Why Lazy Accounting Does Not Work for Churches (Or Anyone for That Matter)
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Just because you’re a church doesn’t mean you shouldn’t have a remedial understanding of payroll, GAAP, taxable income, and right/wrong.
Anthony and Harriet Jinwright, husband and wife pastors from Charlotte-based Greater Salem City of Good church, were warned repeatedly that their lazy accounting could get them in trouble, including by a former consultant in 2001.
Some issues brought up by the consultant include (but a ited to and are, of course, alleged violations at this point):
• Church donations going directly to Pastor Jinwright but not subsequently appearing on his tax forms
• Blatant violation of the sanctity of GAAP.
• Expense reimbursements to Pastor Jinwright without benefit of receipts nor an expense plan at the church.
• Mismatched deposit envelopes that did not contain the actual amounts reflected on the outside when deposited.
For the love of sweet baby Jesus, what sort of operation were they running over there?!
It appears to be one part run-of-the-mill scam, one part complicated church theft, although Jinwright refused to acknowledge that any of this could be considered suspicious or, worse, fraudulent. The couple deposited $7 million into their bank account from 2002 to 2007 while only reporting $3.3 million for the tax returns for those years.
The US District Court thinks otherwise and “can I get a witness?” has just taken on a whole new meaning as Jinwright’s former assistant and business administrator – as well as the former consultant – have appeared on the witness stand to discuss Greater Salem’s, uh, holier-than-thou accounting tricks:
Anthony Jinwright was not only pastor of Greater Salem Church but also chairman of the church’s board or directors, with sway over the “business and financial dealings of the church.”
Although the church paid the bishop a regular salary, which it reported on his regular W-2 form, Greater Salem also cut checks directly to the bishop and his wife for: vehicle and housing allowances, retirement income, “tax liabilities,” personal vacation and travel, their daughter’s college tuition and at least two types of bonuses – a bonus at Christmas and a “pastoral anniversary” every February.
Both the Jinwrights also collected separate fees for speaking at other churches around the country.
Now listen, I’m sure Jesus wanted little baby Jinwright to go to college but the problem is that the meeting minutes that supposedly contain an authorization from church board members to pay for said college education have, um, disappeared. Funny, didn’t that happen at Arthur Andersen when Enron blew up?
What’s the lesson here? Churches are no less responsible for their financial affairs than publicly-traded companies and in many ways should operate with greater transparency as they are not only partially-funded by members of the congregation but supposedly on some sort of divine mission.
Do you really want to have to explain to the Almighty why you faked his financials at the pearly gates? Didn’t think so.
Jinwrights: Did they hide millions? Or miss details? [Carolina Weekly]
Other Holy Men:
Former Pastor Figures Eighth Commandment Is Overrated, Steals from Nonprofit
Priests Snitch on C Street Center to IRS for ‘Masquerading as a Church’
In case you’re not familiar, C Street is the destination spot for washed up, morally-tainted Republican All-Stars like South Carolina governor Mark Sanford post-Appalachain Trail (it’s called “decompression” and I suppose I’d do it too if I was hooked on an exotic South American beauty that wasn’t my wife) and Mississippi’s Chip Pickering who used the C Street facilities to entertain his mistress.
At least Sanford is classy enough to claim he was there for spiritual advice after his wife found out and started planning her book tour.
I guess we know what the C stands for (hint: it ends in “U Next Tuesday”) and there’s plenty of it running around the joint. Must be all that awesome Bible study.
The owners of a $1.8 million townhouse on Capitol Hill that has been home and refuge to conservative members of Congress are wrongly claiming a federal tax exemption reserved for religious establishments, 13 Ohio clergy members contend in a complaint to the Internal Revenue Service.
The clergy suspect that the C Street Center, which rents living space to lawmakers, is “an exclusive club for powerful officials . . . masquerading as a church,” according to a request for an investigation addressed to IRS Commissioner Douglas Shulman.
The questionable spirituality of C Street is nothing new but this is the first time real live priests have taken to snitching to front off the “organization”. Jim DeMint (another South Carolina Republican) defended the place (though mentioned nothing about whether or not he’d do Sanford’s mistress) saying, “We kind of make that commitment to each other to get together once a week. Sometimes it’s a Bible study; we always have a spiritual or scriptural thought. But sometimes we just talk about each others’ lives, try to get to know each other, remind each other that we are not important, that it’s just a title.”
How about lying, cheating, fake non-profit-status-having family values hypocrites? Is that just a title?
What’s up with C Street? Religious group for morally bankrupt politicians at the end of their rope seeking comfort and companionship or fundamentalist flophouse? I guess that’s for the Service to decide.
So far it doesn’t look good for our merry bunch of can’t-keep-it-in-their-pants GOPers, as DC already revoked 66% of C Street’s property tax exemption last year due to the fact that 66% of the facility was used as a residence and not a church.
Does getting on your knees count for that other 34%? Hallelujah and yay conservative family values!
Hallelujah! Church Accounting Miracles!
I had no idea how much a minister can make but now I do. Wait a minute, this just tells me how to bypass Service rules by writing checks in the church’s name. I might totally be in the wrong line of work.
Free Church Accounting (I’m not kidding) brings us a question from “Sharon” of Corsicana, Texas:
How much money does a minister have to make in order for money to be reported?
I started my church back up after 12 years vacancy. I do not have very many members. Right now we are 3 active members and other people stop in from time to time. I do not actually receive money. Since the church is striving I use the money to pay the light bill, get the grass moved.
According to the IRS website, “Earnings of $400 or more are subject to self-employment taxes.” (that includes qualifying ministers)
If you are a church employee, income of $108.28 or more is subject to SE tax.
It would be better for you, if you opened a checking account in the church’s name and paid expenses out of it. If that’s not possible, just make sure and keep all of the receipts that show where the church funds are going.
Fascinating! I took the preliminary “Are You a Tax-Exempt Church” quiz on their website and failed miserably so I guess I’d make an awful 501(c)(3) but that’s probably for the best.
There are ways to fail at this of course, like the Spokane, WA priest who couldn’t keep his arms and legs (and other parts) inside of the vehicle at all times, financial mismanagement in the University of North Carolina system, and JDA favorite the University of Colorado’s wild credit card user with horrible hair.
I would never imply that more regulation is the answer; I’m merely pointing out that there’s a bit of work to be done in identifying non-profit fraud. Seriously, how can one detect fraud when the core basis of fund accounting is an imbalance between “expenses” and expenditures?
The Church of Jr Deputy Accountant Scientist? I’m down.