GRAND RAPIDS, MI: Grace Episcopal Church $1 Million+ Endowment Fund Raided to Keep Parish Afloat
Parish faces immanent dissolution with no reserves
"Your band of rector worshippers [are] running Grace Episcopal Church into the ground and using the Endowment to pay for it" - attorney Robert D. Brower
By David W. Virtue
May 9, 2012
In what is being described as a tragedy of Shakespearean proportions, the once largest, most powerful and influential parish in the Diocese of Western Michigan that was home to a US president and his wife, is now on the verge of coming apart with stories of a raided endowment fund to maintain the church, fleeing parishioners, a duplicitous priest and broken relationships that may never be healed.
Grace Episcopal Church in Grand Rapids, MI, once the flagship parish of the diocese (See VOL's story here: http://tinyurl.com/cpaewds), is now facing pending dissolution due to a $300,000 deficit sustained over the last two years.
To stay afloat, it has taken over the $1 million+ Endowment Fund, a fund set up by parishioners in 1991 for long-range purposes and not operational funds. At that time a group of Trustees was established to administer the Fund. Recently, the Trustees were abolished and replaced by the Vestry appointed by Bishop Robert Gepert. As a result, Grace Church has immediate access to funds that were previously untouchable.
Over the past few years, numerous financial inaccuracies have allegedly been observed in the Church financial statements and Annual Reports. As a result, the parish is in danger of losing money faster than ever.
One of those involved in setting up the Endowment Fund was Robert D. Brower, an attorney, says actions by the current Vestry and priest in raiding the Endowment Fund are "nonsense and untruthful."
In a letter (April 23) sent to VOL, he wrote, "Your announcement regarding the Grace Episcopal Church Endowment Fund compels me to write to set the record straight. Throughout the 1980s I was involved in the parish wide discussions leading to the creation in 1991 of the Endowment. I was the incorporator of the separate nonprofit corporation as well serving many years as a board member, officer and chairperson. I have a perspective that none of you share, nor obviously care about. The published justification for your actions are nonsense and untruthful. I was not the only parishioner disappointed but unsurprised by your actions.
"'Disappointed' because since its inception the Endowment has played an integral role in the life of Grace Episcopal Church. Our Endowment enabled critical advances in the life of Grace Episcopal Church. These include (1) The Building for the Next Generation Project which changed the physical structure of the church leading to membership and program growth, (2) necessary support for Sudanese Grace Episcopal Church and (3) an outreach program, important to parishioners and the community at large that was second to none in Grand Rapids. These worthy efforts stopped almost immediately upon arrival of the rector as pledges plummeted and for the first time Endowment funds were irresponsibly used for deficit operations and to richly reward the rector for continued failure.
"'Unsurprised' because it was apparent from the rector's first meeting with the Endowment Board that the Endowment was in his sights. It has taken him and a small cadre of his followers four (4) years to accomplish what was started in 2008."
Brower believes that the Rev. Stephen Holmgren's explanation of the "Changes to Grace Episcopal Church Endowment" is an offense to those loyal parishioners who over many years built Grace Episcopal Church into a thriving and caring place that shared the vision for an Endowment in continuing that success.
Diocesan Chancellor William J. Fleener told rectors and wardens of the diocese that Title I, Canon 7, section 4 of the Constitution and Canons of the [national] Episcopal Church require that all property, real and personal, held for the benefit of a parish be held in trust for the Diocese. Referring to this national canon, Title II, Canon 23, section 4 of the Canons of the Diocese of Western Michigan, Vestries are to have charge, care and management of all property and temporal affairs of the parish, and to supervise collection, control and disbursement of all monies held by or for the benefit of the parish.
Retorted Brower, "Many alternatives were debated in forming the Endowment but the one deliberately chosen was the separate non-profit corporation as a supporting organization to the church. It was critical to the founders that the vestry (and certainly not an unelected group posing as a vestry) not have the ability to undercut the purposes of the Endowment. It was understood that vestry input was important but control of the Endowment was deliberately separated from the church to protect it from the exact kind of decisions being made today. This enabled the Endowment to have members with relevant and valuable expertise even though they might not be vestry persons. Frankly most of those who gave to the Endowment would not have done so without this clear distinction between entities. Your actions break the trust of those generous givers. I am familiar with many instances of persons amending their estate plans as a direct consequence of the actions and antagonistic attitude of the non-elected leadership group."
Brower blasted Fleener's interpretation of the canons saying, "Your recitation of the canons fails to camouflage an effort to hide behind inapplicable rules. Of course, the vestry has charge and management of all properties and affairs of the parish. However, the opinion of the chancellor as applied to this instance is inappropriate. With one exception the assets of the Endowment came to it as a separate non-profit corporation, not from the parish. The exception is the proceeds of the sale of the Plymouth Street rectory approved by the bishop at that time. These dollars have already been provided to the rector and recently put further at risk by his hand-picked leadership group.
"It is outrageous that your announcement became an opportunity for converts from other denominations to lecture lifelong Episcopalians on whom they are."
Brower continued, "I am a realist about the underlying good and bad in people. Since I was arbitrarily denied the privilege of voting despite 36 years of membership, loyalty, service and pledging, and because much worse has befallen others who dare to challenge the rector's wrongdoing, I understand your position is that I have no interest or right to raise these concerns. I disagree because I have an obligation to not stand by idly as your band of rector worshippers run Grace Episcopal Church into the ground and use the Endowment to pay for it. That obligation runs to those who created the Endowment, those who gave time and expertise to its success and those who for years cared about what Grace Episcopal Church meant in the religious and broader community. You should recognize the same obligation."
Brower pled with the rector and bishop to comply with Michigan law as it relates to the separation of the Endowment from the church. "Even if your position continues to be that no one but you has an interest in these matters, the Michigan Attorney General - Charitable Trust Division has standing to protect the interest of the Endowment and its donors and its oversight will be sought."
Old records from the finance committee reveal that in 2007, the last year of GEC's interim ministry with Rev. McMillan, GEC budgeted $588,000 for pledges and that collections exceeded it by $30,000. This capped a steady climb of revenue and participation at GEC through the ministries of Rev. Howell and Rev. McMillan. The current rector, Holmgren budgeted only $560,000 in his first year and failed to come close. The next year (2008) the budget for pledges was about $420,000. It is understood that the 2011 pledge budget is less than $200,000. Noted Brower, "It is quite obvious that the substantial savings and allocated funds (between $200,000 - $300,000) which were in place when the rector arrived in late 2007 and the significant annual Endowment Fund distributions are the only things keeping the church open. Just the opposite of what was intended by those who created and funded the Endowment Fund."
The long internal struggle has left the parish decimated. Many have been forced to leave or have left voluntarily. Some were members for as long as 30 to 40 years.
A parishioner, who asked not to be named, said he was asked to leave the choir after singing for thirty years because he expressed his concerns about the administration of the Church. Brower's wife, Kathy, was Deacon of Grace Church for many years until Fr. Holmgren and Bishop Gepert removed her shortly after Holmgren's arrival. Holmgren has routinely removed most of the traditional parishioners from Chairmanships at Grace after serving many years at their posts, VOL was told.
A group of about 200 exiled members called Celebrate Grace was formed several years ago and now services at another Chapel. "The primary reason for Church's huge deficits is that the Celebrate Grace members withheld their pledges and funds in a protest over conduct of the Church's affairs. The deficit was in the area of $300,000 during the last two years on a budget of about $1 million."
Bishop Gepert has announced that he is retiring in 2013. None too soon say some parishioners.
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