Business Express: Critics say John Hagee’s compensation is too high
ReligionNewsBlog.com • Monday June 23, 2003
San Antonio Express-News, June 20, 2003
By Analisa Nazareno, San Antonio Express-News
Perched atop a red-carpet altar, seated on a wide white and blue throne, Pastor John Hagee waits until the jazz band has quieted, the 125-member choir has left the stage and the soloist has moved the congregation almost to tears.
An emotional, energetic half-hour of song praising the glory of God passes. Then Hagee tells ushers at his 5,000-seat Cornerstone Church to take their positions.
With the dozens of men bearing glinting platters in the aisles, and six cameramen capturing the moment, Hagee instructs church members to hold their money toward the heavens. The thousands repeat after him: “Give and it shall be given.”
“When you give, it qualifies you to receive God’s abundance,” he tells his listeners. “If God gives to you before you give to him, God himself will become a liar. … If you’re not prospering, it’s because you’re not giving.”
“If you’re not prospering, it’s because you’re not giving,” he repeats.
For four decades, Hagee’s message has motivated his members to give millions to his ministry.
And it is a message that has helped his nonprofit television arm, Global Evangelism Television, become a prosperous, global, moneymaking family enterprise that has netted millions year after year peddling prayer, inspirational books, tapes and the promise of prosperity.
Since Hagee and his wife, Diana Hagee, founded GETV 25 years ago, the organization has gone from a back-room operation broadcasting Sunday sermons to San Antonio area viewers to a 50,000-square-foot multimedia studio broadcasting to 127 television stations and 82 radio stations nationwide.
“God has blessed it until it has literally reached the Earth,” Hagee recently said at his studio about his television evangelism enterprise.
According to income tax statements that GETV filed with the Internal Revenue Service, the nonprofit organization drew $18.3 million in revenue in 2001, the most recent year the organization submitted a return to the IRS. That year, Hagee’s total compensation package amounted to more than $1.25 million.
Like most nonprofit organizations, GETV is obligated to disclose its finances by making IRS income tax statements, called 990 forms, available to the public. In return for complying, it isn’t required to pay income taxes on revenue, business and operation taxes and property taxes. It also receives a discount on bulk mailing.
And it is also able to sell products tax-free and at a 50 percent profit because selling religious books, tapes and albums fits within GETV’s broadly stated mission, which is to “spread the gospel of Jesus Christ.”
According to the 990 forms for GETV, the organization in 2001 netted $12.3 million from donations, $4.8 million in profit from the sales of books and tapes, and an additional $1.1 million from various other sources, including rental income.
As the nonprofit organization’s president, Hagee drew $540,000 in compensation, as well as an additional $302,005 in compensation for his position as president of Cornerstone Church, according to GETV’s tax statements.
He also received $411,561 in benefits from GETV, including contributions to a retirement package for highly paid executives the IRS calls a “rabbi trust,” so named because the first beneficiary of such an irrevocable trust was a rabbi.
The John Hagee Rabbi Trust includes a $2.1 million 7,969-acre ranch outside Brackettville, with five lodges, including a “main lodge” and a gun locker. It also includes a manager’s house, a smokehouse, a skeet range and three barns.
Taken together, his payment package, $842,005 in compensation and $414,485 in benefits, was one of the highest, if not the highest, pay package for a nonprofit director in the San Antonio area in 2001.
“I’m amazed at the income,” said Pamela Smith, an accounting professor at the University of Texas at San Antonio.
Smith, whose research interests include taxation of nonprofit organizations, said it is fairly common for nonprofit directors to receive what some might perceive are high salaries. Nonprofit directors are allowed to receive competitive salaries, she said. They are not, however, allowed to get a share of profits made from the sales of products or services.
Smith said she wasn’t aware of any nonprofit director in San Antonio who earned more than Hagee.
Dr. John Russell earned $361,587 and received $44,974 in benefits as executive vice president of medical affairs for Baptist Health System in 2001. John Brazil, the president of Trinity University, where Hagee received his bachelor’s degree in history in 1964, earned $300,000 and received $142,835 in benefits in 2001.
In addition, Hagee’s compensation was among the highest pay packages for television evangelists in 2001, according to IRS 990 filings.
Paul Crouch, president of California-based Trinity Christian Center of Santa Ana, received $403,700. His wife, Janice Crouch, earned $347,500 as the vice president for the organization, which broadcasts sermons nationally on the Trinity Broadcasting Network.
Billy Graham earned $174,000 in compensation and $28,403 in employee benefits for his role as director and chairman for the Billy Graham Evangelistic Association, which netted $96.7 million in revenue in 2001.
“It’s not unprecedented (for ministers to earn a high salary),” said Paul Nelson, president of the Evangelical Council for Financial Accountability, an accreditation group for Christian ministries that monitors the fund-raising practices of its member organizations. “But it is high,” Nelson said about Hagee’s compensation.
When discussing the finances of GETV and his compensation, Hagee and his wife defended their earnings.
“You’re comparing apples to oranges,” Diana Hagee said when discussing Graham’s compensation and comparing it with her husband’s compensation.
“Billy Graham is set up with 400 acres of property, with a house in the middle of it, with a chain-link fence and security dogs around it. His ministry provides all that,” John Hagee said while seated in the ‘living room” stage set of GETV’s Stone Oak studio.
“I provide my own house,” he said. “I provide my own insurance. I provide everything for myself.”
A representative for the Billy Graham Evangelistic Association said Graham has owned his own home since the 1950s but receives a housing stipend that is folded into his total compensation package. This year, Graham’s total compensation package was $190,000, which included a $47,500 housing stipend.
Hagee and his wife are listed in the Bexar County Appraisal District database as owners of their six-bedroom, 5,275-square-foot house in one of San Antonio’s most exclusive gated communities, The Dominion. The house, similar in architectural style to the building at Cornerstone Church – classical Greek revival and white with tall pillars reaching from the ground to the roof – is appraised at $688,900.
All in the family
Hagee wasn’t the only one making money from the enterprise. Diana Hagee received compensation of $67,907 as vice president of GETV and $58,813 as the special events director for Cornerstone Church.
Their son, Matthew Hagee, 24, received a compensation of $10,288 for his role as a director at GETV. And according to the 990 form, one of his daughters earned a salary for serving as the director of publications for GETV.
Matthew and his sisters, Tina and Sandy, make up the John Hagee Family Singers, who also earn royalties from album sales and honoraria for singing at events and get paid through GETV.
Diana, Matthew and John Hagee are listed on the 990 filing as three of four GETV officers, along with the church’s chief financial officer, Alan Hulme.
It is a setup that some observers say creates a conflict of interest and allows the officers to determine their own salaries, benefits and other forms of compensation.
“That is a serious, serious problem in accountability,” said Ole Anthony, president of Trinity Foundation, a Dallas-based watchdog group that conducts undercover investigations of television evangelists.
Anthony said he and his organization, which operates a victim hot line for people who feel they’ve been bilked by television ministries, have not received any substantive complaints of fraud about John Hagee Ministries, GETV or Cornerstone Church.
“We have had calls, mostly from disgruntled employees, but not the real extraordinary complaints from someone who’s been defrauded,” Anthony said. “Usually, we get those complaints from people who’ve been involved in the healing ministries, the ones that claim to cure illnesses and disease.”
But when Anthony learned about Hagee’s compensation package and the board’s tight family structure, he said the Trinity Foundation might consider conducting an investigation in the future.
“The amount of money he’s making is unconscionable for a minister,” Anthony said.
Hagee defended his GETV compensation package, saying he earned the money and benefits through speaking fees and “royalties” for book and tape sales and not from individual donors calling the station’s prayer line.
“I have no salary here (with GETV), none whatsoever,” Hagee said. “What I have is a royalty from products I produce. That’s very, very different. And to call that an income would be a misappropriation of terms.”
Hagee said John Hagee Ministries buys books that he and his wife have authored at a 78 percent discount from the Thomas Nelson Book Group, a publisher of Christian books in Nashville, Tenn.
Thomas Nelson has published and sold more than 2 million copies of Hagee’s various titles, including his latest, a novel called “Avenger of Blood.” John Hagee Ministries is selling the book for $19 – a 99-cent discount off of full retail price.
Books, tapes, salvation
The organization’s 42-page catalog of resources includes books such as his wife’s, “The King’s Daughter: Becoming the Woman God Created You to Be,” which sells for $16. It sells Hagee’s taped sermons, such as his six-tape series on the “Final Judgment,” a video package selling for $99 or the audio version for $32.
The Web site for John Hagee Ministries offers many of the same books, tapes and opportunities to donate money. It also offers a salvation plan, a prayer and guidance toward reaching salvation by calling GETV’s prayer line.
Additionally, for parents seeking to “protect you and your children from the dangers of the Internet,” the Web site offers John Hagee Online, an Internet service for $21.95 a month.
With the growth of the Internet over the past five years, John Hagee Ministries has penetrated 83 nations – including Gabon, Greenland, Tanzania and Turkey.
GETV’s current computer mailing list includes the names and addresses of 850,000 people who’ve called the prayer line, made a purchase over the Internet, contributed toward the Operation Exodus campaign to send Zionist Jews to Israel or donated money to support the nonprofit organization’s operations.
Inside the TV station, 50 workers buzz daily in the prayer room, a college classroomlike setting with a large brass bell at front. The workers answer the telephone pleas from people seeking divine intervention on everything from a surgery to depression, cancer, a lost child, a bad infection, salvation. They ring the brass bell whenever someone says they’ve accepted Jesus Christ as their savior.
The calls, about 30,000 a month, come from throughout the nation. And the prayer line workers, volunteers who work in four-hour shifts and get gas money or bus fare, are mostly older women, Cornerstone parishioners from the San Antonio area.
When callers dial the prayer line, these volunteers pray on the spot, pray at the end of the day, and pray every day over five stacks of prayer request forms.
Many of those prayers result in donations. Some of them result in big donations.
The most dedicated contributors are called “Salt Covenant Partners.” For their monthly contribution, the volunteers pray for them every day. And the partners have direct access to a toll-free partner prayer line where a partner-relations specialist patches the phone call to Hagee, who then prays for them especially.
Diana Hagee said the prayer line and television ministry have offered hope to millions, including a man she claims stopped his plans of suicide when he turned on the television and heard her husband talking about a new life and new hope.
“So, no matter what the responsibility is, the pressure is always worth it,” she said while giving a tour of the TV station.
Worth every dime
Because he worked “80 hours a week” writing books, singing songs, meeting international dignitaries and answering the call to preach the word of God, John Hagee said: “I deserve every dime I’m getting.”
And while watchdogs and outside observers may feel differently, many of his church members, upon learning about his compensation after services, agreed with Hagee’s assessment that he was worth every dime.
“God has given to him because he has given to God,” Canyon Lake resident Trampus Smith said. “He’s a good man serving a lot of lost souls, and I love him to death. He is my pastor.”
Smith, a 38-year-old construction contractor, said he started his Sunday 75-minute commute five years ago to attend the church after having watched GETV’s programming from home. He now tithes 10 percent of his income to Cornerstone and has given additional income toward the John Hagee Ministry campaign to move Jewish people to Israel.
Smith said he likes “everything” about attending church at Cornerstone.
“It’s more exciting here,” said Smith, who grew up attending Lutheran churches. “I learn more here about the Bible. The church has a wonderful choir. And his son Matthew is blessed with a great singing voice.”
Alicia Loeffelholz, a retired nurse, said: “I know the reason that he earns what he earns is because God has blessed him. It is powerful to preach the word of God. And because he does, he is going to receive everything he needs and more.”
Loeffelholz said she has purchased products from GETV to send to out-of-town relatives and friends who watch his sermons on television.
“We are blessed to have him here in this city,” Loeffelholz said.
Conflict of interest
But while it may be common for preachers to receive royalty payments for books and other intellectual property, experts on television ministries say that selling books and tapes through the ministry and getting royalty payments from that organization creates a conflict of interest.
“We prohibit any personal profiting on a product that is promoted and marketed with the dollars that have been donated to the ministry,” said Nelson, with the Evangelical Council for Financial Accountability.
“If the ministry or charity promotes a book written by the leader or senior officer of that organization, the royalty paid by the publisher on the purchase of that material goes to the charity and not the individual,” he said.
Additionally, the arrangement with the book sale profits or “royalty payments” being placed in a retirement trust – instead of being counted as ordinary income – created the impression that Hagee was trying to avoid being taxed for ordinary income, an intellectual property rights lawyer said.
“The purpose of the arrangement of the sales this way is that it shifts the income from him, where it would be taxable as ordinary income, to a trust where it would not be taxed as income,” said Ronald J. Mann, a professor at the University of Texas School of Law. “As a business lawyer I look at this and say, ‘That’s clearly what someone is trying to do, someone is not wanting to voluntarily pay a tax.’”
‘I’m not afraid.’
Faced with questions about his personal finances and the profitability of GETV, Hagee raised his voice and said: “We are hiding absolutely nothing from nobody. I’m not afraid of you. I’m not afraid of the government, but I am afraid of God. And I’m not going to lie to God and go to Hell over this.”
Hagee would have little reason to fear the federal government. Other than disclosing their 990 forms, nonprofit organizations have little federal government oversight. Each year, the IRS may examine the tax returns of 1 percent of the 1 million nonprofit organizations that disclose income, according to an IRS spokesman.
So, while the IRS has stringent rules about the disclosure of profits and investments, as well as income requirements for officers, most nonprofit organizations such as GETV will operate virtually tax-free with little scrutiny, if any.
In fact, when the federal government challenged his church’s nonprofit status in the mid-1990s, Hagee elicited the help of high-profile lawyers who worked often with Christian enterprises and sued the U.S. Postal Service when it denied his church a nonprofit bulk mail discount.
Hagee’s mailings contained advertisements for a sermon series on self-help and a Bible study cruise to Israel. A year after Hagee sued, the postal service settled with him, granted his church the discount on its mailings in 1999 and refunded more than $40,000 in excess postage fees.
Hagee said he was certain his finances complied with IRS requirements because he hired tax lawyers and accountants to make sure that his books complied with tax laws. He said he is prepared for the IRS, if ever it decides to conduct an investigation.
“We said, ‘We want a set of books so that when the IRS comes in here and looks they’ll say, those people are clean,’” Hagee said. “And I am waiting for the day that the IRS is going to come look at our books. I have spent a chunk of money waiting for them.”
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