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Does approval from the Evangelical Council for Financial Accountability offer Christians useful information about an organization’s financial discipline?
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Picture yourself as a board member of the National Religious Broadcasters, an association of 1,100 member organizations that attempts to “communicate the Gospel of Jesus Christ to a lost and dying world,” according to its website.
Important work. Potentially life-changing work. With headquarters located blocks from the U.S. Capitol, NRB has marketed itself as being to the First Amendment what the National Rifle Association is to the Second. U.S. presidents have spoken at NRB’s annual convention.
Last Dec. 7 you receive the NRB’s latest audited financial report. Your reaction might be like NRB Treasurer Frank Wright’s, revealed in an email legally obtained by radio host and independent journalist Julie Roys, who sent it to WORLD’s editor in chief last month. Wright wrote, “The fact that [the report] arrived 11 months after the close of the fiscal year was an immediate red flag for me, and the substance of the Audit Report and the Management Letter more than verified my concerns.”
In March Wright tells you that after receiving the audit report, he reviewed reports going back to 2014: “The results of this analysis are deeply troubling.” NRB had suffered operating losses of $873,000 since 2014 and had been “financially insolvent for each of the last three fiscal years.” As of Dec. 31, 2018, NRB’s deficit in unrestricted net assets was $613,000. Its cash reserves were virtually depleted. The independent auditor, Wright says, “had flagged NRB as being at-risk as a ‘going concern’—the worst language you can ever see in an audit.”
On April 10 you receive another email from Wright: “NRB needs $750,000 to pay all its convention obligations AND carry it through the summer slump until September 1. To date, we have received $164,500 in pledges. … Let me be candid here. Without your full financial support in raising this $750,000, NRB will have no option but bankruptcy reorganization.”
Wright’s emails were not the only signs of trouble. In February the organization announced Jerry Johnson was resigning after six years as president. Neither Johnson nor NRB cited a reason. Two other high-level NRB staffers also left. Roys said other emails leaked to her showed Johnson, after his resignation, was pushing the NRB board to increase his healthcare benefits and severance pay.
Johnson and several other NRB board members refused to answer my questions about the split-up. NRB general counsel Craig Parshall—husband of NRB board chair and popular Moody Radio host Janet Parshall—told me in July NRB “is firmly established on solid ground.”
But as Wright’s communications to the board show, that financial ground has been anything but solid since 2005. Only twice in those 13 years—in 2007 and 2009—has NRB ended the year with operating surpluses. Many nonprofits have years in which they spend more money than they make, but those 11 years total more than $1.5 million ($1,531,205) in combined deficits.
As Wright indicated, NRB’s net assets have also tanked. In 2015, tax returns showed net assets of $320,089. The next year’s tax returns showed net assets at −$165,811, and NRB’s profile page on the Evangelical Council for Financial Accountability (ECFA) website shows its 2017 net assets at −$220,900, leading up to the deficit of more than $600,000 at the end of 2018 (according to Wright’s email).
So how did NRB get into its current financial trouble? Stuart Epperson, founder of Salem Media Group, sits on the NRB board along with more than 100 other people. He downplayed NRB’s financial troubles: “It appears to be much, much worse than it is.” But he admitted the organization overspent.
“Jerry had plans to cover any expenses, but some of those plans to cover all expenses didn’t work out as he anticipated,” Epperson said. In his view, Johnson “wanted to take us beyond—this is where the added expenses likely came in—take us beyond where people thought NRB wanted to go.”
As it lobbied for Christian broadcasters in the nation’s halls of power, in 2016 the organization got a new hall of power of its own. In June that year, the NRB moved its headquarters from Manassas, Va., to a suite in the National Guard Memorial Museum building on Massachusetts Avenue in Washington, D.C., blocks away from the U.S. Capitol. NRB lost $170,000 on the sale of the Manassas headquarters and the move to Washington. In February 2019—about the time NRB announced Johnson was leaving—the organization moved again, this time into an office suite in a smaller building, next to the National Guard Museum building.
DURING THIS ENTIRE TIME, the NRB remained accredited and in good standing with the Evangelical Council for Financial Accountability, a financial accreditor whose stated mission is “Enhancing Trust in Christ-Centered Churches and Ministries.” The ECFA emerged in the late 1970s as an attempt to restore trust in the finances of Christian nonprofits. Back then a series of scandals involving religious ministries woke up regulators in Washington and ministry heads across the country. As Congress threatened new laws to rein in nonprofits, evangelical leaders met to hash out plans for a new organization to prevent such scandals. In 1979, they met in Chicago to announce formation of the ECFA.
Its mission was to protect donors: “Every Christian charity must be fully accountable to its giving public,” ECFA’s first executive director, Baptist minister Olan Hendrix, said later that year. “Each dollar must be regarded as a sacred trust. ECFA will seek to insure that it does.”
The brewing scandal facing NRB board members earlier this year was just the sort of situation ECFA’s existence was supposed to prevent. Forty years after its creation, it’s time for a report card. How has ECFA performed? What does its seal on websites and marketing material mean? Does ECFA accreditation ensure responsible use of donor dollars?
ECFA boasts more than 2,400 members, representing more than $29 billion in annual revenue, including charter members like Compassion International, Dallas Theological Seminary, and InterVarsity Christian Fellowship, along with more recent additions such as Alliance Defending Freedom (formerly Alliance Defense Fund), Prison Fellowship Ministries, Southern Baptist Theological Seminary, and Samaritan’s Purse.
‘We were just paying for a membership that really didn’t mean anything.’ —Cheryl Johnston, Geneva College
NRB earned ECFA accreditation in 1981. Other than showing three recent years of NRB’s financial information on the ECFA website, the only warning ECFA has offered to donors is a footnote on its NRB profile page saying, ‘A going concern is noted in the 2017 financials.’”
ECFA President Dan Busby refused an interview with me, but Guardian, an Atlanta public relations agency, answered my questions with written responses that it attributed to Busby: “ECFA has been in consistent communication with NRB concerning their finances over the last few years and NRB has been fully cooperative and transparent in responding to our requests for information.”
The Guardian response acknowledged NRB’s financial problems but said the organization’s debt campaign and payroll reduction have contributed to “an annualized financial turnaround of over $1 million.”
But NRB donors and the general public would not have known of the 13-year downturn unless they had known what “going concern” meant or had examined NRB’s financial documents themselves. “ECFA does not intervene in the financial decisions for its members; however, we closely monitor financial viability,” the written statement says.
NRB isn’t the only example of problems with an ECFA-accredited ministry.
HARVEST BIBLE CHAPEL joined ECFA in 2013. At that time the Chicago-area megachurch was already embroiled in scandal. Former elders and members were raising questions about Pastor James MacDonald’s leadership, lifestyle, and undisclosed salary. Harvest remained an ECFA member for the next six years as more of the church’s problems became evident. ECFA only terminated Harvest’s membership four months after a December 2018 WORLD story that detailed MacDonald’s abusive leadership and reckless spending, and two months after Harvest fired MacDonald.
While ECFA says it requires transparency from its members in disclosing financial documents, ECFA won’t reveal details about how it reviewed Harvest’s finances while it was still a member. The Guardian/Busby written statement says, “We believe it is the responsibility of a former member to determine appropriate transparency concerning further details.”
ECFA has proceeded slowly with ministries getting into trouble. One reason could be organizational structure. ECFA pays its bills by charging membership fees to the organizations it’s supposed to monitor. In 2018 ECFA brought in more than $5 million in total revenue. Nearly three-fourths of that—$3.7 million—came from fees charged to its members.
Annual accreditation fees are based on each applying organization’s revenue: The bigger the organization, the bigger ECFA’s accreditation fee. According to a fee schedule on ECFA’s website, NRB pays a $1,650 accreditation fee based on its revenues. Compassion International, which has more than $800 million in total revenue, pays $16,000 in yearly accreditation fees.
If ECFA terminates members, it cuts off revenue. Since 2017, 150 organizations have left ECFA. Some lost accreditation because of failure to turn in required paperwork, or due to a merger with another organization. Harvest Bible Chapel is the only group in that time terminated for failure to meet ECFA’s Seven Standards of Responsible Stewardship, whose requirements include a written statement of faith, a board of directors not made up mostly of employees or family members, a yearly audit by a CPA, compliance with relevant laws and Biblical mandates, and compliance with ECFA policy on setting a top executive’s salary.
According to Busby, Harvest failed four ECFA standards—but it took organizations other than ECFA to bring those failures into the open. When problems arise, ECFA’s website says, they “are addressed respectfully, confidentially, and with a redemptive approach.” That approach appears to value the confidentiality of member organizations more than donors’ need to know.
Each year members submit annual fees and a renewal application stating they are in compliance with the standards: “Decisions regarding membership are voted on by ECFA’s board,” Busby’s written statement says. Wayne Pederson, an executive with Far East Broadcasting Company, serves on the NRB board. He also serves as ECFA’s treasurer. Busby’s statement says that’s not a problem: “If any matter concerning NRB came before the ECFA board, Mr. Pederson would be recused from the discussion and any decisions, thus eliminating any conflict of interest.”
Pederson did not return my phone and email messages seeking comment.
Busby himself sits on NRB’s President’s Council, which takes the lead in lobbying lawmakers in Washington. NRB says the council also serves as an advisory board for the organization. Busby didn’t address my question on why his role with NRB’s President’s Council is not a conflict of interest. I again requested an interview with Busby to give him the opportunity to answer questions about ECFA’s overall credibility, but Busby, through Guardian, declined.
SOME SCANDALS under ECFA’s nose go back to the organization’s early days. Jim and Tammy Faye Bakker’s PTL Club maintained its ECFA membership from 1981 through the end of 1986, even while Jim Bakker was committing the fraud that sent him to prison. Gary Tidwell’s 1993 book Anatomy of a Fraud reported that ECFA sent a letter to Jim Bakker flagging concerns and telling Bakker not to use the ECFA seal on PTL materials—but the organization did anyway. ECFA terminated PTL’s membership only after news outlets reported the scandal.
Some examples are more recent. In March 2014, ECFA revoked the membership of Teen Mania Ministries, a now defunct youth ministry. But as WORLD reported that year, by 2011 Teen Mania had net assets of −$4.1 million. The report detailed extravagant spending and questionable leadership. In December 2015, Teen Mania closed and filed for bankruptcy.
‘Each dollar must be regarded as a sacred trust. ECFA will seek to insure that it does.’ —Olan Hendrix, ECFA’s first executive director
The recent and historical scandals raise the questions: How well does ECFA police its members? Did ECFA membership make wayward ministries more accountable? At least one church—Village Church of Barrington, near Chicago—dropped its ECFA membership because of the agency’s failure to police Harvest Bible Chapel. Senior Pastor David Jones told Religion News Service this year his church sees ECFA membership as a “liability rather than an asset.”
ECFA leaders from the beginning made the agency out as a Better Business Bureau (BBB) for Christian ministries. Both offer seals of approval. Both term their approvals as accreditation. Both have products meant to serve their accredited members. Both have sliding schedules of membership fees. But BBB examines members annually. It gives grades to its members, based on performance. It maintains a forum on its website for consumers to review businesses—positively or negatively. ECFA offers no such forum and wouldn’t reveal specifics of its review of Harvest Bible Chapel.
ECFA USES A PASS OR FAIL CONCEPT in applying the standards rather than a rating system,” Busby’s written statements say—but Harvest is the only already-existing member since 2017 to “fail.” He has previously said the group is not a watchdog. If an ECFA member turns in the necessary paperwork and pays its yearly dues, it retains its accreditation. But some nonprofits that have withdrawn from ECFA say that the limited involvement wasn’t enough to keep them paying, especially when other organizations provide financial oversight.
Geneva College, a Christian liberal arts school in Pennsylvania, ended its ECFA membership in 2017. Geneva director of marketing and public relations Cheryl Johnston said the school is already complying with financial and organizational standards with its academic accrediting agencies and the federal government. Johnston said Geneva considers ECFA’s stewardship standards valuable for ministries not regulated as closely as colleges. But Geneva considered the organization’s services redundant: “We really didn’t have a service at all [from ECFA]. We were just paying for a membership that really didn’t mean anything.”
Geneva has seen no drop in donor revenue since ending its ECFA affiliation. Christian universities Biola and Seattle Pacific have done the same in recent years, both saying leaders decided to end ECFA membership as a cost-cutting measure.
CrossWay International, a small, Texas-based mission and relief work organization, also dropped its membership in 2017. Founder and CEO Dean Chollar told me his board didn’t think the accreditation fee paid to ECFA, which was less than $1,000 each year, was worth the benefit provided to the ministry: “I never quite understood the value of it as time went by.” ECFA provided data on fair compensation and benefits packages Chollar appreciated, but dropping its ECFA membership hasn’t affected CrossWay’s revenue, he said. “We really haven’t seen that much of a difference.”
WORLD’s investigative unit, the Caleb Team, takes its name from the spy who saw giants in Canaan but did not give up, and later drove out of Hebron three of them. Michael Reneau, WORLD’s new deputy editor, heads the team: He’s a graduate of Bryan College and the World Journalism Institute, and edited The Greeneville Sun in Greeneville, Tenn.