An LBC article this week deals with a question that arises occasionally
when Louisiana Baptists read about the collapse of the Arizona Baptist Foundation.
The question is: Could the same thing happen with the Louisiana Baptist Foundation?
An LBC article this week deals with a question that arises occasionally
when Louisiana Baptists read about the collapse of the Arizona Baptist Foundation.
The question is: Could the same thing happen with the Louisiana Baptist Foundation?
The answer to this important question is, simply put, no.
The basic reason the Louisiana Baptist Foundation will not suffer the same
kind of collapse as the Arizona Baptist Foundation is this: The natures and
operations of the two foundations are vastly different.
The Arizona Baptist Foundation was established by the new-work Arizona Baptist
Convention and then allowed to form itself into a not-for-profit organization.
This organization worked to put money primarily into its own coffers rather
than into other Arizona Baptist ministries.
The basic purpose of a Baptist foundation, formed either by a state or national
Baptist convention, is to handle monies for other organizations, to make money
for other organizations. The foundation also encourages giving to state Baptist
convention agencies and churches. The foundation handles monies for the organizations,
and the profits go to these specified entities. For instance, the Louisiana
Baptist Foundation handles a significant amount of endowment and reserves for
Louisiana College. The college maintains full ownership of the money, and directs
the foundation on how to distribute the investment of the monies. The college
decides the percentage of money it wants placed in equities, bonds
or cash funds. The profits or losses of the investments go directly to Louisiana
College, with the foundation retaining only a fraction of a percent of the money
earned for its services. The same principles are maintained for money any other
Louisiana Baptist agency places with the foundation.
The foundation also provides a short-term fund in which Louisiana Baptist churches
can place money. A churchs money is placed primarily in funds guaranteed
by the Federal Government. Managers of this fund also may place money in government
agencies, mortgages, asset-backed bonds and corporate bonds. The percentage
of interest varies according to the prevailing market rates, but they are stable
and there is no risk of losing the principle. The foundation guarantees churches
“a dollar in, a dollar out.”
The Louisiana Baptist Foundation cannot manage individuals money
or personal investments. It helps individuals give money to Baptist causes through
such procedures as trusts and wills.
The Arizona Baptist Foundation handled money much differently. As a rule, institutions
and organizations had no say in how their money was invested. This eventually
gave the Arizona foundations employees the opportunity of investing in
what proved to be high risk “deals.”
The Arizona foundation not only allowed individuals to place money with them,
they promoted and encouraged that practice. Individuals had no say in how their
money was invested.
The Arizona foundation promised extremely high rates of return on money invested
with them. The high rates of return were necessary to draw more and more investors
so, it turned out, the Arizona foundation employees could work what turned out
to be a “Ponzi” scheme.
The Louisiana Baptist Foundation does not assure certain returns on money.
The Louisiana foundation can and will provide a track record of returns, but
employees there tell you quickly that is no assurance of future returns.
It seems with the Arizona Baptist Convention, the Arizona Baptist Foundation
became the tail that wagged the dog. The Foundation became much larger financially
and staff-wise than its mother Arizona Baptist Convention. The state convention
became less and less able or willing to deal with concerns people expressed
about the operation of the Foundation.
The former top executive staff members of the Arizona Baptist Foundation are
now under legal indictment for misconduct of the foundations operation.
Some staff members have already pled guilty to an assortment of charges.
For whatever reasons, the trustees of the Arizona foundation did not act to
stop practices that were illegal. At this point, the public does not know if
the foundations staff sold the investing public and the trustees a bill
of goods, or if trustees sincerely believed the operation was on a firm basis,
or if they were simply vastly negligent in their duties.
Another reason the Arizona Baptist Foundation became the largest investment
failure in United States history was that the firm that audited its operations
failed to detect or report improper financial management. It could be understandable
that a layperson in the field of investments could not decipher all the shuffling
of funds by the Arizona Baptist Foundations staff. But a major accounting
firm such as the national firm used by the Arizona foundation exists and is
trusted and paid to detect and reveal such improper practices. How they continued
failing to detect and reveal the “Ponzi scheme” practices of the foundation
is mind boggling to this layman.
The Louisiana Baptist Foundation is not only audited by a respected certified
public accounting firm, the audit is accepted by LBF trustees, and given to
the Financial Oversight Committee of the Executive Committee of the Louisiana
Baptist Convention and Executive Committee financial staff members for their
study.
Wayne Taylor, executive director of the Louisiana Baptist Foundation, tells
anyone who asks (or will listen!) that the Louisiana Baptist Foundation is by
nature vastly different from the Arizona Baptist Foundation, and the Louisiana
Baptist Foundations operation is vastly different from the Arizona foundation.
So, here are two obvious questions: Can Louisiana Baptist churches lose the
money they place in the Louisiana Baptist Foundations Short-term Fund?
Answer: No, because of the foundations guarantee of “a dollar in,
a dollar out.”
Can Louisiana Baptist Convention agencies that place funds with the Foundation
lose money? Possibly, if losses are incurred in the kinds of equity funds (stock
market), bond funds and cash funds that are managed by investment managers carefully
chosen by the Louisiana Baptist Foundation staff and trustees. As with any equities
or stocks in a company, the equities can go up or down in value and earnings,
as has been true with vast numbers of companies the last year. But for sure,
the Louisiana Baptist Foundation does not place other institutions money
with highly speculative issues such as real estate developments, precious metals
or penny stocks.
We regret the terrible losses incurred by thousands of folks who trusted the
people who ran the Arizona Baptist Foundation. The executive staff of the Arizona
Foundation used the good name of Baptists and the perfect name of Christ to
scam money. What a tragedy.
One of the lessons of the failure of the Arizona Baptist Foundation is that
what happens with one group with the name Baptist on it affects all groups with
the name Baptist. This fact should be sobering to all. But, the Louisiana Baptist
Foundations trust-worthiness is solid and Louisiana Baptists can be secure
in using its services.