More Questions in Chicago Catholic Charities Case

The agency unsuccessfully sought coverage from twenty-five other insurance carriers, showing how deep the lack of trust runs. 

A few days ago, I reported on a story in the Chicago Tribune about the closing of the foster care program by Catholic Charities in Chicago after losing insurance coverage.  What I didn't realize was that the Trib also carried an AP story with more details, including the revelation that the agency shopped the insurance coverage around to twenty-five other carriers.  Twenty-four said no thanks and one didn't even respond. (Thanks to Jack Siegel's Charity Governance blog for the heads up.)

What's to make of that?  Blogger Kelly Kleiman (in her engaging blog the Nonprofiteer) reflected on whether the Federal government should step in and become the insurer of last resort when an agency of this size and long history can't get coverage.

But what about the other side of the case:  If an agency with this much going for it can't get insurance coverage, it is possible that the insurance carriers don't have confidence in the current management of the program.  While Ms. Kleiman notes that this has nothing to do with the clergy sex scandals—at least directly—it seems to me that it is reasonable to speculate that this situation arose from the same environment of weak internal controls, a high degree of centralization, and a culture of secrecy. 

Plus the fact that dealing with the sex scandals has required resources and management time at the highest levels.  One is not surprised to learn of lapses in oversight in other programs. 

Mr. Siegel wasn't going that far, although he mentioned that it would be appropriate to look at the degree of board oversight in a case like this.  From the Catholic Charities web site, we learn that it has a board of advisors, which consists of 450 lay volunteers appointed by the archbishop.  I'm sure this isn't the legal board of directors, as that body would almost surely be much smaller and would include the archbishop himself.  From the description on the web site, it's probably serves more of an auxiliary function than an oversight function. 

This is a significant story, though we are left with more question than answers.  A few things seem clear to me, however:

• Catholic dioceses remain closed systems, all under the direct control of the archbishop.  Funds flow relatively easily from one part of the operations to another.  So a financial crisis in any area will affect all the program areas:  the parishes, the educational system, and the charities. 
• The management structures haven't changed, remaining highly centralized and for the most part not transparent (with a few exceptions, too isolated to be called a trend). 

So we need to keep an eye out for other cracks in the Catholic Charities system. 

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