Category: Believers Church

Gospel for Asia and Compliance with ECFA’s Standards: The 2015 Letter, Part 5

In CEO and founder K.P. Yohannan’s recent “exclusive personal response” to the fraud lawsuit settlement involving Gospel for Asia, Yohannan traces GFA’s problems to a “confidential letter from a financial standards association we were part of, and of which we were a charter member.” That letter was from the Evangelical Council for Financial Accountability and outlined 17 potential violations of ECFA financial standards. In October 2015, ECFA evicted GFA from membership. To help donors understand the nature of the concerns ECFA had about GFA, I am posting one of the concerns each day. You can read all of the posts by clicking this link.

Read the entire ECFA letter on GFA’s compliance issues here.

From that letter, here is the fifth compliance issue:

5. Lack of discretion and control over funds granted to foreign entities. During our review on June 3, ECFA staff raised questions regarding GFA’s oversight and control of funds sent to foreign field partners. GFA’s staff indicated that the foreign field partners are completely independent organizations and therefore GFA did not exercise any direct control over field partners. GFA staff also indicated that they did not have a foreign grant process in place to oversee the use of funds.

Given legal requirements on tax-exempt entities to have appropriate discretion and control over the use of funds sent to foreign entities, ECFA staff indicated that GFA’s lack of a grant process appears to violate ECFA Standard 4’s requirement to follow applicable laws.

Subsequent to these conversations, on August 21, GFA staff indicated a new foreign grant process was developed with the assistance of its new audit firm and will be in effect as of September 1, 2015.

Our review of the board minutes did not indicate the GFA board had approved, or even been notified, of GFA’s minimal oversight of funds provided to field partners.

For reasons I cannot explain, GFA has publicly claimed no control over what happens with donations in Asia. K.P. Yohannon has repeatedly claimed that he is not on any boards in Asia. As recently as last month, he told Francis Chan, he has no more control over Believers’ Church than the other Bishops.

This claim was thrown into doubt during the fraud lawsuit due to discovery of an email from Chief Operating Officer David Carroll to K.P. Yohannan. In it, Carroll said to Yohannan:

We can say all we want that we don’t have anything to do with the Believers Church or the field and that you are only the spiritual head of the church and that finances are handled by others but you, but as a practical matter, that will not hold up.

The Believers’ Church constitution makes it clear that Yohannan is the final and supreme authority in temporal and spiritual matters. Perhaps GFA didn’t want to own up to the level of control Yohannan possesses.

In any case, the claim that Believers Church and GFA-India (now known as Ayana Charitable Trust) had no input from Yohannan seems implausible. At this time, both charities in India are barred from accepting foreign funds since their registration as charities was revoked in 2017.  GFA-USA is sending funds to NGOs which act as shell organizations for the purpose of funneling money to Believers’ Church.

Donors should know that funds given to GFA don’t go directly to GFA in India.  Some funds go to other nations in Asia but most goes to entities in India that have no operational presence in the country. They exist to receive funds and give them to Believers’ Church or some other BC controlled entity. I have asked various authorities if this is allowed but have not received an answer as yet.

Next post: 6. GFA solicits funds for narrower purposes than the eventual expenditure of the funds.

 

Gospel for Asia and Compliance with ECFA’s Standards: The 2015 Letter, Part 4

In CEO and founder K.P. Yohannan’s recent “exclusive personal response” to the fraud lawsuit settlement involving Gospel for Asia, Yohannan traces GFA’s problems to a “confidential letter from a financial standards association we were part of, and of which we were a charter member.” That letter was from the Evangelical Council for Financial Accountability and outlined 17 potential violations of ECFA financial standards. In October 2015, ECFA evicted GFA from membership. To help donors understand the nature of the concerns ECFA had about GFA, I am posting one of the concerns each day. You can read all of the posts by clicking this link.

Read the entire ECFA letter on GFA’s compliance issues here.

From that letter, here is the fourth compliance issue:

4. The level of urgency communicated in GFA donor appeals contrasted with reserves held by foreign field partners and delays in sending funds to the field. In light of the significant cash balances held by field partners and the delay in sending funds to the field, ECFA staff raised concerns about the appropriateness of communicating urgency in many donor appeals. This includes appeals indicating “When we share with you about the urgency to reach the untold, lost millions—and the opportunities to win them to Jesus—it is not done to produce feelings of guilt or manipulate.” One appeal we reviewed indicated “One blanket, like the one Hetaksh received, will literally make the difference between life and death for them and especially for their small children and elderly relatives.”

The delay between when a donor gives a gift and when the funds are actually made available for designated purposes on the field is inconsistent with the level of urgency in many appeals and the timeliness of using donor-restricted funds as required by ECFA Standards 7.1 and 7.2. On August 12, GFA staff indicated that despite the delay in making foreign contributions available to carry out programmatic work, at least some designated funds were disbursed on a timely basis through the use of field-generated income.

Our review of the board minutes did not indicate the GFA board had approved, or even been notified, of GFA’s practice of soliciting funds based on urgency with a corresponding delay in disbursing funds to the field.

GFA Recycles Urgency

Even after being called out for this in 2015, GFA used this same urgent appeal in 2017. In a 2017 Patheos article, an anonymous GFA staff person recycled this appeal as follows:

To Hetaksh’s surprise, God answered his prayer for financial breakthrough in a very practical way—and just before winter started, too: He and his family received a thick, warm blanket!

This blanket came as a gift through Pastor Mrithun’s church during a blanket distribution to the poor—a distribution sponsored by our dear Gospel for Asia friends around the world. The blanket was big enough to keep the whole family warm at night, night after night, throughout the entire cold season.

This visible sign of God’s love and care greatly encouraged Hetaksh. No doubt the Lord will continue to care for this precious family and make them a powerful witness to others.

Urged to Give

Every winter, our partners in Asia feel the urgency of those around them, and we do, too. They pray for means and opportunity to distribute thousands of blankets and articles of winter clothing among those who lack adequate shelter and clothing to survive the freezing cold temperatures. They know that one blanket, like the one Hetaksh received, can make the difference between life and death for a family, especially for small children and the elderly.

It’s crazy to realize what a blanket can do. They are so small, but they work. For those who don’t have extra blankets for every family member, like we may, one blanket can mean a whole lot.

This recycled story (who knows if it is true) of Hetaksh  is presented as if it is current and represents an urgent need. In fact, GFA has had millions sitting in accounts and could have provided thousands of blankets. Instead, some of that money eventually went to other projects and some went to complete the Wills Point headquarters.

It is hard to believe that GFA was called out for this very appeal in 2015 and then reused it in 2017. So few people know about the ECFA report that apparently the GFA marketers believe it won’t matter.

Gospel for Asia and Compliance with the Evangelical Council for Financial Accountability’s Standards: The 2015 Letter, Part 3

In CEO and founder K.P. Yohannan’s recent “exclusive personal response” to the fraud lawsuit settlement involving Gospel for Asia, Yohannan traces GFA’s problems to a “confidential letter from a financial standards association we were part of, and of which we were a charter member.” That letter was from the Evangelical Council for Financial Accountability and outlined 17 potential violations of ECFA financial standards. In October 2015, ECFA evicted GFA from membership. To help donors understand the nature of the concerns ECFA had about GFA, I am posting one of the concerns each day. You can read all of the posts by clicking this link.

Read the entire ECFA letter on GFA’s violations here.

From that letter, here is the third compliance issue:

3. Delay in sending funds to the field. It was not until the meeting on August 12 that we learned that $47,898,342, or approximately 82%, of gifts received by GFA in 2014 designated for India were not sent to the field until the last two days of the calendar year.

To be clear, nearly $50 million of gifts were raised from January to December, with only modest amounts sent to the field until the end of the year. ECFA staff expressed concern over failing to send gifts to the field on a timely basis, raising compliance issues under ECFA Standards 4, 7.1, and 7.2, particularly given the urgent nature of many GFA gift solicitations. Subsequent to this discovery, GFA staff indicated that field partners requested the delay of sending the funds to the field due to challenges in transmitting funds into India. ECFA could not confirm if the delay in transferring the funds was justified.

Based on ECFA’s review of GFA’s internal financial statements as of June 30, 2015, GFA had a cash balance of $28,338,841 in funds designated for foreign field partners, or more than the total of all funds received for the field in the first half of 2015. In other words, the practice of sending funds to the field on a significantly delayed basis was not only followed for 2014 but also during the first half of 2015.

GFA staff informed ECFA on August 12 that part of the cash balances held by GFA on June 30 were transferred to field partners during the month of July. On August 21, GFA staff indicated there is now a plan to send funds to field partners on the 15th of each month.

When ECFA staff asked if the board was apprised of the delays in transferring funds to the field, GFA staff indicated the board was informed of this fact because the board received periodic financial statements. However, the internal financial statements erroneously reflected field funds as a liability and as an expense immediately upon receiving the funds. Thus, it would have been very difficult for the board to learn of the delays in sending funds to the field because the interim financial statements indicated the funds had been sent to the field when they had not. Therefore, ECFA found no indication that the board had approved, or even been clearly informed of the questionable practice of delaying sending funds to the field.

One of the reasons former GFA board member Gayle Erwin resigned related to his realization that he was being kept in the dark about how funds were spent. In this case, funds were being held from the field. Even though GFA representatives urgently solicited donations, the funds were not sent until near the end of the year.

There was no problem in submitting funds to India. However, the field partner Believers Church (K.P. Yohannan is the head of that church as well as CEO of GFA) may not have liked the scrutiny of the Indian government. Spacing out donations might have been part of their plan to manage foreign contributions. However, it is still unclear to me why GFA held back so much money.

In any case, GFA raised millions and held it for several years all the while begging for funds. The next post will deal with that problem directly.

Next post: 4. The level of urgency communicated in GFA donor appeals contrasted with reserves held by foreign field partners and delays in sending funds to the field.

Gospel for Asia and Compliance with the Evangelical Council for Financial Accountability’s Standards: The 2015 Letter

In K.P. Yohannan’s recent “exclusive personal response” to the fraud lawsuit settlement involving Gospel for Asia, Yohannan traces GFA’s problems to a “confidential letter from a financial standards association we were part of, and of which we were a charter member.” He said that the letter was put on social media to damage GFA. He added that a former staff member sent negative letters to donors.

Some of that is true and some is misleading. The letter Yohannan referred to came from the Evangelical Council for Financial Accountability and was given to me by Gayle Erwin, a former GFA board member who served on the board for 30 years. Erwin had resigned from GFA’s board because of multiple problems he saw at GFA. He wanted to correct GFA’s public statements and believed the donor public would only know the truth if they had information. Erwin’s motive was to inform donors and set the record straight. If informing donors damages GFA, then GFA should consider the implications of that.

Yohannan also said a former staff member sent negative letters. In fact, a group of former staff members approached GFA’s board many months in advance of any public revelations. Long before I published my first blog post about GFA, former staff members approached GFA’s board with 5 concerns which they hoped could be resolved without public disclosure. In this newest statement, Yohannan presented the situation with former staff as though he was surprised by it. He should not have been. The situation had been brewing for months before anything came to light. You can read the concerns and history of the situation at GFADiaspora.com.

K.P. Yohannan said that the allegations were false. However, the board member he assigned to look into the matter — Gayle Erwin — found evidence for all but one of the five concerns.  He later changed his view about the last concern and said he agreed with the former GFA staff on that point as well. Erwin also alleged in 2015 that Yohannan altered Erwin’s report to the GFA board to minimize the severity of Erwin’s findings. Those interested in comparing Yohannan’s statements now to former GFA board member Erwin’s documents and statements from 2015 can see them here. I also intend to post excerpts from Erwin’s report over the next several weeks.

For now, I want to respond to this part of Yohannan’s response:

Every year we evaluated our ministry and underwent an independent audit. In 2015, our governing board received a confidential letter from a financial standards association we were part of, and of which we were a charter member, pointing out that our accounting practices needed to better conform to the requirements set by that association. Despite the unique challenges our organization faces by supporting ministry in certain parts of the world, we immediately set out to comply with their request and hired a new auditing firm.

This paragraph appears to blame GFA’s former auditor Bland Garvey for the lack of adherence to ECFA’s financial standards. In fact, the ECFA didn’t specifically request that GFA change firms. The ECFA listed 17 items of concern; in two of them the ECFA listed problems with accounting practices. In one of them, GFA said they had already changed firms without a request from the ECFA. In fact, most of the matters related to financial practices within the control of GFA’s leadership.

To focus attention on matters of interest to the public which have been obscured by GFA’s response to the lawsuit, I am going to post segments of the ECFA compliance letter on the blog over the next month. Interested readers can read the entire letter by clicking this link. However, starting today, I will take each section in a post and highlight elements of what ECFA found. The reasons ECFA evicted charter member GFA weren’t limited to problems with the accounting firm. I will take them in order from the letter to K.P. Yohannan dated September 2, 2015:

The following is a summary of the most significant GFA compliance issues we reviewed:

1. Use of field-generated funds to satisfy designated foreign contributions. During our meeting on July 1, ECFA first learned that GFA and its field partners have engaged in a multi-year practice whereby field partners at least partially satisfied the designations on foreign contributions (primarily from U.S. donors, restricted for field use in India) by using locally generated field income (contributions from donors in India, profits from an India based rubber plantation, hospitals, etc.).

GFA staff indicated that the purpose of this practice was to retain foreign contributions in Indian Foreign Contribution (FC) accounts to earn a higher interest rate while expending locally generated funds that would not earn the higher interest rate. At this point, it is important to note that GFA disclaims that it exercises any control over field partners (see #10 below).

GFA staff also indicated that amounts in FC accounts would be used eventually for their original designation, as well, with the ultimate result that the purpose of the foreign contributions would be more than fulfilled.

To be clear, GFA solicited funds from donors, primarily gifts with donor restrictions, and transferred the funds to field partners in India, depositing them in FC accounts. While certain amounts were expended from the FC accounts in fulfillment of donor designations, significant amounts were retained in FC accounts over a period of years (see #2 below).

ECFA staff observed to GFA that it is not a normative practice to hold donor-restricted gifts and fulfill donor restrictions using other funds. Especially with respect to funds sent to international partners, it is extremely difficult for GFA to demonstrate that it has exercised appropriate control of the funds. Further, ECFA observed that this practice may not comply with ECFA Standard 7.2 because of the lack of clarity regarding the satisfaction of donor restrictions on gifts solicited by and given to GFA.

Our review of the board minutes did not indicate the GFA board had approved, or even been notified of, the practice of using field generated funds to satisfy restrictions on foreign contributions.

Subsequent to ECFA learning of this practice on July 1, GFA represented to ECFA that GFA’s field partners have ceased the practice of satisfying the designation on foreign contributions with field-generated funds.

GFA acknowledged using money from Indian for-profit ventures and Indian donors to fund activities which donors from the US thought they were funding. US funds were being placed in interest bearing accounts. One problem with this is that field partners might not use those foreign funds for the purposes designated. Some funds were held for many years while donors thought their donations had been spent to help evangelists or children. GFA couldn’t satisfy the ECFA that those funds had been used to satisfy donor intent. This was replicated in the fraud trial which led to the federal judge sanctioning GFA because they were unable to produce evidence about how the funds matched up with donor designations.

Next post: Excessive cash balances held in partner field accounts.

Believers Eastern Church and K.P. Yohannan Use Indian Law to Attack Critic

While using a defamation lawsuit to attack critics didn’t work well for Harvest Bible Chapel, it may have a different result in India for K.P. Yohannan and Believers Eastern Church.

According to this The Hindu article, The Believers Eastern Church is behind a charge of defamation which led to the arrest of a longtime critic of the church and Yohannan.  Anush Solomon Joy, aka Solomon Samaritan was arrested and then posted bail after being accused of defamation and attempted blackmail. Over the years, Anush has contacted me as well as GFA former employees with various concerns about GFA. He has published a rather fantastical booklet alleging satellite and microwave attacks.

My impression has always been that the gentleman isn’t making serious or credible attacks  and that he shouldn’t be considered a threat to Yohannan. That the church is taking on someone who has no following and isn’t taken seriously is surprising and disturbing.  Microwaves aside, perhaps Mr. Anush has stumbled on to something and should be given a second look.