MISMANAGEMENT OF FUNDS IN THE CHURCH: ISSUES AND PROSPECTS (A CASE STUDY OF UNIVERSAL REFORMED CHRISTIAN CHURCH)

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CHAPTER ONE

INTRODUCTION

1.1       Background to the Study

Religion organizations especially the church is now considered the biggest and one of the most important organizations in the world (Harris 1990; Booth 1993). The world is estimated to be composed of about 2.3 billion Christians, which is 33% of the overall population, and is expected to reach 3 billion by 2050 (Pew Research Centre, 2017). According to Wikipedia, Christianity has about 4.5% of the population in Nigeria. The main object of the church has been the spiritual and moral development of its members. To add to this, attention has now been shifted to the development of their mental, social, and economic welfare. Consequently, several churches are embarking on developmental projects in their communities and even on a national scale (Mpesha, 2003). They also try to cater not only to the educational and psychological needs of their members but to society at large. The church has hence gradually become a development partner in all societies. To undertake these activities, the church requires funds.

The church receives its funds from members, donor groups, and indeed the general public (Lightbody, 1999; Gruber, 2004; Ahiabor & Mensah, 2013; Mitchell, 2015). There is therefore the need to account for the use of funds to the funding sources. Despite its countless features, the church has been engaged in many financial scandals. Earlier this year (2020), there was a report of the Winners Chapel’s accountant in the Northern part of Nigeria that made away with millions of church offerings and tithes in his care. In addition, the National Executive Council of Voice of the Lord Church in Ghana fired their President for misapplication of funds and poor financial management. He was accused of misallocating funds, unilaterally acquiring loans for projects on the church’s behalf, and running down the education fund, among others (Ghanaweb, 2018). According to the Centre for the Study of Global Christianity (2015), an estimated $50 billion of funds from Christians was lost to fraud and embezzlement with about $1.3 billion perpetrated in Africa. The Religious Financial Fraud Report (2017) also recorded that Christians committed crimes worth about $ 59 billion in 2017.

These events have further intensified the scrutiny of the financial management system of churches. The leadership of some churches has sought to prioritize their general management approaches (Shaibu, 2013; Ahiabo & Mensah, 2013). This has led to the rise in expectations of the church to improve its financial management systems to guard against losing its reputation as the trustworthy custodians they were seen to be in the past. The church aims to manage funds above reproof by maintaining high standards (Shaibu, 2013) so they could be the benchmark for society, as they are meant to be in Matthew 5:13. Consequently, it is prudent that adequate and effective financial management systems and processes are adopted and implemented (Harris, 1990; Booth, 1993; Shaibu, 2013; White & Acheampong, 2017). Moreover, the further rise in interest in the church’s financial management system is also attributed to the large amounts the churches receive from the public. This prompts religious leaders and the public concerned about the management of such huge amounts. The funds made available to churches by their members and donors continuously experience significant growth as the years go by. Church members have thus begun to show more and more interest in how these funds are managed. At general meetings the churches hold to account for activities and resource usage, a lot more of the inquiries made were financial management. For instance, inquiries about the rising operational costs of the church, and the nature of insurance adopted the methods of accounting presentation used, among others.

There is a need for a framework that specifies how funds should be managed. The framework may include; policies, strategies, procedures, and processes guiding mobilization; banking and cash management; investment, disbursement, auditing, records, and information management activities (Public Financial Management Act, 2016). This framework is what is usually referred to as the financial management system. It must however be noted that the financial management systems and standards of the church have to be unique and tailored to suit their operations as they are nonprofit organizations. Various churches have thus put procedures and systems together over the years to suit the technicalities of the church’s operations.

Funds management entails proper planning, operation, control, and account of all the financial resources in an organization. The goals of the organization are spelled out and implemented in financial terms and facilitate goal attainment through proper policies. The main financial components of the church that have been of interest to researchers are funds management, investment management, internal controls, and accountability (Leach, 1960; Laughlin, 1988; Harris 1990; Booth, 1993; Gruber, 2004; Agyei & Kusi, 2006; Shaibu, 2013). These components deal with how to manage finances even before receipt, to how the usage is reported to the stakeholders. The identification of each component allows for a complete insight into the whole financial management system of the organization, giving a more reliable expression of the quality of the management of financial resources. Therefore, this study will look at the issues and prospects of mismanagement of funds in the church by using Universal Reformed Christian Church, Nigeria as a case study.

1.2       Statement of the Problem

Several researches have been carried out all over the world to aim at understanding the unique management systems of the church (Leach, 1960; Laughlin, 1988; Harris 1990; Booth, 1993; Gruber, 2004; Agyei & Kusi, 2006; Shaibu, 2013). Most of these studies have however focused on discrete aspects of the financial management scope such as accounting and communication, internal controls, and investment policy, among others instead of considering the whole system, hence failing to bring an in-depth understanding of how the entire financial system operates. That is, evaluating a single financial management component is not enough to give a true reflection of the efficiency and effectiveness of the financial management practices of an entity.

The number of studies carried out to enable the understanding of the financial management in churches, especially in Ghana, is inadequate compared with the exponential growth the church is experiencing, and the perception of increasing financial mismanagement and malpractices associated with them (Agyei & Kusi, 2006; Ahortor, 2009; Shaibu, 2013; Ahiabor & Mensah, 2013; White & Acheampong, 2017). The justification for the lack of such studies over the years is the difficulty in accessing available and accurate data. The few studies done as stated above also focus mainly on the Orthodox churches (especially the Catholic, Anglican, Methodist, and Presbyterian churches). The findings of some studies identified inadequate financial management practices, poor stewardship, lack of internal control systems, and generally low interest or investment in financial literacy in the respective churches (Leach, 1960; Laughlin, 1988; Harris 1990; Booth, 1993; Agyei & Kusi, 2006; Shaibu, 2013).

1.3       Objectives of the Study

The objective of this study is to look at the issues and prospects of mismanagement of funds in the church by using the Universal Reformed Christian Church, Nigeria as a case study. However, the specific objectives are:

  1. i)      To understand the financial management of the church as a religious organization
  2. ii)    To appraise the effectiveness of internal controls and accountability measures in place for the church

iii)  To examine the prevalence issues of mismanagement of funds in the church

1.4       Research Questions

The following questions were generated during this study:

  1. i)      What is the financial management of a church as a religious organization?
  2. ii)    How effective are internal controls and accountability measures in the church?

iii)  What are the prevalent issues of mismanagement of funds in the church?

1.5       Significance of the Study

I hope that this study would be of immense help to future researchers, and practitioners as well as to policy makers in crafting necessary policies for financial management in churches in the country. The output of this study if adopted, will aid church financial managers, accountants, and treasuries, among others to gain a better understanding of the necessity and need for improving their financial management systems by instituting measures aimed at ensuring accountability and fidelity in the church’s financial management system. It would also be of help to the leadership and members of churches by enabling them to understand how their church is performing financially, detect issues that need attention quickly, make informed decisions on their finances and how they are managed, and reduce the incidence of financial scandals in the church.

This research will help future researchers to identify untapped and under-researched areas with regard to the financial management of churches. It will serve as a blueprint for explanatory studies on the financial management of churches. Thus, the study will contribute to the scholarly works and literature in the field of studies regarding the financial management of the church and related organizations.

It is hoped that this study and derived recommendations would serve as a model to guide churches seeking to institute financial management systems to adopt these practices.

The outcome of this study would guide policy-making, regarding the management of church finances. This would enable leadership to build more confidence and trust in the church; motivate members or even the society at large to offer more funds in support of the church’s programs as they would be assured that their funds are being used for

1.6       Scope of the Study

The research will be carried out at Universal Reformed Christian Church, Nigeria. However, the scope of financial management is limited to cash management, investment management, and internal controls and accountability. This is because they are the main functions or areas of finance most churches engage in hence the subject of the majority of church-related research. They are the significant factors that affect the financial stance of a church.

1.7       Limitations of the Study

            The time frame was not enough for the researcher to delve into the issue as comprehensively as would have been desired. This also informed the decision to focus on one church so the time would be invested in identifying and evaluating all possible aspects of the subject matter to make the study as comprehensive as possible. The use of a case study arguably has many limitations, however, it allows for a level of research that was commensurate with the nature of the results expected.

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