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Lone sentry on the wall

How do wealthy ministries spend the millions of dollars that Americans give them?

Lone sentry on the wall

PHILADELPHIA- Early this summer, Paul Crouch of the Trinity Broadcasting Network (TBN) wrote to supporters, telling them that the network's spring "Praise-a-Thon" was a success. For five days, Crouch and a slate of other televangelists had raised money on-air for TBN, the largest Christian television network in the world. "TBN is debt free," Crouch wrote. "Free to invest every penny into expansion to the rest of the world!"

For TBN, that means investing in broadcasting its Christian-themed programs on thousands of cable systems and more than 5,000 television stations. But it also means investing in something else: Southern California real estate.

The 34-year-old ministry based in Santa Ana, Calif., owns a slew of real estate in Southern California, as well as a mobile home park in Florida. But it's not the mobile homes that have drawn national attention. Instead, the public's gaze has fallen on a pair of TBN-owned mansions in Orange County, Calif., that are reportedly worth millions.

Earlier this year, ABC's 20/20 reported that property records revealed one of TBN's mansions is worth about $4 million. A second home with more than 10,000 square feet is worth about $6 million, according to the report.

TBN spokesman Colby May wouldn't confirm or deny those figures, but told WORLD that the mansions are used for "ministry purposes" like taping shows and hosting guests. TBN founders Crouch and his wife, Jan, sometimes stay in the homes as well. May says the couple reimburses TBN when they use the homes for purposes unrelated to the ministry.

May also explains why TBN owns the expensive properties: He says they are a wise investment of the ministry's funds, including more than $110 million that donors give to TBN each year.

Some 3,000 miles away, in a modest living room in suburban Philadelphia, Rusty Leonard wonders whether TBN donors would agree. Leonard is the founder of Wall Watchers, an independent watchdog organization that reports on the finances of more than 500 Christian ministries, including TBN. The group's website features data for donors, outlining how much money ministries have and how they spend it.

For Leonard, the idea for Wall Watchers was born out of a practical need. A former vice president at Templeton Investment Counsel Inc., Leonard once managed a $3.5 billion portfolio of client assets. He also managed his own personal wealth and donated large sums of money to Christian ministries.

That's where Leonard encountered a problem: He realized he knew much more about the stocks that he invested in than the ministries to which he donated. Companies release "volumes of financial information," he says, but ministries often release little.

To make sure they were donating wisely, Leonard and his wife, Carol, began asking the ministries they supported for annual financial statements. They were stunned by the result: "We got a very bad reaction."

Many of the ministries resisted Leonard's request, and he came to an unsettling conclusion: "I realized these ministries had no accountability, and that the donor was completely unrepresented in the transaction that goes on."

That's a common problem in the nonprofit sector, Christian and otherwise, according to Leonard. "Nobody's going to invest in a company without having an idea of what's going on with the money," he says. "But everybody gives to charities without giving a thought to what they are actually doing with the money."

Convinced that Christian donors needed more information, the Leonards used their own money to start Wall Watchers in 1998. Two years later, Leonard left his high-profile job at Templeton to donate his full-time efforts to the organization and to Stewardship Partners, a Christian investment firm he also started.

Wall Watchers asks Christian ministries for audited financial statements, and most eventually comply. But a handful of organizations refuse, creating troubling questions about how they handle millions of donor dollars.

Some financial information about nonprofits is already available through publicly accessible tax records called 990s. The forms include broad information, including revenue and the salaries of top officials. But churches aren't required to file the forms, and IRS standards are broad: Ministries that hold little resemblance to a traditional church often gain church status and the freedom from public filings.

One high-profile example is Benny Hinn Ministries. The Texas-based, international organization is known for its appeals for financial donations and its "miracle crusades" where ministry founder Benny Hinn claims to heal participants of a range of diseases and disabilities. The organization also claims it is a church, and the IRS agrees. The group isn't required to file public tax records. That means the public doesn't know how much money Hinn takes in, or how the ministry spends it.

But media reports have given some indication of where the organization's money goes. NBC's Dateline reported in 2002 that Hinn lived in a ministry-owned home in California worth $10 million. In a letter to supporters Hinn defended the oceanfront mansion, calling it a "parsonage." He added that the property was a wise investment and noted that it had quadrupled in value.

The segment also reported that Hinn drove a Mercedes SUV and a convertible, both valued at about $80,000. The report documented hotel stays for Hinn ranging from $900 to $3,000 per night, all charged to the ministry. Hinn called the hotel stays "international stopovers" designed for rest.

Hinn says an independent accounting firm audits his organization's finances each year, but he refuses to make the results public. The organization hasn't responded to Wall Watchers' requests for audited financial statements, and Hinn officials did not return calls from WORLD seeking comment. Creflo Dollar Ministries, another nonprofit that would not release financial statements to Wall Watchers, also did not return phone calls from WORLD.

Wall Watchers knows more about the finances of TBN. The network does file public tax returns, and Leonard says the documents reveal some striking information: According to its 2004 filings, TBN's cash and short-term investments totaled more than $340 million. Leonard calls that "a huge cash hoard" for a nonprofit ministry: "They have the profit margins of Microsoft."

TBN's March newsletter announcing the network's spring fundraising telethon included 15 separate links to donating options. Crouch wrote: "If you have a need-'GIVE GOD A SEED!' . . . Fill out your pledge on the flap of your envelope."

In a two-part investigation of TBN, the Los Angeles Times noted that in a past telethon, Crouch encouraged viewers to pledge $1,000, even if they didn't have it. "Do you think God would have any trouble getting 1,000 extra dollars to you somehow?" Crouch asked. The report added that Crouch told viewers: "If you have been healed or saved or blessed through TBN, and have not contributed . . . you are robbing God and will lose your reward in heaven."

TBN spokesman Colby May defends the organization's substantial cash holdings and its appeals for more donations. He points out that television is expensive and says TBN incurs costs of "tens of millions of dollars a month" to broadcast around the world. He also says new FCC regulations will require the organization to make changes that will cost millions more.

May also defends the salaries reported on TBN's tax returns. Paul and Jan Crouch take in a combined total of nearly $800,000 a year, another figure Leonard calls high for a nonprofit ministry. "I'm not saying that people in ministry should be poor," says Leonard, "but you do want to see some degree of sacrifice." May counters by saying that the Crouches built TBN from scratch and that their salaries are small compared to television executives.

Wall Watchers has asked TBN to disclose more financial information, specifically a consolidated audited financial statement that would give a clearer picture of how money flows between TBN and its related corporations. Leonard says TBN has consistently rejected the requests.

May contends that TBN sent Wall Watchers audited financial statements from its individual stations around the country. He forwarded to WORLD a copy of a March 2004 letter to Wall Watchers that said financial statements were enclosed, but did not forward the enclosures.

Leonard says Wall Watchers has never received financial statements from TBN, and showed WORLD an April 2005 letter on TBN letterhead that said: "As stated in past letters to your organization our policy restricts us from including any audited financial statements."

Leonard rejects TBN's assertions that he targets the organization because he disagrees with its theological bent. He does acknowledge his disagreements with so-called "prosperity theology" that emphasizes personal health and wealth as a sign of spiritual blessing: "It's turning the gospel on its head."

But Leonard says he reports fairly on organizations that emphasize prosperity, and points to the St. Louis-based Joyce Meyer Ministries (JMM). In 2005, Wall Watchers issued a "donor alert" for JMM, noting that the ministry did not make financial records public.

The alert also noted a series of reports from the St. Louis Post-Dispatch that revealed Meyer and her four children lived with their families in a five-home compound owned by the ministry. The homes were worth a combined total of more than $3.7 million. Meyer's home included a putting green and an eight-car heated garage, according to the report.

After months of criticism, JMM relented. The ministry sold the homes, paid $1.56 million in real estate and property taxes, and started making audited financial statements available on its website. Wall Watchers removed its donor alert and reported JMM's efforts at financial transparency.

Leonard doesn't expect all of the 29 ministries on Wall Watchers' "transparency watch" list to follow suit. The list reports ministries that refuse to make financial statements available. At least eight of the organizations, including Benny Hinn and Creflo Dollar Ministries, have programs on TBN.

But Leonard does hope that at least a small percentage of donors will consider diverting donations to organizations that are more transparent with funds. He's convinced the work is important and says he has largely funded Wall Watchers himself, pouring in more than $2 million.

The effort is depleting his savings, but Leonard says it's worth it: "If we can just move 10 percent of donations from unworthy ministries to worthy ministries, that's a huge, huge impact."

There are signs the efforts may be working. After ABC's 20/20 ran its report featuring Wall Watchers and TBN, Leonard says he received more than 2,000 emails in response. Most were positive, he said.

But Leonard's favorite sign of progress so far is a money order Wall Watchers received from a man who discovered the group's work. On the "pay to" line, the donor had scratched out "Benny Hinn Ministries."

Jamie Dean

Jamie Dean

Jamie lives and works in North Carolina, where she covers the political beat and other topics as national editor for WORLD Magazine. Follow Jamie on Twitter @deanworldmag.