurance companies handling of abuse settlements.

• December 5, 2002 New York Times article on the Boston Archdiocese considering filing for Chapter 11 bankruptcy protection.

• November 18, 1999 Phoenix New Times article on the financial turmoil at the Baptist Foundation of Arizona.

• June 5, 2002 press release from the Arizona Attorney General’s office on a settlement reached in the Baptist Foundation of Arizona collapse.

• February 7, 2002 Associated Press article in the Minneapolis Star Tribune on Hare Krishnas declaring bankruptcy.

• April 15, 2002 Business Week article on the American Catholic Church’s financial problems.

• March 28, 2002 Christian Science Monitor article on the financial toll of the sex scandals on the American Catholic Church.

Regional sources

IN THE NORTHEAST

• Audrey B. Blondin is a lawyer in Torrington, Conn., and a member of the National Association of Consumer Bankruptcy Attorneys. She has lobbied on behalf of responsible bankruptcy reform in Washington, D.C. Contact 860-489-8997, AudBl@aol.com.

• Richard E. Mikels is a bankruptcy attorney for the Boston firm of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo. Contact Gina P. Addis, director of public relations, 617 348 4413, REMikels@mintz.com .

• Robert A. Sherman is a bankruptcy attorney in Boston who has commented on the Boston Archdiocese possibly filing for bankruptcy. Contact 617-310-6015, shermanr@gtlaw.com.

• Walter W. Miller Jr. is a bankruptcy law specialist at Boston University School of Law. He has commented on the financial situation of the Boston Archdiocese. Contact 617-353-3125, wmiller@bu.edu.

• Thomas O. Bean is cochairman of the Boston Bar Association’s committee on bankruptcy. Contact Bonnie Sashin, communications director, 617-742-0615 ext. 236, bsashin@bostonbar.org.

IN THE EAST

• Charles E. Zech is an economics professor and an expert on church finances at Villanova University, in Villanova, Pa. Contact 610-519-4371, charles.zech@villanova.edu.

• Valerie J. Munson is an attorney and chair of the religious organizations practice at the law firm of Eckert, Seamans, Cherin & Mellott in Philadelphia. Her section provides legal help to religious organization on a variety of issues, including bankruptcy. Contact 215-851-8434, vjm@escm.com.

• Robert B. Eyre is a senior attorney with the Philadelphia office of the law firm of Buchanan Ingersoll and is a member of the firm’s financial institutions, bankruptcy and real estate group. He is also a member of the firm’s Carta Group, which provides legal help to religious organizations on a variety of issues. Contact. 215-665-3884, eyrerb@bipc.com.

IN THE SOUTHEAST

• Michael Bradley is a professor of bankruptcy law at Duke University in North Carolina. Contact 919-660-8006, Bradley@mail.duke.edu.

• Howard “Rusty” Leonard is the founder of Wall Watchers in Matthews, North Carolina, which was created to help Christian parishioners identify well-managed ministries. Contact 704-841-7828, info@wallwatchers.org.

• Mack Tennyson wrote the book Church Finances for People Who Count and is on the executive committee of the General Conference of Seventh-day Adventists in Charleston, S.C. Contact 843 953-8038, tennysonm@cofc.edu.

IN THE SOUTH

• Lawrence Ponoroff is a law professor specializing in bankruptcy at Tulane University in New Orleans. Contact 504-865-5933, lponoroff@law.tulane.edu.

• Robert K. Rasmussen is a director of the Joe C. Davis Program in Law and Economics at Vanderbilt University in Nashville. He specializes in bankruptcy law. Contact 615-322-2810, robert.rasmussen@law.vanderbilt.edu.

• Stephen J. Ware is a bankruptcy law professor at the Cumberland School of Law at Samford University in Birmingham, Ala. Contact 205-726-2413, sjware@samford.edu.

IN THE MIDWEST

• Irene Howard is general counsel for the United Methodist Church’s General Council on Finance and Administration in Evanston, Ill. Contact 847-869-3345, ext. 6531.

• The Rev. William C. Green is the team leader of Stewardship and Church Finances for the United Church of Christ in Cleveland, Ohio. Contact 216-736-3851, greenb@ucc.org.

• Anson Shupe is a sociologist at Indiana-Purdue University in Fort Wayne who studies finances and abuse within churches. Contact 260 481-6667, shupe@ipfw.edu.

• G. Ray Warner is a bankruptcy law professor at the University of Missouri at Kansas City and a scholar in residence at the American Bankruptcy Institute. Contact 816 235-2384, warnerg@umkc.edu.

• Daniel T. Dennehy is section leader of the religious organization team for the law firm of von Briesen & Roper in Milwaukee. The team provides legal counsel to numerous churches and religious organizations. Contact 414-287-1281, ddenehy@vonbrisen.com.

• R. Scott Appleby is director of the Cushwa Center for the Study of American Catholicism at Notre Dame University. Contact 574-631-5665, Robert.S.Appleby.3@nd.edu.

IN THE SOUTHWEST

• John Wylie is an attorney in Colorado Springs, Colo., who works with a variety of religious organizations providing corporate and tax counsel. Contact 719-473-3800, wyliej@hro.com.

• Chuck Goldberg is a lawyer in Denver who serves as general counsel for the archdioceses of Denver and Fargo, N.D. He represents plaintiffs and defendants in complex civil litigation, religious liberty issues, professional and products liability, personal injury lawsuits, and will contests. Contact 303-628-9533, cgoldberg@rothgerber.com.

• Bill Wilson is founder and president Resource Services Inc., in Dallas, a consulting firm that helps congregations raise and manage funds. Contact 214-866-7500, info@rsi-ketchum.com.

IN THE WEST/NORTHWEST

• Peter Califano is a partner at the law firm of Cooper, White & Cooper in San Francisco, Calif., and a member of the firm’s bankruptcy and creditors’ rights group. He has written on church finances. Contact 415-433-1900, pcc@cwclaw.com.

• Judy Beckner Sloan is a bankruptcy law professor at Southwestern University School of Law in Los Angeles. She has written articles on bankruptcy as a way to crusade for social change. She believes that by declaring bankruptcy, the Archdiocese of Boston will attempt to set up a trust fund to pay all current and future claimants in sex abuse cases. She adds that such trusts pay very little to claimants. Contact 213-738-6841, jsloan@swlaw.edu.

• Joseph Harris studies the finances of the Catholic Church and is the financial officer for the St. Vincent de Paul Society in Seattle. Contact 206-957-4424, 206-764-6449.