|Sen. Charles Grassley (R-Iowa) dropped a bomb on a small segment of the church world in the United States on Nov. 6. But it has the potential of creating shock waves that may have long-term effects for many congregations in church-state relations, financial accountability and understanding of clergy income and taxes.
The ranking member of the Senate Finance Committee, Grassley requested the records of six megachurch ministries that happen to be television-based and generally identified with the "word of faith" prosperity gospel movement. The six pastors and their respective ministries and some spouses were requested to provide a variety of documents to the committee by Dec. 6. The ministers are Paula and Randy White, Creflo and Taffi Dollar, Joyce and David Meyer, Kenneth and Gloria Copeland, Benedictus (Benny) Hinn and Bishop Eddie Long. Since two of these ministries are located in Atlanta, the media of this city have been saturated with both reports and commentary on the issues involved.
As of the date of his deadline for response, each of the ministries has replied in some form with Creflo Dollar and Bishop Eddie Long announcing they will not comply unless subpoenas are issued.
Unlike most of the ministries, Grassley has been forthcoming with his requests, posting copies of his letters on his Senate Web page. One can read exactly what he asks--records of board actions with minutes documenting them, approved compensation for ministry leaders, explanation of certain expenditures reported to his staff and documentation of travel and other expenses.
Only Joyce Meyer has been equally forthcoming in responding--one can read audit letters, the amount of her salary, and an explanation on her ministry website of the "commode" for which she reportedly spent $23,000.
The sermons have already begun on the satanic power being unleashed against God's anointed by this probe of highly visible ministry leaders. What are the issues and potential outcome of this initiative by a tithing, Baptist, Christian senator?
The first outcome will likely be greater attention to governmental reporting requirements for churches, even small ones. They are several and are ignored by a host of churches, large and small. At a minimum, all churches must report to the Internal Revenue Service (IRS) a W-2 for all employees or a Form 1099 for any compensation given in excess of $800 in a year. Second, the church must maintain records of giving to the church by its members and provided documentation to them if they choose to deduct such giving from their individual tax returns.
Some churches have formalized non-profit corporations, usually tax-exempt 501(c)3 corporations. If they have done so, and they are indeed a church engaged in worship and spiritual activities, they are exempt from one very important reporting requirement of all other charitable, non-profit corporations--an annual submission of a Form 990 to the IRS.
This is a report of revenues, expenditures, the salaries and benefits of the highest paid employees, and other pertinent information. Such information is public so one can secure the 990 information on most charitable organizations like the Red Cross, hospitals, colleges and universities, and all other non-exempt organizations.
The IRS has no such information on churches. Grassley could influence the Finance committee to consider legislation requiring 990 reporting from churches and should he do so advocates of church-state separation should scream "NO!" It is none of the government's business to collect such information on houses of worship.
But the issue is different when you look at the industrialization of the church in post-modern America. Why should a non-profit ministry set up for the purpose of publishing books, tapes, educational materials or televising the preaching of a church pastor be exempt from such reporting? Many of the kinds of abuses Sen. Grassley is reviewing would be avoided if such were the case.
It would also eliminate the deception of the tap dance done by Baptist denominational leaders to avoid making public the levels of compensation of leaders of their ministries and agencies that are not specifically houses of worship. Shareholders of Coca-Cola can read the salary of its CEO. So should members of denominations.
The second outcome of this Grassley shockwave is likely to be more intense IRS scrutiny of clergy income. If one looks carefully at the potential abuses of these ministries, all of whom collect more than $25 million in revenue each year, the real issue is whether their leaders are properly reporting taxable income.
The senator's probe will never be able to determine that given the confidentiality of such IRS information. However, the public will become aware if one or more of these clergy are indicted by the IRS. Willfully and knowingly failing to report one's income is a felony. An IRS audit might just be a far worse consequence for these ministers than Grassley's request for information.
The third consequence ought to be a new level of conversation within the church itself and among clergy about income and taxes. It is unethical for clergy to view themselves as less responsible than any one else for the payment of their taxes. When pastors model techniques of enriching themselves by schemes to avoid taxes, they weaken the Christian's responsibility to honesty and integrity. The also reduce the government's capacity for responsible fiscal accountability. Yes, honesty with the government is a Christian virtue!
In reality, a host of pastors and lay leaders of churches large and small understand too poorly IRS requirements as it relates to housing allowances, Social Security, Medicare and taxable income.
One of the practices of many churches, especially non-denominational and African-American ones, is to provide a love offering from the members to their pastor in place of salary. This technique is, for some, a way of avoiding the reporting of income. The IRS definition of a gift is money given with no provision of services nor expectations of such. When one gives a "love offering" to another for a sermon preached, a seminar led or some expectation of a visit when in the hospital, that is not a gift. It is compensation.
It is the abuse of the practice that ought to concern all church leaders. In Sen. Grassley's letter to Ken and Gloria Copeland, he inquires about a $2 million "love offering" given to them by a host of friends and ministry colleagues at their 40th anniversary celebration. It is altogether fair for Sen. Grassley to determine whether such monies were indeed gifts or were checks from churches given by members who were eligible for a charitable deduction on their taxes. If they were, it was not a gift!
The final consequence of the senator's questions may be some significant analysis of the accounting firms that advise these ministries. It is interesting to observe the interlocking connections among them with several employing the same firm for their accounting services and audits.
Let's not forget, it was Sen. Grassley's staff that was able to unravel the intricacies of Arthur Anderson's accounting fiascos in the Enron case when the IRS seemed unable to do so. Neither Arthur Anderson nor Enron exist anymore.
Larry McSwain is professor of ethics and leadership at McAfee School of Theology in Atlanta.
Sen. Charles Grassley is a member of Prairie Lakes Church in Cedar Falls, Iowa, affiliated with the Baptist General Conference, and is a scheduled speaker at the New Baptist Covenant Celebration Jan. 30-Feb. 1 in Atlanta.