Cover Story

Lone sentry on the wall

How do wealthy ministries spend the millions of dollars that Americans give them? Many of them won't say, and few donors seem to know. That's where Rusty Leonard and Wall Watchers come in

Issue: "Big bucks ministries," July 28, 2007

PHILADELPHIA- Early this summer, Paul Crouch of the Trinity Broadcasting Network (TBN) wrote to supporters, telling them that the network's spring "Praise-a-Thon" was a success. For five days, Crouch and a slate of other televangelists had raised money on-air for TBN, the largest Christian television network in the world. "TBN is debt free," Crouch wrote. "Free to invest every penny into expansion to the rest of the world!"

For TBN, that means investing in broadcasting its Christian-themed programs on thousands of cable systems and more than 5,000 television stations. But it also means investing in something else: Southern California real estate.

The 34-year-old ministry based in Santa Ana, Calif., owns a slew of real estate in Southern California, as well as a mobile home park in Florida. But it's not the mobile homes that have drawn national attention. Instead, the public's gaze has fallen on a pair of TBN-owned mansions in Orange County, Calif., that are reportedly worth millions.

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Earlier this year, ABC's 20/20 reported that property records revealed one of TBN's mansions is worth about $4 million. A second home with more than 10,000 square feet is worth about $6 million, according to the report.

TBN spokesman Colby May wouldn't confirm or deny those figures, but told WORLD that the mansions are used for "ministry purposes" like taping shows and hosting guests. TBN founders Crouch and his wife, Jan, sometimes stay in the homes as well. May says the couple reimburses TBN when they use the homes for purposes unrelated to the ministry.

May also explains why TBN owns the expensive properties: He says they are a wise investment of the ministry's funds, including more than $110 million that donors give to TBN each year.

Some 3,000 miles away, in a modest living room in suburban Philadelphia, Rusty Leonard wonders whether TBN donors would agree. Leonard is the founder of Wall Watchers, an independent watchdog organization that reports on the finances of more than 500 Christian ministries, including TBN. The group's website features data for donors, outlining how much money ministries have and how they spend it.

For Leonard, the idea for Wall Watchers was born out of a practical need. A former vice president at Templeton Investment Counsel Inc., Leonard once managed a $3.5 billion portfolio of client assets. He also managed his own personal wealth and donated large sums of money to Christian ministries.

That's where Leonard encountered a problem: He realized he knew much more about the stocks that he invested in than the ministries to which he donated. Companies release "volumes of financial information," he says, but ministries often release little.

To make sure they were donating wisely, Leonard and his wife, Carol, began asking the ministries they supported for annual financial statements. They were stunned by the result: "We got a very bad reaction."

Many of the ministries resisted Leonard's request, and he came to an unsettling conclusion: "I realized these ministries had no accountability, and that the donor was completely unrepresented in the transaction that goes on."

That's a common problem in the nonprofit sector, Christian and otherwise, according to Leonard. "Nobody's going to invest in a company without having an idea of what's going on with the money," he says. "But everybody gives to charities without giving a thought to what they are actually doing with the money."

Convinced that Christian donors needed more information, the Leonards used their own money to start Wall Watchers in 1998. Two years later, Leonard left his high-profile job at Templeton to donate his full-time efforts to the organization and to Stewardship Partners, a Christian investment firm he also started.

Wall Watchers asks Christian ministries for audited financial statements, and most eventually comply. But a handful of organizations refuse, creating troubling questions about how they handle millions of donor dollars.

Some financial information about nonprofits is already available through publicly accessible tax records called 990s. The forms include broad information, including revenue and the salaries of top officials. But churches aren't required to file the forms, and IRS standards are broad: Ministries that hold little resemblance to a traditional church often gain church status and the freedom from public filings.

One high-profile example is Benny Hinn Ministries. The Texas-based, international organization is known for its appeals for financial donations and its "miracle crusades" where ministry founder Benny Hinn claims to heal participants of a range of diseases and disabilities. The organization also claims it is a church, and the IRS agrees. The group isn't required to file public tax records. That means the public doesn't know how much money Hinn takes in, or how the ministry spends it.

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