$42-Million Budget : Schuller Sheds Light on Finances

On a recent Sunday morning at the Crystal Cathedral in Garden Grove, the Rev. Robert H. Schuller was standing beside a 20-foot image of himself on a giant Sony video screen, looking out over the throng of worshipers. For a moment, his trademark megawatt smile slipped.

“PTL’s declared bankruptcy and what happens?” he asked. “The phones ring off the wall here. And every television newscaster and reporter wants a statement from Robert Schuller. Why should I have to make a statement if Jerry Falwell decides to go into bankruptcy? This is ridiculous. It’s not my business.”

Schuller, whose weekly “Hour of Power” program is the nation’s most-watched religious television broadcast, spends a lot of time these days trying to distance himself from the problems swirling around televangelism. Ever the optimist, Schuller drives home to his TV audience of 2.4 million the ways in which he is different from other televangelists--the upbeat sermons, the softer appeals for money, the generally apolitical message.

Schuller Not Spared

Still, the siege on televangelism has not spared Schuller, who finds himself dodging salvos from a few disgruntled congregation members and former employees. There is the complaint, for example, about a fund-raising letter with a photograph purporting to show Schuller touring China when he was merely posing before a picture of the Great Wall. And the objections to the recent transfer of ownership of the Crystal Cathedral property to Schuller’s TV ministry. And the questions about putting a Schuller son-in-law in charge of the church’s famous Easter and Christmas pageants.

Schuller has dismissed the complaints as the work of “the devil himself” and has identified former employees as “enemies” who are trying to destroy his 32-year-old ministry.

But Schuller also became one of the first television ministers to agree to participate if the oversight subcommittee of the House Ways and Means Committee goes ahead with congressional hearings on the finances and tax-exempt status of television evangelists. No hearings have yet been scheduled.

Questions About Finances

Moreover, offering what it believes is the most complete public financial disclosure ever by a major television ministry, the Schuller organization recently agreed to respond to more than 200 written questions, submitted by The Times, about fund raising, expenditures, salaries and internal structure.

The results reveal a sprawling organization with estimated combined annual budgets of $42 million that in some ways resembles a business conglomerate. The flagship is Robert Schuller Ministries, the television and fund-raising arm with annual revenues last year of $35 million. Then comes the Crystal Cathedral, which brings in $6 million a year, and some smaller loosely affiliated entities, including a child day-care center, retirement housing and a counseling service. The ministry and church have more than 400 paid employees and nearly 2,000 volunteers.

At the same time, however, the organization remains largely a family-run operation, with nine Schuller family members on the payroll. They help run the TV show, edit Schuller’s writings, put out the ministry magazine, even take care of the church grounds.

Schuller is moderately compensated by corporate standards--$123,500 last year in salary and housing allowances--but his book royalties and his work on the global lecture circuit have earned him millions. He lives well, though not extravagantly, with homes in Orange County, Hawaii and Colorado. He drives a 1979 Cadillac; his wife, Arvella, drives a 1983 Lincoln provided by a book publisher.

Executives on Board

Meanwhile, the television ministry part of the organization has far-flung landholdings and sophisticated direct-mail and marketing operations. Its board of directors includes such top business executives as Chicago insurance magnate W. Clement Stone, Amway Corp. President Richard De Vos and Beurt Ser Vaas, board chairman of Curtis Publishing Co.--as well as Schuller’s spiritual mentor, the Rev. Norman Vincent Peale.

Despite the presence of such wealth, it is an organization fueled mainly by thousands of small contributors. Last year, the average donor gave $20.66.

In many ways, the 60-year-old Schuller and his ministry are unique. His sermons lack the Bible-thumping emotionalism and political tinge of some other televangelists. In fact, Schuller objects to being called an evangelist, noting that his sermons are “cognitive” rather than passionate. His ministry has a decidedly secular flavor; it lost part of its tax-exempt status several years ago for allowing church buildings to be used commercially. And, unlike many other TV ministers, Schuller stresses joy rather than hell fire, and he focuses on the belief that a human’s driving need is for self-esteem.

He is a minister of the Reformed Church in America, a Protestant denomination that has about 950 congregations nationwide, with roots in the Calvinist Reformation of the 1500s.

The author of 32 books, Schuller was the first religious writer with two titles--”Tough Times Never Last, But Tough People Do” and “Tough Minded Faith for Tender Hearted People”--on the New York Times best-seller list in the same month. More than 11 million copies of his works have been printed in English alone.

Book Royalties

The ministry estimates that Schuller’s book royalties total $1.9 million over the past 25 years, although others in the publishing industry say the figure may be much higher.

Despite his huge viewing audience, Schuller’s $35 million was less than other major televangelists raised in 1986. Jimmy Swaggart, by contrast, took in $142 million last year.

Schuller’s television ministry had total expenses in 1986 of more than $31 million, of which which about $15 million was spent on TV production, $6 million on direct mail solicitations and letter processing, $3.8 million on administrative costs like rent, insurance and professional fees, and $2 million on free gift offers to stimulate contributions from viewers; $53,285 of that was donated to other churches and religious organizations for charitable purposes.

Schuller officials say they consider the TV ministry itself a charity of sorts since it reaches the sick and other shut-ins who cannot go to church. Russ Reid, a Pasadena-based marketing consultant to nonprofit organizations and a member of the board of directors of the Evangelical Council for Financial Accountability, said this is a common attitude for electronic religious programs. “All the money they raise is for television and television is their mission,” he said.

In 1986 Schuller’s television ministry raised about $4 million in excess of that year’s expenses, of which $2.7 million was used to pay leftover bills from the previous year and $1.3 million was deposited into the ministry’s checking account, according to Fred W. Southard, chief financial officer for Robert Schuller Ministries.

After a decade of growth, the Schuller television ministry’s income has leveled off, as competition from other TV evangelists has driven up the cost of broadcast time. In 1987, “Hour of Power” expects to spend about $13.65 million to buy time on the air, 81% more than the $7.53 million it spent in 1982. To cut costs, the number of stations carrying “Hour of Power” has been slashed from 213 in 1985 to a current total of 187 stations.

Highly Paid Lecturer

Schuller also is a highly paid lecturer, commanding $15,000 for an appearance. Before 1986, he earned as much as $100,000 a year on the lecture circuit. Starting in 1986, Schuller said, he has donated all his lecture fees to the ministry. Schuller does not earn royalties on books, tapes, cassette books or videos of his sermons sold by “Hour of Power” on the air or through the mails. Sales of Schuller books through “Hour of Power” have raised more than $25 million since the 1970s for the television ministry.

In addition to Schuller, his wife and three of their five children and their spouses are employed by the ministry.

Arvella Schuller, 57, is executive program director of “Hour of Power,” responsible for the production of the program, programming budget, logistics of staging and audio and video contracts. She also supervises the editing of the program.

Daughter Sheila Schuller Coleman, 36, selects music and vocalists for the show. Son-in-law James Coleman, 38, is president of the television ministry. Daughter Jeanne Schuller Dunn, 29, edits Possibilities, the ministry’s magazine. Son-in-law Paul David Dunn, 29, is executive producer and director of the Glory of Easter and Glory of Christmas pageants. Dunn and his wife also own and operate a travel agency that arranges trips to the Holy Land, weekend packages for visitors to the Glory pageants and other tours that are advertised on the air by “Hour of Power.”

Robert Anthony Schuller, 33, Schuller’s only son, received a $200,000 loan at 9% interest from a foundation established by Crystal Cathedral to build a church for his own ministry at Rancho Capistrano, 92 acres near San Juan Capistrano that Robert Schuller Ministries is developing into a “renewal center.” Robert A. Schuller oversees the renewal center, reads Scripture on “Hour of Power” and, along with his mother and father, sits on the board of directors of the television ministry.

Robert A. Schuller’s wife Donna, 31, researches broadcast projects, supervises the taping of Scriptures and prayers and helps edit the TV program. And James Coleman’s uncle, Terry Larson, 44, is the Crystal Cathedral’s property manager.

Family Earns $371,899

Arvella, daughters Jeanne and Sheila, son Robert A., as well as their spouses and Larson in 1986 earned a combined total of $371,899.

Schuller said the family became involved in the church’s early days when money was scarce and he delivered Sunday morning sermons from the tar paper top of a drive-in movie snack bar in Orange. He tells how he and Arvella drove to Orange County from their native Iowa in 1955 with $500 and a portable organ. She was the church’s first organist and gradually expanded her duties. For 22 years, Schuller said, she worked without pay.

“When you started a church like I did 32 years ago with no money, you need all the free help you can get,” Schuller said. “Nobody in my family ever got paid what they are worth in current scale.”

Chuck Todd, the ministry’s general counsel, said Robert and Arvella Schuller “do give back in cash (to the ministry) much more than they take out” in salaries. Todd said that over the last three years the Schullers have made average annual cash contributions of $100,000 to the ministry and have donated some properties, including a cabin in Big Bear, and some royalties on their books. In addition, he said, Schuller last year gave the ministry $100,000 to $125,000 earned in lecture fees.

Schuller does not consider himself especially wealthy. “I have no consciousness of wealth,” he said. “I don’t think in those terms. But when you have power that’s where I have a consciousness. And I want power to do good . . . to influence people to be creative people, honest people who are part of the answer and not part of the problem. And that is what every book is geared for, every message is geared for, all parts of our ministry are geared for that.”

Schuller and his wife own a well-appointed house on 1 3/4 acres in Orange as well as condominiums in Honolulu, Winter Park, Colo., and Laguna Beach. Schuller uses the Laguna Beach home as a private writing studio. According to Schuller ministry officials, all these properties are mortgaged and were purchased from book royalties or with family inheritances.

Ministry’s Landholdings

The Schuller ministry’s landholdings include the 20-acre church grounds, an interest in the 92-acres near San Juan Capistrano, 126 acres of farmland in Michigan, a manor in Maui and an office building in Sydney, Australia.

Although the majority of church members appear devoted to Schuller, there have been a number of complaints from some congregants. Schuller acknowledged that there were objections when his son-in-law, Paul Dunn, took over as director of the church’s Christmas and Easter pageants in May, 1986. But he said that although the former director’s productions had won critical acclaim, they had been extravagantly expensive.

Also the ministry got into trouble in 1984 over tours that were advertised on “Hour of Power” and arranged by a travel business founded by Schuller’s son and his wife at the time, Linda.

When Robert A. and Linda Schuller were going through a divorce, two overseas tours they had put together were canceled. Just who was responsible for the tours and the cancellations is a matter of dispute. In any case, about 35 people who had heard about the tours on “Hour of Power” and made deposits failed to get refunds from the tour business, and some of them threatened to sue the television ministry.

Attorney Todd said that to avoid a public airing of the family dispute--and because legal advisers said the television ministry was financially liable--the ministry paid $104,000 in refunds for the two tours.

Schuller’s son later paid $12,249 to Robert Schuller Ministries to help cover the loss, and he volunteered to write a book, “How to Be an Extraordinary Person” for use in television fund raising, waiving royalty rights.

The ministry did not recoup any money from Linda Schuller, according to Schuller officials. Instead, they paid her $20,000 and assumed the remaining liability for the tours’ refunds. In exchange, she promised to refrain from making further derogatory remarks about the family after she was interviewed for a story that appeared in the Globe, a supermarket tabloid.

Having swallowed a bitter pill, Robert Schuller Ministries tried to be more careful when it entered into a subsequent business relationship with Arbel Corp., known as Travel Possibilities, a tour agency operated by Schuller’s daughter, Jeanne Schuller Dunn, and her husband, Paul Dunn, Todd said. The ministry has a written contract with Arbel, he said, that requires strict financial controls, including audits, of money that the Dunns collect for tours they arrange that are advertised on “Hour of Power.”

Arbel, with headquarters near Crystal Cathedral, routinely uses the church and the Schuller name as selling points. A brochure touting a July tour of the Orient promised participants “a special reception with Dr. Schuller at our hotel” in Korea.

Schuller officials said the Dunns have agreed not to receive any personal compensation for services that their travel agency provides to the cathedral, the television ministry or any affiliated organization.

A computerized mailing list of 842,000 names is the engine that drives Schuller’s money-raising machinery, accounting for far more income than than the church collection plates. The list, mainly including names of television viewers who responded to Schuller’s TV appeals, generated revenue of $21 million in 1986.

Those on the list can receive books, and audio and video cassettes. Or they can subscribe to the Sermon Service Club, in which $12 a year brings copies of Schuller’s sermons. They also get requests each month for further contributions, usually with a free gift in return.

Schuller pioneered the use of telephone banks to thank contributors and urge them to become regular givers. He also was an innovator in offering small gifts--inscribed with inspirational slogans such as “Bloom where you are planted” and “God loves you and so do I”--free to television viewers who write in or send contributions--adding their names to the huge Schuller mailing list.

Despite this effort, Schuller raises less money than other ministers in part because his television ministry does not promote causes for the needy or overseas missions, marketing experts say. Marketing consultant Reid said Schuller’s fund raising is more “honest” than that of some television ministers who latch onto causes such as famines to prime the pump for funds that are used mostly to pay for air time.

In the Schuller organization, most of the funding for charitable works comes from the church congregation, rather than the much larger “Hour of Power” audience.

$6 Million Raised

Last year the church raised $6 million from plate contributions and ticket sales to its Christmas and Easter pageants, of which $485,000 was spent on denominational contributions, foreign missions and charities, including $100,000 in receipts from the pageants that were donated to charitable organizations. By contrast, $700,000 was raised to help fund construction of a family center and new chapel on the Crystal Cathedral church grounds. New Hope, a 24-hour telephone counseling service manned by church volunteers that Schuller frequently points to as a major outreach program of his ministry, last year cost the church $85,000 to maintain.

The remaining $4.3 million was for operation and maintenance of the Crystal Cathedral.

Bill Stevens, a minister in Long Beach who headed Crystal Cathedral’s prison counseling program and left because he was tired and unable to get expansion funds, said Schuller’s ministry caters principally “to people who are up and coming” rather than to the down and out.

One reason why Schuller spent $20 million to build the Crystal Cathedral rather than on missions and other programs to directly help the poor is that he “knows from experience that it is next to impossible to raise that kind of money for those purposes,” according to an authorized Schuller biography by church public relations chief Michael Nason and his wife, Donna.

“Bob has his own way of combating poverty,” the Nasons’ book continues. “It’s not militant or political, it’s not done through crusades or handouts or protest marches. He says, ‘The secret to solving the poverty problem is to develop possibilities within people to be creative so that they can become prosperous and develop self-respect in the process.’ ”

Perhaps the most frustrating fund-raising effort Schuller ever launched, in fact, was to finance a hospital for needy Indians in the rugged Mexican state of Chiapas. After six years, the church raised a net total of only $300,000, far short of the targeted $1 million. Ultimately, only a small clinic and eight-bed hospital were built in Chiapas.

Fund-Raising Letter

Schuller recently has been criticized for a fund-raising letter that talked about his being in China and pictured him next to the Great Wall when, in fact, he had not yet gone to China. Schuller officials shrugged off the complaint, saying that such practices are common in advertising and that Schuller had arrived in China before the letters were received by his followers.

Such use of hyperbole appears to be part of the Schuller style. For example, in their biography of Schuller the Nasons described how in 1957 Schuller invited Peale to speak at his church, but was worried whether “someone of Norman Peale’s prestige (would) be interested in flying across the country just to speak in a drive-in theater?”

“In typical Robert Schuller fashion, he decided not to tell him. He would write the letter, he would tell the truth--he just wouldn’t tell all the truth.”

So the letter described the beauty of the mountains and orange blossoms and how every member of the congregation had a comfortable chair by an open window--plus parking for 1,500 cars.

“That’s Bob Schuller,” the Nasons wrote. “He purposely paints a picture that is every word true but that doesn’t necessarily give the whole impression. He doesn’t see this as deceitful; it’s just that he’s so great with adjectives, and in the positive way he views things, he’s really describing them as he feels they are.”

The book said that after Peale accepted the invitation, Schuller sent another letter saying he wanted to “set the record straight” by letting Peale know he would be speaking at a drive-in. Peale came anyway. His sermon at the drive-in attracted a huge turnout and spurred the growth of Schuller’s ministry.

KEY FIGURES IN SCHULLER’S ORGANIZATION

ARVELLA DeHAAN SCHULLER--Schuller’s wife is executive program director of “Hour of Power”. She began as church organist when her husband preached from the roof of a snack bar at the Orange Drive-In and now produces the show. Aruello Schuller, 57, is also a member and secretary of the board of directors of Robert Schuller Ministries, the television arm of the Schuller organization. Annual salary is $50,000.

ROBERT ANTHONY SCHULLER--Schuller’s only son, Robert Anthony, 33, is on the board of Robert H. Schuller Ministries and manages a renewal center at Rancho Capistrano near San Juan Capistrano. He also reads scriptures and prayers on “Hour of Power”. In 1986, he received a salary of $9,050, a housing allowance of $17,350 and a car allowance of $3,600 for his Crystal Cathedral work. He is paid $31,800 as minister of Rancho Capistrano Community Church.

SHEILA SCHULLER COLEMAN--Eldest Schuller daughter, Coleman, 36, in 1986 received a salary of $30,000 for selecting music and vocalists for “Hour of Power” and other duties involving the TV show. She also edits her father’s messages that are sent to viewers. She edits her father’s books, and has written two of her own. She is a graduate of Hope College and has training in piano and voice.

JAMES COLEMAN--Sheila’s husband, 38, became president of Robert Schuller Ministries, Schuller’s television ministry, in 1984, after moving up the ranks from art director to director of marketing to vice president of marketing. In his role as top staff member in the Schuller television organization in 1986 he received a $90,000 salary and use of a 1985 van.

JEANNE SCHULLER DUNN--Another Schuller daughter, Dunn received a $31,899 salary in 1986 as chief editor and writer for Possibilities, a magazine published by the Schuller ministry. Dunn, 29, also helps with church public relations and is on “Hour of Power’s” marketing strategy committee. Jeanne and husband, Paul David Dunn, also own and operate Travel Possibilities, a travel agency that arranges tours to the Holy Land that are advertised on “Hour of Power”.

PAUL DAVID DUNN--Husband of Jeanne Schuller. A Mideast scholar who has traveled extensively in the Holy Land, Dunn was executive producer of the Crystal Cathedral’s Glory of Easter and Glory of Christmas pageants. In mid-1986 he took on the extra title of director of the pageants and his salary was increased to $70,000. Dunn, 29, has co-authored two books with Robert H. Schuller.

VICTOR ANDREWS--Chief executive officer and vice chairman of Robert Schuller Ministries. He is well-known in Republican circles and was a key fund-raiser for former President Richard M. Nixon. Independently wealthy from investments in farming, land development and oil, Andrews, 72, donates his time and expertise to Schuller, whom he praises as “a true intellectual” and “one of the great men in America today.”

MICHAEL NASON--Joined Schuller’s organization in 1973. As a consultant to the ministry he is paid $110,000 a year. Nason, 45, has long been active in the Orange County Republican Party. He is owner of Nason Media, a consulting firm that in 1986 was paid $513,554 for production and public relations work for the “Hour of Power.” He also co-owns a separate public relations firm that is active in the Dole for President campaign.

HERMAN J. RIDDER--President of the Crystal Cathedral congregation and president of the Robert Schuller Institute for Successful Church Leadership, which conducts educational seminars for Schuller ministries. In 1986, his salary was $100,000. His wife, Leonora, is director of Christian education for the Crystal Cathedral at a salary of $38,000. According to the ministry, Ridder, 61, donates “substantial contributions” to the congregation.

1986 TELEVISION MINISTRY FINANCES Where the money came from?

Although fund-raising appeals broadcast on the Schuller weekly “Hour of Power” program raised $14 million in 1986, a larger sum of $21 million was raised through repeated direct mail solicitations of a huge pool of prior and potential contributors.

Of funds raised in 1986, the largest portion--$15 million--was spent on producing “Hour of Power” broadcasts. Other major expenses included almost $6 million for direct mail fund raising and processing of letters and contributions from viewers. About $3.8 million was spent for administrative costs such as rent, leased equipment, professional fees, insurance and taxes.

How it was spent 1986 expenses:

Production of “Hour of Power” $15.05 million Television Production Administration $86,710 Television Programming $353,740 Television Production $1,902,244 Television Distribution, including air time $12,711,988

Viewer Mailings $9.55 million Gifts to Viewers $1,998,448 Direct Mail Fund Raising $2,785,797 Possibilities Magazine $1,485,547 Christmas Catalog $78,955 “Hour of Power” Mail Processing $3,198,263

Administration / Operations $5.08 million Financial Planning Department $443,985 Development $144,860 Administration (rent, leased equipment, professional fees, insurance, taxes, etc.) $3,777,539 Fund Raising $59,108 Tape Department $211,667 Computer Services $528,024 Communications Division $312,391

Outreach Programs $1.17 million Missions $53,285 Intl. Center for Possibility Thinkers $7,919 Education of Ministers $98,444 Home Study Center $17,133 Michigan Renewal Center $1,106 Rancho Capistrano & Baldwin Manor (Maui) Renewal Centers $991,305 Total: $31.26 million