The Canadian iteration of Gospel for Asia has filed for creditor protection at the same time it is being sued in multi-million dollar action by donors who claim the charity did not use funds as donors intended. The action appears to be a stalling tactic since the charity doesn’t have any significant creditors except the possibility of paying back donations that didn’t go where donors thought they would go.
Read the affadavit filed by GFA’s Pat Emerick here.
Read the Court order on creditor protection here.
The order prohibits GFA from disbursing any funds without permission of the court and sets up Price Waterhouse as GFA’s overseer. GFA has asked the court to stay this prohibition but the court has yet to rule on that request.
Of course, the donors don’t want GFA to be able to send money out of the country until GFA can satisfy donors and the authorities that the funds are being used as promised. They favor the hold on sending funds out of the country. I would like to add that funds cannot be sent to Gospel for Asia in India or Ayana Charitable Trust or Believers’ Church or at least two other NGOs because the Indian government removed their ability to accept foreign funds. I hope this court action explores where the funds are actually going and how they get from shell NGOs with no actual structure to the people in need.
This is a missing link that no one at GFA has ever spoken about. No one has ever said how funds get from the U.S. to needy people in India since the organizations with a structure to distribute them can’t accept them. I understand the Believers’ Church has set up shell NGOs but this seems like it could be a stealthy and perhaps illegal way to funnel foreign funds to organizations which the Indian government has prohibited from getting them.
I wonder if them creating a Believers church in wills point on their campus has opened doors for them to move funds in and through that as an entity?
Not legally. Believers’ Church in India has been prohibited from accepted foreign donations.
Although I am an accountant, I am not a lawyer so my interpretation could be wrong. As I read it, the triggering fact causing GFA World (GFA Canada) to take this action is that the GFA-USA settlement required, in addition to an initial $26,000,000 payment from funds on hand, a final installment of $11,000,000 due approx. June 25, 2020. The settlement specified that this final installment was to be take from funds raised for “general ministry purposes”. GFA-USA has not been able to raise these funds and the settlement has now been varied to allow them “to use funds given to GFA-USA preferenced for specific uses in the field”. In other words, funds that donors wished to go to supporting national missionaries, etc. can now be used to make up the final amount needed to pay the $11,000,000 installment.
The obvious fall-out of this US ruling would be that GFA Canada donors who are aware of it could logically conclude that funds they give to GFA Canada “preferenced for specific uses in the field” could instead be used to cover other costs such as the legal fees and any settlement relating to the Canadian class action. GFA Canada obviously anticipates (and probably with good reason based on the US situation) that if this information becomes widely known among their donors that their Canadian giving will plunge even further. It appears that this creditor protection is basically a desperate attempt to prevent this reaction by assuring Canadian donors that any “preferenced funds” received after this date will be monitored by an outside party to ensure they are properly disbursed.
It would be very interesting to see GFA-USA financial statements for the last few years, not only to see what has happened to total giving over that period, but specifically to see if there was a disproportionate decrease in giving for “general ministry purposes” over the last year since terms of the settlement were released.
Daniel:
What did you think about the Pat Emerick affidavit?
Interesting that Gospel for Asia USA wasn’t able to meet it’s court ordered settlement payment in June of 11 million.
It’s also interesting that GFA has been monitoring social media and news closely.
PwC is a huge company with 21 offices in Canada alone: as monitors for this charity, they must be aware the Government of India prohibits foreign donations. So are donations going to other countries?
Also interesting is K.P. Yohannan and his son stepping down as Cdn directors in June.
“GFA Canada understands that Gospel US and possibly certain of the individual defendants may determine to bring a jurisdictional challenge to the CDN Class Action on the basis that Canadian courts do not have jurisdiction over the claim as against them.” Emerick affidavit p.38
Quelle surprise.
Lawsuits aside, Imagine Canada projects losses to Canadian charities due to the pandemic (six months worst case scenario with enforced isolation and economic downturn) at 15.6 billion with a loss of 194 thousand jobs. Charities employee 2.4 million Canadians. The federal government stepped up with some funding, charities were also able to access a wage subsidy. That being said, the world-wide pandemic means lean times.
It certainly looks like GFA World is trying to stall.