A Los Angeles diocesan committee has recommended the Rt. Rev. J. Jon Bruno be divested of exclusive control over church property with oversight transferred to the Corporation of the Diocese and its Board.
A Los Angeles diocesan committee has recommended the Rt. Rev. J. Jon Bruno be divested of exclusive control over church property with oversight transferred to the Corporation of the Diocese and its Board.
On 30 July 2016 the Special Committee Concerning Corporation Sole, created by the 2015 meeting of the diocesan convention, recommended the power of the bishop to unilaterally dispose of properties be curtailed, and that the diocese adopt the model of property ownership practiced by the Diocese of California. The 26 page reported recommended the diocese amend its Canon XXX requiring the bishop to given an annual report to the diocese concerning the “activities of the Corporation Sole” and that its “financial condition” be stated in accordance with “generally accepted account principles.”
The proposed resolution further asks the bishop through the Corporation Sole to “transfer all real and personal property and funds in its possession to the greatest extent feasible to the Corporation of the Diocese,” and retain only those assets whose transfer to the diocese would trigger adverse tax consequences.
The committee was created by the diocesan convention last December in response to the controversy surrounding Bishop Bruno’s stewardship of St James the Great Episcopal Church in Newport Beach. At the convention Bishop Bruno promised to make public his financial dealings, but he subsequently changed his mind, saying that on advise of his attorneys he would not release the information.
The report reviewed the history of the Corporate Sole and the reasons for its creation at a time when California law did not permit the formation of a religious corporation that could hold real assets. It reviewed the history of the Corporate Sole in the dioceses of California and San Joaquin and noted that when the Diocese of San Diego was created in 1973 California corporate law had changed to permit a diocesan corporation to own land.
In its report, the committee found the “current governance and transparency processes and structures for Corp Sole … do not meet current standards and practices for transparency, oversight, or accountability in either the corporate or non-profit world.”
These management practices posed “potential pastory, financial, legal and other risks to the Diocese of Los Angeles” it observed.
The committee reviewed the assets of the Corporate Sole as of December 31, 2014, but found the accounting methods used to be problematic. “The financial statements are kept and audited on what is described as a ‘modified cash basis,’” it found. “This standard is vague, and is much less consistent than accrual basis accounting.”
It further noted the financial statements it was given included “no statements of cash flow, making it difficult or impossible to determine the flow of funds through Corp Sole,” adding, “The statement of activities or income statement is uninformative.”
Unlike all other diocesan and parish entities, the structure and management of the Corporation Sole was opaque “The activities of the Corporation of the Diocese and its parishes, missions, and institution are subject to extensive oversight and transparency requirements,” the report stated.
The affairs of the Corporation Sole had operated “without outside governance oversight, and without transparency,” the committee found. It recommended merging the Corporation Sole into the Corporation of the Diocese, to the extent possible without creating adverse tax consequences “rather than having it as a parallel, independent entity controlled solely by the bishop [which would]provide the necessary governance and transparency.”
Members of the committee met with staff at the national church office in New York and learned the national church canons did not contemplate the existence of parallel diocesan structures or holding companies, and that lawyers for the national church believed Los Angeles was unique in managing its affairs in this way.
Bishop Bruno has made no public comment on the report. He is, however, set to appear before a national church disciplinary panel in the near future to answer charges of conduct unbecoming a member of the clergy in relation to his trusteeship of the Los Angeles Corporation Sole.
