DATELINE: January 10, 2011, Chicago
In November 2007, Senator Charles Grassley stood at the door of six well-known ministries, demanding that they reveal their inner workings. Unlike other charities that Senator Grassley has investigated, these were churches, protected by the imprimatur of the Constitution. The question we and many others asked at the time was whether...
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these ministries would voluntarily disclose the requested information to Senator Grassley's investigators, or defuse the request by falling back on their status as churches.
None of these ministries would have been our first choice for our own charitable donations. Based on articles we read at the time, we certainly had some questions about how those running several of these ministries were spending the money they were collecting. But our reaction to Senator Grassley’s demands was similar to our reactions to his investigations of other charities: The IRS has regulatory authority over these organizations (albeit limited authority because these organizations are churches). It is the appropriate agency for opening an investigation (an audit or examination), not Senator Grassley. When the IRS investigates, taxpayers are guaranteed due process. On the other hand, taxpayers are in a legal no-man's land when Senator Grassley opens one of his faux audits. He is free to trample on their rights--unless the subject of the inquiry take the "political" risk of resisting--and often has done just that.
We were therefore pleased to read Senator Grassley’s January 6, 2011 press release. Talk about spin. Here are the facts. Four of the six ministries being investigation by Senator Grassley did not provide him with information or provided what Senator Grassley refers to as “incomplete” information. Two of the ministries—Joyce Meyer Ministries and Benny Hinn Ministries—completed the questionnaires and adopted voluntary governance reforms. But did the Meyer and Hinn ministries really reform? We took a look at the Hinn documents posted on the Senate Finance Committee's website.
Pastor Hinn’s staff turned over nearly 5,000 pages of documents, and Hinn wrote a letter to Senator Grassley dated September 9, 2008. While we will never know what is deep within Pastor Hinn’s heart, we read the verbose language in that letter as a sign that Hinn was thumbing his nose at Senator Grassley--whether that was his intent, we don't know. The accompanying memo outlining governance changes at the ministry hits all the right notes, but there simply isn't enough detail to determine whether the response is an exercise in form or substance. Moreover, without a Form 990, it is impossible to determine how the purported reforms affected the numbers, including compensation. We found no Form 990 when we reviewed the GuideStar database, which was not surprising given the ministry's status as a church.
Among the obvious questions we have are the following: How do "Love" offerings play into Pastor Hinn's ministry? As we understand the concept, "Love" offerings are voluntary payments made by members of a church directly to the church's spirtual leader as a sign of appreciation. Is Pastor Hinn required to disclose any "Love" offerings that he receives to the board if he receives any? While the board has supposedly been strengthened, are there affiliated entities and how do they play into the structure of Pastor Hinn's ministry? Following the retention of an outside compensation consultant, how does Pastor Hinn's and other senior leaders' compensation compare to compensation paid by similar organizations for similar services? The memo accompanying Pastor Hinn's memo indicates that historically Pastor Hinn's compensation had been "below those of other evangelists working in the same sphere." When evaluating comparables, how are "Love" offerings taken into account?
Many of the changes referred to in the memo accompaying Pastor Hinn's letter could be largely cosmetic. For example, board meetings were moved from "leisure-centric" locations and are now held telephonically or in "more perfunctory" locations. That says nothing about the balance of power on the board between Pastor Hinn and the directors. Nor does it necessarily preclude other types of meetings in "leisure-centric" locations. Is this a board that suffers from "founder's syndrome?" That's the critical and unanswered question.
Then there is the question of ministry-provided vehicles and credit cards. The memo accompanying Pastor Hinn's letter points out that the ministry was always reimbursed for personal use of credit cards and that the value of automobile usage was always reported on W-2s. It does not, however, say whether pay has been adjusted upward to replace the value of automobiles previously provided by the ministry, nor does it indicate how personal and business expenses are defined.
The memo also talks about new limitations on the housing allowance for ministry employees, but it does not describe the new limitations in detail, nor does it indicate whether salaries were grossed up to take account of the reduction in the housing allowances.
In short, much of what is written in Pastor Hinn's letter is empty verbiage in the absence of specific details. Maybe there were meaningful reforms, but we certainly can't tell from the letter whether the changes are in form or are more substantive. This is not meant as a criticism of Pastor Hinn or his ministry. It is a criticism of Senator Grassley and his staff. Senator Grassley's staff wrote to him in a memo:
Pastor Hinn and Joyce Meyer complied with your request and engaged staff in constructive, open dialogue. Through our review of their responses as well as our conversations with their representatives, we learned that they each had separately undertaken significant reforms, some of which began before your inquiry. These reforms are outlined in the letters they submitted to you, which are attached. The reforms undertaken by Pastor Hinn and Joyce Meyer are extensive and are to be commended. Staff completed its review of these organizations as a result of these reforms. Joyce Meyer Ministries also became a member of the Evangelical Council for Financial Accountability in March, 2009.
Maybe the oral responses from Pastor Hinn and his staff provided Senator Grassley's staff with a basis for its commendation of Pastor Hinn, but what is in the memo accompanying Pastor Hinn's letter raises lots of questions which the staff doesn't acknowledge in its memo. Moreover, the bulk of the memo is a general discussion of issues relating to churches and religious organizations rather than a discussion of the facts and conclusions pertaining to the investigation. In one sense that is good. The staff of the Senate Finance Committee should be taking on policy issues rather than conducting audits.
We have a problem, however, when any government official publicly raises questions about a citizen or group, but doesn't follow through with a complete and specific set of findings. Although Pastor Hinn and other religious leaders who received inquiries from Senator Grassley may be happy to put the matter behind them, the fact remains that there are a lot of unanswered questions. Senator Grassley should have never gone down this road, but once he did, he should have arrived at a more complete and definitive resolution.
One thing is clear: Pastor Hinn knows how to use experts to lend creditability to his response. His ministry retained Bruce Hopkins and two former IRS Commissioners to assist him in responding. Yet, despite the changes and the experts, Wall Watchers, a well-known Christian watchdog group, has given the Benny Hinn Ministries an F in terms of transparency and placed the ministry on its 2010 Donor Alert Ministries list.
Now that he is shifting from the ranking member of the Senate Finance Committee to the ranking member of the Senate Judiciary Committee, Senator Grassley has asked the Evangelical Council for Financial Accountability (ECFA) to pick up where his unfruitful investigation left off.
ECFA will be looking at a number of issues on Senator Grassley's wish list. Many of these items are on the periphery of what is really at issue here. For example, Senator Grassley has asked ECFA to consider whether the law should impose an excise tax on nonprofit organizations that engage in excess benefit transactions and whether the rebuttable presumption under Section 4958 should be repealed. These questions miss the point. Although churches are covered by Section 4958, their practical concerns are narrower than other Section 501(c)(3) organizations' given the strict limitations on the IRS's authority to commence audits of churches and the exemption of churches from having to file the Form 990. In short and with all due respect to ECFA, there are others who are better equipped to address those two issues than ECFA, although ECFA is probably the right organization to examine the issues that are limited to churches and religious organizations.
As regular readers of this blog know, we are not big fans of judging whether someone’s compensation is too high. Despite our reservations, what ECFA should focus on is whether there should be upper limits on what religious leaders receive as compensation and fringe benefits, whether and when religious leaders should be flying around in private jets, what religious leaders should be disclosing to donors and the public, and when a church is no longer a ministry, but rather a business that should be taxed. Those are difficult questions, but those are the questions that are implicit in Senator Grassley’s investigation.
Despite his departure as the ranking member on the Senate Finance Committee, Senator Grassley will continue to monitor the tax-exempt sector. We suspect his interventions will be less frequent given his diminished role on the Senate Finance Committee and his new duties.
Although we may not be fans of the four ministries that either did not to respond or responded incompletely, we do give them credit for taking an apparent stand against Senator Grassley’s intrusive and unwarranted investigations. Senator Grassley's press release is a white flag indicating surrender rather than a victory. It’s an old story, with a new twist. The big bad wolf huffed and he puffed, but the six houses are still standing. However you may feel about these six ministries and how they go about accomplishing their missions, all taxpayers owe them thanks for how they responded to what we consider to be overreaching inquiries from the United States Senate.
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