Are big-spending clergy abusing U.S. tax code?.

Tax exemptions for wealthy media-based ministries lead a senator to ask hard questions.

December 6, 2007

Should Congress care if a minister drives a Bentley, flies private jets, or buys a $23,000 commode?

Yes, says Sen. Charles Grassley (R) of Iowa, if the high-spending ways violate the US tax code – especially a tax exemption for religious organizations.

He's given six televangelist ministries a deadline of this Friday to respond to questions on issues ranging from compensation and housing allowances to personal use of assets and unreported income.

"If tax-exempt organizations, including media-based ministries, thumb their noses at the laws governing their preferential tax treatment, the American public, their contributors, and the Internal Revenue Service have a right to know," says Senator Grassley, the top Republican on the Senate Finance Committee.

In the past five years, Grassley has led probes of nonprofits that unearthed lavish perks at the Smithsonian Institution, conflicts of interest at the Nature Conservancy, and mismanagement at the American Red Cross. Now, he's looking at some of America's largest, media-based ministries.

"Considering tax-exempt media-based ministries today are a billion-dollar industry ... with minimal transparency, it would be irresponsible not to examine this tax-exempt part of our economy," he said in a statement this week.

But church groups and other nonprofits worry that this probe could lead Congress to pass laws that slip into constitutionally protected territory – imposing excessive government oversight on a wide range of churches and other nonprofits.

Last week, National Religious Broadcasters (NRB) wrote to Grassley expressing concern about "the broader implications of this issue, not only for our members, but for all non-profit Christian ministries as well."

The information requested of the six ministries "goes far beyond a mere request for financial records necessary to scrutinize the charitable nature of an organization's operations," said NRB president and CEO Frank Wright in a Dec. 4 statement.

This includes requests for compensation agreements, employment contracts, minutes of board meetings, credit card statements, flight records, plastic surgery expenses, and a detailed account of the personal use of assets.

"There is financial information in an employment contract but also a lot of information that's none of the government's business," says Craig Parshall, NRB senior vice president and general counsel.

While none of the six ministries included in the probe to date is an NRB member, Mr. Parshall says that if abuses are found, Congress may be tempted to move government into the spiritual life of a church.

"There are thousands of Christian ministries engaged in electronic communications who are doing the right things – agonizing about how they are going to use donor dollars. Then you have, perhaps, a handful that have abused the tax laws. That's how bad laws get made," he says.

The six ministries include Without Walls International Church in Tampa, Fla., the World Healing Center Church, Inc. in Grapevine, Tex., Joyce Meyer Ministries in Fenton, Mo., the New Birth Missionary Baptist Church in Lithonia, Ga., World Changers Church International in College Park, Ga., and Kenneth Copeland Ministries in Newark, Tex.

Grassley says that he chose these six ministries because of "disturbing news coverage" and information provided to his staff by interested third parties.

All six are also associated with the so-called prosperity gospel, which says that God wants people to be financially successful and they can get there by giving generously to church.

Some groups say the decision to target these six may signal that lawmakers are picking and choosing among religions in violation of the Constitution.

"Anytime a Congressional committee gets involved in this kind of issue, a red flag goes up," says Brent Walker, executive director of the Baptist Joint Committee in Washington, which advocates for religious liberty.

"A lot of us are not enamored with the prosperity gospel, but this is not a decision for government to make. Government is supposed to enforce the law evenhandedly, not get involved in picking and choosing the best expression of religion," says Mr. Walker.

Americans gave more than $295 billion to charity in 2006, and Congress gives tax breaks to encourage it. Under federal law, churches are exempt from some of the reporting requirements of other tax-exempt organizations, but must ensure that donated funds are used to meet goals of the organization and not be diverted to personal use.