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Should the UTO be independent?

Should the UTO be independent?

Tobias Haller suggests that the UTO, subject of an ongoing controversy (1, 2) would benefit from independence. He writes:

There seems to me to be nothing to stop UTO from incorporating, and there is no need that I can see for Executive Council to “approve” such a movement, since UTO was never formally a part of the institutional structure of DFMS, but an auxiliary entity that functioned, and functioned quite well, primarily as a ministry of and by women (when they were prevented from a large sector of possible ministries in the church). The UTO always worked in cooperation with the existing structures of the church and the Episcopal Church Women, from the parish on up through the dioceses and provinces; and at the national level through the Triennial. It could still continue to do that, but with the financial donations coming directly to UTO (instead of through the parish mechanisms) and grants being made autonomously by their own duly elected board.

However, Sandra McPhee, a former Executive Council member who was involved in the efforts to restructure the relationship between the UTO and the wider church says in a comment on the Cafe that the UTO had previously considered and rejected this idea. She writes:

Prior to 2007, the legal relationship between the UTO and the ECW and DFMS was fuzzy at best. As part of the well-documented study undertaken at the behest of the Presiding Bishop, it became necessary to make certain that the UTO complied with IRS regulations and with the regulations and procedures of DFMS. The INC-055 Task Force worked very closely with representatives of the UTO and indeed, Sarita Redd, who was the president of the UTO until her untimely death last January, was a member of the Task Force. Early on in its work, the INC-055 Task Force discussed the option of the UTO forming a separate corporation. That idea was rejected by the INC-055 Task Force and by the UTO Board. The report of INC-055 was never intended to be an end. It was intended as a starting point with the clear understanding that the UTO Bylaws would have to be re-written to comply with current procedures of both the IRS and DFMS. In addition, a formal Memorandum of Understanding would be prepared to set forth the relationship between the UTO and DFMS.

The proposed Bylaws and MOU that have been posted on the internet are just that, they are proposed and not final documents. It seems premature to attribute various motives to the Presiding Bishop and members of the DFMS staff or to the current and resigned members of the UTO Board. What seems appropriate is to let the UTO Board members who remain react to the draft bylaws and MOU and let the Executive Council have an opportunity to review and discuss this issue at its meeting in October.

Any thoughts on whether UTO would work better if it were a separate 501.c.3? Any intelligence on whether the remaining 10 members of the original 14 member board (only the 11 elected board members are pictured on the UTO website, but there are three appointed members as well) would find that desirable?


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tobias haller

John, what I mean is that a parish gains its tax-exempt status because of the group exemption granted to PECUSA (not DFMS, apparently). And I think this has to be kept distinct from the notion of “whose” money it is. I agree that the inappropriateness lies in DFMS or Executive Council telling UTO where it can make grants with money it raised for charitable ends — which is what makes it deductible. Unless they are simply watchdogging to make sure IRS rules are followed (money cannot “inure to private individuals” or be used for “political” ends, and generally goes to other exempt entities — and there may be issues with overseas grants) then I think it would be intrusive. The point is that if UTO were a separate 501c3 they would then be responsible for their own actions, and not burden Exec Council. Personally I see this as worth exploring. I’m not at the point of saying it’s a must do, just questioning the rationale for the rejection of the possibility.

Elizabeth Kaeton
John B. Chilton

Just to be clear, I’m not proposing one path or another. Thus, I’m not in agreement with Chris. Yet.

Tobias has clarified what he meant by money trail and I’m satisfied with that we agree on the source of the angst.

I’m not sure though, Tobias, that the analogy of a diocese and a vestry holds up. A diocese can’t reach into the pockets of a parish and direct the grant to another recipient. In principle, as I understand it, the proposed bylaws would not prevent “the leaders” of DFMS from overriding decisions of the UTO. That the UTO would retain autonomy rests on the trust that the leadership would not do so — the assurance that in practice this wouldn’t happen.

Where a parallel does come in with respect to diocese-parish relationships would be if a members of parish attempted to leave and take the assets of the parish with them. The UTO is the church in that sense and not the board of the UTO.

Chris H.

I agree, John. Also, one of the letters/documents released says that DFMS is already refusing to release grants the UTO has decided to give. If true, I think that separation might be a very good idea, perhaps the only real way forward.

Chris Harwood

tobias haller

John, that’s really what I meant by money trail.

But as I understand it (and I’m not a lawyer, but I’ve had to deal with some of these issues on the ground) an integrated auxiliary of an exempt organization (such as TEC) doe not have to have a separate 501(c)3 status and yet can retain significant control over its assets and their distribution for charitable ends.

Parishes in the diocese of NY are all exempt as integrated auxiliaries — we don’t need independent 501(c)3 status, though many if not all are “incorporated” under NYS Not for Profit Religious Corporations Act. But that doesn’t mean that the diocesan council or standing committee have to approve the vestry’s decision to make a grant of support to the local soup kitchen, or to ERD, for that matter!

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