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Slush Funds and Other Ways Your Money was Spent

Sep 23rd, 2010 | By | Category: Central and South America World Sector, Contribution, Finances, Kip McKean, Middle East World Sector, Special Missions Contribution

During a question and answer session on Delphi Forums, a former church administrator (Barry Mahfood) revealed some information that had not been known before about some of the inner workings of the finances in the World Sectors.  Apparently there was a “special projects” fund set up for Kip McKean’s use.  Why? A percentage of the Special Missions Contribution (SMC) money collected went to this fund.  What were these funds used for?  How much money was collected and deposited in this account year after year? How many of the world sectors were contributing into it? Was there any accountability as  to how these funds were used? Who had the checkbook?  When McKean left the ICOC’s employment, what happened to the fund?

It was also discovered that another percentage of SMC contributions from the Central and South America World Sector was given to the MEWS World Sector.  Why?  There were already churches assigned to the MEWS and whose collected SMC went specifically to MEWS.  Why did MEWS, a small world sector by comparison to the others, need more SMC?

Some churches admitted to SMC accounting problems in their 2003 Apology letters.

Why were these issues never disclosed to the members of the church who were giving their money?  We appreciate Mr. Mahfood’s candid comments and encourage other leaders and administrators to come forward and share what they know.  While we do have permission from Mr. Mahfood to display his answers to questions below, we are willing to keep the identity of our sources confidential, but we will publish the information we receive.  Please email us to discuss further information you may have.

Below are the posts taken from Delphi Forums about these matters, used with permission.  To aid in reading, we’ve marked the questions in Green.

Questions will appear in GREEN

From:      as myself (barrymahfood)              6/5/2005
To:     barney9846

>>’When you were preaching – asking the congregations for Dollars – did you know that the collection was not going or would not go where your solicitation was promising it would go?'<<

“When I was preaching” would span a period between 1984 and 1995. I took on a different role, that of administrator, from 1997 until 2003 when the decision was made that my services were no longer required. During the time that I was preaching, I never asked for money that I knew would not go where I said it would go. Looking back, the charge could be made that I should have requested more information on how our missions and HOPE collections were being spent. It wasn’t until after the HKL that I began to be less trusting in that regard. I was the administrator of the OC [Orlando Church] at that time. We (the OC board) began to ask questions of Jaime DeAnda about how our missions was being spent. I discovered, at a meeting of administrators and leaders of CSA churches, that, out of our missions money, there was a slush fund for Kip’s “special projects,” a percentage was going to support the Middle East world sector, a large percentage was being used to support in part USA admin and ministry staff who had a peripheral responsibility for CSA missions, and the rest was being sent to the various GSAs[Geographic Sector Administrators] in the CSA to be spent as they saw fit, with no knowledge of how that was being allocated.

With regards to HOPE, the same as above is true. I did not begin to question what the funds were going for until after the HKL. When we took up collections for HOPE, we typically said that these funds were for HOPE and for local benevolence. Our HOPE obligation (about 3% of regular contribution) would be paid from these collections, and local benevolence requests would be paid out of these funds also. The funds that went to HOPE included our 3% commitment (which went to HOPE corporate) as well as an additional amount that went to HOPE Florida in Miami: this was for our local programs. The majority of that local program budget went to pay the local program director’s salary (this was my wife, about $30K annually) and a smaller amount paid for actual program costs. As program director, my wife would organize the volunteers from the church to participate in various community service activities. After the HKL the board decided they didn’t want to fund a program director. I am thankful for this decision, since my wife is now doing what she’s always wanted to do, teach, and we no longer take any money from the church.
Barry

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From:      as myself (barrymahfood)              6/5/2005
To:     WildJen

>>Do you have a guess-timate as to what the actual percentage of SMC ever really made it to the S. American countries? What percentage was used for MEWS?  What percentage did Kip get?<<

I wish I still had some of those spreadsheets we got from CSA. I think I remember that 8% went to MEWS, maybe 18% was called overhead. I’m shaky on those numbers. I have no idea how much went into Kip’s slush fund.

>>Why was CSA supporting MEWS? Didn’t they have churches assigned to their support?<<

From what I was told (how true this is, I can’t say), somehow, with some shifts in world sector boundaries, the MEWS ended up without much financial support from 1st world churches, so other world sectors were asked to contribute a percentage of their missions to the Middle East. I asked, “Why didn’t the individual churches have any say in this decision? We didn’t even know about it.” The answer was, “Your GSL knew, he was supposed to pass it on.” That was AG, who had left the church by then, so was not there to defend himself. To me, this was another sign of the ICOC’s main problem, i.e. the arrogance of leadership, believing they had the right to make these decisions and inform the people who would be giving the money whenever they felt like it.

>>Did Orlando ever get any money that was sent to the various GSAs as you stated?<<

Not a dime. All of it (about $100K) was sent to Miami, since the GSL lived there. What did they use it for? Probably the GSL’s salary, trips, etc.

>>Do you or any of the leaders understand the consequences in raising money for one purpose and then spending it for another?<<

Yes, the IRS requires that non-profits restrict the expenditure of funds to whatever purpose was communicated when the collection was taken. When we took up the “special,” we would say that so much would go for “missions” and the rest would be used for local ministry. Then we’d wire the missions money to the CSA mission society. To my discredit, until the HKL, I didn’t ask for an accounting past that point. Once we wired the funds to CSA, I assumed it would be used properly.

>>Was there any indignation? Any disgust? Did anybody stand up for what is right here?<<

Some did. I wasn’t happy with how the missions funds were used. Some others felt the same way, which I think is why the Orlando board decided to send future missions funds to the foreign churches through the Miami church, who said they’d keep the overhead to 10% and get an accounting from the receiving churches on how they planned to spend and actually spent the funds.

>>After I read the highlights of that CSA meeting that you and other leaders attended, I was amazed that this group would once again ask/appoint Peter Garcia to continue to lead the group. What was the thinking there?<<

I think Peter sounded so contrite and broken that people felt bad for him. That meeting, to me, smacked of the same unspiritual elitism that I was already sick of. The so-called elders and bigwigs were obviously still running the show. I even spoke to John Brush about how I felt, to no avail. I was quite vocal there, so much so that DE told me on our return to Orlando that I spoke too much for my “position.” So, basically, Peter’s best buddies still wanted him in.

>>Last comment/question…..why are all the churches setting up “mission societies” now?<<

As far as I know they are just legal entities that allow the collection and distribution of funds from several different churches/corporations.

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From:      as myself (barrymahfood)              6/5/2005
To:     barney9846

>>What exactly did you learn – and did this {how it was spent} ever become public information?<<

Several things bothered me about how the missions contribution was handled by CSA and LA.:

1. We were told how much to give, never asked. Once every year I’d get a memo from Jaime DeAnda saying how much Orlando was to send to them for missions. There was no discussion of budgets, needs, no request, no gratitude.

2. Once we started to question how the money would be allocated, we were told about the special projects fund for Kip, the Middle East assistance, and the support for people like the Garcias, the Williamses, the DeAndas, their office staffs and personal assistants, the GSL funds, etc. None of that sat well. I later found out, at the meeting in Miami, that the money that actually went to the CSA foreign churches was distributed to the Geographic Administrators with absolutely no accounting of how it was to be spent, or whether these churches actually needed the funds.

I don’t think all of these things were ever explained to the membership.
Barry

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From:      as myself (barrymahfood)              6/5/2005
To:     WildJen

>>I have a couple more, if you don’t mind…..<<

No prob.

>>When you advertised the “multiple” for SMC, did you ever tell the church that your xx times really represented what CSA had asked for, PLUS, what the local leadership was asking for? Didn’t you normally just say “anything over our goal will go to local use,” without saying also that the “goal” already included a portion for local use?<<

In the last few years, we’d figure out what the multiple was for missions, then add on a few multiples for our local budget. We’d tell the church that the missions goal was $x, and local needs were $y, for a total multiple of weekly contribution of 20 times, or whatever. I think there were earlier times when it would be announced as you mentioned, 15 times (for ewxample) for missions and anything over that we use here. The reason for doing it the way we did in later years was that we were using special to add funds to our annual budget. I tried to encourage the board to wean us from that practice.

>>You said you’d wire money to CSA. Did you ever wire money to the ICC Mission Society? Or did they get their money from CSA?<<

Again, I can only speak to the time when I was the administrator and privy to these things, but we’d wire it to the CSA Missions Society.

>>Why couldn’t you just wire money straight to the churches in need? You could send me a check for a million and I could forward it to a third world church for just the price of an envelope and the postage. Why was 10% considered an acceptable fee to pay ?<<

Before HKL the idea was that those churches needed both ministry and administrative supervision, hence the Garcias, Williamses, DeAndas, etc. Also,there were banking regulations, etc. that required some degree of expertise to avoid problems.

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From:      as myself (barrymahfood)              6/6/2005
To:     XXXXXX
Hi XXXXXX,

>>Barry, are you familiar with a document known as the “World Financial Plan”? Supposedly, it was the master plan for all the ICOC worldwide including all World Sectors and the mysterious ICOC Missions Society. Have you ever seen this document?<<

No, I’m not familiar with this document. Above my pay grade I guess.

>>Also, you say that once the SMC monies left the local church to go to the World Sector office, it is unclear to you how the monies were spent in the local mission churches. Are you saying that it’s unclear to you but known perhaps to the World Sector office or was it not known by anybody? I ask because I was a member of a church in the ACES world sector. We were given the impression that the mission contribution was set with the actual budgets and needs of each mission field church known and taken into account.<<

At the Miami meeting, Jaime DeAnda told us, when asked, that once the funds were wired to the foreign GSAs, he did not ask for or receive any accounting for the use of those funds. The amounts collected and sent for each Geographic Sector had been determined years before based on some formula that took into account expected growth, etc. I think it was a 10-year plan. As far as the ACES are concerned, they may have done things differently. I was a minister in Kingston, paid through ACES, but the administrative side was handled by Colin Lecesne (sp?), our administrator. I’m not sure what accounting he sent back to Vivian.
Barry

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From:      as myself (barrymahfood)              6/6/2005
To:     XXXXX
Hi XXXXX,

It was my understanding that the DeAndas, Williamses and Garcias, AND their personal assistants received 100% of their salaries and benefits from the missions contributions of the CSA-USA churches, even though they had significant responsibilities in the LA church. What a ripoff.
Barry

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From:      as myself (barrymahfood)              6/6/2005
To:     WildJen

>>Thanks Barry for all your information. Even though you don’t have spreadsheets and documents on hand, your knowledge and experience from “being there” is a much needed resources for us. It’s still a lot of information for us to process and chew on. I appreciate your candor.<<

Anything I can do to help save some folks from the heartache of the ICOC, I’m happy to do. You have certainly been working hard on that front, which is much appreciated.

>>In my years in CSA churches, I can’t recall ever hearing that the CSA SMC went to MEWS. Do you remember what years that might have happened?<<

I know it was the case in ’03 and ’04. It may have started before that.

>>Also wondering if CSA was giving around 8% to MEWS, do you know if all the other world sectors were doing the same? Either giving to MEWS and at what percentage?<<

I have a vague memory of hearing that one or two other world sectors participated. Not sure at what percentage.

>>Kip’s slush fund…..how was this discussed with you back then…..I’m sure they probably called it something a little less inflammatory? “Pet projects in LA” is how one Orlando elder described it to me…..just wondering how it was discussed at your level.<<

The phrase I heard was “special projects.”
Barry

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