Washington account of $2m Cardinal Wuerl fund raises transparency questions

News: Archdiocese of Washington

The Archdiocese of Washington on Thursday said that more than $2 million allocated for the “continuing ministry activities” of emeritus archbishop Cardinal Donald Wuerl was given by donors to cover Wuerl’s living and travel expenses, and to allow the cardinal to give charitable gifts at his discretion.

But while the archdiocese now says the money was given by donors for the express purpose of funding Wuerl’s “expenses and ministerial needs,” its audited financial statements tell a different story, stating the archdiocese designated $2 million of its own “net assets without donor restrictions” for Wuerl’s use.

“The funds in our Continuing Ministry Activities account are donations made by persons who want to cover Cardinal Wuerl’s expenses and ministerial needs, including living expenses, prior travel for business in Rome, as well as for charitable requests asked of the archbishop emeritus,” the Washington archdiocese said in its March 4 statement.

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“These donations have accumulated over time and were made by persons who did not want to have the Archdiocese burdened with these expenses, even though the Archdiocese is obligated to support the ongoing ministerial needs of the archbishop emeritus before and after retirement,” the archdiocese added.

“Any remaining proceeds will be used to support the general purposes of the Archdiocese.”

The 2020 financial statement of the archdiocese distinguishes between net assets without donor restrictions, which are internally designated by the archdiocese for particular purposes, and “net assets subject to donor imposed restrictions stipulating how, when and/or if the net assets are available for expenditure.”

Donor imposed restrictions can be “temporary in nature, such as those that will be met by the passage of time or other events specified by the donor. Net assets are released from restriction and reclassified to net assets without donor restriction when the stipulated time has elapsed, when the stipulated purpose for which the resource was restricted has been fulfilled, or both,” the financial statement explains.

The Pillar asked the archdiocese why the $2,012,639 allocated for “continuing ministry activities for Archbishop Emeritus” in the archdiocesan 2020 financial statement is characterized as an unrestricted net asset, if it was given by donors for the particular purpose of covering Wuerl’s expenses, as the archdiocese claimed on Thursday. 

The archdiocese has not yet responded.

If the archdiocese misrepresented itself in its audited financial statements or in its statement Thursday, it could face both tax consequences and a deepening crisis of public perception. Improper use or designation of restricted gifts can lead to significant consequences for non-profit organizations, as the designation of such funds is regulated both by state law and by the Internal Revenue Service.

The Thursday statement from the archdiocese did not detail the extent of expenses it has incurred on Wuerl’s behalf. Neither did it identify the charitable donations made through Wuerl’s fund in the archdiocese, or identify the donors who gave the archdiocese $2 million for Wuerl’s use.

The archdiocese did say Thursday that “All the expenses of Cardinal Gregory and Cardinal Wuerl are reviewed by members of the Archdiocesan Finance Council throughout the year. All expenditures go through the Archdiocese’s normal budget and internal control procedures, which are also audited by an accounting firm annually.”

The Pillar first reported Wuerl’s “continuing ministry” fund March 3. 

In addition to the funds allocated for Wuerl’s expenses, the archdiocesan 2020 financial statement includes an unfunded priest retirement liability of at least $35 million, which has grown from $23.5 million since 2015. 

The statement also includes a 30% drop in funds earmarked for “Archdiocesan charitable giving” in the 2020 fiscal year, which decreased to $401,136, from $651,136 in fiscal year 2019. 

The amount allocated to “formation of priests” also declined, from $1,102,500 in 2019 to $1,000,481 in 2020.

In August 2020, the archdiocese announced the layoff of 17 employees, reduced the hours of 17 additional employees, and eliminated 14 vacant positions. The move would save the archdiocese $4 million in the 2021 fiscal year, the archdiocese said.