Gospel for Asia – Page 25 – Warren Throckmorton

Phoenix Preacher Raises Red Flags Over Gospel for Asia

Last week, the Phoenix Preacher blog ran a post titled Red Flags over Gospel for Asia. The post describes a GFA donor’s attempt to get answers to questions which have come up in recent weeks. It is good to see donors asking questions but not so good to see the responses. The blog author raised some of the issues I have covered with this assessment.

GFA has felt that Throckmorton has been unfair to them and takes them out of context and so they have chosen to stop communicating with him in any efforts to clarify the concerns he raises. In my phone conversation with the GFA rep, he did give me explanations to some of the concerns raised by Throckmorton. However, some of the explanations seemed to me more like trying to put a positive spin on things rather than giving good solid evidence and rationale. Meanwhile, Throckmorton continues to raise more concerns as he uncovers more and more suspicious looking information. Here is a link to all his GFA articles: https://www.wthrockmorton.com/category/gospel-for-asia/

I plead not guilty to this charge. Up to and including the last email from David Carroll, I included the information Carroll sent on behalf of GFA. Here is what he said in his final email:

No, Gospel for Asia has not violated the law.

When you first contacted us, I mentioned that we would not be able to respond to every question you put before us. Now, with the increased volume and frequency of your questions, it has become clear that this back and forth has become a distraction from our mission work. For this reason, this will be my final response. We understand that you will continue to explore issues around Gospel for Asia and continue to be fed accusations from former employees, and we accept that.

We continue to remain accountable to all applicable laws and regulations, to the Evangelical Council for Financial Accountability and to independent auditors.

In his email, Carroll doesn’t accuse me of being unfair or taking him out of context. He said I asked too many questions and for that reason, he was not going to reply. This reason should be of grave concern to donors.

As we now know, GFA did violate the law when they sent groups of students to India each with $4500 in cash in envelopes without declaring the cash to U.S. customs.

The Phoenix Preacher post shows that the questions have only multiplied.

Gospel for Asia, and the $9 Million Interest Play

In note H of GFA’s 2013 audited financial statement, GFA describes a $9 million transfer to India to take advantage of what is described as “favorable interest rates” (see the last paragraph in the image below).

The Indian FC-6 forms requires NGOs to report the amount of foreign contributions received and the amount of interest made on those contributions. It appears that GFA in India made about 6% on contributions in 2011-2012. According to the Bank of India, the benchmark interest rate peaked at 8.5% during the period.

source: tradingeconomics.com

While 6-8.5% sounds high compared to U.S. rates, the unfortunate thing about the move is the fact that Indian rupee continued to weaken. On August 15, 2011, one rupee was worth .02177 cents. By December, the rupee had declined to .01816. By August of 2012, the decline continued to .01796. The financial statement doesn’t say when the money was returned but even if it was January 2012 (.01889), GFA lost just over 13% due to currency devaluation.

Gospel for Asia Gives Non-Answer to Question About Massive Cash Reserves in India

In a Christian Today article from yesterday, Mark Woods was able to secure some answers to questions I have been posing on this blog. In response to massive cash reserves being held in Indian banks, COO David Carroll said bank balances change as money is spent and deposited.

GFA’s Chief Operating Officer David Carroll told Christian Today that it was important to understand that GFA India and Believers Church were separate entities from Gospel for Asia USA. While he did not provide detailed figures, when asked about the cash reserves apparently held in Indian accounts, he said: “Like any nonprofit organisation or ministry, money in these bank accounts ebbs and flows throughout the year. It does not just sit there. The account balance will swell and then decline as the money is spent according to donor designations.”

In other news, water is wet.
Of course, the balances change but GFA’s surplus has been swelling for years. One nice feature of the Indian FC-6 forms is that balances at the beginning and end of the fiscal years are reported. Looking at just GFA’s balances (remember, GFA in the U.S. sends donor money to at least four Indian NGOs – GFA-India, Believers’ Church, Love India Ministries, and Last Hour Ministries), the balances have been doing more flowing than ebbing.

The above figures do not include money sent from GFA in the U.S. to the other three Indian NGOs. However, the rate of increase is about the same to the point where now all four organizations have more than $150 million just sitting in bank accounts.
Looking the growth of the balances, GFA in the U.S. continues to tell donors that so much could be done if only there was enough money. GFA has money stored away and that has been growing steadily.
I will end this post by previewing a future one. As I have done these calculations, I have noticed that the value of the rupee has declined over this period. By sending so much American money to India and letting it sit in banks, millions have been lost to currency devaluation. In my conversations with those knowledgeable currency exchange rates, they tell me it is better to keep money in the U.S. until it is actually needed on the field. It is easy to see why this is true. The minute you send money to India, you lose some of it. And the longer it sits there, the less it is worth. This method of management of the funds has lost millions of dollars over the years.

Gospel for Asia Admits Money Smurfing; Legal Counsel On Board

In a statement to Christian Today, via comment from the Evangelical Council for Financial Accountability, Gospel for Asia admitted sending cash to India via student groups and ministry partners. From the article by Mark Woods:

GFA is a member of the Evangelical Council for Financial Accountability (ECFA), which made an on-site review of its finances at its headquarters in Willis Point, Texas last week. ECFA told Christian Today: “We found the organisation to be highly transparent and fully cooperative, as I’m sure they’ll continue to be as ECFA continues our review of Gospel for Asia.”

It confirmed that GFA had sent cash with individuals travelling to India, but said that it had “stopped this practice entirely, and is working with legal counsel to determine appropriate remedial measures, if any”.

An organization is not highly transparent when they tell members of the public that they won’t answer questions which have now proven to be legitimate. On a regular basis, I get communications from former donors who tell me that GFA did not answer their questions and David Carroll told me he wouldn’t respond to any more of my emails.

On the money smurfing, it is now clear that the ECFA leaders now know this was happening. We also learn here (not from the “transparent” GFA but from GFA’s public relations spokesgroup, ECFA) that GFA has some idea that legal counsel may be necessary.

There is something wrong with this picture. The financial watchdog group appears to be more interested in damage control for a charter member (GFA) than getting answers for donors. All those years the money smurfing was taking place, GFA was a member in good standing with ECFA. If not for recent disclosures from former students and staff, GFA would still be doing it in violation of their own stated financial standards. However, when discovered, ECFA’s response is to focus on GFA’s claim that it won’t happen again. If ECFA had benefit for donors, it would focus on why GFA sent money to India in the first place.

Recently, a person who had carried cash to India for GFA told me that no explanation was given when the cash was handed out just prior to leaving the U.S. Travelers did not have time to contact family or advisors to ask questions about it. It was just expected. There were no receipts given in the U.S. or in India and no customs forms were completed. The amount in an envelope was $4500.

If you are a student, staff member, ministry partner, or pastor who carried cash out of the United States to another country, please contact me at warrenthrockmorton@gmail.com. We can speak off the record unless you designate otherwise.

Gospel for Asia’s Canadian Funds Given for Activities in India Don’t Show Up in Indian Reporting Documents

Canadian law requires charities to file information on their activities with the Canadian Revenue Agency. Gospel for Asia has a Canadian affiliate and that organization took in just over $17 million in 2013. The CRA requires charities to complete Form T3010 which captures disclosure of where and how donations are spent. In the case of Gospel for Asia, the T3010 shows that GFA’s Canadian affiliate sent $ 15,172,204 to India in 2013. The webpage showing this information is captured below:

As I will demonstrate below, none of these funds show up in GFA India’s reports to the Indian government. In other words, if one just looked at what GFA in India reports to the India government, one would not know anyone in Canada donated $15 million Canadian dollars to the work of GFA in India.

The activities to be carried out with those funds are listed in the T3010 form:

Ongoing programs:

Providing education to children of the Dalits and untouchables of India. Medical missions – treating the poor and needy in rural areas on the Indian subcontinent. Providing assistance in the slums. Literacy programs for illiterate adults. Disaster relief for natural disasters. Providing water for undeveloped communities. Sharing the love of God by meeting the basic needs for those below the poverty line. Sheltering street children.

According to Magali Deussing, Media Relations Advisor and Spokesperson for the Canadian Revenue Agency, Canadian charities, by law, “can only use its resources (for example, funds, staff, and property) in two ways, whether inside or outside Canada.” Those two ways are:

on its own activities (those which are directly under the charity’s control and supervision, and for which it can account for any resources used); and

on gifts to qualified donees.

Deussing added:

A registered Canadian charity is required to report annually to the Canada Revenue Agency (CRA) on its expenditures, and maintain adequate books and records so that the CRA can validate whether the charity’s funds are being appropriately applied to its own charitable activities (whether inside or outside Canada), or on gifts to other qualified donees. If a charity reports to the CRA that it has spent its resources on a certain program or activity, it is incumbent upon the charity to validate that expenditure or allocation of resources.

Form T301o lists “qualified donees” and Gospel for Asia International is not one of them.

Charitable funds may only be used if the activities are “directly under the charity’s control and supervision” and “can account for any resources used.” Canadian rules are specific about what control and supervision mean:

The CRA recommends adopting the following types of measures to direct and control the use of a charity’s resources:

Create a written agreement, and implement its terms and provisions.
Communicate a clear, complete, and detailed description of the activity to the intermediary.
Monitor and supervise the activity.
Provide clear, complete, and detailed instructions to the intermediary on an ongoing basis.
Arrange for the intermediary to keep the charity’s funds separate from its own, and to keep separate books and records.
Make periodic transfers of resources, based on demonstrated performance.

If a charity simply takes donations and funnels them to another organization, the Canadian charity might be considered a conduit — which is illegal in Canada. The CRA defines a conduit:

5.5 What is a conduit?

For this guidance, a conduit is a registered charity that receives donations from Canadians, issues tax-deductible receipts, and funnels money without direction or control to an organization to which a Canadian taxpayer could not make a gift and acquire tax relief.

One way that transferring money to an organization overseas does not of necessity create a conduit is if the money goes to a “head body” outside of Canada. In the case of GFA, the Indian operation mighr be considered a “head body.” The CRA website addresses this question:

Appendix C – What if a charity has a head body outside Canada?

Some charities are registered as the Canadian representatives or offshoots of a larger organization, often located outside Canada. These head bodies sometimes require payments from their Canadian charities, in the form of tithes, royalties, memberships, or similar transfers.

The same requirements for the direction and control of resources apply to charities that are offshoots of head bodies outside Canada. In other words, a charity may not simply send gifts of money to a non-qualified donee, even if that non-qualified donee is the charity’s head body.

However, having the head body act as an intermediary for a charity is also often not practical, since the nature of the relationship may prevent the charity from instructing its head body in how to use the money. In these cases, the charities must be sure they are receiving goods and services equivalent in value to the amounts they are sending.

For example, a head body might provide a Canadian charity with any of the following:

training

accounting services

literature for distribution

use of a name, trademark, or copyright material

The CRA will generally accept that a charity with a head body outside Canada usually benefits from access to useful resources from that head body such as policies, communications, and training material. If a charity transfers small amounts to a head body, and the charity has access to internationally produced material, we will not require additional evidence of benefits to the charity.

For these purposes, we will probably consider a small amount to be whichever amount is less—5% of the charity’s total expenditures in the year or $5,000.

I wonder what Canada is getting from GFA International that is worth $15 million. Note this line:

In other words, a charity may not simply send gifts of money to a non-qualified donee, even if that non-qualified donee is the charity’s head body.

Canadian Donations Don’t Show Up in Indian Reports
According to the Canadian report, GFA Canada sent the lion’s share of donations from Canadians to do work in India. However, in Indian public charity documents (yearly FC-6 forms), GFA Canada doesn’t show up.

On the website where Indian charities record their activities, Gospel for Asia is required to indicate the source country of donated funds. In the image below, source countries are reported for 2013-2014 (see pdf of page):

GFA: Canadian Funds Are Combined with U.S. Funds in India
Canada does not show up. I checked the other three entities controlled by GFA (Believers’ Church (pdf), Last Hour Ministries (pdf), and Love India Ministries (pdf)) and found no reference to Canada as a source for those funds. I asked GFA COO David Carroll about the absence of Canada and he told me:

The Canadian funds were combined with U.S. funds by our auditor in India for various accounting reasons. There is no requirement that they be reported separately.

I wrote back to ask for the auditor’s rationale and Carroll declined to address the question.

According to Canadian law, Canadian charities must retain control of the funds, must keep separate books and records, and must be able to show that the funds were spent on the charity’s mission. Perhaps GFA in Canada can do that. However, on the Indian side, there is no way to verify it.

What seems odd about Carroll’s explanation is that the Indian website requires the donors of those funds to be identified. For instance, in 2013-2014, the following donors were identified by GFA.

Note that there are donor GFA organizations from Germany, Australia, New Zealand and the USA. Canadian law requires that the funds donated in Canada be spent for the charitable purpose intended by donors. This report in India seems tailor made to comply with that mandate. However, in the part of the form where GFA could account for where Canadian donations were spent, they fail to identify the activities paid for by those funds.

According to COO David Carroll, the $15 million Canadian dollars were lumped in with the United States for accounting reasons. However, no recognition of the funds as having come from Canada shows up. All of the groups listed there are GFA affiliate organizations (e.g., Road to Peace, Grace in Action are LLCs controlled by GFA) so it seems odd that GFA of Canada doesn’t show up. Given the Canadian guidelines, it seems as though the funds coming from Canada should be identified for the very reason David Carroll says they weren’t: “for various accounting reasons.”

The Numbers Don’t Add Up
Note: the figures are in Indian Rupees. As I have pointed out before, the funds the U. S. GFA says they sent to India don’t show up on the Indian reports. The situation is worse if we take into account David Carroll’s claim that the Canadian funds are lumped in with U.S. funds in India. If Canada sent just over $15 million Canadian dollars ($14,183,700 in U.S. dollars on December 31, 2013) to India for calendar year 2013, and the U.S. sent $58,542,900 (from their 2013 U.S. audited financial statement) that adds up to $72,726,600 sent to India from the two countries. However, according to reports of foreign contributions in India, the U.S. GFA is only credited with sending $6 million during 2013. If one adds up all of the funds sent by GFA – US to Indian organizations in FY 2013 (GFA -India, Believers’ Church, Love India Ministries, Last Hour Ministries), we still only get to $37,097,750. The bottom line is that there is a massive difference in what the U.S. and Canada report that they send and what the Indian GFA organizations report to the Indian government.

It is possible that the excess is sitting in an account somewhere and is being reported in some other manner in a way that is not publicly available. I freely admit I am not an accountant and that I don’t know all of the auditing rules which may apply. However, these reports are provided in the U.S., Canada, and India so that an informed person can evaluate whether or not a charity is being accountable with donated funds. Using the reports available, I believe GFA has many questions to address. Where is the money that doesn’t show up on the Indian reports? GFA’s silence does not inspire confidence.

*I used the exchange rate from March 31, 2014.

Documentation of Former Gospel for Asia Staff Concerns is Now Public

In a prior post, I disclosed that a dispute existed between a group of over 80 former Gospel for Asia staff and the GFA leadership. GFA former staff claims that GFA leaders engage in unbiblical practices. In response, GFA leaders claim that a board member’s investigation failed to find serious problems. Currently, an impasse exists.
Until recently, most of the documentation of these concerns was unavailable to the public because the main website of the former staff group (called the GFA Diaspora) was on a password protected website. That has changed. The website — GFA Diaspora — is now available to the public.
On the website, you can find rationale for the five major problems observed by the former GFA staff, a communications history regarding efforts to bring GFA leaders into reconciliation talks, a review of specific evidence including the K.P. Yohannan ring kissing video, and numerous personal testimonies of former staff which support their overall list of concerns.
I was initially leaked materials from this website by former donors to GFA who believed the efforts of the staff to effect dialogue and change were not being taken seriously by GFA leaders. Since the first post, I have provided several other reports of information about GFA which I believe deserve greater awareness among evangelical supporters of missions. GFA has now ceased all responses to my questions and have failed to answer questions from one other new source — Christian Today.
Perhaps open access to this material will bring matters such undeclared cash carrying, misrepresentation of ecclesiastical practices, massive cash reserves, and other concerns into greater public conversation.

Gospel for Asia Reveals Financial Information on Evangelical Council for Financial Accountability Page

In a major departure from past practice, Gospel for Asia changed their ECFA page to include their U.S. financial information. Citing security concerns, GFA has declined to reveal this information on the web, but instead required interested parties to request it by mail. Up until now, the ECFA has allowed charter member GFA to be exempt from usual practice.

Now the page looks like this:

In a prior post, I noted that GFA sent $58 million to India but the FC-6 forms there show only a little over $6 million received from the U.S. Perhaps, GFA is moving toward more transparency. If so, the organization still has a long way to go to explain this discrepancy, as well as the money exporting to India, and discrepancies in the Bridge of Hope program reporting. Clearly, the organization is raising massive amounts of cash but has yet to explain why so much is sitting in Indian banks.
Given this change, perhaps the ECFA has been in talks with GFA and is privately working to bring GFA into compliance with ECFA guidelines. If this is true, don’t expect ECFA to alert the donating public. If the ECFA and GFA don’t see things the same way, my guess is that GFA will quietly give up their membership with no explanation.

How Hard is it for Gospel for Asia to Get Money to the Field?

In a staff meeting on May 14, COO of Gospel for Asia David Carroll said it was getting hard to send money into India.

We’re always looking for ways to get money into India because the reality is that it’s getting more difficult to do that, and we are looking for other ways that we’re able to do that.

Given other information provided by GFA, this is a confusing statement.
On GFA’s frequently asked questions page, GFA addresses financial integrity and tells donors that everything is ethical. On that page, GFA promises financial accountability:

The sentence underlined in red says: “Some of those systems include transferring funds only through approved banking channels.” Carrying cash in backpacks is not an approved banking channel. As I have reported, money smurfing is a violation of both federal law and this website promise to donors. So hard or easy, moving money is only supposed to be done through banks.
I have to also question if it is difficult to get money into India via legitimate means. According to the audited financial statement for 2012 and 2013, GFA started creating limited liability companies in 2009 to aid transfers of money to India. They now report 12 of them.
A quick review of the Indian FC-6 forms (e.g., GFA’s 2013-2014 FC-6) shows that GFA transfers money frequently. In fact, GFA decided to transfer $9 million to India just to get better interest rates. Apparently, any difficulty was worth it. See the relevant section of the financial statement in the image below:

GFA took $9 million which they needed for their new home office and transferred to that money to India for about a year to get better interest rates. Then they transferred it back. GFA was willing to place $9 million at risk; so how hard could it be to move money back and forth?
GFA has admitted money smurfing but to my knowledge, there has been no explanation to staff about why the students and money was put at risk. I am aware that staff are very concerned about it as they should be.
I encourage anyone who was asked by GFA to move cash on a trip to India (or elsewhere) to contact me at my email address (click the link). If you have questions about the matter, please feel free to contact me.

Gospel for Asia Reports One Thing in American Audit, Another in Indian Reports

In addition to the usual income and expenses data, Gospel for Asia’s audited financial statement discloses related party transactions. As you can see from the image below, the direction of the transaction is from the U.S. to GFA affiliates in Asian countries with 96% going to India. In addition to GFA India, GFA in the U.S. claims contributions to GFA affiliates in Myanmar, Sr Lanka, Bangladesh and Nepal. See below:
GFA reports contributions to five related non-profits. However, in the Indian FC-6 report, three other charities — Believers’ Church, Love India Ministries, and Last Hour Ministries — report receiving contributions from GFA in America. In the audited financial statement above, GFA reports to Americans that the organization gave $58,542,900 to GFA India in calendar year 2013. However, in the FC-6 form filed to the Indian government, GFA – India reported that much less than $58 million was received. Just from the U.S., GFA – India reported that they received INR 404,638,271 which converts to $9,170,270 million USD during the period between April 1, 2013 and March 31, 2014 (see line 5 below).*

GFA said in the audited financial statement over $58 million was sent to GFA India, but GFA in India reported only a little over $9 million being received (actually more like $6 million, see the last note below).**** So where is the rest of the money?
As I reported in a prior post, GFA in America also sent money to at least three other charities in India: Believers’ Church (INR 909,041,794 = $20,601,500), Love India Ministries (INR 162173900 = $3,675,330) and Last Hour Ministries (INR 161084820 = $3,650,650) (click the links for their FC-6 forms). Looking at what came from the United States to all four of these entities, the total is $37,097,750 which still does not get us to the $58 million GFA claims came from the U.S.** It is possible that GFA – U.S. contributes to other ministries in India that have not been disclosed or discovered yet. However, just taking these reports at face value (what GFA says in the audited statement and what GFA tells the Indian government, there appears to be a significant discrepancy.
It is worth asking what Love India Ministries and Last Hour Ministries do. I can’t find a viable web presence for either entity and as far as I can determine, GFA does not mention them in their materials. They may be shell companies operating in name only, much like the 12 limited liability corporations in Texas mentioned in the audited financial statement which exist just to transfer money to the field.***
Thus, at least two problems emerge for GFA’s credibility. One, GFA claimed in the audited financial statement that it only contributed to “five related non-profit organizations.” However, GFA in the U.S. uses 12 LLCs to send money to at least three additional registered charities in India (Believers’ Church, Love India Ministries and Last Hour Ministries) which are not disclosed in the audited financial statement. Two, the amounts GFA says they send to GFA in India comes nowhere close to matching what GFA – India reports to the Indian government.
Thus far, GFA has remained silent in the face of questions regarding cash smurfing to India, video of Believers’ Church bishops bowing and kissing the ring of GFA president K.P. Yohannan in contradiction to Yohannan’s denials of the ritual, discrepancies in Bridge of Hope giving requests and spending, and cash hoarding in Indian bank accounts. These discrepancies being reported today now call into question the accuracy of the American audited financial statement. Silence may be a good PR strategy but it seems ill-suited for a Christian ministry.

*It seems very unlikely that the different reporting years explains the $ million difference. Both methods of accounting cover 12 month periods which report consistent monthly giving totals year over year.
**Contributions to GFA-India, Believers’ Church, Love India Ministries and Last Hour Ministries from all foreign sources (including interest on foreign contributions) totaled $54, 550,683 for fiscal year ending March 31, 2014, still less than the $58 million to India reported on the audited financial statement.
***As an aside, it is worth asking again why sending cash to India in student backpacks was ever done. GFA told students it is a way to get cash into India. As one can see from the financial statement, GFA set up 12 LLCs to transfer money, and even transferred $9 million at one point just to get better interest payments. There appears to be no problem getting money back and forth from India.
****I remembered after doing the post that India’s FC-6 forms require a charity to record when the contributions are received. Thus, I was able to discern the amount sent during the calendar year 2013 but looking at the reports for the fiscal years 2012-2013 and 2013-2014. The situation is actually worse than I first reported. GFA – India reported that they received only $6 million in calendar year 2013. The American audit says GFA U.S. sent $58 million to GFA India in the calendar year but GFA India only reported $6 million in the same time span.

Indian News Magazine Weighs In on Gospel for Asia and the Loss of Cheruvally Estate

Today, Tehelka, an award winning Indian investigative magazine, posted an article about the loss of the Cheruvally Rubber plantation to the government. Even though I posted on this topic recently, I thought this article added some facts and was interested in the tone of the report.
Some snippets:

Kerala-based evangelist and self-consecrated archbishop Dr K P Yohannan has hit the headlines yet again, as the state government has recently issued orders to take over three estates his church body owns illegally. According to the government of India website, Gospel for Asia (GFA) – a Texas based charitable organisation – is funding ‘Believers Church’ for the purpose of charity to improve the condition of orphan children. Interestingly, both GFA and Believers Church are headed by Yohannan. The funds sent by GFA were used to purchase these estates instead of putting it to use for charity purposes.

I have been curious about perception in India regarding GFA’s purchase of land for commercial purposes. The writer of this article takes the position that the foreign contributions were used to buy commercial properties rather than for the intended purpose. This is a serious charge and one which GFA should address.

However, it has been learnt that Yohannan and his trust had spent Rs 300 crores on the plantation property. With the government now taking over the land, BC will in all probability face losses on their investments in these estates. Moreover, BC would possibly be ineligible for any compensation as Harrison Malayalam sold the property to BC when the former had no right to sell the property. After the purchase, however, the property was mutated in the name of the Believers’ Church and tax was being paid by the BC itself under the Plantation Tax Act.

Instead of $14.3 million, as I reported earlier, this article claims the price was much higher — $68.5 million. However, no source was given for the information which makes it impossible to verify.
An implication of this report is that a massive amount of donor funds may be lost due to the purchase of this property. Although GFA in India may have believed it had the better legal case, it is a legitimate question whether or not donor money should have been risked in this manner.
GFA has remained silent about a number of concerns recently raised by donors, former staff and students. Prominent among them is the report by former students that they were told to carry cash in backpacks and suitcases to India, seemingly at odds with American and possibly Indian law.