According to the respected academic journal International Bulletin of Missionary Research, Christian religious leaders alone committed an estimated $34 billion in financial fraud in 2011 — compared to the $31 billion spent by Christians on global missions. Another estimate from the Center for the Study of Global Christianity says Christian religious leaders commit $90 million in financial crimes daily, and the fraud is growing at a rate of 5.97% each year. If the researchers are correct, religious financial fraud among Christians will almost double in 14 years to $60 billion annually by 2025.
False “Needs.” For example, Dallas-based televangelist W.V. Grant raised a lot of cash claiming at one time to be supporting dozens of orphanages in the Caribbean but in reality was giving insignificant amounts of money to only one orphanage that he used for photo ops.
False testimonials. Fabricated reports of healings or financial miracles are broadcast and printed in order to induce donors to give money. For example, we’ve helped in a series of investigations that revealed people claiming to be miraculously healed by televangelist Benny Hinn were later found to be still sick or had never had that ailment. Even more blatant are the appeals generated by Gene Ewing and his fake St Matthew’s Churches sent mostly to people living in poverty. They report testimonials of people who gave donations and later were blessed by God-given windfalls, but their last names are never used.
“Seed Faith” Donations. Viewers and readers are given the impression that if they give a small amount of ‘seed’ or ‘seed money’ to God, then God is obligated to either heal their loved one or to bless them financially and reward donors ‘tit for tat’, times a multiplied factor of ten to one hundred. People in poverty are especially vulnerable to this appeal.
Inurement. This is a term used by the IRS to describe excessive compensation and benefits — a massive amount of money given by well meaning donors is intercepted by the organization’s hierarchy to be used for their own private benefit. This includes such things as huge salaries, large housing allowances, “parsonages” that are mansions, ministry aircraft (often private corporate jets that become personal airliners for a pastor’s vacations), enormous clothing allowances, luxury cars, unregulated ministry credit card usage, ministry ranches “for the pastors devotional time”, etc.
For example, televangelists travel like rock stars. Their demands for an appearance can include a five-figure honorarium, a $10,000 gasoline deposit for the private plane, a manicurist and hairstylist for the speaker, a suite in a five-star hotel, a late-model luxury car from the airport to the hotel and room-temperature Perrier.
They attempt to justify large salaries by citing dubious “independent” compensation studies. Many of these studies were prepared by Justin Osteen, brother of Houston mega-church pastor Joel Osteen. A lawyer representing many of these religious leaders listed Benny Hinn, T.D. Jakes, Ed Young and Creflo Dollar as examples of clients of Osteen, and stated that Justin Osteen “represents most of the million-dollar-plus salary clientele in the nation.”
Conversion. Another IRS term that describes creating for-profit companies to benefit from non-profit organizations. The leadership of the non-profit ministries are the same individuals controlling and benefitting from the for-profit entities. One example: the Copeland Cattle Ranch recently grazed its cattle and horses on their own church’s land, Eagle Mountain International Church, run by Kenneth Copeland Ministries. Another example: Joni Lamb, vice-president of the Daystar Television Network, recently wrote a book, published by her for-profit company, Joni Lamb Publications, and then sold the copies to her non-profit TV network.
Absolute Church Status. The IRS makes a distinction between non-profit organizations and non-profit churches when it comes to financial disclosure of information. Our tax code gives an additional advantage to churches by not requiring them to file the IRS Form 990, an informational form which helps donors know where their money is going and how it is used. Many large multi-million dollar ministries who once filed the form 990 have claimed church status in order to avoid facing public scrutiny about the money and potential scandal. In most of these cases only a miniscule part of the organization is related to religious worship. The Daystar Television Network is the 2nd largest “Christian” television network in the world, boasting a worldwide footprint transmitted from numerous satellites. The TV conglomerate claims to own 70 television stations, yet it claims to be a church and makes no financial information available to the public.
Overwhelming Numbers, Scant Oversight. There are almost 600,000 churches in the United States alone. The Guide Star website boasts a database of 1.8 million non-profit organizations. The Charlotte Observer reported, “the IRS office that monitors nonprofits is so thinly staffed it examines just 1 percent of their returns.” We believe it’s less than that. The paper went on to say that, “from 2005 to 2008, the number of charities filing returns with the IRS increased by 38 percent, according to data from the National Center for Charitable Statistics. But staffing in the IRS branch that monitors nonprofits declined over that period… About 460 people in that office are responsible for enforcement (as of 2009). That works out to roughly one enforcement agent for every 4,000 tax-exempt groups nationally.”
Weak Enforcement. Federal Law actually prohibits non-profits from awarding excessive compensation to their leaders; but, according to the Charlotte Observer, “Regulators rarely enforce the rules that do exist. Most years, fewer than 10 of the nearly two million U.S. nonprofit leaders are penalized for receiving excessive compensation.”… “The IRS can impose fines – known as “excise taxes” – on nonprofit leaders found to be receiving excessive pay or benefits… But in reality, that rarely happens. Since 2003, the IRS has taken that step about 10 times a year on average.” “The (IRS) criteria for excessive compensation are so loose that they’re virtually worthless…,” says Pablo Eisenberg, a senior fellow at the Georgetown Public Policy Institute. “The sky’s the limit.”
No Political Will. In 2007 the IRS asked the Senate to investigate these activities. Sen. Chuck Grassley’s Senate Finance Committee wrote letters to the six televangelists, asking that they “disclose their assets, spending practices, compensation plans and business arrangements.” In 2008, the committee was about to serve subpoenas that would have better exposed the problem to public awareness. At the last minute they punted. Grassley asked the Evangelical Council for Financial Accountability (ECFA) to form a committee to try to deal with the problem. But this is analogous to asking the Girl Scouts to audit Enron. The ECFA is too close to the problem, and many of its clients have too much to lose.
Complain to the FCC. Unlike newspapers and other media, television and radio depend on using airwaves that belong to all of us. The Federal Communications Commission is charged with regulating these broadcasts in the public interest.
Canada has a law that any claims over the airwaves have to be verifiable. We’d like to see the American public join in a nationwide discussion of the merits of that option. In 1993, Ole Anthony of our Trinity Foundation met with the Energy and Commerce Committee to try to get them to adopt the Canadian code. Unfortunately at the time, Republicans thought this would alienate their Christian voter base.
Write the FCC to express your outrage at allowing this fraud to continue to be broadcast.
Chairman Julius Genachowski
Federal Communications Commission
445 12th Street, SW
Washington, DC 20554
or e-mail him at Julius.Genachowski@fcc.gov
Tighten local restrictions. Many cities have laws that require those who solicit more than 50 people to obtain a license from the city. TV and radio preachers, with massive direct mail campaigns, are routinely breaking those laws. Voters could urge their city government to tighten those restrictions.
Complain to State Comptroller or Attorney General. Many of the televangelists say they’re raising money for a certain project, then use the money for something else– sometimes to buy property or items in their own name. People should urge their state comptrollers and the IRS to target these operations for tax violations.
Use the Victims Help Line: 1(800) 229-VICTIM. If you or someone you know has been a victim of a fraudulent ministry, call in the Victims Help Line and we’ll consult with you, take down the information and refer you to resources in your area.
Urge your church, religious organization or non-profit to take a stand. Write your congressman or a letter to the editor. Rock the boat.
Encourage your church to reach out to the poor and needy in your own community who are the most frequently victimized by these ministries.
Support groups like Trinity Foundation who are monitoring these excesses.