The Financing of Religious Groups: Little Information Is Made Public

When Quentin Schultze, a Michigan college professor long fascinated with electronic evangelists, wrote 100 television and radio ministries for information about their finances five years ago, he was flooded with responses he did not expect.

They included computerized letters soliciting donations, sand reputedly from the Holy Land and a single rubber glove whose match had been worn by a pastor.

But when he looked for the financial information he sought, only nine of the 100 had offered a clue as to how much money their groups raised and how it was spent. Schultze’s experience is but one example of how difficult--and sometimes impossible--it is to glean financial information on church and church-affiliated organizations.

Billion-Dollar Enterprise

Television evangelists run a largely unregulated billion-dollar enterprise because of the legal protections offered them through their religious affiliations.

In a tradition rooted in British common law and the American principle of separation of church and state, churches do not have to pay income tax on money raised for their religious or charitable purposes.

The scandal that erupted in evangelist Jim Bakker’s South Carolina-based television ministry is one of the rare cases in which the government may get a glimpse of a church or religious organization’s financial affairs.

After Bakker abruptly resigned his leadership of the PTL ministry, it was disclosed that a $265,000 settlement had been arranged for a woman who had a sexual encounter with Bakker seven years ago. If money paid to the woman came from PTL funds, the IRS could seek to revoke its all-important tax-exempt status. Tax-exempt status is the lifeblood of all charitable organizations, without which contributions would likely dry up. IRS officials have declined to comment on whether an investigation has been initiated.

The public information available on religious financing is kept by only a few organizations, and their data is very sketchy.

Helen O’Rourke McClary, an official with the national Council of Better Business Bureaus, said it is estimated that almost half of the $80 billion donated to charities in 1985 went to churches and religious organizations.

She said the council often gets inquiries for information about religious and charitable groups, but generally the group can call only on the data included in the brief annual statements they must file with the IRS for their tax-exempt status.

Not Required of Churches

Churches are exempt even from that requirement. And the statements on groups that are available “do not tell us about fund-raising practices or very specifically how money is spent,” McClary said.

McClary said she wishes she could do more. “While it’s true we have no legal right to insist on financial statements and other such information,” she said, “when someone goes to the general public for money, then I think the public has a right to know how their money’s being spent.”

An organization was formed in 1979 specifically to encourage religious organizations to disclose financial information and to serve as a voluntary, self-policing agency to help build public credibility. Formed after a 1977 mail-solicitation scandal involving the Pallotine Fathers, the Evangelical Council for Financial Accountability helped defuse pressure in Congress for legislation to stiffen financial disclosure requirements.

Membership in the Evangelical Council for Financial Accountability “is a sort of ‘Good Housekeeping’ seal, a way of telling donors you’re concerned about the ministry and how you’re carrying it out,” President Arthur C. Borden said. Members are required to follow accepted accounting principles, make audited financial statements available upon request, and use contributions for the purposes for which they were raised.

However, few well-known television evangelists have chosen to join the organization, Borden said. “I guess it has been our failure that we haven’t be able to get more to see that it is in their interests to do so.”

Among television evangelists, only Billy Graham Evangelistic Assn. in Minneapolis, Luis Palau Evangelistic Assn. in Portland and Fred Price’s Ever Increasing Faith Ministry in Los Angeles are members, Borden said. Bakker’s organization withdrew in December, saying it was joining a religious broadcasters group instead.

Forced Disclosure Opposed

However, Borden, an evangelical Christian, said he does not favor forced financial disclosure by churches or religious organizations. “The Constitution says separation of church and state. That means no prayer in school and that means no government in church, either.”

The Federal Communications Commission is one of the few government agencies that has any jurisdiction involving religious organizations. However, its role in that area is limited to looking into complaints about radio or television stations that broadcast religious programs.

The commission “does not get involved in programming,” said spokeswoman Rosemary Kimball. That means, she said, that when Oklahoma television preacher Oral Roberts said recently on his televised program that he had to raise $8 million or God would “call him home,” the FCC would not become involved.

“What is said or isn’t said on programs is not something we deal with,” Kimball said. “We deal with station licensees. We assume unless there is some unusual circumstance that the station is just carrying programs and has no control” over what is said in a syndicated program.

Bruce Fein, a Washington attorney and former FCC general counsel, said, however, that if someone on television or radio made “some clearly fraudulent claim like selling the Brooklyn Bridge” or shouting obscenities, the Justice Department could consider prosecution based on laws against broadcast fraud.

Schultze, the communications professor at Calvin College who continues to be interested in broadcast evangelists, said he believes that most evangelists are sincere and the number of viewers will not decrease because of the recent controversies.

Times staff writers Ronald J. Ostrow and Robert L. Jackson contributed to this story.