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Update on Churches Filing Chapter 11 Bankruptcy

posted by Pamela Foohey

As parts of the country are counting ballots, I thought I'd post about counting church chapter 11 cases. The headlines about churches and other religious organizations filing chapter 11 still focus predominately -- almost exclusively -- on Catholic Diocese filings. As of June 2020, 27 Catholic religious organizations have filed chapter 11, as detailed on a site put together by Professor Marie Reilly. But Catholic religious organizations' filings are a very small sliver of churches filing bankruptcy, as my prior research has shown. The last time that I updated my count of religious organization chapter 11 cases was at the end of 2017, and the last time I updated denominations and demographics of the congregations that file was in 2013. Since then, I've continued to track religious organizations' chapter 11 filings, using the same methodology, through the end of 2019. 

Preliminary results are in. Highlights: churches, synagogues, mosques, and other religious organizations are still filing bankruptcy, and the denominations and demographics of the congregations that filed have remained basically the same.*

RI Ch 11 Thru 2019As shown on the graph to the right, between 2014 and 2019, an average of 59 religious organizations filed chapter 11 each year.** This is lower than the average of 87 cases between 2006 and 2013 that I've previously reported, but it is consistent with a decline and leveling off of consumer bankruptcy filings overall during this period. As I've noted, in the past, religious organization chapter 11 filings tracked personal bankruptcy filings, not business bankruptcy filings. This continues to be true.

Find tables with congregation denominations and demographics, and some more detailed discussion after the jump.

RI Ch 11 CongregationsFirst, denominations.*** As in prior years, congregations file chapter 11 in similar percentages to their make-up of congregations nationwide. In the United States, more than 90% of congregations are Christian. Assuming that a sizable portion of the "unclear" congregations are Christian, as detailed in the table to the left, the same is true among bankruptcy filers.

Second, demographics.*** As I've written about based on an analysis of congregations that filed between 2006 and 2013, churches with predominately Black congregants file chapter 11 at almost three times their incidence in the church population. About 20% of congregations nationwide have membership that is at least 80% Black (the typical definition of a Black Church). RI Ch 11 DemographicsBetween 2006 and 2013, 60.4% of the congregations that filed chapter 11 were Black Churches. As detailed in the table to the right, between 2014 and 2019, a similar 59.1% of the congregations that filed chapter 11 were Black Churches.

The breakdown between historically Black Churches and other Black Churches is also similar. Stated succinctly, churches are still filing bankruptcy to reorganize and Black Churches still comprise the majority of the church chapter 11 filings.

I have yet to compile religious organization chapter 11 cases from 2020. Looking through the cases of some of the churches that filed in 2019, the effects of the pandemic stand out. If religious organization chapter 11 filings have not increased in 2020 yet, which would be consistent with consumer bankruptcy filings, the economic situation evident in the documents filed by those churches going through the reorganization process now suggest that more churches may file in the future to deal with decreased revenues (donations, fundraisers, etc.) during the pandemic. More detailed writings about religious organization chapter 11 cases to come.

 


* For the purposes of this post, and consistent with my prior work, I define a religious organization as as any organization whose operations are motivated in a meaningful way by faith-based beliefs and principles. I exclude those that primarily sell goods or services that duplicate services provided in the private market, such as hospitals and YMCAs. I define a congregation as that sub-set of religious organizations that primarily operate places of worship. This excludes, for example, homeless shelters, low-income housing, and Christian and Jewish schools.

** I count jointly administered cases as one case. I count each time a religious organization files bankruptcy. Between 2014 and 2019, there were 28 repeat filings of 23 distinct religious organizations. This graph replaces and updates the preliminary data in my post from February 2018.

*** To assess denomination and demographics, I relied on the same methodology as I used to assess religious organizations that filed chapter 11 between 2006 and 2013, and which is detailed in this article.

Comments

How does this look if you rank by assets or total amount of debt? I could be wrong, but my gut tells me that the numbers may look different based on that ranking as, for example, Catholic dioceses are typically much larger than a Black community church.

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