News analysis
Who profits from the Methodist Building?

By Mark Tooley

Is the United Methodist Board of Church and Society wrongly spending dollars on liberal political activism that were originally designated by Methodist donors for temperance and work on alcohol-related problems?

A handful of senior temperance activists have long made such a claim of misappropriation. But their claim was largely ignored until recently, when Church and Society sought a legal opinion on whether rental income from the Methodist Building, along with other assets originating with the old Board of Temperance, must go toward alcohol-related work.

That 2002 legal opinion found that part of that income must indeed go towards alcohol-related work.

A copy of the 1965 trust agreement, which transmitted the Methodist Building and other Board of Temperance assets to Church and Society, shows that those assets were to be permanently “restricted” to causes relating to “temperance and alcohol problems.”

The Methodist Building on Capitol Hill, in Washington, D.C., is one of the most prominent structures in the nation’s capital. Originally built 80 years ago by the church’s old Board of Temperance to lobby for temperance causes, it now is the headquarters of the UM Board of Church and Society.

Church and Society maintains its staff of 26 people in the Methodist Building and rents the remaining space to several dozen organizations. Most of them are other mainline church lobbies or liberal advocacy groups. It also rents residential space to individuals. Church and Society is well known as a lobbyist for a wide array of political causes, from abortion rights to socialized medicine to gun control to opposition to U.S. military programs.

In 2001, Church and Society had nearly $4.7 million in income. Of that, nearly $1.5 million, or about one third of its total income, was gross rental income from the Methodist Building. Nearly half a million, or about ten percent, came from investments. Another $755,000, or 15 percent of its income, came from released assets.

By comparison, about $1.6 million, or a little over one third of income, came from the World Service Fund, which is the denomination’s primary funding channel for general church agencies.

The Methodist Building and Church and Society’s investments therefore provide the bulk of its operating expenses.

If income from the Methodist Building and old Board of Temperance investments were restricted to alcohol-related work, it would be a devastating blow to Church and Society’s ability to lobby for its more favored liberal political causes.

Even more devastating would be any legal finding that required Church and Society to reimburse the millions of dollars it has spent over the years from old Board of Temperance assets, in seeming violation of the 1965 trust agreement’s expectation that all income was to be reserved for alcohol-related work.

According to its audit for 2001-2000, Church and Society sought a legal opinion about its financial obligations. That legal inquiry found that Church and Society must comply with the 1965 Trust agreement and designate those assets, primarily the Methodist Building, as restricted.

The audit reveals that prior to this legal inquiry, Church and Society had always treated its income from the Methodist Building and other old Board of Temperance assets as unrestricted. Following the 2002 legal finding, a new policy was established making the 1965 value of those assets, or $2.6 million (approximately one-third of its current estimated value), a restricted holding.

This means that about one-third of the Methodist Building’s net income of $715,000 will be set aside for work relating to “alcohol, public morals, gambling, drug abuse, and general welfare in these areas.”

The 2001-2000 audit seems to contradict itself in this conclusion, because elsewhere it asserts that the 1965 trust agreement “restricts” all income from the Methodist Building and other old Board of Temperance assets to work relating to “alcohol, public morals, gambling,” etc.

Apparently the legal inquiry that Church and Society obtained suggested that Washington, D.C. trust law allowed it to comply with the 1965 trust agreement only as it related to the 1965 value of the building and other assets.

However, the 1965 trust agreement itself specifies that the Methodist Building and other old Board of Temperance assets are to be permanently restricted to work with “temperance and alcohol problems.” There is no mention of “public morals,” “gambling,” “drug abuse” or “general welfare.”

Church and Society will not publicly release its 2002 legal finding that the 2001-2000 audit cites as its justification for the new policy.

 According to the 1965 trust agreement, the church’s Board of Temperance, Prohibition and Public Morals was organized in 1913 by order of the 1912 General Conference of the Methodist Episcopal Church. Since 1912, funds had been raised to endow Methodism’s fight against alcohol. Over the next 50 years the old Board of Temperance continued to collect gifts to endow its work.

The 1965 trust agreement stipulates that “principal and accumulated income” from the trust are to be devoted to “work in the areas of temperance and alcohol problems.”

Further noted in the 1965 trust agreement is language from the 1960 General Conference of the Methodist Church, which declared that “funds vested in any of the predecessor boards [of the Board of Church and Society] shall be conserved for the specific purposes for which such funds have been given.

The 1965 trust agreement created a Board of Trustees for the Methodist Building, which continues to operate within the Board of Church and Society. Those trustees are charged with distributing the income of the Methodist Building Endowment Fund to “work in the field of temperance and alcohol problems.”

As of 1964, the Methodist Building Endowment Fund owned $1.9 million in real estate (primarily the Methodist Building), $535,000 in stocks and bonds, and $478,500 in other investments.

The totals of these figures seem to account roughly for the $2.6 million that Church and Society’s 2001-2000 audit has declared to be a permanently restricted asset.

Church and Society’s current total assets are pegged at $22 million. The bulk of these assets are the Methodist Building and the accrual of other funds associated with investments originating with the old Board of Temperance.

Without Church and Society’s releasing its 2002 legal finding, it is difficult to understand how it can legally justify not devoting all funds originating with the Methodist Building Endowment Fund for the anti-alcohol work specifically mandated by the 1965 trust agreement.

Mark Tooley is the director of UM Action, a committee of the Washington D.C.-based Institute on Religion and Democracy.

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