Evangelicals in a Nation of Tax Loopholes

Note to readers in countries outside the United States: What follows is not fiction. What is described below is believed to be an accurate recounting of the statements issued by an Evangelical organization which has already been a trusted brand in ministry.

Wade Mullen is my new hero. His exposé on one of the charity sector’s most unusual accountability loopholes published as a Twitter thread last week. It took time and research to write. It took courage to print. But then I shouldn’t be surprised. As his “about” page on his website notes:

I earned a PhD researching the ways in which organizations seek to escape a scandal with their legitimacy in tact. My dissertation is titled: “Impression Management Strategies Used by Evangelical Organizations in the Wake of an Image-threatening Event.” You and can download it for free HERE.

(Warning: That dissertation is 279 pages!)

The gist of the thread is summed up thus:

Focus on the Family received approval from the IRS to be reclassified as a church in 2016.

For many of my readers here, that may seem a little strange, but it doesn’t appear to be a world-shaking observation. But as most of my American readers know, the difference is in the responsibility for transparency. The site The Balance Small Business notes:

In other words, churches, to be considered 501(c)(3) charities, must act like other charities. If they do so, they may qualify for tax-exemption.

But, unlike other charities, Churches do not have to register with the IRS by submitting Form 1023. However, many do file to make their status clear to their donors and supporters. Churches that do officially register as charitable organizations are included on the IRS list of registered charities.

Churches that do not register with the IRS do not have to file yearly 990s, the tax document that all other charities must submit yearly. If the church has registered as a 501(c)(3), it does have to file a 990.

Okay, so far so good. A church is a church is a church, right? Not exactly. In the years since the end of World War II, we’ve seen a massive explosion of we insiders call parachurch organizations. The website continues:

Religious groups [organizations] are not places of worship. They do not usually belong to a particular denomination. They often try to bridge particular belief systems, although they can also be groups that study or promote a particular religion.

To be considered tax-exempt, a religious organization must register as a 501(c)(3) charity. That means filing Form 1023 (groups with income below $5000 annually are not required to file although they may wish to). Once registered, the organization must file an annual 990.

The last few years have shown that the leadership of both churches and parachurch organizations is fallible. Have a sex scandal and the IRS isn’t particular interested, unless money changes hands. But be guilty of financial impropriety and donors, potential donors, watchdog organizations and the IRS will investigate. So if you can hide behind the idea of being a church you can escape many of those watching eyes.

Wade Mullen then went through each of the IRS criteria of Church, criterion by criterion and Focus on the Family’s response. I’m not going to reproduce each of the accompanying images here, but this is well documented; in fact, I would suggest if you have Twitter (and even if you don’t) skipping what follows and reading this starting with this Tweet. However, I’m reproducing the text here because Twitter and blogs are often an entirely different audience, and this deserves, in my humble opinion, wider exposure. [Note: Bold face type added.]

Wade Mullen
[photo: Lancaster Bible College]

■ A church needs an established congregation.
According to FoF, their personnel make up their 594-member congregation overseen by the elders (aka Board of Directors) and deacons/deaconesses (aka Executive Cabinet). Radio listeners are their mission field.

■ A church needs a place of worship.
According to FoF, their dining hall doubles as a worship auditorium. They call it a “chapelteria.”

■ A church needs a process for membership.
According to FoF, their “congregants” become members when they go through the employee or volunteer hiring process.

■ Churches give their members certain rights.
According to FoF, their “congregation” are encouraged to “participate in the religious functions of Focus on the Family,” like Monday prayer meetings and devotional opportunities.
As expected, this “congregation” does not vote.

■ Members of one local church typically don’t become members of another local church.
According to FoF, however, it’s normal for people to be members of more than one church.

■ Churches usually conduct baptisms, weddings, funerals, etc.
According to FoF, their “congregation” participates in communion every Easter during a chapel service. All other functions (baptisms, weddings, funerals) are supposedly conducted by the “congregant’s” other church.

■ Churches should have a school for the religious instruction of the young.
According to FoF, their radio programs, like Adventures in Odyssey, constitute their religious instruction for the young members of their “congregation.”

■ A church typically has ordained or licensed ministers.
According to FoF, they refer to the leadership team as deacons/deaconesses and the board of directors as elders. Jim Daly, President/CEO, is the head elder and they follow the “model of an elder-led church.”

■ Churches typically required their ministers to receive formal preparation culminating in ordination, licensing, or commissioning.
According to FoF, they do not find such requirements necessary for their “church.” Elders (BoD) are selected from the “congregation.”

■ Churches are sometimes affiliated with other churches.
According to FoF, the offices they have in 13 other countries are the “churches” they affiliate with.

■ A church should primarily function as a church, with most activity being religious.
According to FoF, their “daily work is worship.” This is one of their strongest claims throughout the application.
They view all employee activity as religious activity.

■ A church usually has a religious history.
According to FoF, their organization has been evolving into a church in the same way that John Wesley started his “Holy Club” that evolved into Methodism, and is beginning to resemble other churches as it continues to institutionalize.

■ A church usually has a creed.
According to FoF, their statement of faith and “Six Pillars” are their creed and one of their distinctive is the belief in “work as worship.”

■ Churches should have both an equipping and service role.
But according to FoF, they are one of two blades in a pair of scissors. FoF is the “service and mission” blade and the “congregant’s” other church is the “teaching and equipping” blade. Together they comprise the Church.

■ When the IRS brought up the fact their employees attend other churches on Sundays, FoF claimed not all churches have services on Sundays, like the Seventh-day Adventist, and that “it has been quite common for believers to be involved in more than one church body…concurrently.”

■ When the IRS asked about membership being tied to employment, FoF claimed that since they invite visitors and volunteers to join their “services,” then membership is not “in fact contingent on employment.”

■ When the IRS asked about religious leadership being the same as directing business operations, FoF claimed that “nearly all congregational churches…have a board of directors that doubles as a board of elders or board of deacons”

■ When the IRS suggested there was nothing distinctive that would cause “a group of believers to coalesce around you,” FoF chided them for their “ecclesiastical judgment” and argued their group of believers are among the largest in the world – 5.5 million nationwide.

■ When the IRS pointed out that these congregational activities appear to be incidental to the business operations, FoF argued their church activities are fundamental to their operations and that thinking of church as a building to gather to hear a sermon on Sundays is antiquated.

■ Finally, when the IRS questioned their real purpose for using facilities for “some religious activity in the course of their work day,” FoF chided them again for their “ecclesiastical judgment” and argued their members engage in “religious activity, all day, every day.”

■ My take:
This is an incredible twisting of the biblical view of the nature and purpose of a local church for the apparent purpose of forcing one’s ecclesiology into IRS codes.
Not surprisingly, others like BGEA, Samaritan’s Purse, and RZIM have followed.

■ If Focus on the Family truly believes it is a church, its employees and volunteers are its congregants, their executives are their pastors and elders, and their listeners are their mission field, then they should immediately stop requesting donations from their 6m+ listeners.

■ The lawyer offering these answers is Stuart Mendelsohn, legal counsel to the Evangelical Council for Financial Accountability (EFCA), a group that offers accreditation for ministries and churches.

■ Here is the letter FoF sent to the IRS requesting the reclassification from a 509(a)(2) to a 509(a)(1), stating “Focus on the Family was established and has been historically operated as a church.” [Attaches link to this 125-page .pdf file]

[end thread]

Here are some responses Wade received:

► From Rachel: “This is bananas. This is also why some people are anti-tax exemption for churches. It’s not because they want to blur the line between Church and State; it’s because of ethically dubious loopholes that religious orgs take advantage of.”

► Diane quoted N.T. Wright: “When you pretend evil is not there you merely give it more space to operate.”

► Albert noted: “…PLOT TWIST, they used the Seventh-day Adventist Church as a tiny part of their justification.”

► Bill wrote: “Focus on the Family is not a church. And claiming that it is for tax purposes is lying. A “Christian” ministry shouldn’t be lying for financial gain.”

► Julia asks: “It is such a tragedy that churches are becoming more secretive while secular non-profits are demonstrating transparency. Why are these “churches” considered Godly?”

► Hannah reasoned: “When anything with a vaguely religious cast can be a “church,” then nothing is.”

► Craig wrote: “I’m embarrassed reading the arguments. This is incredibly dishonest.”

► Rachel aptly notes: “I’m here thinking the fact that the IRS has a “church” designation in the first place is a bit unsettling.”

► Lucrezia wrote: “I look forward to FoF ceasing all political activity since it is apparently a church.”

[end responses]

And those are just the ones Wade retweeted. I’m sure there were hundreds more. To me this is every bit as scandalous as many of the other scandals of 2019. It brings me no pleasure to share this, but having discovered it, I felt there should be some additional recognition and highlighting of all these things that were made available to Twitter account holders last week.

Something is seriously wrong and as I said at the outset, Focus on the Family has long been a respected brand in Evangelicalism, and ought feel shamed by the responses it made to the IRS. 

Ask yourself, who benefits by all this?

 

The Business of Charity

Portions of today’s blog post have been edited to avoid specificity.

Earlier in the week we had a trip into the big city, and Mrs. W. suggested there was a place she needed to go as they are the sole supplier of a particular item she needs for a particular hobby. So after dealing with the necessities that took us there, we ventured into some new territory, only to discover her supplier was across the road from a well known Canadian Christian charity.

Not wanting to miss the opportunity, I dropped in. I’m not sure whether or not this happens frequently or not, but they didn’t seem to have a protocol for this. Nonetheless someone was fetched and she answered a few of my questions, and then I asked her if it was possible to have a quick tour.

Now she could have easily turned us down, but she took the time to show us around the building which was larger than I expected for an agency of this nature. It’s easy to judge from the outside, but I am not aware of all the many facets of their ministry, so I just took it as given that better minds than mine had determined that both the facility and the staffing level were right-sized.

Still, having been around the Christian scene for a long time now, I am sometimes able to sense things. I guess that having worked for Christian organizations that have been forced to operate on a shoestring, I am always surprised at the size and scope of the larger ones, a reminder, as I said when we were walking back to the car, that charity is a business (of a sort) and is part of a larger industry (of a sort) of charities and not-for-profits.

Generally, I was surprised at the number of offices and staff, even though the number is probably conservative by charity standards. I will admit that getting this balance right is probably a science, as indicated by the chart below:

I once worked for a Christian organization that paid their staff “based on needs.” As a single, young person fresh out of college and still living at home, I was paid very poorly. (They later faced a lawsuit over this practice, and I was issued a subpoena but was released after I told them I didn’t work concurrent with the woman who launched the suit.)

On the other extreme, a friend of mine once visited the head office of a better-known Christian charity and reported entering the lobby and “sinking in the plush carpeting.” While that person may have been given to exaggeration, I don’t question the report of a grand piano in the “guest reception room.”

I believe that probably fewer people would give the organization I visited money if they saw what I saw, but then again, I’m not sure that some people would continue giving money to their local church if they saw the invoices for floral arrangements sent to funeral homes. Or that the church really needed to lease a third copier/printer which doesn’t do anything that the other two don’t do. One one level, perhaps my tour yielded too much information.

What I do think however, is that the type of “drop in” that I did should be more the norm than the exception. The organization should have a designated person who can deal with spontaneous public relations opportunities that arise, and also be able to offer an apologetic for why the various staff are needed in conjunction with the organization’s mandate or mission statement.

On another level, it never hurts for the people who do the actual giving to be better informed.

 

 

World Vision Paying Bookstore Up To $185 For Each Child Sponsor

An article published Sunday in the Detroit Free Press on the receivership/restructuring of Family Christian Stores (FCS) carried information not seen to this point, including the amount of kickbacks the chain received from World Vision for each child sponsor recruited. 

We can attest to the solicitations personally; going through the FCS checkout there is a litany of pitches including bonus buy offers, but also charitable causes including placing Bibles in prisons, and child sponsorship:

The one which was most shocking was the amount of the “bounty” paid the company each time someone signed up to sponsor a child through World Vision:

Family Christian has also benefited from customers who sign up to sponsor a third-party group called World Vision, which provides food, clothing and shelter to impoverished children throughout the world.

The chain solicits sponsorships from its customers and receives a $150 fee from World Vision for each customer who signs up and pays the monthly fee, according to records obtained by the Free Press. Family Christian receives another $35 if the customer signs up for automatic payments.

Again, you’re encouraged to read it all at The Detroit Free Press. 

Let’s do some math here.  The sponsor is paying World Vision $35 per month per child. That means that for the first 5.28 months, the organization has yet to break even. It’s really into the 6th month that the sponsor’s donation is free and clear, but of course there are also overhead costs in that $35 that we don’t know. 

In our part of the world, we’ve seen special events like Couples Night Out and Ladies Night Out which are used to attract potential donors to hear a pitch for sponsorship. These evenings feature special speakers, giveaway prizes, and printing costs for posters and tickets. The cost per sponsor recruited is possibly equally high or higher. 

Still, the idea of the charity paying bookstores such a large incentive to get cashiers to make the appeal is somewhat disturbing, don’t you think?

 

Dr. David Jeremiah: King of Mailing List Abuse

“Please, make it stop; make it go away…”

I have no doctrinal issues with David Jeremiah. Although his radio and television programs are not broadcast at times I can listen or watch, as far as I know he is very mainstream Evangelical.

His fundraising mailings however are relentless.

If you are the type of person who really enjoys getting snail mail, this is the mailing list for you. As a family member told me last week, “I got another one from D.J.;” she has now stopped using the name since understanding is implicit, “That’s three this week.” She doesn’t have my knowledge of printing processes, paper stocks, bleeds, color separations, etc., but notes, “They’re all on glitzy paper.” Well, the letters are on standard bond, but yes, the enclosures are all on glossy stock, and color envelopes unique to each mailing.

Lots of trees gave their lives.

The latest pitch is for the Turning Point Bible Strong Partners program. For $25 per month you can choose from a couple of gifts or curiously, this option: “Please apply my entire gift to the needs of the ministry.” Those needs however would include printing and mailing more appeal letters.

This is a beast that requires constant feeding.

We’re not even going to get into the whole ResultsSource thing here. This is one of the big Christian publishing stories of 2014, where authors including Mark Driscoll — and David Jeremiah is also listed in reports — paid the consulting organization to ensure placement of their books on the New York Times Bestseller List.^source

Turning Point’s 2012 Form 990 shows it as having nearly $40 million income that year.^source There is a principle in business that once something reaches a critical mass it is capable of perpetuating itself on its reputation; other factors have to start working against it in order for it to start to experience decline (market changes, competition, economy, etc.). But with charities you have to keep asking, keep begging. You have to keep your name in front of the public. Each mail appeal produces a bump in donations.

For David Jeremiah, there seems to be no law of diminishing returns. The appeal letters keep coming.

In 2012 the ministry paid nearly $700K to In Service America which operates call centers. $400K to Majestic Productions which provides equipment for large arena-type events. Officers, directors and trustees received just under $900K while general salary and wage expenses were approx. $4.6M.  (Jeremiah is also pastor of Shadow Mountain Community Church, an SBC church in California founded by Tim LaHaye.)

It’s a big ship, and it takes money to make money.

I wonder what God thinks of all this?

I don’t begrudge these people some fundraising or donor development costs. They believe in what they’re doing. While individually they would acknowledge the existence of similar ministries, corporately they are no doubt passionate about what they do. Just as Christians we believe we’ve got the hottest news on the rack, many organizations feel they’ve got a great distribution system for that news.

What you end up with is a group of creative people being paid to develop fundraising appeals because the ministry needs money in order to pay people to develop more fundraising appeals.

But when people are getting three mailings in a single week… That’s not right is it? It seems driven by an ambition that’s gone into overdrive, and historically, when that happens, often the organization experiences collapse.

The time to rethink all of this is now. It’s time to develop long-term sustainability that doesn’t involve the rape of so many trees, the theft of so much carbon. Otherwise, their ambition could lead them, like so many others, to find it impossible to sustain the minimum income they now require.

And that could be their turning point.

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For an alternative view about fundraising costs, check out this 2013 TEDTalk.

Missions Models: Paying the Staff

We continue where we left off on Monday and Tuesday with more of our missions theme. Today we want to look at how the actual mission workers — as well as people working for Christian parachurch organizations — get paid.

Salary – Several lifetimes ago I was hired by the publishing division of InterVarsity Christian Fellowship (IVCF). I was the warehouse manager for the Canadian operation, and to the best of my knowledge this was the only time in my life I was ever covered by a dental plan, though being young and carefree I never used it. They were probably the best organization I ever worked for full-time. I was also hired for three years by our local Christian and Missionary Alliance Church, and again, it was a fixed dollar amount, though I was basically subcontracted to them which meant not technically on their payroll. I also worked briefly for the Canadian Bible Society and again, the job included a guranteed pay rate, as did all the jobs in their head office.

Raising Support – Several times in my life I’ve been offered an opportunity to work with the too-often repeated phrase, “but you need to raise your own support.”  Sigh! Do they want me, my gifts and abilities, or simply to exploit my network? Some of these Christian organizations actually don’t have a cap on the number of people they will hire; if you have the support raised, you’re welcome to come on board. (The organization takes 10 to 20% off the top for ‘administration.’)

Base Salary + Donations – This one is a combination of the two above, and the place I’ve seen it practiced most often is with students working at Christian summer camps. They are promised a very conservative rate of pay which includes meals and housing, but can then do fundraising over and above that in order to increase their bi-weekly pay. Sometimes the donors remain on the camp’s mailing list long after the kids have left and the last canoe has been stored away, which can be a bit of a windfall for the camp long-term.

Deputation – This is a word used largely in the Evangelical community to describe the relationship missionaries have with the local churches that support them. It usually means that when they are home on “furlough” instead of having a season of sabbath rest, they spend their weekends driving around to visit those churches, hand out prayer cards, set up a table in the lobby with artifacts and possibly even preach the Sunday morning sermon. This guarantees that they will be kept on the missions budget for the following year. 

Bi-Vocational – We usually hear this term used in conjunction with pastoral ministry, as it’s a growing model. But anyone serving part-time in ministry and part-time with a ‘secular’ job qualifies. There are really two meanings to bi-vocational; sometimes it means two part-time jobs, but other times it may mean the ministry job doesn’t really pay at all. Despite this, the ministry job may actually have demands that leave the individual ‘on call’ 24/7. There’s a saying that, “When they have you part-time, they have you full-time.” You’re expected to be available at all hours.

You Pay Us – In many cases, the person working for the organization actually pays for the privilege of doing so. In the case of an organization like YWAM, its entry program, known as Discipleship Training School is really an educational opportunity, not anything resembling actual employment. Participants can do fundraising to cover the costs, or if they’re coming out of the business world, or a students who took a year off to raise funds to take any of YWAM’s schools, they might just show up on day one with their checkbook and pay it that way. However, in other organizations (i.e. not YWAM) the line between education and training and the need for people to actually work on the organization’s behalf is rather blurred. If you’re paying to sweep floors or do dishes, and that is the majority of your responsibility, then you have the worst of both worlds: It’s not a job, and you’re not learning anything.

Are there some I’ve missed? Probably. One faith ministry I worked for frequently gathered the staff together and announced that the payroll would be late that week. I was a single guy, but there were people working for them that were the sole earners in their family, with dependent children. That’s why I’m sure this story is incomplete; there are all manner of variations out there because, after all, “It’s the Lord’s work.”

The Moral Quandry of Website Re-Design

If you have any technical skills at all, there are boatloads of money to be made in convincing website owners, including a great many Christian organizations, that their website needs to be upgraded.  Sometimes this is true. Most of the time it is simply not the case that the thing needs a fresh coat of paint.

In many cases, websites are under-performing because they are simply not maintained. In other cases, designers have supplied the organization in question with a great template but no little about the mission of the company or ministry to be able to supply content. In yet other cases, consultants are using minor technical glitches to justify a total refit.

Unfortunately, in other cases, the only argument that can be made for change is that people simply want a website that looks current, or want change because every other organization they deal with has upgraded their site this year.

In the case of what is probably one of the most widely used sites among Christians, BibleGateway.com, the changes necessitate relearning a website that was comfortable and familiar.  Things that were at the top are now at the bottom. The “resources” page now consists of a number of links to product that is being sold, not coincidentally, by the site’s new owners, HarperCollins Christian Publishing.

Probably knowing the need to hedge their bets, the site has the option of reverting to the “old” Bible Gateway.

I guess the thing that bothers me most is that designers get paid big bucks to ply their HTML trade, while writers, content-producers and not-so-technically-gifted creatives work for peanuts. This happened to us literally. After not getting much direction from the author and then not hearing anything for several months, a bag of peanuts showed up in the mail. Seriously.

Christian organizations need to save their money and not be obsessed with having the best-looking site in town when website users may not even appreciate the changes. And designers need to stop bleeding organizations of the tithes and offerings they have collected from sincere donors.

…Now then. Having said all that, I do have some friends who are website designers, and there are some sites out there that are hopelessly out of date. This wasn’t directed at them, but rather at the industry that revolves around change purely for the sake of change.

…And yes. This blog has had the same theme since it started. I’ve looked at alternatives but there have been reasons I’ve stuck with the familiar red border and the thin serif-font lettering, also in red. Oh wait, that’s TIME Magazine. I’ll change when they do.

 

Austin Gutwein: Living to Give

The nature of my work permits me to be able to recommend books to parents for their middle-school and high-school kids. When this occurs, which it does regularly, I have three “go-to” authors to recommend. While a number of books are written to teens, it’s great to have authors like these where the books were written by teens for their peers:

• Zach Hunter — He has three books with Zondervan, starting with Be The Change, and his cause his 21st century slavery. His organization is called Loose Change to Loosen Chains, which he began at age 12.
• Alex and Brett Harris — A&B are twins and also brothers to author/pastor Joshua Harris. Their books, Do Hard Things, and its companion, Start Here inspires challenge youth to deeper commitment.
• Austin Gutwein — His first book, Take Your Best Shot tells the story of how he turned a passion into throwing free throws into a fundraising organization, Hoops of Hope, that benefits HIV/AIDS orphans in Africa, a charity he started at age 13 based on an idea he had at age 9.

So when I had a chance to review Austin’s newest book, Live to Give, I jumped at the chance to be able to introduce people to Austin’s writing and his personal story.

But the temptation was to thnk, ‘Hey, this is a youth book, I’ll just read the first half of it and then write the review.’ However, I’ve never reviewed a book I haven’t read to cover to cover, and honestly, I really enjoyed the experience.

Live to Give is based around the story of Jesus feeding five thousand men (plus women and children) and focuses around the lunch that a young boy offered up to Jesus and his disciples that was multiplied many times over. Austin compares this to the lunch box his mom packs for him, and sees that lunch box as symbolic of the ‘gift set’ that each of us possesses. Remarkably, he gets more than a dozen chapters out of that analogy.

The writing style is very conversational. I can’t emphasize that enough. This is a book that even that “not-much-of-a-reader” in your house — which is usually a boy — can get into.

Although the book centers around the gospel narrative of the miracle Jesus performed that day, and the little boy who played a part; there are a number of other stories and related scriptures mentioned. This is a book that will raise the Biblical literacy level of that kid who hasn’t been paying attention at weekend services.

I suspect that Austin tells more of the story of Hoops of Hope in the first book, but there’s enough of it here that you don’t need to have read Take Your Best Shot to appreciate Live to Give.

This is a book that teens, parents and youth workers should be aware of.  Thomas Nelson, paperback, 197 pages. Great book. Amazing author.

A copy of  Live to Give was provided to Thinking Out Loud by Graf-Martin a Canadian agency that works alongside U.S. publishers like Thomas Nelson to promote key titles north of the 49th.

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I wanted to step outside the review itself and add a few comments that may seem superficial, but which I feel are important. There’s a saying that you can’t tell a book by its cover, but there are three things with the back cover of Live to Give that I think need to be addressed.

1. What on earth is Austin wearing in his publicity shot? And is that a tie he has on? Are they cool now? Please don’t tell me ties are coming back. It seemed an odd choice for the primary market they’re going after.
2. The sticker price of $14.99.  Thomas Nelson has kept its youth fiction at $9.99 for paperbacks; I’d hate to see this price work against more people seeing the book; though I’ll grant you some prices are being set high with the full knowledge that mass merchandisers will be aggressively discounting, rendering the MSRP somewhat meaningless. Still, Pete Wilson and Max Lucado list at $15.99, $14.99  seems high for a youth market title.
3. The use of the appellation “JUVENILE NON-FICTION” above the bar-code. I realize this is standard at Thomas Nelson; everything that’s not for adults gets this “juvenile” designation; but perhaps it is time to rethink that on teen/youth books. Heck, Austin just started at Anderson College as a poli-sci major; his peers — who would enjoy it — aren’t going to read his book when they see that category label. If that’s ‘policy,’ either change the rules or make exceptions.

To repeat, I enjoyed this book, and I intend to strongly recommend it, but I think the publisher’s choice for a back cover constitutes shooting themselves in the foot.

Inspiration Network CEO Pay Tops $2.5M US

In the part of the world where I live, they’ve just published the 2011 edition of the “sunshine list.” Basically, it requires that the compensation package for anyone working in the public sector totaling $100K or more has to be made public. Each year’s announcement is usually followed by the predictable amount of outrage, but each year the list gets longer.

So I was somewhat distressed to see this story in the Charlotte (NC) Observer:

Inspiration Networks, a nonprofit Christian broadcaster based near Charlotte, paid chief executive David Cerullo nearly $2.5 million in total compensation in 2010, newly released IRS returns show.

His pay increase since 2008: 47 percent.

Operating from a 92-acre campus in Indian Land, S.C, the cable television network has become one of the world’s largest Christian broadcasters, bringing religious programming to more than 120 countries.

With a budget of more than $95 million, it has raised much of its money by telling viewers that God brings financial favor to those who donate. Televangelists tell viewers to expect miracles if they send money.

A 2009 Charlotte Observer investigation found that Cerullo was the best paid leader of any religious charity tracked by watchdog groups…

Continue reading here.

One of the challenges that we face living in the Christian bubble involves interacting with a larger world where the concept of “right and wrong” has vanished off the radar. Yet here is a Christian organization with a situation that so clearly flashes “wrong.”  Their defense?

His pay is determined largely by an independent committee that studies executive compensation at “similar organizations” – including cable television networks, media companies and national ministries – and then makes a recommendation to Inspiration’s board of directors, the network said.

But many philanthropy experts say it’s unfair to compare salaries in nonprofit organizations with those in the for-profit world. That’s because nonprofits get substantial tax breaks – a form of public subsidy. In exchange, they’re expected to keep salaries at reasonable levels.

Ken Berger, president of Charity Navigator, said that he considers it “outrageous” for a nonprofit of Inspiration’s size to provide a $2.5 million compensation package, no matter what the organization’s pay studies say.

“You can manipulate the studies to put a good face on something that defies common sense, which is what we’re talking about here,” said Berger, whose group evaluates nonprofits.

Even religious nonprofits with far bigger budgets pay their leaders less than Cerullo, the Observer found. The Christian Broadcasting Network, founded by Pat Robertson, has a budget that’s nearly three times as large. Its CEO got total compensation of $383,000 in 2010.

This story also feeds those who feel religious charities and churches should pay their share of property taxes. And who can argue that with executive compensation of this degree, INSP is nothing more than a business?  The ministry relocated from Charlotte to Lancaster County. “I’d love to tax them at market value, for the county’s sake,” said Smith, the deputy assessor. “In the long run, it would help every taxpaying citizen in Lancaster County.”

In addition to David Cerullo’s pay package, the article goes on to state that according to 2010 tax returns:

• Wife Barbara got $191,000
• Daughter Becky got $195,000
• Son Ben got $188,000

Wrong. Wrong. Wrong.

As someone I know once said referring to a similar situation a few years ago, “Do these people get to heaven or are they exempted because they’ve experienced it already?”

And all these salaries are paid through the donations of people naively sending in their monthly donations of $10 or $20, which they can ill-afford; people who will never hear how much the ministry boss takes home.

Again, you’re encouraged to read Ames Alexander’s article at The Observer (click here)

The Business of Charity

This weekend I had two widely different experiences which were both connected by the theme of philanthropy in a Christian context.

The first began with an article I read about an organization which annually pools funds from a handful of wealthy donors and foundations and then receives grant applications from ministry organizations from which a few are selected to receive funding for various projects.  I’m guessing that you have to be giving around $100,000 to play in this league, but I wondered if in the process of collecting applications they had uncovered any organizations that might be of interest to people whose charitable donations were closer to $10,000 annually.

My motivation was that I believe that many people of means who are looking beyond their local church for worthy projects tend to go with what I call “the usual suspects.”  These high profile Christian parachurch organizations and relief and development agencies have frankly, in my opinion anyway, grown fat. They’re well known, well-established; they receive money in bequests, and honestly don’t need as do other charities.

On the other hand, there are a number of what I would call “next generation” missions and ministries which are just starting out, haven’t been corrupted by largesse, and are trying to meet new challenges; while at the same time being relatively unknown among the people I would call “the givers.”

However, when I delved into this further, what I found grieved me deeply, and when I use the word grieve, I am not trying to be overly dramatic.

In case you don’t know, charity is an industry.

This industry is greatly focused on self-perpetuating and while some revenue definitely goes to charitable purposes, a surprising amount goes to assuring that there will be even more revenue in the future.

As I examined some of the successful grant applications, a large number of them had gone to improving websites, integrating technology systems, streamlining data processing, hiring IT specialists, increasing web presence, etc.  The phrase, “proposals that demonstrate a thoughtful and innovative approach to increasing an organization’s impact will be more favorably considered” should have been a red flag.

The organizations themselves are doing work worthy of support, but these large donors would never have the satisfaction of seeing their money used for those more noble goals.  Instead there was money for proposals and studies and initiatives to increase further fundraising. Quick, gag me with a response card.

There was money for Christian colleges, but it wasn’t going to bursaries or keeping tuition costs flat for the next three years.  There was money for a Bible distribution organization, but it wasn’t buying Bibles.  There was money for an organization that helps out young mothers in poverty, but it wasn’t going toward infant formula or subsidized housing. There was money for a Christian camp, but it wasn’t providing for summer leadership training for students or giving free weeks of camp to children in poverty. There was money for a medical mission, but it wasn’t going to buy pharmaceuticals or first aid supplies. There was money for a student ministry that wasn’t going to hire another high school or college worker; perhaps one that is qualified but not networked enough for the rigorous deputation required.

There was money to buy an organization new laptops, to help another promote a promotional DVD, for another to hire a consultant, for another to start an arts journal. And more consultants, IT directors and website improvements. And then there was the one for a well known inner city mission to improve the acoustics in a meeting room. “Seriously, I just can’t work with the echo in here.”

Do you see the problem?

I was hungry and you hired a consultant. I was thirsty and you improved your website. I was in prison and you merged with another organization. I was naked and you lobbied your government for increased freedoms to raise more money.  I was homeless and you were worried about room acoustics. I was sick and you bought inventory management software.

This is the very type of liberal spending that grates on so many people when it’s done by government, but we forget that there is much excessive spending in the religious charitable sector as well. I’d really like to know how that arts journal is going to make the world a better place.

By contrast, on Saturday night, we attended a fundraising dinner for a missionary in eastern Europe. He got on a plane and landed in a foreign place with nobody there to meet him at the other end. No idea where he would stay when he got there or where his first meal would come from. No covering from a mission agency or church denomination.

The spaghetti dinner we attended — and church fundraising doesn’t get any more basic than this, except for car washes — was put together ostensibly because the church had no proper means by which to receipt donors. The missionary in question was working with the gypsy population until the government forced most of them out of the city in question, and so he now works with ethnic minorities. Any extra money he has he spends on the people he works with, including needs they face for prescription medicine. He has apparently put off his own medical care several times, preferring to look after the needs of others.

The money collected on Saturday night will be given to his mother here in Canada, who will then credit an account that he can access. This is real grassroots fundraising for a real grassroots missionary. What it should be all about. They raised $840; nothing in that number to attract the interest of the elite donors club.

Charity is a business; there’s no getting around it. Its participants end up with confused priorities and misguided visions. The term, “misappropriation of funds” needs not refer to people who are stealing or embezzling from the organization in question, you misappropriate every time fail to meet the genuine needs for which the organization or program was established in the first place.

In all fairness, I should add that all the examples above apply to 2010, and in 2011, the “faith-based funders,” as they call themselves elected to support more realistic projects, and required that each one represent a partnership between two established Christian charities. Still, many of the projects were described in a somewhat nebulous form of charity-speak that belies what the actual invoices for goods and services actually pertained to; and also, as a footnote, the money in both years all stayed in North America; there was no consideration of projects undertaken by U.S. and Canadian organizations overseas.

Sigh.

…If you wish to support the missionary in the story above, contact me off the blog and we’ll try to provide some direction. I guarantee it would be money well spent, even if you don’t get a tax receipt.

James 1:27 Religion that is pure and genuine in the sight of God the Father will show itself by such things as visiting orphans and widows in their distress and keeping oneself uncontaminated by the world. J. B. Phillips Translation   THIS IS TRUE RELIGION

Our Post-Christmas Credit Card Crisis

Each year we say that instead of giving gifts to each other, we’re going to do something significant to help the third world, and a couple of years ago we got more serious about this and began a Christmas tradition of donating to water projects — the repair and restoration of fresh water wells — through the organization Partners International.

This year Partners sent us a catalog containing a variety of projects to which we could donate, and I decided to let the family have greater input into this than in previous years.  The various needs  in the Canadian organization’s mailing called Hope in Action were divided into different categories such as,

• Children and Education
• Entrepreneurship
• Justice Issues
• Women’s issues
• Christian Witness
• Health and Wellness

while Partners in the U.S. has a greater variety of potential giving themes in their catalog called Harvest of Hope.

The family seemed especially interested in projects which keep young women out of the sex trade overseas, or projects which help them not end up there to begin with.  One of these is listed on my receipt as item 8007C — Mahima Home — A Refuge for Girls Rescued From the Sex Trade — $300.00

We selected three projects that were certainly more expensive than our previous investment in water wells, and then added one more to top it off to an even number, a number that was larger than I expected when we first sat down around the computer.  “Oh well, it’s only money;” I remember saying at the time.

But then, like so many other families that overextend themselves over the holidays, we got a credit card bill which contained both our Partners projects and our regular expenses, not to mention the Christmas gifts that we actually gave.

And it’s all due on Friday.

“I think we need prayer;” I said to my wife when she read me the bill.

I then told her, “I think we should ask the pastor for prayer because I’ve run up our credit card on prostitutes.”

It would be funny if it were funny.

It got me thinking however, what about the person who does find themselves with an impossible credit card bill because they did spend too much on hookers?  You’ve got the sin of fornication combined with the sin of overspending, and they don’t cancel each other out.

I might just leave the prayer request at our church’s prayer email address anyway.  We’ll call it increasing global awareness.