After 12 years of publishing complete audited financial statements for its Administrative Offices and affiliates, the DRVC appears to have now taken a step backward in financial transparency. It no longer intends to publish these detailed financial statements. Instead, beginning in 2016 for its fiscal 2015 year, the DRVC has published a “Snap Shot of Revenue and Expenses” of the Administrative Offices only with no affiliates, no balance sheet and no footnotes. Needless to say, this makes it impossible to compute the amount of free cash reserves the DRVC is maintaining and/or the trend in these reserves. In correspondence with Sean Dolan, DRVC Director of Communications, he states that the Snap Shot is “sufficient”. I strongly disagree. Without the other information, the Snap Shot is certainly not sufficient to fully understand DRVC results or financial condition, particularly with respect to the excess free cash reserves accumulated. Based upon a written policy recommendation adopted by the U.S. Conference of Catholic Bishops, the USCCB agrees with me.
For background purposes, I am appending below my prior year summary of the 2014 financial statements. As noted therein, the DRVC accumulated $222.1 million of free cash reserves, approximately $191 million of which was considered excessive under the most conservative generally accepted industry standards. $85.7 million of those reserves were accumulated in just the previous three years alone—a period during which the portion of Catholic Ministries Appeal proceeds given to Catholic Charities was cut almost in half…I can only wonder whether this trend continued in 2015 and is the reason the DRVC decided not to publish complete financial information for that year.
If I learn anything further, I will certainly communicate it to you. In the meantime, Nassau and Suffolk County Catholics will remain in the dark about the financial stewardship of and by their Diocese, particularly with respect to the massive amount of reserves maintained by it.
Summary Of My Report On DRVC Free Cash Reserves Sent By Email On July 1, 2015
The DRVC has now published all 13 of its fiscal 2014 audited financial statements. My report thereon with particular emphasis on the “Free Cash Reserves” accumulated by the DRVC is available upon request. The following is a brief summary of that report:
Free Cash Reserves (“FCR”) increased by a staggering $38.3 million in 2014 and by $85.7 million over the past 3 years. FCR now equal $222.1 million. That’s equivalent to 4.4 years of “unfunded operating expenses”, or $172 million in excess of the maximum amount recommended by generally accepted industry standards.
In addition, changes in Unrestricted Net Assets, which directly impact FCR, increased by $38.7 million in 2014. They now equal $340.6 million, which is approximately $191 million in excess of the maximum amount recommended by the BBB Wise Giving Alliance. The $38.7 million increase in Unrestricted Net Assets is also the greatest increase during my 12 years of doing this analysis. While about 75 percent of that increase is attributable to a continuing recovery in the DRVC investment portfolio, the rest is attributable to a significant operating surplus, which follows on the heels of operating surpluses in 2013 and 2012. While operating surpluses are nice for a nonprofit organization to have, they raise a question about the goals and mission of the organization, particularly when they rise well beyond the break-even point as is the case with the DRVC.
Despite these increases and a growing amount of excess FCR, the DRVC reduced its subsidy to Catholic Charities to $1.25 million during the past three years from a high of $2.3 million in years past. In addition, there are no signs that the DRVC is expanding services elsewhere even though its FCR now far exceed the amount available before the 2008-2009 market crash. Although some increased support has been provided to needy parishes in the past three years, parish support on an overall basis pales in comparison to the increases in FCR and barely exceeds the additional assessment income raised by the DVRC via a higher “tax” on all parish collections beginning in 2011. Consequently, it appears that the DRVC has resumed its policy of building reserves in conflict with its overall mission.
—Dick Grafer
