The Watchtower Society and Financial Transparency (or Lack Thereof)

The Watchtower Society places high demands on its followers. All adherents to the Watchtower religion must spend many hours each month selling the Society’s literature, without compensation. 

As noted in my last message, the Society expects its members to forgo education and career to pursue “kingdom interests,” actually the interests of the Watchtower Bible and Tract Society. At the same time, it demands considerable financial support from believers.  

I don’t think it is unfair to say that Jehovah’s Witnesses make huge personal investments in the Watchtower Bible and Tract Society. Does the Society deserve this investment? Although Witnesses do not expect a financial return on their time and money, I’m going to look at the Society from the perspective of financial investment. I am an accountant, so it’s a natural line of inquiry for me, and I believe it sheds some light on the Society’s moral leadership.

The Society’s finances are a closely guarded secret. This is in sharp contrast to normal investment principles, and contrary to best practices for nonprofit organizations.  Although not required to do so, many churches (those organizations the WTBS constantly maligns) do release reports, and many belong to voluntary associations such as the Evangelical Council for Financial Accountability. The ECFA issues two relevant standards for its members:

Standard 3 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."

Standard 5 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." http://www.ecfa.org/Content/Standards

In contrast to these excellent standards, the Watchtower Society’s record of financial disclosure is nonexistent. Once a month, each congregation provides its members with an accounts report that discloses its financial status. Circuits provide a general (but flawed as we will see) accounting report. Above that level, the Society is silent in matters involving money, except when asking for more. Districts do not release financial reports even for conventions. Branch offices in some locations outside United States are legally required to provide financial reports.

But the Society’s headquarters is in the United States, which has no requirement for private organizations to release financial information. Consequently, no overall financial statements for the Watchtower organization as a whole are available to the public. 

Recently the Watchtower’s instructions for circuit assembly accounting was leaked on the internet. This provided some additional insight on its accounting practices. It has been known the “expenses” for the assemblies (as announced partway through the session) include a per attendee charge paid to the society. Many Witnesses do not know about this calculation, I certainly did not hear of it until long after I left. Here is an excellent video:  https://www.youtube.com/watch?v=APb1RpfjCrA

In addition, I noticed this in the instructions:

“Funds-on-deposit arrangement: The funds on deposit arrangement is not a banking arrangement. Rather, it is an arrangement wherein circuits are encouraged to send excess, or presently unneeded, circuit funds to the branch office instead of setting up a savings account, money market bank account, or certificate of deposit. Doing so makes such funds available for use in promoting Kingdom interests while the circuit is not using using these funds. No interest is paid on such funds sent to the branch office.”

Note “this is not a banking arrangement”. If it was, they couldn’t get away with the following:

 “It is understood that whenever a need arises for these funds, the assembly overseer and the accounts overseer may request that they be returned. A brother authorized to transfer circuit funds can log in to the jw.orgWeb site, view the current balance, and request an amount to be returned.”

Think about that for a minute. If you want to transfer a thousand dollars from your savings account to your checking account, do you need to tell your bank what you need it for and request that they move the money? No, you just go in and do it, it’s your money. So, just as they did with extra funds at the congregations, the Society is now seizing control of loose funds at the circuit level. I doubt most Witnesses are aware of these transfers.

Incidentally, in my years as an accountant I had several jobs working with multiple interlocking companies. It was my experience that intercompany transfers were frequent sources of error and mismanagement. With the Watchtower’s reliance on unskilled labor, this problem gets worse.  

It is natural to wonder what they are doing with all this money. The only answer we get involves the nebulous “kingdom interests.”  As one example, they’ve built a massive new headquarters complex in rural New York. Nobody knows what it cost. Lacing real information, we can only speculate as to the true nature of the Watchtower Society’s financial affairs. It is perhaps human nature to question the legitimacy and integrity of the organization’s finances, when leadership deliberately hides the information.

The ECFA website makes an excellent scriptural point. 

“The financial statements (and the disclosure of the financial statements) are key components of transparency, both within the ministry and to donors and the public. This flows directly from biblical principles: “This is the verdict:  Light has come into the world, but men loved darkness instead of light because their deeds were evil. Everyone who does evil hates the light, and will not come into the light for fear that his deeds will be exposed” (John 3:19–20 NIV).

Transparency serves to deter improper diversion of funds and other misdeeds. It also provides a defense to critics and a witness to both believers and nonbelievers. When Jesus was arrested, He said to the crowd, ‘Am I leading a rebellion, that you have come out with swords and clubs to capture me? Every day I sat in the temple courts teaching, and you did not arrest me’ (Matthew 26:55 NIV). The openness of His public actions revealed a significant contrast to His middle-of-the-night arrest.”

If the Watchtower Bible and Tract Society handles donated funds properly, it could end all speculation and clear its name easily: release an audited financial statement.

While we’re on the subject of financial transparency, you may notice I’ve added a “donate” button to the website. Within the next few weeks, I will start serializing a JW related novella (“Armageddon’s Slaves”) on this website. Your feedback will be very useful to me. After a final edit, I intend to publish it through an online print on demand service, if you would like to contribute something to get that project off the ground, please throw something in the tip jar.