Warning Signs When Reviewing Church or Ministry Financial Statements


Before donating to a particular organization, stop and consider a few warning signs first.

Trinity Foundation has spent several decades examining financial statements of religious organizations. There are common warning signs that show up on these documents that donors should be aware of. Sometimes accounting errors occur, but other times, warning signs may indicate fraud or deeper financial problems. If questions arise when reviewing a church financial statement or ministry Form 990, politely ask the organization’s leadership to address your concerns.


Different forms of fraud exist for each stage of the church/ministry money cycle.

The five stages are solicitation (asking for donations, investments or loans), collecting the funds, depositing the funds, spending or investing the funds, and finally, reporting how the money was spent.

Although American churches are not required by law to disclose financial information to donors, some churches provide their members a monthly, quarterly or annual report.

The Internal Revenue Service requires non-profits that are not churches, synagogues or mosques to file a Form 990. This financial disclosure document lists total revenue, total expenses, and salaries for highest paid employees and independent contractors.

Organizations with less than $50,000 in revenue are required to file the smaller Form 990-N which is sometimes called the “postcard 990.” Non-profits with revenue of less than $200,000 and assets of less than $500,000 may file a Form 990-EZ. Larger organizations are required to file the regular Form 990.

After the documents are filed with the IRS, they are made available to the public through ProPublica, GuideStar and the IRS Tax Exempt Organization Search.

Warning Sign #1: Not Filing a Form 990

Donors need accurate financial data to make informed decisions, but many media ministries and churches refuse to provide this data to donors.

In recent years a troubling trend has started to emerge of large media ministries re-classifying themselves as churches to avoid filing a Form 990. The Billy Graham Evangelistic Association, Grace to You and Ravi Zacharias International Ministries have stopped filing this form.

Religious TV networks Daystar and The Word Network have raised hundreds of millions of dollars while claiming to be churches and do not file a 990.

Many of the best-known televangelists also refuse to file 990s. The non-filers include Jim Bakker, Kenneth Copeland, Creflo Dollar, Jesse Duplantis, Benny Hinn, Joyce Meyer, Joel Osteen, Jimmy Swaggart and Paula White.

Loopholes in tax law allow televangelists to avoid filing 990s. They may claim their ministries are integrated auxiliaries of their churches. However, this loophole doesn’t cover church-based colleges. For example, the Kenneth Copeland Bible College is legally required to file a 990 but doesn’t.

Fortunately for donors, the financial secrecy of Daystar was breached in a court battle.  Through litigation Trinity Foundation invoked the Texas Open Records Act and obtained six years of financial statements and provided the documents to National Public Radio (NPR) for an exposé of Daystar.

NPR reported that Marcus Lamb, head of Daystar, claimed his network had given $30 million “of donations to others, to ministries, to churches, to missions, to hurricane relief, to tsunami relief, to hospitals” in five years.

NPR’s investigation proved otherwise: “NPR analyzed six years of Daystar balance sheets. They show the network gave away $9.7 million dollars in direct grants to outside recipients. Not $30 million.” This shows that the courts may be a viable option for whistleblowers, investigative reporters and defrauded donors to obtain financial statements from ministries refusing to disclose their finances.

If Christians started boycotting large church-based media ministries that refuse to provide 990s, the church world would be forced to become more transparent.

Warning Sign #2: Unreported and Excessive Compensation

When a ministry files a 990 and refuses to disclose the compensation of officers, it may be hiding excessive compensation. The IRS has adopted a reasonableness standard for what non-profits can compensate their employees, and still maintain their tax-exempt status. According to the IRS, “Reasonable compensation is the value that would ordinarily be paid for like services by like enterprises under like circumstances.”

In 2007, Trinity Christian Center of Santa Ana, better known as Trinity Broadcasting Network (TBN), failed to report the income of assistant vice-president Matthew Crouch and network attorney John Casoria. Both claimed to work an average of 40 hours per week for TBN, and it’s hard to believe they received no compensation, considering well-reported lavish family lifestyles.

One of the dangers of reviewing financial statements is jumping to inaccurate conclusions. In one year, Chuck Pierce, head of Glory of Zion International Ministries, received $1.3 million in compensation. Most of his pay was reportedly “bonus & incentive compensation.” What looks like excessive compensation could be book royalties as Pierce is an author and some of his books are published by his ministry.

Warning Sign #3: Tax Evasion and Large Financial Losses

IRS rules require churches and ministries to file a Form 990-T to report unrelated business income. If a church or ministry receives more than $1,000 annually from a business, the income must be reported, and it can be taxable. Again, there are loopholes that exist. For example, rental income is not taxable if the church or ministry owns the property they are renting, but if the church is making payments on a building and rents it out, then the rental income should be reported. When asked for clarification, an IRS official explained to Trinity Foundation, that if a non-profit or church borrows money to make a profit, then the income should be taxed.

Many televangelists operate businesses from their churches. If their businesses are not paying rent for use of the facility, it could be argued that they are taking advantage of their tax-exempt organization. If a non-profit fails to report unrelated business income, its leaders could be engaging in tax evasion.

Lines 7a and 7B on page one of a Form 990 report total unrelated business income and net unrelated business taxable income. Also, pay special attention to non-profits reporting large financial losses.

From 2008 to 2012 Inspirational Network reported $45,205,820 in financial losses due to unrelated business operations. Donors could surmise from these losses that Inspirational Network is a poor steward of donor funds.

Line 7b from Inspirational Network’s 2012 Form 990 shows a one-year loss of $14,483,039.

Warning Sign #4: Unreported Expenses

Form 990s include a Statement of Functional Expenses page which lists the amounts spent on grants, salaries, lobbying, travel, accounting and other categories. Sometimes expenses are not properly listed. Unintentional accounting errors can harm the credibility of the non-profit organization.

For many years TBN featured one of the largest exhibits at the annual National Religious Broadcasters convention but reported no conference, conventions and meetings expenses.

In 2018, the Superchannel Centre reported only $123,538 in total expenses. However, the same 990 also reveals they paid one independent contractor over $6 million and another $343,385. The Superchannel Centre 990 was completed by an accounting firm. How do trained accountants miss $6 million in expenses?

Warning Sign #5: Large Legal Expenses

When a ministry reports large legal expenses, that is usually a sign the ministry is involved in a lawsuit. From 2012 to 2018, TBN spent $30 million on legal expenses as the TV network fought legal battles with the granddaughters of the founders of the network. Legal expenses are disclosed on the Statement of Expenses page of 990s and payments to law firms are occasionally listed under independent contractors.

In 2014, TBN spent $6 million on attorney fees. TBN also spent $12 million in 1998 and $29 million in 1999 settling lawsuits.


Following the money trail can be confusing. Accounting errors and misunderstandings easily occur. Do not hesitate to seek expert guidance from an accountant or auditor, investigative reporter or religious watchdog organization. If you find a suspicious Form 990, let Trinity Foundation know about it. We may be able to confirm your suspicions, disprove them, or suggest further investigating to resolve the issue.