TIME: Almanac 1995

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<text id=93HT0799> <title> 1987: Enterprising Evangelism </title> <history> TIME--The Weekly Newsmagazine--1987 Highlights </history> <article> <source>Time Magazine</source> <hdr> August 3, 1987 ETHICS Enterprising Evangelism </hdr> <body> 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 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 this 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 </body> </article> </text>