When the Church Parsonage Looks Like a Mansion

Televangelist Kenneth Copeland lives northwest of Fort Worth, Texas, near the shore of Eagle Mountain Lake in a “church parsonage” that can easily be described as a mansion or palace. The extravagant home fits Copeland’s theology as he teaches his church and TV audiences “to live like a king.”

Eagle Mountain International Church (EMIC) owns the 18,279 square-foot home currently appraised for $10,825,462. A road connects the home to the Kenneth Copeland Airport.

In 2007, Senator Charles Grassley surprised the religious establishment by launching an inquiry into six TV ministries. Grassley asked for EMIC and Kenneth Copeland Ministries to provide housing allowance information to the Senate Finance Committee.

A Senate Finance Committee report summarized the response to Grassley’s request: “The Church informed Senator Grassley that the Church provides a parsonage to Revs. Kenneth and Gloria Copeland and a housing allowance to Rev. John Copeland. The Church further explained to the Senator that the Church’s independent Compensation Committee takes into account the fair rental value of the parsonage or housing allowance provided to these individuals when it determines whether the overall compensation it pays to them is reasonable.”

What is the fair rental value of Copeland’s parsonage? Let’s apply the one percent rule for an answer.

Investopedia explains, “The one percent rule can provide a baseline for establishing the level of rent that commercial property owners charge on real estate space. This rent level can apply to all types of tenants in both residential and commercial real estate properties.”

One percent of the Copeland parsonage’s appraised value is $108,255. By multiplying the appraised value by 12 months, we can estimate the annual fair rental rate for Kenneth Copeland to be almost $1.3 million. If Kenneth Copeland received a housing allowance for the mansion, it would be $1.3 million.

Copeland, not his church, owns his second home, a vacation home in the Rocky Mountains and is unlikely to receive a housing allowance for this second home.

Meanwhile, other pastors have received housing allowances for two homes. The IRS attempted to curb the practice, resulting in a Supreme Court case. Musician and minister Phil Driscoll applied a housing allowance to both a parsonage and lake home.  After the IRS denied the housing allowance on the second home, Driscoll sued but ultimately lost the case.

Original Intent of the Clergy Housing Allowance and its Evolution

Through legislation Congress established the clergy housing allowance in 1921. The original goal was to assist small churches in providing financially for their ministers. Churches unable to provide a full-time salary, could often provide a place for the minister to live. The clergy housing allowance was amended in 1954 to allow clergy to set aside part of their compensation as a housing allowance and it would be exempt from the federal income tax.

In 1953, Illinois Congressman Peter Mack explained why he sponsored the housing allowance changes:

“Of our clergymen, 55 percent are receiving less than $2,500 per year. This is some $256 less than the $2,668 annual median income for our labor force. It is well to keep in mind that many of these clergymen support families like the rest of us, and that many of these clergymen still receive low income based on the 1940 cost of living but must pay 1953 rents for a dwelling house.”

The 1954 law paved the way for numerous financial abuses and multimillion dollar parsonages.

A memo to Senator Grassley explains how Rick Warren, pastor of Saddleback Church and future author of The Purpose Driven Life, got caught in the clergy housing allowance controversy:

“In 1992, Warren bought a house for $360,000. In 1993, the Church paid Warren $77,663, and Warren excluded the entire amount from income as a housing allowance. In 1994, the Church paid Warren $86,175, and Warren excluded $76,300 from income as a housing allowance. In 1995, the Church paid Warren $99,653, and Warren excluded $84,278 from income as a housing allowance.”

Litigation followed first to the U.S. Tax Court and then to the U.S. Ninth Circuit as Warren defended his clergy housing allowance. While the Courts attempted to resolve the issue, Congress passed the Clergy Housing Allowance Clarification Act of 2002. The new law limited the clergy housing allowance to the fair rental value of the minister’s home rather than setting a dollar value limit.

Religious TV networks and megachurches have offered clergy housing allowances to employees that are not actually ministers. In 1989, the Los Angeles Times reported that Paul Crouch Sr. ordained TV station managers so he could offer them a clergy housing allowance, the result being a tax cut for employees.

More recently, a confidential informant contacted Trinity Foundation, revealing that televangelist Ed Young Jr, pastor of the multisite Fellowship Church with campuses in Texas, Oklahoma and Florida, has perhaps 50 employees receiving a clergy housing allowance.

How Should Concerned Christians Respond to Clergy Housing Abuses?

Important financial information might be a obtained with a simple internet search.

Many ministries file a Form 990 with the IRS. These documents disclose total revenue, total expenses and the compensation of officers. 990s can be obtained through the 990 Finder, ProPublica, and the IRS Tax Exempt Organization Search. Schedule J of the Form 990 discloses if the ministry offers a housing allowance.

( Phil Driscoll’s Mighty Horn Ministries discloses his housing allowance in 2012 Form 990.)

While churches are exempt from filing a 990, they may provide members with a monthly, quarterly or annual financial statement or budget. Sometimes these financial statements disclose the amount of a clergy housing allowance.

By obtaining these documents and carefully reviewing them, Christians can evaluate if their donations are being spent in a manner that honors God.

Donors have a responsibility to hold clergy and ministries accountable. Any church or ministry that fails to disclose its finances should be avoided.