107. Megachurches

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Growing up in the town of Waynesboro, Pennsylvania, Julie Royce spent much of her youth in a local church.

It was a small church, maybe 150, 200 people, wonderful pastor who was a friend of the family, and everybody knew each other.

As she grew older, Royce became more involved in the evangelical Christian faith.

But she found that many of the newer churches weren't like the ones she grew up in.

They were enormous, a hundred times the size, and they were run more like businesses than religious institutions.

I went to church after church and I saw they're very highly programmed.

The pastor gives a very entertaining sermon that really doesn't teach much about scripture.

It used to be the pastor is a servant and a shepherd and now he's more like a corporate CEO.

There's thousands of people that come to the church and he doesn't know anybody on a first name basis.

What Roy's noticed is a part of a larger story that's been playing out in America over the past few decades.

While many small community churches struggle to stay afloat, a new breed of megachurches has emerged.

Some of them boast weekly attendance in the tens of thousands.

They're run by celebrity pastors with boards of directors.

Their worship services feature live rock bands, fog machines, and sometimes much grander theatrics.

Here's a clip of an event organized by a 16,000-person megachurch in Missouri.

Heavy metal blares through a PA system while a tank rolls across a stage and crushes a row of cars.

The crowd goes wild.

To some, these mega churches are a masterclass in community building.

To others, they're a machine for extracting money from the faithful.

Either way, their multi-million dollar budgets often raise eyebrows.

So, where does all that money go?

A lot of Christians don't want the church to be regulated at all by the IRS, but this has created a situation where you have megachurches that are making literally $30, $40, $50 million a year, and there is zero accountability.

For the Free Economics Radio Network, this is the Economics of Everyday Things.

I'm Zachary Crockett.

Today, mega churches.

In most of America, you can't go far without seeing a religious institution of some kind.

By one estimate, There are around 370,000 of them across the country.

The vast majority of these are churches of various Christian denominations, and most of them are pretty small.

The median church hosts around 60 attendees a week.

But over the past few decades, a number of megachurches have emerged.

Few people know more about that trend than Scott Thuma.

I'm a professor of sociology of religion at Hartford International University and the director of the Hartford Institute for Religion Research.

Thuma has been researching megachurches for more than 30 years.

In the 1950s and 60s, you had a pretty standard way of how to do church.

They all had similar liturgies, they all sung hymns.

The megachurch really attempted a different model coming out of the Jesus movements in the 60s and a kind of openness that spawned the hippies.

It created a relaxed and different perspective on how to do church.

These These new churches traded in hard pews and solemn hymns for cushy seats and soft rock ballads.

And so consequently, people were like, well, this is something different.

This isn't my grandparents' typical religion.

And it was attractive, especially to these younger late 60s, 70s, boomer kind of people.

And it just started to grow.

Theuma's definition of a megachurch is any church with a weekly in-person attendance of more than 2,000 people?

He estimates there are around 1,800 of them in the U.S.

And some of them are many, many times that size.

Out of those 1,800, there's about 100 of them that have 10,000 people or more.

Some of these churches have one enormous facility where thousands of people gather each week.

If you've ever seen Joel Osteen and the Houston Lakewood Church, that arena holds, what, 15,000 people people at a time.

It used to be where the Houston Rockets played.

But mega churches have become so large that many of them have multiple locations, sometimes even in different states.

They might have one mother congregation that seats 2,000 or 3,000, perhaps, but then they also have auxiliary satellite congregations.

By Thuma's estimation, around 95% of megachurches are evangelical Christian, and many of them encourage attendees to expand the congregation.

They go out and evangelize.

They want to win more people for Jesus, but megachurches are not asking their people to go out and try to save other people.

They say, go bring other people into the church.

The emphasis is really on recruitment.

At least 50% of the people from some of our surveys say that they're pretty active in trying to recruit people to come to the church.

As a church grows, the size of the congregation itself becomes its own marketing tool.

It's sort of like how dance clubs with long lines outside the door tend to attract more people.

It captures people's attention when you drive down the street, and all of a sudden, on a Sunday morning, you see traffic and you see hundreds and sometimes thousands of cars parked.

If you get big, you're going to stay big because people are interested in what circus came to town.

Make it churches also invest resources into building attractive facilities.

The largest of them operate almost like small towns.

If you're a church of 43 people, you're probably not going to have many programs.

You're not going to have a good nursery for the kids.

You're singing hymns may be a little off tune.

But if you go to a congregation of 15,000, you're going to have multiple bands, you're going to have hundreds of programs that both you and your wife can do, your kids can do, you might even have an entire sports facility to work out.

It's a much more seeker-friendly, consumer-oriented faith.

For megachurches, getting more people in the door isn't just a matter of spreading the gospel.

It's how they pay the bills.

Some mega churches earn money through ancillary revenue streams.

They might charge membership fees for those sports facilities, run conferences, or sell Christian-themed merchandise in on-site stores.

Hillsong, a mega church that reports 150,000 global members, has released more than 100 albums and has made millions of dollars in royalties for music.

At most mega churches, though, the bulk of the money comes from donations.

Basically, 96%

of their income comes from member contributions, offerings, tithes, dues.

On a median per-person donation is about $1,800 a year.

Thuma says the median megachurch budget is $5.5 million a year.

That's compared to around $120,000 a year for your typical small neighborhood congregation.

Of course, it has to cover a lot more overhead.

Roughly 50%

of expenditures of megachurches go to staff, salaries, benefits, things like buildings and operations, utilities, mortgage, insurance, all that kind of stuff.

Is about 20%.

20% goes to things like programming, materials, education.

And then usually around 10% goes to things like missions and benevolence.

If they get five and a half million, that's about what they spend.

They extend what they think God is telling them to do by building more buildings or reaching out in new and different ways.

It's a very different model compared to a traditional church that might have a surplus and then created an endowment because they want to be here forever.

The megachurches function in a much more dynamic financial way.

The largest megachurches pull in much more than $5 million.

Lakewood Church in Texas, headed by the celebrity pastor Joel Osteen, once reported $79 million in revenue.

And the Oklahoma-based Life Church, which boasts 85,000 weekly attendees, reportedly rakes in nearly twice that.

All of this money is entirely tax-free, because under Section 501C3 of the Internal Revenue Code, churches, regardless of size, are designated as nonprofits.

And what's more, they enjoy a special exemption.

Unlike other nonprofits, they're automatically exempt from needing to file any application with the IRS, so they're subject to far less regulatory oversight and fewer filing requirements.

It's up to them if they really want to file with the IRS or not.

Most nonprofits have to file an annual 990 form, which discloses a detailed breakdown of revenue and expenses, like the compensation of top executives.

Churches don't have to open their books if they don't want to.

And for some, that raises ethical questions.

I can't imagine any other organization or any other industry where we would expect there to be zero accountability and that people, out of the goodness of their heart, would not enrich themselves with that money.

That's coming up.

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Julie Royce always knew she wanted to pursue religious work.

After she got a degree in broadcast journalism, she landed a job as a national host at Moody Radio Network, one of the leading Christian media companies.

She spent more than a decade there and was on track to become a Christian radio star.

I had this program called Up for Debate, where we would debate controversial topics within the church, and I'd get people with different perspectives on different issues.

In her role, she also got a glimpse of the inner workings of megachurches.

And she began to question some of what she saw.

This whole, I call it the evangelical industrial complex, where it's a business, and these businesses, they're all interrelated and they're all feeding off of each other.

And because of that, they don't hold each other accountable.

So, Royce left Moody and started the Royce Report, an online publication that does investigative reporting on megachurch scandals.

Our tagline is Reporting the Truth, Restoring the Church.

A lot of people think that when you report even the bad behavior or misconduct of church leaders or churches, that you're out to destroy it.

And really the opposite is true.

I mean, scripture says that the kisses of an enemy are profuse, but it's actually the wounds of a friend that are really meaningful.

Royce says that megachurches aren't just bigger than traditional churches.

They're fundamentally different.

It used to be that a pastor was a servant.

You spent your life helping people and living in the parsonage, which is usually a very, very modest house next to the church.

What's happened in a lot of these mega churches is you have a celebrity pastor at the top and the celebrity pastor has become the brand.

You get put on a stage and people worship you and they think you're the best thing since sliced bread.

They give you a big salary, along with all sorts of perks.

The definition of a megachurch, 2,000-plus weekly attendees, is fairly broad.

Many of them don't have this kind of celebrity pastor at the helm.

But as Scott Duma points out, the size of the church itself can introduce complications.

The religious leader in whatever size congregation has a distinctive role in society.

But with the megachurch, that's amplified, this person is leading an organization of thousands of people with all this excitement and energy and success.

That creates not only a significant amount of spiritual authority and power, but also kind of personal authority and power.

Megachurches often have an organizational structure that aims to keep these powers in check.

In a healthy megachurch, you have a division of labor and also a division of some power.

The pastor is sort of the CEO and the person who preaches most often.

But then you also have a role that's more administration, that's often an executive pastor who takes care of the functioning of the buildings and the programs.

And then you also have a board that may be made up of people internal to the congregation, but also some people external to the congregation.

But this can change as a church grows.

The more the pastor becomes that celebrity person or that charismatic authority person, the board ends up functioning oftentimes as a kind of yes board,

whatever you say, senior leader.

And sometimes in that structure, that's where things can go wrong quickly.

Julie Royce has reported on numerous scandals involving mega churches.

She says in some cases, churches have had black budgets or executive accounts that are unknown even to many senior members of the church.

She's found instances of pastors using millions of dollars of the church's money for personal things like clothing, cars, hunting trips, and even college tuition payments for their kids.

You have people embezzling the church's money.

This is why there just has to to be checks and balances within churches.

They're sinners, I mean, just like everybody else.

But many megachurch pastors don't have to rely on hidden funds to make a good living.

In the U.S., the median salary for a pastor across all congregations is around $56,000.

Celebrity pastors at mega churches can command many multiples of that.

And the job sometimes comes with other completely legal benefits that take advantage of the generous tax permissions enjoyed by churches.

The pastor and televangelist Kenneth Copeland reportedly owns several private jets through his church and its subsidiaries.

He's justified them as a business expense, necessary to avoid demons on commercial flights.

Churches also often have a parsonage.

a tax-free home owned by the church that can be used by the pastor.

These parsonages are intended to be modest dwellings, but a 2021 report by the Houston Chronicle and the Trinity Foundation found more than two dozen parsonages in Texas worth at least seven figures.

That included a $12.5 million 30-bedroom compound owned by New Light Christian Center Church.

The report estimated that the church's pastor, I.V.

Hilliard and other church officials who lived there, saved more than $150,000 per year in property taxes.

It can sometimes be hard to disentangle a pastor's private income from the institutions they run.

Joel Osteen reportedly draws no salary from his post at Lakewood Church in Texas, but his books, based on his sermons, have reportedly earned him millions.

Fuma says it can be equally hard to separate a megachurch's religious income from the money it makes through other activities.

A lot of these megachurches have large properties and multiple activities going on that don't exactly fall under what might be considered religious activities.

If they're doing a daycare or they have a school or they have a sports league and people have to pay dues to get in the sports league, is that really part of their religious activities?

One potential cause for this conflation is that at megachurches, religion and consumerism are sometimes intertwined.

Some pastors preach a doctrine called prosperity gospel.

It's a theological viewpoint that wealth is earned through faith and that riches might indicate God's favor.

Here's the pastor, Kenneth Copeland, during a sermon in Washington, D.C.:

The money is the carrier, and you water it with your praise,

and it will

harvest.

A lot of the people that give to these prosperity preachers are people that are on a fixed income or are poor.

They think if you plant a seed that you will get back much more.

And so these people are basically giving their money thinking they give $100, they're going to get $1,000 back.

Scott Duma says that some level of solicitation is necessary to keep mega churches operational.

He's done survey work that shows the average donation size decreases as a church grows.

In other words, there's a diminishing return for each additional congregant.

The larger the congregation gets, the weaker its influence and pressure on the individual.

And that's true of any grouping of people together.

If I had a heart attack, I was standing in a group of five people, at least one of those is going to jump to my aid.

If I'm in a group of 50 or 500 people, everybody goes, well, it's somebody else's problem.

Megachurches have to talk about money because they know that without pressure, their people are not going to give as much.

So it's this really catch-22.

If they don't talk about it, they're not going to get the money.

If they do talk about it, then they're going to get criticism about that's all they talk about.

The financial scandals that emerge each year have made many of today's megachurches more cautious about optics.

As the megachurch model has matured, I think it's learned what it should be doing and how precious its reputation is and, you know, putting in those checks and balances and guardrails to make sure that they don't lose that important standing in the community.

Many megachurches choose to work with an oversight body called the Evangelical Council for Financial Accountability, or ECFA.

In addition to that, Duma estimates that around three-quarters of mega-churches willingly submit to an audit by an external or independent CPA.

Oftentimes, they may have their audit statements on their websites.

They welcome some challenge by the people who are within the congregation, but it's only three-quarters, right?

It's not all of them.

None of the churches mentioned in this story responded to our request for for comment.

But for what it's worth, the independent evangelical Christian organization Ministry Watch tracks America's largest ministries and gives them a grade for financial transparency.

To get an A, a ministry must have a 990 tax filing, an audited financial statement, and membership with ECFA.

In the most recent report, only around 40% of ministries in the database were awarded a grade of A.

More than a quarter of them received a D or an F,

including the institutions run by Joel Osteen and Kenneth Copeland.

Of course, a lack of transparency doesn't necessarily indicate wrongdoing.

And even though the bad behavior tends to get the most attention, Duma says there are good things that megachurches contribute to America's religious landscape.

They're still drawing young people, and they're still growing a lot of these things that the megachurches do, like have clean bathrooms and good coffee and a hospitality team that welcomes people.

Those things any congregation could do no matter what their size.

I think there's a lot to learn from them.

Julie Royce has found a different kind of church to attend.

I'm in this tiny house church, and it's wonderful.

I look forward to it every week.

Nobody's sitting there giving us a 30-minute lecture.

We're opening the scriptures, and we're all discussing it, and we're being edified by the insights of everybody else.

Evangelical to me is a church that has always stressed having a personal relationship with God, believing in heaven and hell, that your faith should be acted out in the way you live your life.

None of that has changed, but what church looks like for me has changed a lot.

For the economics of everyday things, I'm Zachary Krackett.

This episode was produced by me and Sarah Lilly and mixed by Jeremy Johnston.

We had help from Daniel Moritz Rapson and Davin Abowaji.

We're supposed to have one celebrity, that's Jesus, right?

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Here's a question.

How can you keep from getting sick with a respiratory illness this season?

The good news is, everyday actions can help you stay well and stop the spread.

Wash your hands.

Take steps for cleaner air and try to avoid close contact with people who are sick.

And talk to your doctor about what vaccines may be right for you so you can help keep yourself and your loved ones healthy.

Learn more at cdc.gov/slash respiratory dash illnesses.

A message from CDC.