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 Erwinfound 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.

Christianity Today On the Release of Gayle Erwin's and ECFA's Reports on Gospel for Asia

Bob Smietana at Christianity Today has put together a great summary of both the ECFA and Gayle Erwin reports to the board of Gospel for Asia. I encourage readers to go read it.
Here are some highlights:
In the article, Smietana pointed out the misleading nature of GFA leaders’ communications with the ECFA, GFA board, and the donors.
From the article:

Despite running a ministry that collects hundreds of millions in donations, Yohannan appeared to be unaware of the basics of nonprofit management.

GFA appears to be cultivating a narrative which casts Yohannan and COO David Carroll as incompetent rather than deceptive.
In a first, Yohannan sent a note to Smietana saying he appreciated the GFA review. As I noted in my post about Gayle Erwin’s report, Yohannan did not appreciate Erwin’s candid report.
A scapegoat for Yohannan in his note to Smietana is the rapid growth of GFA. Remember, GFA was a charter member of the Evangelical Council for Financial Accountability. GFA has had access to ECFA materials and guidance for well over 30 years. GFA’s website is full of promises to be financially astute, still using the Independent Charities of America Seal. Blaming their growth is another way of passing the buck.
Smietana pointed out that Gayle Erwin was told to rewrite his report on the allegations from the GFA Diaspora.
Smietana pointed out that David Carroll told CBS 11News Dallas that GFA was kicked out of ECFA over minor infractions. Smietana contrasted that claim with the serious problems highlighted by the ECFA report.
Go take a look, there is much more.

The Other Gospel for Asia Report K.P. Yohannan Did Not Want Anyone to Read

On December 2, former Gospel for Asia board member Gayle Erwin released the results of ECFA’s investigation into GFA’s violations of ECFA standards. At the same, Erwin also disclosed another aspect of GFA’s actions which is as disturbing as the ECFA report. First some background.
In June 2014, a group of former GFA staff members approached GFA’s leadership with five major concerns (see the GFA Diaspora site for a detailed history and list of concerns). Eventually, GFA’s board appointed long-time board member Gayle Erwin to conduct an investigation into the five allegations. In early March, Erwin submitted his report. Erwin found that most of the allegations had some substance and should be addressed. According to Erwin, GFA’s CEO and founder K.P. Yohannan was furious when he read Erwin’s report. Erwin described his recollection of the scene in an undated letter to the GFA Diaspora former staff group.

When I first presented the conclusions of my investigation to KP [Yohannan] (with David Carroll present) KP glanced at it, declared that he was a speed reader, and began what I will simply call an ugly scene filled with brutal expressions I don’t wish to repeat, except for one I will reveal later. I presented this same report to the Board of GFA. The ugly scene began again with similar brutality. My recommendation was that we confess, make restitution and change, and that I be granted permission to meet with you. The board rejected my findings and I was instructed to write the public report which was sent to you. Although the board was very pleased with the report, the agony of having written it has not left me.

Erwin also wrote a letter, dated March 17, to Yohannan in which he described Yohannan’s reaction:

I [Erwin] approached this situation in as honest and ethical manner as possible. Never did I hint to you [Yohannan] or anyone else what my findings were until I presented them to you in your office in the presence of David Carroll. I kept isolated from any attempt to present “our side” from anyone including you. Obviously you were not happy. I think you expected me to completely exonerate you and GFA. You more than lost your temper that afternoon. You exhibited a serious mental failure in your paranoia and irrationality. Your response was and still is a “scorched-earth” approach that is willing to burn down anyone and anything in the way of your own conclusions and status.

Erwin then rewrote the report. It was sent to the GFA Diaspora in a letter dated March 26, 2015. It is much shorter than Erwin’s original report and denied the allegations. With board awareness of the original report, Erwin wrote

In response to your letter of September 3, 2014, after many hours of investigation, intense prayer and examination of heart, we are broken-hearted and repentant that we damaged by our actions and attitudes any believer for whom we had responsibility by relationship. We have proposed, and still do, to go wherever we need to and do all within our power to apologize and seek forgiveness and healing with anyone and everyone on your list who may have suffered damage of spirit or heart from us. That individual contact has not been afforded to us by you, which, to us, neutralizes your accusations. But, we have done all we can do about the past until freedom is granted to us.
We have, from the beginning, made our new headquarters fully open to the community and have purposely served the community. We do not have church services in our chapel. We do encourage workers to go to local churches, be a part of them and receive any and all counseling from the local pastors and churches, except in very rare cases. Our gates are left open and visitors are welcomed and shown whatever they wish to see and questions are answered. We are, indeed, a community and fellowship, but no one would be able to find evidence of being a cult.

Your final combined declaration about the structure and presentation of the personnel and headquarters in India, coupled only with a photo was misapplied about an ordination service whose presentation is required by the state for proof of ordination, otherwise one could be imprisoned for doing religious activities limited to the ordained. Other parts of that accusation could not be verified in the manner in which you made them, and have been dropped as worth considering.

Consequently, we feel that your other accusations are without foundation in terms of the fulfilling of our call to enlarge the Kingdom of God. We also feel that your demand that we gather the boards of the USA and Canada to meet with you in order to escape your threats is excessive, impractical and counter to the commitment of our time to getting the Gospel to those who have not heard. We do not intend to call for or participate in such a board meeting.

Therefore, we send this as our final report and communication and now consider the matter closed.


In behalf of the Board of Gospel for Asia

Then on December 1, Erwin sent a letter of apology to the GFA Diaspora and provided the original quashed report. Erwin expressed sorrow and provided a brief rationale for re-writing the report.

I apologize to you for the report that was sent to you. Some of the report I wrote with the hope that it would become true and that I was making progress in some intense mental and spiritual combat with KP. That hope was dashed. The financial part that I dismissed, I later learned was true. Please forgive me.

Thus, Erwin suppressed the actual results of his investigation because CEO Yohannan was angry. The GFA board (which at the time included Skip Heitzig, Chuck Zink, Bob Felder, Yohannan, and Yohannan’s wife and son) went along with this deception.
The original report includes evidence that the Diaspora’s allegations had merit. Below are some excerpts:

POINT #1 – Absolute Obedience
Here are my findings relative to the question of obedience/submission as expressed in point #1: Requirement of absolute submission and obedience without questioning to GFA leadership.
A. This complaint appears to be true and is the main source of the problem. If this were to be settled, we would be almost finished with the problem. B. The evidence for this is overwhelming. First there was tacit admission that this is true and the defense was not to refute the charge but to cast doubt on the claimant’s truthfulness or motive.
Point #2 Shunning
However you define shunning–isolating, ignoring, quarantining—this appears to have actually happened, often without explanation, in order to keep “poison” from other workers. In some cases, this kept people from the only fellowship they had. Along with required obedience without questioning or praying, this was a great source of pain for some and fueled some complaints we have facing us.
Point #3 Misrepresentation of the Use of Contributions
This is not true. A case could be made for use of contributions for more than what was stated, but not wrongly used. Plus, K. P. says that 60% of the needs are now met from the field—they are that close to independence—so some things are domestically funded that may appear to those at a distance as misuse. I considered this a speculative claim with no true basis. (This now appears to be true.)

Erwin added in his apology that he now believes the allegation of misrepresentation of contributions (“the financial part”) is true.

Point #4 Cultism
Developing a cult or cultish mentality is a claim for which evidence exists.
A. Obedience and shunning are tactics that every cult uses.
B. Isolation. When KP decided to build the compound in Wills Point, Texas, the reasoning was not that the Carrollton, Texas location was inadequate, but that it would save money (from $1 million to $3 million a year) and, when I asked if disrupting the lives of the workers was a consideration, the answer was “We will find out who is committed.” Those were the only two reasons I heard given.
C. Spurious demands. Head covering is expected of all the girls though “it is not required.” It is taught by KP because he firmly believes it, although the 1 Corinthians 11 recording of Paul makes it clear that a girl’s hair is her covering and that, if anyone is contentious, “We have no such custom.” You could expect any girl who chooses not to add a cover to be under heavy pressure and have to constantly explain her choice—a great difficulty when the interpretation is questionable.
D. Praying is discouraged about decisions concerning their personal life. A common cult tactic. This is ironic since prayer is such an emphasis.
E. Secrecy. These expectations are never listed in the advertising. Nor was the secrecy in which the compounds and practices in India ever admitted or explained. `
Point #5 Withholding Information About Organizational Structure
Adopting an Eastern Orthodox organizational style and clothing style without letting it be known in North America is true and represents a vulnerability that may be costly.
A. KP has taken upon himself the title of “Metropolitan,” a title in Orthodox circles equivalent to “Pope” in Catholic Churches.
B. Dramatic robes and long white cassocks are worn at church events by bishops and others in authority. The most dramatic robes are used in ordinations, they explain. The explanations for the most ornate robes and authority symbols is that these are necessary for ordinations so the government will recognize them as such, since to claim ordination falsely will subject you to jail. I have no evidence that this ornateness is necessary to validate ordination.
C. Two visits ago to India, as I was brought to the new headquarters, the first image I saw was a large stone “cathedral” building of British/European design. I was in shock for two reasons: First, the cost of something like that, copied from a failed system, could have sponsored many evangelists. My thought was, “How many souls did this cost us?” Second, why had I not heard of this before? Also, during a break, I wandered to a side room of the platform and read a book outlining service orders more from episcopal type churches than from evangelical ones. These old orders may provide a spectacle but they are borrowed from failed and failing systems.
D. In my last visit, on a Sunday, I was carefully kept from observing the service. It was a troubling moment.
E. Though admitting the Orthodox style and system, KP maintains that the theology remains evangelical.

Erwin finished his report with the following questions:

This concludes my observations and comments but leaves me with certain significant questions:
1. Why did all of this come as a surprise to me, a 30-year board member?
2. How can we apologize to our accusers without being self-serving?
3. Can anything be successfully changed to make our training systems free from traditions and more like the example and teaching of Jesus?
4. If no changes or apologies are made, how can we handle (or can we) the public relations disaster of the revelation of the Orthodox system to our largely evangelical supporters?
5. What is our role as a board?
6. Were any of these actions of GFA (KP) necessary for the success of GFA?
7. Were we not succeeding before the imposition of new systems?
8. Are there any surprises yet awaiting us?
Sincerely and Painfully Submitted, Gayle D. Erwin

There certainly have been more surprises.
Suppression of Information
Taking the two reports together (Erwin’s and ECFA’s), it is hard to escape the conclusion that CEO K.P. Yohannan and the GFA board have engaged in suppression of information material to donors and supporting churches. A trusted board member of 30 years (Erwin) discovered information he did not know but considered important and potentially damaging. This information was then suppressed and covered up. According to the ECFA report, much of GFA’s  financial information was kept from the board. In the case of Erwin’s report, the board deliberately suppressed information important to donors and critical to their role of serving the public interest.
One former board member, Skip Heitzig, still seems to be engaged in damage control. Not long ago, he allowed a subordinate to write a letter about GFA that minimized the findings of both the ECFA and his former board colleague, Gayle Erwin. Heitzig’s assistant declared that no independent investigation had established wrongdoing on the part of GFA. This is an incredible claim given that Heitzig had access to ECFA’s report of 17 areas of concern leading to an ECFA board vote which found GFA in violation of five financial standards. Furthermore, now we know that Heitzig had access to Gayle Erwin’s report and sat on the GFA board which approved suppression of Erwin’s findings.
The suppression of Erwin’s report is, like so many aspects of the unraveling GFA story, truly scandalous. Donors, supporting churches, and the general public expect board members to look out for their interests and the interests of people served. It remains to be seen whether the GFA board will step up to those responsibilities.

World Magazine on the Release of the ECFA Gospel for Asia Investigation Report

World’s Bill McCleery has an article today on the Evangelical Council for Financial Accountability’s Gospel for Asia investigation report released to me and the GFA Diaspora last week.
GFA COO David Carroll sounds more contrite than ever in this piece saying GFA leaders “owned” their mistakes and are sad and sorry that they “breached the confidence of our donors.”  This is a long way from May 7 of this year when Carroll told me:

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.

As he should be, Carroll is sad and sorry about the donors, but I still wonder when GFA is going to make a sincere effort to deal with the GFA Diaspora and other former staff.

As in previous reports, K.P. Yohannan is missing in action. No comment from him.

At the end of the article, Carroll promises to do better but he doesn’t explain why we should listen to him now. GFA touted their relationship with ECFA and their financial integrity while they were violating ECFA standards and telling people they were fine.

Some others aspects of the World article will be reviewed in a separate post (e.g., Bridge of Hope).

Former Gospel for Asia Board Member Gayle Erwin Speaks Out, Discloses ECFA Report on GFA’s Violations of Membership Standards

In response to ongoing claims from Gospel for Asia about the investigation conducted by the Evangelical Council for Financial Accountability, former GFA board member Gayle Erwin has released a series of documents, including the report of the ECFA investigation as well as the GFA response. As is now widely known, the result of that investigation was a vote of the ECFA board to terminate GFA’s membership. I believe it is important to note that Erwin put in over 30 years of service as a board member and was cited in the original edition of K.P. Yohannan’s first book (ghostwritten by Bill Bray) as an influence.

Erwin also released correspondence which documents his efforts to bring change to GFA before he resigned. Given the lack of public accountability by GFA, these documents provide some answers to remaining questions raised by the public, GFA donors and former donors, former and current staff, and current recipients of GFA’s services.

In this post, I intend to provide links with a short description of each document. A fuller response to the ECFA investigation and GFA’s response to it will follow.

ECFA’s Report To Gospel for Asia – This report covers the results of the ECFA’s investigation into a variety of allegations. The contents provide much needed context which help make some sense of the simplistic descriptions given by GFA. Furthermore, the contents vindicate much of my reporting here.

GFA’s Response to ECFA’s Report – GFA replied to the ECFA report with additional information and promises to make changes. From my vantage point, the promised changes were small compared to the magnitude of the problems. Apparently, the ECFA agreed because the board voted to remove membership on October 2.

March 17, 2015 Letter from Gayle Erwin to K.P. Yohannan – In this letter, former GFA board member Gayle Erwin discusses his investigation of the charges brought by the GFA Diaspora. Erwin felt some of the Diaspora claims were true which upset Yohannan.

Letters of Concern from Gayle Erwin to K.P. Yohannan – It is clear in these letters that Erwin is hoping to provoke transparency and change at GFA.

Gayle Erwin’s report to GFA as assigned – This is the GFA board investigation report Erwin originally filed with the board. According to Erwin, it was significantly rewritten by K.P. Yohannan before being given to the former staff group, GFA Diaspora. In contrast to the report which GFA’s former staff members received, Erwin actually found evidence for nearly all of the claims made on this website by the former staff (GFA Diaspora). Erwin now believes that financial mismanagement claims are also true.

The report of former staff concerns actually presented to the board – According to Erwin, K.P. Yohannan rewrote this report to appear in this format. Comparing the two, one can see significant whitewashing of staff concerns.

Gayle Erwin’s Resignation Letter – How and why Erwin left the board.

Gayle Erwin’s Letter of Apology to GFA Diaspora Spokesperson J.D. Smith – Erwin’s apology to the former staff members of GFA.

There is a wealth of information here which will take several days if not weeks to unpack.

See additional information about Gayle Erwin’s communications with former staff at the GFA Diaspora site.