Almost four years have passed since Gospel for Asia (GFA), the global promoter of native missionaries, settled a class action lawsuit for $37 million
GFA has finished paying back $37 million to former donors.
The settlement agreement also required GFA to “publish annual reports of all work accomplished with donated funds.”
While the 2022 annual report is not yet available, we can review the 2021 annual report.
If the annual report is accurate, GFA provided water for 39 million people, sponsored 142,000 children and taught 27,000 women to read. While the reports of charitable activities are impressive, there is no disclosure of how much these activities cost.
The GFA annual report doesn’t disclose total assets, travel costs, legal expenses or other financial numbers that cautious donors may wish to review before giving.
By claiming to be a church or association of churches, GFA also avoids filing the IRS Form 990 which discloses salaries of top ministry executives and features an itemized statement of expenses. *
Understanding Restricted Donations
GFA collects money for constructing church buildings, drilling water wells, supporting missionaries, child sponsorship and livestock. But does the money reach its intended recipient?
As required by the settlement, GFA’s website features a disclaimer which says, “Regardless of particular designations, moneys are raised for ministry purposes, and GFA retains discretion to use donated funds in any manner that serves our charitable objectives.”
Imagine giving money to support a missionary and then learning the missionary family or church never received the funds.
In 2019, Christianity Today reported, “One of America’s largest ministries—in 2013 alone, it brought in about $93.8 million—GFA faced two lawsuits accusing it of sending only 13 percent of its donations to the field instead of the oft-promised 100 percent.”
During the settlement agreement, GFA refused to admit any guilt: “Defendants’ position is that the evidence demonstrates (i) all funds designated to the field were sent to the field and used for ministry purposes; and (ii) no Individual Defendant, as defined herein, received any improper personal gain or enrichment from or related to donated funds.”
There are religious charities that disclose restricted donations.
Samaritan’s Purse ended 2020 with $283 million in net assets with donor restrictions. This information was disclosed on page 11 line 28 of its 2020 Form 990.
Many churches and ministries accept “restricted donations” — money given to support a specific project, program, or cause. Examples would include a church building fund, missions trips and educational presentations.
Because churches rarely file a Form 990 they often fail to disclose restricted donations to their donors. Instead, churches may disclose restricted donations on an annual report or audited financial statement.
In the past, restricted donations often involved special offering envelopes. Lifeway, the Southern Baptist Convention publisher, distributes envelopes for home missions, world missions, building funds, global hunger, and disaster relief.
With donors transitioning to online giving, restricted donation options are often presented on church and ministry websites. The following screenshot example is from GFA’s website.
When non-profit organizations ignore donor intentions and use the funds for other purposes, they risk state investigations or being sued by donors that feel betrayed. That is, if they had any earthly idea, with the lack of transparency of religious non-profits.
According to Non-Profit Issues, “… the IRS generally does not concern itself with whether or not funds are ‘restricted.’ This is normally a matter of state law.”
In America’s best-known case of restricted donation abuse, State Attorneys General and Congress launched investigations into the American Red Cross Liberty Fund.
Following the 9/11 terrorist attacks on the Twin Towers, more than $500 million was donated on behalf of the victims’ families.
After the Red Cross decided to use a large portion of the funds for other purposes, the charity’s reputation was temporarily shattered.
The head of the American Red Cross resigned, the charity rescinded its earlier decision and additional funds were distributed to the families of victims.
When a non-profit organization ignores donor intentions and misuses restricted donations, a trust is betrayed. GFA should honor restricted donations and become more financially transparent. A good place to start would be filing a Form 990. This action would go beyond the requirements of the settlement agreement and show donors in greater detail where the money is being spent.
* GFA files a Form 990-T which discloses unrelated business income. In 2019, GFA reported $117 in unrelated business income.