TIME: Almanac 1993/TIME Almanac 1993.iso/time/caps/87/87capeth.2

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                                                                                August 3, 1987

ETHICS

Enterprising Evangelism


Scandal opens a window on TV's major preachers--but not too wide


Televangelism is a special kind of big business. In less than
two decades, the vocation of preaching the Word of God via video
has grown from hardscrabble beginnings into far-flung real
estate and broadcast empires with assets ranging in the hundreds
of millions of dollars. In almost every instance, those
holdings are dominated by a single dynamic individual who
decides how the money will be spent and who strives, above all,
to keep vital donations flowing from the faithful.

Who are the televangelists and how well are those
multimillion-dollar stewardships handled?  What exactly happened
at PTL?  Could it affect other major television ministries?  To
answer these important questions, which involve hundreds of
thousands of devout Americans and the huge amounts of money they
give, TIME conducted a month-long investigation of these often
secretive organizations. In the process of piecing together a
comprehensive picture of the inner workings of PTL and other
ministries, correspondents scrutinized hundreds of documents and
crisscrossed the U.S. to speak with the key performers and more
than 100 inside sources, many of whom had previously refused all
interview requests.

Despite the many hovering suspicions and accusations, none of
the major organizations, including the renovated PTL, are
currently caught in any scandal. But TIME's examination
revealed a continuing pattern. In case after case, the basic
management problem that gave birth to the PTL scandal was
glaringly evident in other evangelical organizations:  a lack
of effective accountability.

The controversy in the field of televangelism is being stirred
by six Protestant conglomerates of varying wealth and influence.
The gaudiest is scandal-tarred PTL: proceeds from all
operations in 1986 came to $129 million. PTL is currently run
by Fundamentalist Jerry Falwell, 53, who also telecasts weekly
services from his own 22,000- member Baptist church in
Lynchburg, Va., and operates Liberty University, a 7,500-student
institution, and a 1.5 million-subscriber cable system, the
Liberty Broadcasting Network. Annual proceeds from Falwell's
ministry amount to about $84 million. In Baton ROuge, La.,
Pentecostal Jimmy Swaggart, 52, has his 4,300-member local
church, plus daily and weekly TV shows; he stage-manages
elaborate preaching tours in the U.S. and overseas and leads a
Bible college. Proceeds from the ministry:  some $142 million.

Based in Virginia Beach, Southern Baptist Pat Robertson, 57,
formerly presided over a daily talk show (The 700 Club), his
Christian Broadcasting Network (CBN) and a graduate school.
(All those activities are now run by subordinates while
Robertson campaigns for the Republican presidential nomination.)
His ministry's activities earn some $183 million annually. In
Tulsa, Oral Roberts, 69, a member of the United Methodist Church
but Pentecostal in style, oversees daily and weekly television
shows and presides over a $500 million complex, including the
4,650-student Oral Roberts University and the City of Faith
Hospital. Annual budget:  some $120 million. Robert Schuller,
60, who was ordained by the Reformed Church in America,
broadcasts his syndicated weekly Hour of Power shows from the
$20 million Crystal Cathedral in Garden Grove, Calif., and
takes in some $42 million annually.

All these entrepreneur-preachers have been hit hard, at least
temporarily, by the PTL scandal. Swaggart says that in April
and May he ran a $3 million deficit; the June gap was a little
over $1 million. In June, Robertson's CBN reported $12 million
in lost revenues for the three-month period ending in May and
projects a $21 million shortfall through next March. The
Roberts organization has admitted that monthly donations to the
ministry dipped from $4.5 million to about $3 million in April
and May. Falwell has reported a $4 million deficit in the wake
of the scandals, and Schuller admits to a "significant" dip
during March and April.

The drop in funds has coincided with a decline in the
ministries' TV audience. Exact figures on cable viewership are
hard to come by, but the falloff of broadcast viewers has been
dramatic. Between February and May, the number of TV households
tuning in to Swaggart's weekly show dropped from 2,161,000 to
1.759,000. Robert Schuller's Hour of Power lost 191,000
households, dipping to 1,507,000. Oral Roberts dropped 155,000
households, to 994,000. Jerry Falwell's Old Time Gospel Hour
and Robertson's daily 700 Club just about held even. The only
gainer of the group, ironically, was The PTL Show, which
climbed from 250,000 to 302,000 households. That increase may
have been due to curiosity seekers or to Falwell supporters who
tuned in after the Fundamentalist minister took over the
program.

The ratings changes are highly significant in the televangelism
industry, because viewers form what ministries term their
"donor base."  The faithful TV audience is a mainstay of
ministry income, providing a steady flow of gifts--commonly $20
or $20 a contributor. The names and addresses of donors are
carefully preserved in computer banks and used in direct-mail
donation pitches, another major source of ministry income. At
the Jimmy Swaggart Ministries headquarters, for example, workers
used to extract some $2.5 million in monthly donations from
occasional donors. That amount has now been cut in half.

All these ups and downs stem directly from accounts of the
mismanagement, which reached epic heights, or perhaps depths,
at PTL. From a jury-rigged studio, which began broadcasting in
1974 from an old furniture store in Charlotte, Jim and Tammy
Bakker had nurtured a Christian entertainment colossus. But the
mountains of documents at PTL show that the ministry ran, almost
literally, on a wing and a prayer. At one time the ministry
spent employee retirement funds to pay operating expenses. PTL
had no reliable internal audits, no checks and balances for
financial accountability and often no receipts or other devices
for keeping track of incoming and outgoing cash. In the final
months of the Bakker era, PTL was taking in $4.2 million a month
and spending $7.2 million.

Behind the accumulated chaos was a helter-skelter organization
run by an insecure, often dictatorial man who, in the words of
a former PTL executive, "didn't know how to balance his own
checkbook."  Executive turnover was constant. PTL repeatedly
switched legal advisers and accounting firms. Under Bakker, PTL
at one point had 47 bank accounts and 17 vice presidents, with
financial control split into four separate departments. Thus
no one except Bakker and his closet aides had an overall view
of the ministry and its money.

Some of the Bakkers' excesses have been well documented. Among
them: six luxurious homes, complete with gold-plated bathroom
fixtures and, famously, Tammy's air-conditioned doghouse. But
behind those well- publicized items, a broader pattern of
plundering PTL's treasury has emerged. According to the Falwell
loyalists who are currently in charge at PTL, in the Bakkers'
last 16 months in power, more than $2.4 million was paid out of
a single confidential executive checking account handled by the
Charlotte office of Laventhol & Horwath, PTL's auditors. Almost
$1.4 million in compensation went to the Bakkers and top
executives from the account during the first four months of
1987. Aide David Taggart received 1987 cash advances of
$111,000 and bonuses of $225,000. Payments totaling $128,000
were made last year to James Taggart, brother of David, who ran
an interior-decorating firm.

All of the came atop the Bakkers' salary and compensation, which
the current managers of PTL estimate at $1.6 million for 1986.
That was up considerably from a decade earlier, when Bakker
drew $24,000 in salary and expenses. In subsequent years, that
amount ballooned as Bakker used expense accounts to pad his
income. By 1982 Bakker was making about $129,000 and Tammy
$52,000, yet all the Bakkers' expenses, from tutors for the
couple's two children to their personal automobiles, were
covered by PTL. The ministry paid for virtually everything, no
matter how trivial:  Bakker once summoned a PTL plumber to
attach a lawn hose to a spigot at his home.

The Bakkers and their close aides drew colossal bonuses with
the approval of PTL's complaisant seven-member board. "We
directed very little, but we approved a considerable amount,"
says former Board Member J. Don George, pastor of the
4,500-member Calvary Temple in Irving, Texas. In a series of
confidential board minutes for November and December 1986,
subsequently obtained by TIME, no numbers are listed for the
bonus granted to Jim and Tammy and to Richard Dortch, a top aide
who joined PTL in 1984 and was defrocked along with his boss in
the wake of the Hahn scandal. Instead, on an attached piece of
Jim Bakker's stationery are listed bonuses totaling $800,000 for
the preacher, $175,000 for his wife and $175,000 for Dortch.

Were the board members bought off?  All deny it. Even so, some
board members received substantial gifts from PTL for their own
churches. Board Member George, for one, received a $100,000 gift
for landscaping his church in Texas shortly after he joined the
board in late 1985.

The Bakkers' high living had caught the eye of the IRS long
before the PTL scandal finally broke. In 1981 the agency
launched a two- year inquiry into the ministry. Then, in a
confidential 1985 report, the taxmen recommended revocation of
the PTL's tax-exempt status, retroactively to 1980. Reason:
the IRS believed the organization did not operate exclusively
for tax-exempt purposes and that part of its income personally
benefited the Bakkers and others.

Among other things, the IRS report called Jim Bakker's
compensation for 1981 ($259,770.29), 1982 ($400,765.58) and 1983
($638,112.27) excessive. The agency raised questions about a
host of other Bakker- PTL arrangements. AMong them:  PTL's
purchase of a $390,000 condominium for Bakker in Highland Beach,
Fla., in 1982, along with $202,566 that was spent on furniture
and fixtures; and an interest- free loan of almost $76,000 to
Bakker from the ministry. For its part, the ministry argued
that Bakker's salary was reasonable because he was the "guiding
light" of the ministry. IRS suspended its long- pursued civil
cases when a criminal investigation involving PTL began in June.

All those excesses, however, paled beside PTL's underlying
corporate style. PTL ran, says one former executive, on a
"theology of building."  Recounts Harry Hargrave, a Dallas
businessman recruited by Falwell to run the shattered
organization:  "Jim would build something here, and then he'd
have to build something bigger to finish paying for this as well
as the enlarged cash flow."  That pyramid philosophy led Bakker
from his first Heritage Village television studio in Charlotte
to Heritage USA and, finally, to the 500-room Heritage Grand
Hotel and its sister, the unfinished Heritage Towers. Bakker's
ultimate fantasy was a $100 million replication of London's
Crystal Palace. A painting of that now canceled project still
stands forlornly near the gilded piano in the lobby of the
Heritage Grand Hotel.

Bakker's sense of vision was highly erratic as well as
expensive. In 1977 he suddenly announced a push for a
world-wide network of missions; months later he abandoned that
project and broke ground for what was to become Heritage USA.
In 1986 Bakker raised $3 million in the span of a month to
erect Kevin's House, an adjacent 14-bedroom home for handicapped
children. Today only two youngsters live there, and federal
investigators are wondering where the money went. The principal
victims were PTL's "Lifetime Partners," an estimated 120,000
heads of households who pledged $1,000 or more in exchange for
a lifetime guarantee of free hotel lodging. In the past two
years, according to PTL officials, the ministry raised $108
million through those time shares, but only $54 million of that
went for construction, with the rest paying debts or covering
operating expenses.

Since taking over PTL, Falwell has instituted a substantial
measure of corporate sobriety. Sales of lifetime partnerships
at the Heritage hotels have ceased. A ten-member board,
including several businessmen, closely monitors the ministry
finances. A new accounting firm is digging through the ruins
of PTL's finances, preparing a comprehensive reorganization plan
to be presented in federal bankruptcy court this fall.

The rectitude that Falwell is administering at PTL has spilled
over into his own Lynchburg ministry. Last month the
organization published a rare 16-page report that included a
succinct two-page financial summary. For the year ending June
1986, the document noted, ministry revenues totaled $84.1
million and expenses ran to $82.9 million. Total assets were
valued at $91.5 million, while liabilities totted up to $56.5
million. However, Falwell would provide TIME with no audited,
detailed financial statements for the ministry.

Falwell has been relatively forthcoming about his income. He
earns $100,000 annually, with unspecified additional income from
speaking engagements (he receives about $5,000 an appearance,
and makes a dozen or so each year). No other members of his
family work in the ministry. Falwell recently received a $1
million advance from Simon & Schuster for his autobiography; the
first draft was completed in June. The preacher and his wife
Macel are making payments with interest to the ministry on an
1834 dairy farmhouse, purchased in 1980 for $160,000 and given
to his church. The televangelist's Thomas Road Baptist Church
pays the household utilities, as well as health and life
insurance. Falwell drives around Lynchburg in a
four-wheel-drive GMC truck and boards a small jet for
out-of-town trips.

Like most of the other major televangelists, Falwell is not a
member of the Evangelical Council for Financial Accountability,
a Washington-based group with 376 members. The council was set
up in 1979 to enforce a not terribly rigid ethics code for
independent Protestant fund raisers; Billy Graham is a member.
The group insists that the boards of its ministries cannot have
a majority of family members or insiders and that they must
release audited financial statements. Falwell left the
organization in 1983. He can at least claim to be responsible
to a nine-member board of outside businessmen who serve without
remuneration. One of them is Texas Wheeler-Dealer Nelson Bunker
Hunt, whose family currently faces a $1.4 billion bankruptcy
proceeding.

Aside from PTL, few ministries produce more controversy than
the television empire of Louisiana's pugnacious Jimmy Swaggart.
It was Swaggart who prodded his denomination, the Assemblies
of God, into defrocking Bakker. The bayou spellbinder boasts
the highest U.S. ratings for a televangelist, and his shows are
broadcast by 3,200 stations in 145 countries. Swaggart has
lately provided journalists with audited financial statements
of his ministry for 1984 and 1985, and this month an unaudited
two-page financial report went out to donors, with pie charts
showing the ministry's income and outgo. Just how much of the
Swaggart financial story is told in the reports is hard to
determine.

Swaggart is frank about his powers as head of Jimmy Swaggart
Ministries. "The board does not run these organizations," he
says. "Legally it has the final say. If it said, 'No, you can't
build a Bible college,' I couldn't build one. But you know what
I'd do?  I'd fire the board, because I'm the spiritual head of
this organization. It can't run without me."  Swaggart's board
is unlikely to rebel. It consists of himself, Wife Frances, Son
Donnie, Daughter-in-Law Debbie, Ministry Lawyer William Treeby
and four clergy chums. Swaggart says he is accountable to his
denomination, the Assemblies of God, and provides it with
audited financial rundowns.

The Swaggart organization has been involved in several
convoluted legal disputes. Among the charges leveled against
Swaggart over the years, the most serious was a 1983 accusation
that contributions to a children's aid fund went for other
purposes. The operation was undoubtedly sloppy, since money
raised went into the general fund, and only after 1984 did the
outflow of children's aid match the $21.8 million in donations.

Jimmy Swaggart Ministries is a family business, with 17
relatives on the payroll. Jimmy is paid $86,000 annually.
Frances and Donnie reportedly receive more than $50,000 each.
In 1985 the Swaggarts borrowed $2 million from the ministry to
build three luxurious homes in a wealthy Baton Rouge
subdivision. They have use of a $250,000 ministry "retreat" in
California and say that such luxury items as twin Lincoln Town
Cars and handsomely furnished offices come from donors.
Swaggart is a hot-selling gospel singer and pianist, but says
he takes no royalties on the records his ministry sells.

Hundreds of miles from Baton Rouge, in Virginia Beach, Va., the
PTL scandal prompted a historic event:  the first summary of
finances ever issued to supporters of CBN, the network headed
by Pat Robertson. In a four-page document, the organization
listed revenues for the year ending March 31 at $182.8 million.
Of the revenues, 74% came from donations and most of the rest
from Robertson's for-profit, 36.7 million-household cable-TV
network. Robertson refused to release full, audited financial
records of his operations to TIME, claiming that he needs
financial secrecy to compete with the HBO cable network (owned
by Time Inc.). Robertson's board consists of himself, his wife
Dede and three close associates.

Robertson reported a 1986 salary of $60,000, which he donated
back to CBN, and a $104,000 payment covering 1985-87 as a
"consultant" to his commercial network. He gets unspecified
book royalties and speaker fees, lives in a handsome CBN-built
mansion in Virginia Beach worth an estimated $400,000 or more
(though he personally paid $200,000 toward the construction and
underwrote the nearby horse stables), and drives a Ford Bronco
that the ministry provides.

Alone among the big-time televangelists, Oral Roberts makes not
even a token effort at financial openness. Only a handful of
people know how donations to the cause are used. But according
to an investigation by the daily Tulsa Tribune, revenues in
Roberts' evangelical empire have been on a steady downward
spiral:  from $88 million in 1980 to $55 million in 1986.
Roberts has told close friends that he desperately wants to keep
open his costly and largely vacant City of Faith Hospital, even
though he is shopping for another organization to run it. His
son and fellow preacher Richard Roberts said this month that the
hospital is breaking even:  the facility was said to have lost
$11 million in 1986. The Roberts clan claims that monthly
ministry revenues have begun to rebound from their $3 million
April and May low.

In terms of life-style, Oral Robert is not in the Bakker class.
Nonetheless, he has the use of two houses worth $2.9 million,
owns a $553,000 home and appears to get whatever other perks he
wants. Roberts told an audience last month that he had raised
more than $1 billion in his career and "kept less than one-tenth
of 1% of all the money."  The Roberts association has a
nine-member board, including three family members.

Of all the major televangelists, Robert Schuller has the
smallest operation, limited basically to weekly broadcasts from
the cavernous Crystal Cathedral. The perpetually upbeat
preacher and his staff refused for weeks to cooperate with TIME
in disclosing finances, but last week stated that the ministry
had 1986 operating revenues of $35 million and expenses of $31
million.

Schuller looks out for the interests of his family:  eight
members are on the payroll. Among them is his wife Arvella, who
is executive program director of the Hour of Power; she is
secretary of the 20- member Robert Schuller Ministries board.
Her salary:  $50,000. Schuller gets a salary of $80,000 and
tax-exempt housing allowances of $43,500. The couple owns one
home and three condos,and the ministry has extensive real estate
holdings. Schuller draws no royalties from books and tapes sold
by his ministry, but royalties from commercial book sales have
garnered him some $2 million in the past 25 years.

Nothing, including the PTL scandal, seems about to change
televangelism's practice of financially secretive one-man rule.
None of the current crop of big-time TV preachers seem eager
to follow the example of the most famous of modern evangelists,
Billy Graham, who still gets the highest TV ratings of any
preacher for his occasional prime-time crusades. Decades ago
Graham pioneered a cleanliness campaign among evangelists by
taking a straight salary (currently $59,000, plus housing
allowance and expenses) rather than living off unaudited gifts.
Graham led the way in giving control of his ministry to an
independent board of businessmen and in issuing audited
financial statements. Donations to pay for Graham's TV crusades
and other forms of evangelism are holding about even with last
year's $66.6 million.

Short of government intervention, which no religious
denomination welcomes, the probity of the major TV preaching
empires will continue to rest with the character and personality
of their leaders. Still, none of the other important figures
shows any signs of being as perplexing, as grandiose or as
misguided as Jim Bakker, who now says that "if God ever lets me
resume television, I hope that I will be able to do it
differently."  Supporters of America's other video evangelists
can only hope that they will never hear their spiritual leaders
ask for the same kind of second chance.

--By Richard N. Ostling.  Reported by Barbara Dolan/Baton Rouge
and Michael Riley/Fort Mill