A reader recently sent me a copy of a 2001 CEF Q&A flyer that stated in part:
“Is My Investment Safe?”
Your investment in Church Extension is probably safer than in any commercial financial institution. Church Extension has been in operation since in the ABC District since 1921 and no one has ever lost a penny. Your investment is guaranteed by the church.
First of all – while it’s true that nobody’d lost a penny in the ABC CEF – this claim only works as long as management is diligent in it’s portfolio management. Things can go swimmingly for years but if management makes a series of bad decisions the wheels can still fall off the vehicle with catastrophic results.
Second – the statement “your investment is guaranteed by the church” is a rather significant claim – particularly since it doesn’t detail how a person’s investment is guaranteed. By insurance policies? Assets which can be sold off to recover any loss? Something else?
As experience has shown, this claim wasn’t worth the paper it was written on.
What’s also interesting is to compare the statements in this flyer with the ABC Task Force Report about what was going on behind the scenes during the same time. A cursory review of the report shows that the CEF BOD’s overall attitude and posture regarding the safekeeping of investor funds experienced a significant change in it’s risk management stance when it decided it needed to take risks “for the sake of the Gospel.”
In the following text I’ve quoted some sections of the report from that time period.
5. March 2001 BOD Meeting:
Presentation from POP church on seniors’ ministry and POP Village. They are hoping to construct a lodge where current residents could move after they are no longer able to live on their own. MSC that the BOD agrees with the concept of the new Lodge at POP Village, encourages them to continue with the development of their plans, and asks that they would continue to keep BOD informed.
I’ll note that CEF was setup to fund churches and schools, not retirement lodges. This shouldn’t have even been on the radar “thanks but no thanks.”
10. September 2001 BOD Meeting:
Discussion of District Planning Document: “…risks should be taken for the sake of the Gospel.” “The Circuit Counselors and their reports indicated that in our District, and in a number of the circuits, many risks are being taken for the sake of the Gospel. It was noted that while our District may be willing to take risks, the vision is often not seen by others perhaps we need to help others see how these risks are necessary.
It’s one thing to risk something you can live without and quite another to risk something belonging to someone else when they’ve entrusted it to you to use with a certain level of care. In cases like the ABC CEF’s where security of funds is the first order of business “taking risks for the sake of the Gospel” is completely off the table – both as a violation of the fund’s mandate and as a clear attempt to tempt God. While CEF’s work may’ve supported the Word and Sacrament ministry of the church, in it’s execution it needed to be run strictly as a business venture that protected the depositor funds and only deployed those funds in the support of safe construction projects for building churches and schools. Anything else was outside of the mandate of the fund.
Does Synod need to see the vision as we do perhaps? …We need to do better in implementing new ideas to our people… people fight change. We cannot go too quickly. … We need more action rather than all talk. We cannot change too fast and we need to consult with our people.”
12. September 2001 BOD Meeting:
Motion to apply for a $14+ million bank loan on behalf of POP. The Minutes record discussion “with many questions being raised about the District’s liability and other concerns voiced by Board members…the financial picture of Canada, Alberta and the stock market… Board members asked many questions about the viability and necessity of this project and how it related to our own mission and ministry in the District.”
It’s too bad the BOD didn’t realize that funding a business venture was completely outside the fund’s mandate.
Request to table the motion to a later time; tabled to the next morning. MSC to pursue the loan then passed, though one member wanted a ‘no’ vote recorded.
And so the POP disaster began the same year this flyer was issued.