Covenant House: Journey of a Faith-Based Charity
by Peter J. Wosh
University of Pennsylvania Press, 2004
296 pp., $55.00
It’s the nightmare no donor or board member wants to face. Imagine you’ve been giving to a charity for years, headed by a dynamic social entrepreneur who’s been doing good deeds using unconventional but effective methods. Then a scandal forces the founder of the charity to resign. What do you do to save the organization?
That’s the problem that in 1990 faced the board of Covenant House, a Catholic ministry serving runaways and troubled teens, after its founder, Fr. Bruce Ritter, was forced to resign in the midst of personal and financial scandal. As Peter J. Wosh shows in his fine history, the board’s effective response not only saved the ministry, it also provides valuable lessons for other donors and boards in similar situations.
Wosh, a historian and archivist at New York University, was originally commissioned to write the official twenty-fifth anniversary history of Covenant House. That project mutated into this book, in which Wosh had full access to the ministry’s archives (which he helped to create), but was able to produce an independent book. Wosh is a fair-minded and judicious historian, and his book can be used as a model by other long-lived nonprofits who have yet to produce their own history.
Covenant House was founded by the Reverend Bruce Ritter (1927-99). After two years of service in the postwar Navy, Ritter joined the Franciscans in 1947. After several years of study, Fr. Ritter began to teach theology, first at several Catholic high schools, then at Manhattan College, where he became swept up in 1960s-era radicalism. In his memoirs, Fr. Ritter recalled a sermon he gave in 1966. “How long before you guys sell out?” he preached, “to money, power, ambition? Will you sell out by the time you’re 25?”
Afterwards, a student came up and said, “You’re standing up there telling us this, and you’re not leading by your example and life-style. We all think you’re a pretty good teacher, Bruce, but we don’t like your sermons. We think you should practice what you preach.”
Fr. Ritter began to think that rather than teach, he should dedicate his life to serving the poor. After intense discussions with some of his fellow Franciscans, Fr. Ritter resigned from Manhattan College in 1968 and moved to New York City’s troubled Lower East Side. He and his colleagues began to create a ministry that helped troubled teenagers by offering group homes where the teens could live until their lives were straightened out. In 1972, this ministry was formally organized as Covenant House.
For much of the 1970s, Covenant House was a small organization that ran group homes for teenagers in Manhattan. Although most of Covenant House’s leaders were Catholics, the ministry was only loosely affiliated with the Church. Most of its funds came from contracts with New York City. But after a series of feuds with city social service agencies about how Covenant House’s group homes should be organized and managed, Fr. Ritter decided in the mid-1970s that most of Covenant House’s funds should come from private donations, not government contracts.
Covenant House also benefited from a 1970s social trend. In 1973, Houston detectives discovered that Elmer Wayne Henley, Dean Allen Corll, and their associates had spent the past three years picking up runaway boys for drug-laden homosexual liaisons, murdering the boys after the evening was over. Prosecutors determined that the Henley gang was ultimately responsible for 26 murders.
After Henley’s crimes became known, the press ran many stories, often exaggerated, about the “runaway epidemic.” As Wosh shows, Covenant House became a national organization in part because of these fears.
In 1977, Covenant House launched a dramatic expansion into the Times Square area. Backed by nearby parishes, Fr. Ritter vowed to use the new facility to fight pimps and prostitutes flourishing in Times Square and the nearby Port Authority Bus Terminal. Covenant House launched a new program, Under 21, specifically designed to help teenagers who might be tempted to become prostitutes. Covenant House’s headquarters was moved from the Lower East Side to a townhouse near Times Square.
The evolution of Covenant House from a ministry helping any troubled teenager into an organization more focused on combating the teenage sex trade was enthusiastically supported by the Franciscans and the Archdiocese of New York, who made substantial contributions. Fr. Ritter also received many favorable stories in New York tabloids. These led to a 1979 profile on “60 Minutes.” The story lionized Fr. Ritter, who was shown marching through Times Square looking for teenage prostitutes and complaining that local cops weren’t arresting more pimps.
The “60 Minutes” segment made Fr. Ritter into a celebrity and helped turn Covenant House into a national organization. Most of the notable Catholic philanthropists of the 1980s, including William Simon and J. Peter Grace, made substantial contributions. The ministry’s budget soared to $40 million by 1986 and $100 million by 1989. Covenant House expanded to seven states and had international branches in Canada, Mexico, Guatemala, and Honduras.
Covenant House’s labors bore abundant fruit. Already within a decade of its inception it had ministered to countless thousands of New York City’s wayward and downtrodden youth, with more than 10,000 fed, clad, and sheltered at the Under 21 Crisis Center in 1989 alone. The unique combination of Franciscan spiritual ministry with more traditional counseling and personal assistance had won Covenant House and its thriving national network of shelters not only widespread acclaim but also a healthy flow of contributions to already burgeoning coffers. By the late 1980s the prospects for growth and expansion seemed illimitable.
Then in 1989 the empire Fr. Ritter built began to tremble. In December, a front-page New York Post headline screamed, “TIMES SQUARE PRIEST PROBED.” The article charged that a male prostitute (who used the alias “Tim Warner”) had an affair with Fr. Ritter, who rewarded his paramour with a nice apartment and a full scholarship to Manhattan College. Covenant House fended off this story by asking people whom they believed: the admirable Fr. Ritter or the sleazy New York Post? This trick worked a second time, when a second male prostitute made similar allegations to the Village Voice.
Faced with growing doubts about Fr. Ritter’s reputation, Covenant House then went to the New York Times, which had run many favorable articles about the ministry over the years, in hopes it could lay the scandal to rest. But after investigating, the Times found a third male prostitute with plausible accusations against Ritter. The New York Post then discovered how Fr. Ritter’s initial accuser chose the alias “Tim Warner.” Covenant House staffers had asked a parish priest in upstate New York to provide a baptismal certificate. The priest found one for a Tim Warner, who had died of leukemia in 1980, and then produced a forged certificate that was used to obtain fraudulent identification. The Post found the real Tim Warner’s parents, who were outraged that their dead son’s name was being used to cover up a prostitute’s crimes.
When this story came to light, Fr. Ritter announced his resignation, and the Covenant House board named one of its members, former New York City schools chancellor Frank Macchiarola, acting president. But Macchiarrola’s hard-charging style swiftly alienated the board, and he was forced out three weeks after he was hired. In revenge, Macchiarola provided lurid details to the press of purported Covenant House incompetence.
In March 1990, the New York Times made a further front-page revelation. Most monks and nuns do not have bank accounts; their room, board, and a stipend for personal needs are provided by their order, which usually receives the salaries its members are paid. Fr. Ritter was given special dispensation by the Franciscans to have his own account. He then invested in a board member’s company, whose stock soared. In 1983, Fr. Ritter used much of this wealth to create the Franciscan Community Trust, a nonprofit he controlled. By the late 1980s, assets in the trust had risen to about $1 million. There’s no evidence Fr. Ritter used the trust to enrich himself; he claimed he was going to will the trust’s funds to Covenant House after his death. He did, however, use the trust’s funds to provide below-market-rate loans to his sister and two Covenant House board members. He also kept the fund’s existence secret from most of the board.
Faced with plummeting donations and growing chaos after several months of bad press, the board went to John Cardinal O’Connor, head of the Archdiocese of New York, for help. He arranged to have two veteran priest-administrators take over as interim heads of Covenant House, and as the press and public saw that Ritter and his lieutenants were no longer in control, the controversy subsided.
Internally, however, much turmoil remained, and collapse was still possible. That prospect disturbed even former critics in government and social work circles, who “believed that this would constitute an unmitigated disaster” because Covenant House’s $88 million budget was triple what the federal government spent on youth shelters. Even the New York Post reporter who had broken the scandal story concluded, “Covenant House is a desperately needed provider of services to an often forgotten segment of the population.”
Fortunately, the charity’s board had begun to reform the group’s internal governance. It also decided to commission a no-holds-barred look at Covenant House by Kroll Associates, a respected investigative agency, with the report to be made public. After months of careful work, Kroll reported that, except for the Franciscan Community Trust, the ministry’s finances were sound. But they also found credible evidence that Fr. Ritter may have had sexual liaisons with 15 young men he met through Covenant House, and they criticized the board’s “past failures to monitor institutional affairs” and to permit “inappropriate transactions.” To its credit, however, the board had already enacted most of the measures Kroll recommended.
As a condition of his resignation, Fr. Ritter had insisted that Covenant House agree that all the ministry’s presidents after Frank Macchiarola be members of religious orders. After a lengthy search, the board chose Sister Mary Rose O’Geady, who had spent her career with Catholic social-service agencies in Long Island. The choice of this “stern but fair taskmaster” was universally hailed, and between her efforts and those of the sobered board, the charity was soon back in the good graces of the state attorney general and such charity watchdogs as the Better Business Bureau.
Sr. Mary Rose kept most of the top-level Covenant House staff, ensuring continuity of mission and institutional memory. She also returned the ministry to its pre-1980 mission of helping any teenager in trouble, instead of focusing on victims of sex crimes.
Covenant House’s budget fell from $100 million to $80 million in the year after Fr. Ritter’s resignation. Annual contributions are now in the $120 million range. The ministry rarely makes news these days, but it does quietly do a great deal of good work helping teenagers straighten out their lives.
Peter Wosh’s well-told history offers several lessons for donors and board members. First, recognize the inherent tension between leadership by charisma and the need for dull but reliable organizational procedures—this is the classic story of a charismatic nonprofit founder who succeeds so well that the group becomes too large to govern the way it had been in its start-up phase. Second, nonprofits whose founders have erred should swiftly act to remove their fallen leaders. Openness and transparency are far better ways to deal with donors and the press than trying to cover up. Third, having long-time staff stay on is the best way to ensure the mission of a nonprofit remains firm, even if the founder has to go.
Contributing editor Martin Morse Wooster is the author of By Their Bootstraps, a study of nineteenth-century social entrepreneurs published by the Manhattan Institute.