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Issue Date:  March 3, 2006

Of business practices and accountability

There are three keys, goes the old saw, to a successful real estate venture: location, location and location. Increasingly, in the U.S. Catholic church, those locations are the abandoned church, the neglected rectory, and the long-closed parochial school. Not to mention a once-bustling convent.

To that old saw, permit us to add a new one that should apply to the U.S. church as it attempts to move forward from scandal and amid a sharply changing landscape: accountability, accountability and accountability.

That concept should apply increasingly whether the matter is disposing of property that has outlived its usefulness or considering investment in new ventures.

A common situation facing the church today includes shuttered parishes, retreat centers with no retreatants, monasteries with no monks, lush seminaries with few recruits. Real estate that virtually everyone agrees must be dealt with in some fashion.

There is so much of it and of apparently sufficient value and potential that, as Washington writer Joe Feuerherd reports this week, a group of developers claiming ties to Vatican officials set up shop in New York three years ago with its primary purpose the purchase of vacant church property.

Whether the Follieri Group is able to do good and do well simultaneously on these church ventures remains to be seen. Some unanswered questions, intriguing ones, certainly remain about the Group’s operations. Not least among those are what other connections beyond the obvious link to Vatican Secretary of State Cardinal Angelo Sodano exists between the firm and unnamed members of the “Vatican hierarchy.” And what those connections have to do with purchasing U.S. church real estate and, of course, whether those connections equate to favored treatment. Only the U.S. bishops dealing with the group know for sure and that is the point at which accountability comes into play.

To their credit, many dioceses and religious orders are striving to, or have, professionalized their real estate operations. Brokers are hired, properties well-advertised, bids dealt with fairly, and internal reviews and outside scrutiny welcomed. Out of crisis, and not without considerable pain, the Boston archdiocese appears to have developed what might be a model of lay and expert input into church real estate sales.

Sadly, too many of our institutions have not.

The American church’s business practices are, as the prestigious National Leadership Roundtable on Church Management has pointed out, generally abysmal. Here’s how Fred Gluck, former managing partner of McKinsey & Company, a leading management consulting company, put it in a 2003 memo to church leaders:

“Your entity is a subsidiary of a large enterprise located in a foreign country where management has been historically committed to resisting change and maintaining the status [quo].” He continued:

  • “Your organization has no effective central point of leadership that can energize the necessary program change.
  • “Your leadership is aging and also largely committed to the status quo or even the status ante.
  • “Your tradition of hierarchy dominates most of your thinking about management.”

“Coming to grips with this formidable set of challenges in an organization as historically successful as yours will be a daunting challenge, and can only be accomplished by a comprehensive program of change with strong leadership from the top,” concluded Gluck.

The need for such change is rarely more evident than in recent revelations that the Detroit archdiocese has poured $40 million of its people’s money into the John Paul II Cultural Center, a Washington museum and think tank that virtually no one visits. It is the palest of white elephants, a complete flop in terms of popular interest or scholarly pursuit (NCR, Feb. 10 and 17).

“The cardinal thought it was a worthwhile project and still thinks so,” the archdiocesan spokesman told NCR. “But we just don’t talk about our investments.”

It’s beyond us why Cardinal Adam Maida thought it was a worthwhile investment to begin with, and the idea that he “still thinks so” is almost incomprehensible. But think for a moment about the latter part of his spokesman’s statement. “We just don’t talk about our investments.”

To which a logical response, is: Well, why not?

Now, perhaps it’s gratuitous to point out that if the archdiocese had bothered to “talk about” its investment in the money pit that is the John Paul II Center, it might have avoided the malpractice in stewardship that has occurred.

In the broader world of nonsectarian nonprofits and major corporations the board and administration of these entities are required by law to “talk about” their investments. No one is arguing that proprietary information should be cavalierly disclosed or trade secrets revealed. But the church needs to at least meet the standards of disclosure and transparency required of a stock exchange-listed corporation or a local chapter of the Red Cross.

Instead, far too often, the pet projects of the local prelate, the sole source contractor who has donated to the bishop’s appeal, the well-connected lawyer, or the real estate developer with local ties or friends in the hierarchy benefit from this lack of basic accountability.

It is time, when it comes to its business practices, for the church in the United States to catch up.

National Catholic Reporter, March 3, 2006

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