TIME: Almanac 1990/1990 Time Magazine Compact Almanac, The (1991)(Time).iso/time/caps/87/87capeth.2

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                Æöç                                                      ╡««Enterprising Evangelism

August 3, 1987

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