Evangelical Council for Financial Accountability
The Evangelical Council for Financial Accountability (ECFA) is an American organization which seeks to assist religious non-profit groups (churches and other organizations) by improving their transparency in financial matters to the general public and to donors, specifically. ECFA is headquartered in the Washington, DC suburb of Winchester, Virginia.
ECFA was formed in 1979 after Republican Senator Mark Hatfield (who had been a long-time board member of World Vision) warned evangelicals (in the midst of several scandals involving non-profits misuse of donations) that they needed to either formalize some form of financial accountability amongst themselves (a "Christian Better Business Bureau" of sorts), or face the possibility that the United States Government would pass legislation to make them. Ultimately, 150 ministries (among them the Billy Graham Evangelistic Association, but notably World Vision itself did not join, though its US branch did) would become charter members.
Membership in ECFA is voluntary and members range from small churches to many of the major Christian non-profit organizations. In order to become and remain a member, each organization must adhere to ECFA's "Seven Standards of Responsible Stewardship" (the phrase is trademarked by ECFA):
- Doctrinal Issues: Every organization shall subscribe to a written statement of faith clearly affirming a commitment to the evangelical Christian faith or shall otherwise demonstrate such commitment, and shall operate in accordance with biblical truths and practices. (ECFA itself has a statement of faith which would be considered evangelical in nature.)
- Governance: Every organization shall be governed by a responsible board of not less than five individuals, a majority of whom shall be independent, who shall meet at least semiannually to establish policy and review its accomplishments.
- Financial Oversight: Every organization shall prepare complete and accurate financial statements. The board or a committee consisting of a majority of independent members shall approve the engagement of an independent certified public accountant, review the annual financial statements, and maintain appropriate communication with the independent certified public accountant. The board shall be apprised of any material weaknesses in internal control or other significant risks. (NOTE: The larger ECFA members must have audited financial statements; smaller members may submit reviewed or compiled statements, but in any case an independent CPA must be involved.)
- Use of Resources and Compliance with Laws: Every organization shall exercise the appropriate management and controls necessary to provide reasonable assurance that all of the organization’s operations are carried out and resources are used in a responsible manner and in conformity with applicable laws and regulations, such conformity taking into account biblical mandates.
- Transparency: Every organization shall provide a copy of its current financial statements upon written request and shall provide other disclosures as the law may require. The financial statements required to comply with Standard 3 must be disclosed under this standard. An organization must provide a report, upon written request, including financial information on any specific project for which it sought or is seeking gifts.
- Compensation-Setting and Related-Party Transactions: Every organization shall set compensation of its top leader and address related-party transactions in a manner that demonstrates integrity and propriety in conformity with ECFA’s Policy for Excellence in Compensation-Setting and Related-Party Transactions.
- Stewardship of Charitable Gifts: This standard is comprised of five sub-standards:
- Truthfulness in Communications: In securing charitable gifts, all representations of fact, descriptions of the financial condition of the organization, or narratives about events must be current, complete, and accurate. References to past activities or events must be appropriately dated. There must be no material omissions or exaggerations of fact, use of misleading photographs, or any other communication which would tend to create a false impression or misunderstanding.
- Giver Expectations and Intent: Statements made about the use of gifts by an organization in its charitable gift appeals must be honored. A giver’s intent relates both to what was communicated in the appeal and to any instructions accompanying the gift, if accepted by the organization. Appeals for charitable gifts must not create unrealistic expectations of what a gift will actually accomplish.
- Charitable Gift Communication: Every organization shall provide givers appropriate and timely gift acknowledgments.
- Acting in the Best Interest of Givers: When dealing with persons regarding commitments on major gifts, an organization’s representatives must seek to guide and advise givers to adequately consider their broad interests. An organization must make every effort to avoid knowingly accepting a gift from, or entering into a contract with, a giver that would place a hardship on the giver or place the giver’s future well-being in jeopardy.
- Percentage Compensation for Securing Charitable Gifts: An organization may not base compensation of outside stewardship resource consultants or its own staff directly or indirectly on a percentage of charitable contributions raised.
A commentary is provided for each Standard or sub-standard; videos are available on each of the sub-standards under Standard 7.
Members may leave ECFA at any time; the most common is when a member dissolves as an active entity, merges with another, or voluntarily resigns. Members can also be terminated from the organization for failure to adhere to one or more Standards (though in practice, they often resign beforehand). There have been controversies surrounding the effectiveness of ECFA, notably in regards to member Harvest Bible Chapel and its financial dealings with its former pastor James MacDonald, who was terminated by the church's elder board for conduct unbecoming a pastor; ECFA had been warned about Harvest's financial dealings but took no action until forced to do so.
In addition to its "seal of approval" for members in good standing, ECFA also provides resources (financial and otherwise) for members, much of which is available to the general public as well (some items are free while others are at a cost).