Why priests steal

— Researchers look to ‘fraud triangle’ in parish life

Collection boxes, Our Lady of Mount Carmel and St Simon Stock Catholic Church, Kensington, London.

Priests who steal are often motivated by resentment, envy, and a desire to cover up for other moral lapses, new analysis has found.

BY The Pillar

Priests who steal are often motivated by resentment, envy, and a desire to cover up for other moral lapses, new analysis has found, adding that isolation and weak oversight can contribute to the rationalization of theft through “moral licensing.”

But the same analysis concluded that a relatively small number of priests have been caught stealing from parishes, and that the priesthood does not seem to attract fraudsters or financial con artists.

A new scholarly article, “Exploring Embezzlement by Catholic Priests in the United States: A Content Analysis of Cases Since 1963,” documented almost 100 instances of stealing by priests, which have sometimes involved hundreds of thousands stolen.

The study aims to assess financial crimes committed by Catholic priests in light of what researchers call  the “fraud triangle” — pressure, opportunity, and rationalization.

“The fraud triangle… has proven a remarkably robust analytical device for the understanding of a broad range of financial deviance,” the report said.

“In the religious arena [it] offers several advantages, beyond the irony of its presence. Anecdotal accounts characterize these entities as reluctant and slow adopters of modern business practices including elementary internal controls.”

Researchers Robert Warren and Timothy J. Fogarty compiled documented financial crimes committed by American Catholic priests in the last six decades. They looked at environmental and personal factors, aiming to understand how parish pastors can be tempted into large-scale theft from their parishes.

“Priests are a highly distinctive occupational group,” the report noted, while explaining that while pressures, opportunities, and rationalizations varied case to case, distinctly clerically Catholic elements were identifiable.

The report was published in the January-June issue of the Journal of Forensic and Investigative Accounting.

Crimes of opportunity

The peer-reviewed scholarship looked at 98 cases of priestly fraud committed between the years 1963 through 2020, but discounted three cases in which the fraud was unrelated to the priests’ ministry.

Of the remaining cases studied, more than 90% of priests were serving in parish ministry at the time of their crimes, in which an average amount of nearly $500,000 was stolen, at a median amount of more than $230,000, over an average period of 6 years.

In all of those cases, the authors wrote, the opportunity to steal was consistent with conditions facing virtually all priests in parish ministry – and not only the ability to steal once, but the opportunity “to successfully continue it through time,” the authors explained.

“Catholic priests would seem to have a strong ability to commit fraud,” the article concluded, noting that “they command local positions of unchallenged authority over cash-generating operations with weak internal controls that would detect or deter the misappropriation of resources. For many, priests also exist as citizens above suspicion for misdeeds such as fraud.”

The analysis found that while priestly fraudsters used a variety of ways to steal, four common ways emerged:

“Taking cash directly from the weekly collection and poor box, coercing vulnerable elderly parishioners (primarily widowed females) to gift money to the parish or to the priest personally under false pretenses, diverting checks payable to the parish into non-parish accounts, and improper reimbursement of personal expenses and using secret bank accounts in the church’s name as a slush fund.”

While some of those methods are created by the realities of priestly life, like the potential to abuse moral and spiritual authority in office, the report noted that others are the result of systemic vulnerabilities in the Church’s internal ordering.

The report noted that canon law “still gives the pastor sole control over the parish assets, even though he is obligated to use it for the good of the parish. Thus, a pastor can unilaterally open bank accounts, disperse funds, and sell assets.”

“Parish councils consisting of volunteer parishioners tend to provide ceremonial oversight, often rubber stamping the acts of a priest who most consider a person beyond suspicion,” the report found, while “hierarchical authorities of the dioceses expect parishes to be self-sustaining or to send money upstream and are not generally the source of structure or discipline.”

As a result of infrequent audits in many dioceses, usually undertaken during a change of parish leadership, “detection is left mostly to happenstance,” the report found, noting that only 29.5% of fraud or theft cases were discovered in the course of a routine diocesan audit or parish-level financial controls.

Nearly half of studied cases came to light as a result of whistleblowers, sting operations, or unrelated law enforcement investigations.

But even while administering parishes presents a target-rich environment for fraud, the report found that the data “does not attest to whether Roman Catholic priests are more or less honest than other groups.”

It added that financial crimes were found to have been only committed by a “small fraction of all priests.”

Indeed, the evidence suggests that the priesthood does not attract intentional fraudsters, or those necessarily predisposed to theft. Were that the case, one would expect to see instances of theft arise in the early years of ministry, or begin when the opportunity first presented itself.

Instead, the article said, the cases examined took place later in a priest’s ministry, at an average age of 52 and after an average of more than two decades in ministry.

Under pressure?

A key part of the “fraud triangle” used to analyze patterns of theft is the pressure to commit a crime in the first place. Among priests, the report found, “the collected evidence points to few conventional pressures.”

Common drivers of first-time financial crime include sudden material necessity, like the loss of employment or the need to provide for a family’s basic needs — all of which, the report noted, were not present for Catholic priests.

Other kinds of urgent financial necessity did arise in a minority of cases, they found, including gambling debts (8.4% of cases) and, more often, the need for financial resources to cover other moral failings, usually sexual: in nearly 12% of cases, money was taken to support “illicit relationships.”

Among such cases are “a priest in Virginia [who] embezzled $591,000 to support his secret wife and three children; a priest in Connecticut [who] used about $1,000,000 in church funds to pursue romantic relationships with at least three men before abandoning his parish; and a priest in Pennsylvania [who] embezzled at least $32,000 to spend on men he met on a dating website.”

Outside of acute financial needs, the report said, ordinarily a key pressure to steal comes from maintaining a publicly successful lifestyle and the appearance of material success to maintain personal reputation. But, the authors pointed out, the reverse pressure is actually present for Catholics priests, for whom an ostentatious lifestyle could actually detract from their social standing.

Instead, they said, “the incentives to steal could be summed up as a desire to live a life very different from that usually associated with a priest.”

“A recent study found that newly ordained priests were paid between $26,000 and $30,000 depending on their geographic area, with lead priests (pastors) earning between $26,000 and $34,000,” said the article.

“Although the diocesan priest also enjoys a plethora of other benefits including free room and board, health insurance, a car allowance, and a retirement plan, these rates of pay put them barely above minimum wage rates for a job that is quite demanding.”

This, the report said, can lead to some priests experiencing a sense of frustrated entitlement, and even jealousy, when compared to the relative lifestyles of ministers of other religions and even their own parishioners.

“The pressure felt by a priest might be closely associated with the very occupation itself, or more precisely the demands that the role makes upon its incumbents” said the report. “The pressure felt by priests might not be in the nature of a sudden emergency or an unexpected reversal, but instead be the grinding and persistent force of envy.”

More than half of the cases studied showed that priests spent stolen or misappropriated funds “primarily to support a lavish lifestyle.”

“Many of these priests used the ill-gotten gain to support second and third homes,” the study found, while noting that in a handful of cases the priests said they were trying to provide for their own retirement. In one extreme case, a priest in New York City “was caught with a handgun and $50,000 in cash told police it was his ‘401-K plan.’”

‘Not really stealing’

A key factor in the cases studied is the phenomenon of “moral licensing,” or the rationalization of the financial crime by the priest. In many cases, the report said, stealing priests believed that taking parish money, or using it for personal benefit, was justifiable self-compensation for hard work, long hours, or even a more general lack of remuneration or appreciation for other good behavior .

“Those that took money to spend in hedonistic ways and on purely personal pursuits did not tend to profess their entitlement as a general rule,” the report found. “In that priests often see themselves as independent contractors or entrepreneurs, they are more willing to buck the hierarchical authority of their organization in the name of a personal view of what is in the best interests of the clientele.”

“The latter may be a highly occupationally specific fraud rationalization.”

The article also noted that the “‘it’s not really stealing’ rationalization” was explicitly cited by six priests caught stealing, each of whom argued that canon law gave them authority to spend parish funds wherever they wished.

Sometimes that argument worked, the report found. A judge in Arizona dismissed an indictment against a priest who argued that he was canonically allowed to rent a parcel of real property with parish money even without a proper parish purpose.

But the “good purpose” line of reasoning also has “considerable variation,” the authors wrote.

“Two pastors indicated that they maintained secret bank accounts to have more funds available to the parish. For instance, a diocesan priest from Connecticut kept an ‘off the books’ bank account to ensure the parish had enough funds to operate in the summer months when regular church attendance slipped, although doing so had been expressly forbidden by the bishop. During a four-year period, the priest spent $2,000,000 from that account, with $1.7 million going to various legitimate projects for the parish and school.”

“However,” the report noted, “the priest spent the remaining $300,000 to enjoy a lavish lifestyle and maintain an alleged inappropriate relationship with a male friend with whom he maintained an apartment in New York City.”

The report also highlighted that, in a number of cases, stolen and misappropriated parish funds were not actually used for the benefit of the priest who took them.

Of the 95 cases examined, seven of the priests used their ill-gotten gains to support family members or charities in foreign countries: One priest in Wisconsin pocketed parish funds to buy goods sent to the poor in his native Nigeria, a priest in Kansas took cash from the collection plate to take back to Mexico for his family, and priest from Pennsylvania skimmed funds from his parish to support a charity hospital in his native Lebanon.

Crime and punishment

“Opportunity can also be judged by final consequences,” the authors noted, and flagged that even when caught and convicted, “long sentences were the exception rather than the rule,” and in many cases priests faced only internal discipline by Church authorities.

While in each of the 95 cases examined the priest unquestionably stole Church funds, only 58 were actually charged with embezzlement, fraud, or larceny, and almost a third of those who were criminally convicted were subsequently returned to ministry, in some cases even when there were exacerbating factors to the crime:

“A former pastor (and self-described ‘sexaholic’) in Minnesota who embezzled $73,733 to finance his pilgrimages to strip clubs and massage parlors pleaded guilty, served a short stint in the county prison with work release privileges, and was eventually returned to ministry as an assistant pastor,” the report noted, while “a priest in Nevada who served 36 months in federal prison after gambling away $650,000 in parish funds, was transferred to another diocese where he became head of human resources.”

“Opportunity is abetted by the probable awareness that those detected will not be severely punished nor will there be sizable reputational consequences,” the report concluded.


While the report identifies a number of unique aspects to fraud by U.S. Catholic clergy, it also underscores that those are essentially sector-specific iterations of the “fraud triangle” of pressure, opportunity, and rationalization found everywhere.

Although Catholic parish and diocesan structures present a “strong and obvious” opportunity for fraud and theft, and their reliance on the personal trustworthiness of priests can actually increase the risk of stealing and drive down the chances of being caught, the article’s authors stress that priests appear no more likely to succumb to temptation than anyone else, and the kind of long term, high value thefts examined represent a tiny minority of priests..

The article explains that while certain idiosyncrasies of fraud in parish life do emerge from the data, the authors could not claim a predictive model for identifying potential fraudsters.

But the report does highlight that “the pressure felt by a priest [to steal] might be closely associated with the very occupation itself, or more precisely the demands that the role makes upon its incumbents.”

Across cases, whether motivated by the financial gain itself, a need to cover up illicit relationships, or even the conceit that a priest can decide for himself how any and all parish funds are spent, the findings of the report would seem to point to an underlying commonality of isolation, disaffection with ministry, and a disordered relationship with Church structures among clerical financial criminals.


Warren and Fogarty’s findings noted that priests are unique among financial criminals, and that  large scale or systematic embezzlement in religious institutions is often under-studied, even while religious institutions often involved considerable amounts of cash accounted for on a basis of personal trust.

In addition to calling for better mechanisms of financial oversight and accountability, the study’s findings highlight the need for ongoing spiritual and personal formation in priests throughout their ministry.

The researchers explained that focusing on Catholic priests presented a unique opportunity for study, both because the Catholic Church is the country’s largest religious denomination, and because it allowed for a study sample with broadly consistent hierarchical and financial policies.

Complete Article HERE!

Sitting on billions, Catholic dioceses amassed taxpayer aid

By REESE DUNKLIN and MICHAEL REZENDES

When the coronavirus forced churches to close their doors and give up Sunday collections, the Roman Catholic Diocese of Charlotte turned to the federal government’s signature small business relief program for more than $8 million.

The diocese’s headquarters, churches and schools landed the help even though they had roughly $100 million of their own cash and short-term investments available last spring, financial records show. When the cash catastrophe church leaders feared didn’t materialize, those assets topped $110 million by the summer.

“I am gratified to report the overall good financial health of the diocese despite the many difficulties presented by the Covid-19 pandemic,” Bishop Peter Jugis wrote in the diocese’s audited financial report released last fall.

As the pandemic began to unfold, scores of Catholic dioceses across the U.S. received aid through the Paycheck Protection Program while sitting on well over $10 billion in cash, short-term investments or other available funds, an Associated Press investigation has found. And despite the broad economic downturn, these assets have grown in many dioceses.

Yet even with that financial safety net, the 112 dioceses that shared their financial statements, along with the churches and schools they oversee, collected at least $1.5 billion in taxpayer-backed aid. A majority of these dioceses reported enough money on hand to cover at least six months of operating expenses, even without any new income.

The financial resources of several dioceses rivaled or exceeded those available to publicly traded companies like Shake Shack and Ruth’s Chris Steak House, whose early participation in the program triggered outrage. Federal officials responded by emphasizing the money was intended for those who lacked the cushion that cash and other liquidity provide. Many corporations returned the funds.

Overall, the nation’s nearly 200 dioceses, where bishops and cardinals govern, and other Catholic institutions received at least $3 billion. That makes the Roman Catholic Church perhaps the biggest beneficiary of the paycheck program, according to AP’s analysis of data the U.S. Small Business Administration released following a public-records lawsuit by news organizations. The agency for months had shared only partial information, making a more precise analysis impossible.

Already one of the largest federal aid efforts ever, the SBA reopened the Paycheck Protection Program last month with a new infusion of nearly $300 billion. In making the announcement, the agency’s administrator at the time, Jovita Carranza, hailed the program for serving “as an economic lifeline to millions of small businesses.”

Church officials have said their employees were as worthy of help as workers at Main Street businesses, and that without it they would have had to slash jobs and curtail their charitable mission as demand for food pantries and social services spiked. They point out the program’s rules didn’t require them to exhaust their stores of cash and other funds before applying.

But new financial statements several dozen dioceses have posted for 2020 show that their available resources remained robust or improved during the pandemic’s hard, early months. The pattern held whether a diocese was big or small, urban or rural, East or West, North or South.

In Kentucky, funds available to the Archdiocese of Louisville, its parishes and other organizations grew from at least $153 million to $157 million during the fiscal year that ended in June, AP found. Those same offices and organizations received at least $17 million in paycheck money. “The Archdiocese’s operations have not been significantly impacted by the Covid-19 outbreak,” according to its financial statement.

In Illinois, the Archdiocese of Chicago had more than $1 billion in cash and investments in its headquarters and cemetery division as of May, while the faithful continued to donate “more than expected,” according to a review by the independent ratings agency Moody’s Investors Service. Chicago’s parishes, schools and ministries accumulated at least $77 million in paycheck protection funds.

Up the interstate from Charlotte in North Carolina, the Raleigh Diocese collected at least $11 million in aid. Yet during the fiscal year that ended in June, overall offerings were down just 5% and the assets available to the diocese, its parishes and schools increased by about $21 million to more than $170 million, AP found. In another measure of fiscal health, the diocese didn’t make an emergency draw on its $10 million line of credit.

Catholic leaders in dioceses including Charlotte, Chicago, Louisville and Raleigh said their parishes and schools, like many other businesses and nonprofits, suffered financially when they closed to slow the spread of the deadly coronavirus.

Some dioceses reported that their hardest-hit churches saw income drop by 40% or more before donations began to rebound months later, and schools took hits when fundraisers were canceled and families had trouble paying tuition. As revenues fell, dioceses said, wage cuts and a few dozen layoffs were necessary in some offices.

Catholic researchers at Georgetown University who surveyed the nation’s bishops last summer found such measures weren’t frequent. In comparison, a survey by the investment bank Goldman Sachs found 42% of small business owners had cut staff or salaries, and that 33% had spent their personal savings to stay open.

Church leaders have questioned why AP focused on their faith following a story last July, when New York Cardinal Timothy Dolan wrote that reporters “invented a story when none existed and sought to bash the Church.”

By using a special exemption that the church lobbied to include in the paycheck program, Catholic entities amassed at least $3 billion — roughly the same as the combined total of recipients from the other faiths that rounded out the top five, AP found. Baptist, Lutheran, Methodist and Jewish faith-based recipients also totaled at least $3 billion. Catholics account for about a fifth of the U.S. religious population while members of Protestant and Jewish denominations are nearly half, according to the Pew Research Center.

Catholic institutions also received many times more than other major nonprofits with charitable missions and national reach, such as the United Way, Goodwill Industries and Boys & Girls Clubs of America. Overall, Catholic recipients got roughly twice as much as 40 of the largest, most well-known charities in America combined, AP found.

The complete picture is certainly even more lopsided. So many Catholic entities received help that reporters could not identify them all, even after spending hundreds of hours hand-checking tens of thousands of records in federal data.

The Vatican referred questions about the paycheck program to the United States Conference of Catholic Bishops, which said it does not speak on behalf of dioceses.

Presented with AP’s findings, bishops conference spokeswoman Chieko Noguchi responded with a broad statement that the Paycheck Protection Program was “designed to protect the jobs of Americans from all walks of life, regardless of whether they work for for-profit or nonprofit employers, faith-based or secular.”

INTERNAL SKEPTICISM

The AP’s assessment of church finances is among the most comprehensive to date. It draws largely from audited financial statements posted online by the central offices of 112 of the country’s nearly 200 dioceses.

The church isn’t required to share its financials. As a result, the analysis doesn’t include cash, short-term assets and lines of credit held by some of the largest dioceses, including those serving New York City and other major metropolitan areas.

The analysis focused on available assets because federal officials cited those metrics when clarifying eligibility for the paycheck program. Therefore, the $10 billion AP identified doesn’t count important financial pillars of the U.S. church. Among those are its thousands of real estate properties and most of the funds that parishes and schools hold. Also excluded is the money — estimated at $9.5 billion in a 2019 study by the Delaware-based wealth management firm Wilmington Trust — held by charitable foundations created to help dioceses oversee donations.

In addition, dioceses can rely on a well-funded support system that includes help from wealthier dioceses, the bishops conference and other Catholic organizations. Canon law, the legal code the Vatican uses to govern the global church, notes that richer dioceses may assist poorer ones, and the AP found instances where they did.

In their financial statements, the 112 dioceses acknowledged having at least $4.5 billion in liquid or otherwise available assets. To reach its $10 billion total, AP also included funding that dioceses had opted to designate for special projects instead of general expenses; excess cash that parishes and their affiliates deposit with their diocese’s savings and loan; and lines of credit dioceses typically have with outside banks.

Some church officials said AP was misreading their financial books and therefore overstating available assets. They insisted that money their bishop or his advisers had set aside for special projects couldn’t be repurposed during an emergency, although financial statements posted by multiple dioceses stated the opposite.

For its analysis, AP consulted experts in church finance and church law. One was the Rev. James Connell, an accountant for 15 years before joining the priesthood and becoming an administrator in the Milwaukee Archdiocese. Connell, also a canon lawyer who is now retired from his position with the archdiocese, said AP’s findings convinced him that Catholic entities did not need government aid — especially when thousands of small businesses were permanently closing.

“Was it want or need?” Connell asked. “Need must be present, not simply the want. Justice and love of neighbor must include the common good.”

Connell was not alone among the faithful concerned by the church’s pursuit of taxpayer money. Parishioners in several cities have questioned church leaders who received government money for Catholic schools they then closed.

Elsewhere, a pastor in a Western state told AP that he refused to apply even after diocesan officials repeatedly pressed him. He spoke on condition of anonymity because of his diocese’s policy against talking to reporters and concerns about possible retaliation.

The pastor had been saving, much like leaders of other parishes. When the pandemic hit, he used that money, trimmed expenses and told his diocese’s central finance office that he had no plans to seek the aid. Administrators followed up several times, the pastor said, with one high-ranking official questioning why he was “leaving free money on the table.”

The pastor said he felt a “sound moral conviction” that the money was meant more for shops and restaurants that, without it, might close forever.

As the weeks passed last spring, the pastor said his church managed just fine. Parishioners were so happy with new online Masses and his other outreach initiatives, he said, they boosted their contributions beyond 2019 levels.

“We didn’t need it,” the pastor said, “and intentionally wanted to leave the money for those small business owners who did.”

WEATHERING A DOWNTURN

Months after the pandemic first walloped the economy, the 112 dioceses that release financial statements began sharing updates. Among the 47 dioceses that have thus far, the pandemic’s impact was far from crippling.

The 47 dioceses that have posted financials for the fiscal year that ended in June had a median 6% increase in the amount of cash, short-term investments and other funds that they and their affiliates could use for unanticipated or general expenses, AP found. In all, 38 dioceses grew those resources, while nine reported declines.

Finances in Raleigh and 10 other dioceses that took government assistance were stable enough that they did not have to dip into millions they had available through outside lines of credit.

“This crisis has tested us,” Russell Elmayan, Raleigh’s chief financial officer, told the diocese’s magazine website in July, “but we are hopeful that the business acumen of our staff and lay counselors, together with the strategic financial reserves built over time, will help our parishes and schools continue to weather this unprecedented event.” Raleigh officials did not answer direct questions from AP.

The 47 dioceses acknowledged a smaller amount of readily available assets than AP counted, though by their own accounting that grew as well.

The improving financial outlook is due primarily to parishioners who found ways to continue donating and U.S. stock markets that were rebounding to new highs. But when the markets were first plunging, officials in several dioceses said, they had to stretch available assets because few experts were forecasting a rapid recovery.

In Louisville, Charlotte and other dioceses, church leaders said they offered loans or grants to needy parishes and schools, or offset the monthly charges they assess their parishes. In Raleigh, for example, the headquarters used $3 million it had set aside for liability insurance and also tapped its internal deposit and loan fund.

Church officials added that the pandemic’s full toll will probably be seen in a year or two, because some key sources of revenue are calculated based on income that parishes and schools generate.

“We believe that we will not know all of the long-term negative impacts on parish, school and archdiocesan finances for some time,” Louisville Archdiocese spokeswoman Cecelia Price wrote in response to questions.

At the nine dioceses that recorded declines in liquid or other short-term assets, the drops typically were less than 10%, and not always clearly tied to the pandemic.

The financial wherewithal of some larger dioceses is underscored by the fact that, like publicly traded companies, they can raise capital by selling bonds to investors.

One was Chicago, where analysts with the Moody’s ratings agency calculated that the $1 billion in cash and investments held by the archdiocese headquarters and cemeteries division could cover about 631 days of operating expenses.

Church officials in Chicago asserted that those dollars were needed to cover substantial expenses while parishioner donations slumped. Without paycheck support, “parishes and schools would have been forced to cut many jobs, as the archdiocese, given its liabilities, could not have closed such a funding gap,” spokeswoman Paula Waters wrote.

Moody’s noted in its May report that while giving was down, federal aid had compensated for that and helped leave the archdiocese “well positioned to weather this revenue loss over the next several months.” Among the reasons for the optimism: “a unique credit strength” that under church law allows the archbishop to tax parish revenue virtually at will.

In a separate Moody’s report on New Orleans, which filed for bankruptcy in May while facing multiple clergy abuse lawsuits, the ratings agency wrote in July that the archdiocese did so while having “significant financial reserves, with spendable cash and investments of over $160 million.”

Moody’s said the archdiocese’s “very good” liquid assets would let it operate 336 days without additional income. Those assets prompted clergy abuse victims to ask a federal judge to dismiss the bankruptcy filing, arguing the archdiocese’s primary reason for seeking the legal protection was to minimize payouts to them.

The archdiocese, along with its parishes and schools, collected more than $26 million in paycheck money. New Orleans Archdiocesan officials didn’t respond to written questions.

PURSUING AID

Without special treatment, the Catholic Church would not have received nearly so much under the Paycheck Protection Program.

After Congress let nonprofits and religious organizations participate in the first place, Catholic officials lobbied the Trump Administration for a second break. Religious organizations were freed from the so-called affiliation rule that typically disqualifies applicants with more than 500 workers.

Without that break, many dioceses would have missed out because — between their head offices, parishes, schools and other affiliates — their employee count would exceed the limit.

Among those lobbying, federal records show, was the Los Angeles Archdiocese. Parishes, schools and ministries there collected at least $80 million in paycheck aid, at a time when the headquarters reported $658 million in available funds heading into the fiscal year when the coronavirus arrived.

Catholic officials in the U.S. needed the special exception for at least two reasons.

Church law says dioceses, parishes and schools are affiliated, something the Los Angeles Archdiocese acknowledged “proved to be an obstacle” to receiving funds because its parishes operate “under the authority of the diocesan bishop.” Dioceses, parishes, schools and other Catholic entities also routinely assert to the Internal Revenue Service that they are affiliated so they can maintain their federal income tax exemption.

While some Catholic officials insisted their affiliates are separate and financially independent, AP found many instances of borrowing and spending among them when dioceses were faced with prior cash crunches. In Philadelphia, for example, the archdiocese received at least $18 million from three affiliates, including a seminary, to fund a compensation program for clergy sex abuse survivors, according to 2019 financial statements.

Cardinals and bishops have broad authority over parishes and the pastors who run them. Church law requires parishes to submit annual financial reports and bishops may require parishes to deposit surplus money with internal banks administered by the diocese.

“The parishioners cannot hire or fire the pastor; that is for the bishop to do,” said Connell, the priest, former accountant and canon lawyer. “Each parish functions as a wholly owned subsidiary or division of a larger corporation, the diocese.”

Bishops acknowledged a concerted effort to tap paycheck funds in a survey by Catholic researchers at Georgetown University. When asked what they had done to address the pandemic’s financial fallout, 95% said their central offices helped parishes apply for paycheck and other aid — the leading response. That topped encouraging parishioners to donate electronically.

After Congress approved the paycheck program, three high-ranking officials in New Hampshire’s Manchester Diocese sent an urgent memo to parishes, schools and affiliated organizations urging them to refrain from layoffs or furloughs until completing their applications. “We are all in this together,” the memo read, adding that diocesan officials were working expeditiously to provide “step by step instructions.”

Paycheck Protection Program funds came through low-interest bank loans, worth up to $10 million each, that the federal government would forgive so long as recipients used the money to cover about two months of wages and operating expenses.

After an initial $659 billion last spring, Congress added another $284 billion in December. With the renewal came new requirements intended to ensure that funds go to businesses that lost money due to the pandemic. Lawmakers also downsized the headcount for applicants to 300 or fewer employees.

A QUESTION OF NEED

In other federal small business loan programs, government help is treated as a last resort.

Applicants must show they couldn’t get credit elsewhere. And those with enough available funds must pay more of their own way to reduce taxpayer subsidies.

Congress didn’t include these tests in the Paycheck Protection Program. To speed approvals, lenders weren’t required to do their usual screening and instead relied on applicants’ self-certifications of need.

The looser standards helped create a run on the first $349 billion in paycheck funding. Small business owners complained that they were shut out, yet dozens of companies healthy enough to be traded on stock exchanges scored quick approval.

As blowback built in April, Treasury Secretary Steven Mnuchin warned at a news briefing that there would be “severe consequences” for applicants who improperly tapped the program.

“We want to make sure this money is available to small businesses that need it, people who have invested their entire life savings,” Mnuchin said. Program guidelines evolved to stress that participants with access to significant cash probably could not get the assistance “in good faith.”

Mnuchin’s Treasury Department said it would audit loans exceeding $2 million, although federal officials have not said whether they would hold religious organizations and other nonprofits to the same standard of need as businesses.

The headquarters and major departments for more than 40 dioceses received more than $2 million. Every diocese that responded to questions said it would seek to have the government cover the loans, rather than repay the funds.

One diocese receiving a loan over $2 million was Boston. According to the archdiocese’s website, its central ministries office received about $3 million, while its parishes and schools collected about $32 million more.

The archdiocese — along with its parishes, schools and cemeteries — had roughly $200 million in available funds in June 2019, according to its audited financial report. When that fiscal year ended several months into the pandemic, available funds had increased to roughly $233 million.

Nevertheless, spokesman Terrence Donilon cited “ongoing economic pressure” in saying the archdiocese will seek forgiveness for last year’s loans and will apply for additional, new funds during the current round.

Beyond its growing available funds, the archdiocese and its affiliates benefit from other sources of funding. The archdiocese’s “Inspiring Hope” campaign, announced in January, has raised at least $150 million.

And one of its supporting charities — the Catholic Schools Foundation, where Cardinal Sean O’Malley is board chairman — counted more than $33 million in cash and other funds that could be “used for general operations” as of the beginning of the 2020 fiscal year, according to its financial statement.

Despite these resources, the archdiocese closed a half-dozen schools in May and June, often citing revenue losses due to the pandemic. Paycheck protection data show four of those schools collectively were approved for more than $700,000.

The shuttered schools included St. Francis of Assisi in Braintree, a middle-class enclave 10 miles south of Boston, which received $210,000. Parents said they felt blindsided by the closure, announced in June as classes ended.

“It’s like a punch to the gut because that was such a home for so many people for so long,” said Kate Nedelman Herbst, the mother of two children who attended the elementary school.

Along with more than 2,000 other school supporters, Herbst signed a written protest to O’Malley that noted the archdiocese’s robust finances. After O’Malley didn’t reply, parents appealed to the Vatican, this time underscoring the collection of Paycheck Protection Program money.

“It is very hard to reconcile the large sums of money raised by the archdiocese in recent years with this wholesale destruction of the church’s educational infrastructure,” parents wrote.

In December, the Vatican turned down their request to overrule O’Malley. Spokesman Donilon said the decision to close the school “is not being reconsidered.”

Today, the three children of Michael Waterman and his wife, Jeanine, are learning at home. And they still can’t understand why the archdiocese didn’t shift money to help save a school beloved by the faithful.

“What angers us,” Michael Waterman said, “is that we feel like, given the amount of money that the Catholic Church has, they absolutely could have remained open.”

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