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International Church of Christ Finances (ICC, ICOC)

"Don’t you care about your soul more than your checkbook?”

-- Jim Brown; see full quote

The multi-million dollar International Churches of Christ (ICC) claim to have finances beyond reproach.

In this section, we explore the reality of ICC finances. We will find that ICC finances are upside down, with members sacrificing to meet the financial needs and dictates of leadership, while getting inadequate information in return.

Contents

• Intro
• “Our books are open”
• Weekly Contribution and the 10% Myth
  • Chart: ICC Monetary Expectations
• Where Does Special Contribution Money Go?
• Leaders’ Compensation
• Leaders’ Homes
  • Steve Johnson homes
  • Chicago evangelist’s house
  • Kip McKean condominium
• HOPE Fundraising
• Notes

“Our books are open”

The International Churches of Christ (ICC) appear to be a monetary success on a massive scale. The organization has grown from humble beginnings in 1979 to apparently well over $100 million in annual contributions from its members. Although it has a tradition of not buying worship spaces, the organization has considerable assets. For instance, one property the ICC inherited through its “reconstruction” of the Tokyo (mainline) Church of Christ was sold in 1994 for $30 million (1) – no small change for any church.

Despite its prosperity, the ICC puts considerable pressure on members to give money. Accordingly, the organization owes members full disclosure of how it is spent. [In fact, the “Donor Bill of Rights” endorsed by charities and fundraisers says access to recent financial statements is a right of all charitable donors. (2)]

The ICC claims that “questions by members about procedures and allocation of funds are welcomed,” (3) and ICC founder Kip McKean himself has plainly said the books are open:

“The financial books and how we spend our money are open to any member at any time.”

Kip McKean (ICC founder), “Revolution Through Restoration”, Upside Down, Volume 1, Number 2, April 1992.

In reality, ICC members will find it difficult or impossible to get fully informed about ICC finances. Leaders may be reluctant to give members access to financial information, sometimes questioning the “heart” of a member who asks for the information. When the ICC does provide financial statements, they are generally vague and cover only basic totals for one local congregation. (The ICC does not typically provide statements for its many other incorporated entities, e.g. International Churches of Christ, Kingdom News Network, the various World Sectors, etc.).

The ICC points to its audited statements as evidence of faultless finances, but auditors’ signatures do little to dispel the questions about ICC finances (see Figure 1). The Los Angeles International Church of Christ Annual Report, for example, is signed by auditors, but tells members very little about how local money is spent.

Figure 1: Selected figures from 1998 LAICC financial statement

	Local Ministry
Payroll and related expenses	$9,215,000
General and administrative	$3,953,000
Facilities rental	$2,743,000
Benevolence	$232,000
Total expenses	$16,143,000

Source: Los Angeles International Church of Christ, "Statements of Functional Expenses," 1999 Annual Report, p. 8.

We see that the Los Angeles church spent $9.2 million “payroll and related expenses” – but we don’t know what any of the salaries are. We see that the church spent $3.9 million on “general and administrative” but are not given detail on those expenses. Despite sixteen pages of information in its 1999 Annual Report, Los Angeles members will likely be unable to judge if their money is being spent appropriately.

While the ICC hasn’t given members enough information to scrutinize its own multi-million dollar finances, it may expect members to disclose theirs to the organization:

“We need to smash this little idol we have of secrecy with our finances. That you don’t want people to see your bank statement. Well, what on earth is that for – what do you fear, exposure? Well, then I’d fear not getting exposed if that’s the case. Don’t you care about your soul more than your checkbook?”

Jim Brown (Geographic Sector Leader), Personal Budget Workshop, New York, audio tape, August 23, 1997.

So goes the story of ICC finances: too much scrutiny on the finances of members, and not enough on the organization and its leadership.

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Weekly Contribution and the 10% Myth

ICC member weekly contributions are the organization's largest single source of income. According to one ICC leadership document, the March 1999 “budget” for weekly contributions church-wide was apparently $2.3 million per week (4) – which projects to $120 million in total annual weekly contributions.

The ICC says its members “are encouraged to tithe – that is, give 10% of their income.” (5) But leadership doesn’t just expect members to give 10% of their take-home pay. It wants 10% of gross:

“A tithe is a 10% contribution of your gross income – not your net take-home pay. 10% of gross. 10% of what you earn before taxes, before IRA contributions, before any co-health insurance plan, before a savings plan, before everything.”

Jim Brown, Personal Budget Workshop, 1997.

This disparity between net and gross income results in more money going to the ICC organization. In reality, typical members will donate much more than 10% of their take-home pay just by meeting the ICC’s basic expectations. To calculate what percentage goes to the ICC, we must do some math:

• Calculate 10% of gross income (before taxes or withholding)

• Add at least one Special Contribution of sixteen to twenty times one weekly contribution

• Divide the total annual weekly and Special Contributions by net income for a percentage

The results are enlightening (see Figure 2).

Figure 2: ICC Monetary Expectations*

*This chart assumes that a member "tithes" 10% of gross salary, gives 16 times that amount for Special Contribution, and pays 25% in total taxes. Any of these ratios could be higher or lower in actual practice.

If we project a rough 25% in total taxes/withholding, (6) we see that a typical ICC member would actually give a minimum of 17.4 percent of their available income to the organization in a year – not counting additional HOPE contributions, poor contributions, etc. Members who give beyond the “minimum” expected ratio or who are saddled with higher tax brackets can easily give more than 20% of their available funds to the organization.

Whether they do the math or not, 10% giving for most ICC members is a myth.

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Where Does Special Contribution Money Go?

Besides weekly contributions, the ICC collects many millions each year in Special Contributions – according to ICC documents, Special Contributions from 1999 thru 2001 exceeded $44 million each year. (7) The year before, the Los Angeles Special Contribution alone was $5.4 million (8) – an average of over $700 per member. Special Contributions are typically collected once per year – again with considerable pressure put upon members.

So where does Special Contribution money go? The primary stated purpose is to support “missions” in each ICC World Sector, although congregations that exceed their goal may spend the extra money locally instead of on missions. (9) For more detail, a 1995 document from the Boston Church of Christ is helpful (see Figure 3).

Figure 3: Reported use of Special Contribution

Source: Boston Church of Christ, "What The 1995 Special Missions Contribution Covers," Presentation on Church Growth, Congregational Workshop, January 6, 1995, p. 17.

*A 1999 article also mentions part of special contribution money going “to provide for Kingdom cash reserves.” [Kingdom New Network, “1997: Beyond 2000”, LA Story, August, 1999, p. 9.]

If Special Contribution spending is truly this systematic, its puzzling that the ICC typically doesn’t report these details. The ICC could list all of its first, second, and third world churches in each World Sector, specifically showing which congregations are giving and receiving what amounts. It could also give members a breakdown of what their World Sector Leaders, World Sector Administrators and Geographic Sector Leaders are costing them.

Figure 3 also raises questions about how many ICC churches are actually getting Special Contribution support. All established “First World Churches” are supposed to be self-supporting and give their own Special Contributions. “Second World Churches” are supposed to become self-supporting within two years and give Special Contributions too. (10) [Some plantings quickly achieve self-sufficiency: the Freeport, Bahamas congregation did within 6 months of its 1998 planting. (11)] New nations are not being planted as frequently since the 2000 completion of the Evangelization Proclamation. And many of the remaining “Third World Churches” are in countries where "First World" money may be worth much more.

In at least two cases the media has reported improprieties with ICC Special Contribution funds:

• In 1993, UK newspaper The Independent reported that the London Church of Christ planned to spend some Special Contribution funds at home in the UK despite collecting the money for missionary work in other places – a violation of UK charities law. Although London church leaders denied this, The Independent reportedly had a tape of a leader saying that some of the money would be spent domestically in Edinburgh, Bristol and Oxford. (12)

[To read the Independent article on the TOLC Web site, click here.]

• In 1996, the Sunday Business News (London) said that ICC Special Contribution money had actually been used to bribe police officials in Indonesia. The paper reported that money raised to send a mission team to Jakarta in 1990 was used to get authorities to drop inquiries into the group after four UK leaders had been arrested. (13)

[To read the Sunday Business News article on the TOLC Web site, click here.]

Incidents like these – and the enormous amounts of money collected worldwide – point to a need for detailed financial reporting of the ICC's missions spending. Considering the tremendous sacrifices members make to give their Special Contributions, the ICC would seem to owe them more information.

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Leaders’ Compensation

While the ICC has painted its leaders as sacrificial servants who make barely enough to get by, many make an extremely comfortable living while working for the organization. (Note: this is not to suggest that typical low-level ICC leaders are paid exhorbitantly because they're not). At one leadership conference, Kip McKean scorched leaders for their increasing salaries:

• click here to hear this quote in

“I’m telling you. We’re losing it. We’re looking like everybody else, we’re sounding like everybody else, we’re rationing out things like everybody else. Back in the early days of the ministry, used to pay our young interns 700 a month. And Bob [Gempel] and I thought we were being very generous. That’s about 8,000 a year… Now we’ve got evangelists making 80,000 dollars, and you are not grateful or happy for what you have – you don’t have enough.”

Kip McKean, Malachi: God’s Radical Demand for Remaining Radical, Manila, DPI Archive Cassette Series, Tape # 9104, 1994. (about audio clips)

Certainly, some ICC leaders make less than others. But beyond salaries, ICC leaders’ housing allowances and other perks may drastically reduce their cost of living and make even medium-sized salaries exorbitant. Other perks may include expense accounts, insurance and extensive travel. ICC leaders who travel to speak to other ICC congregations they can receive additional income (“honoraria”) of up to $200 per day (or $500 total for multi-day engagements) according to a tax document filed by DPI. (14) Leaders’ retirements are also looked after – Los Angeles financial statements say that employees over 35 get an “automatic salary adjustment to fund monthly contributions for the employee’s TSA (Tax Sheltered Annuity) account” ranging from $125 to $750 per month. (15)

Unfortunately, as a US religious non-profit organization, the ICC is not required to report its top salaries on publicly available tax returns. However, other ICC entities are required to, and these American tax documents provide useful benchmarks.

HOPE World Sector Leader: $102,886

ICC charity HOPE Worldwide's 1997 IRS tax return lists five individuals (including officers) getting compensation in excess of $75,000. Top compensation of $102,886 went to HOPE World Sector Leader Bob Gempel (16) – who ICC founder Kip McKean ironically once praised by for his “frugalness.” (17) Gempel’s wife Pat drew an additional $30,000 from HOPE.

[To see HOPE 990 tax returns at the Guidestar Web site, click here.]

Boston Super Region Administrator: $102,685

Discipleship Publications International (DPI), the ICC’s publishing service, also submits a publicly available tax return. On DPI’s 1999 tax return, it lists the compensation of Jim McCartney, an Administrator for the South Super Region of the Boston Church of Christ. [It listed this information because McCartney was a DPI officer employed by a “related organization.”] According the tax return, McCartney’s Boston Church of Christ compensation was $102,685. (18)

[To see this information on page 17 of DPI's 1999 tax returns at the Guidestar Web site, click here.]

It seems ICC leaders aren’t getting such a bad deal, after all.

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Leaders’ Homes

The ICC has claimed that “leaders in our church do not have extravagant life-styles.” (19) In reality, many senior ICC leaders have lived in expensive and sometimes controversial homes, many of them publicly documentable. Here, we will mention three of the more notorious ones.

Steve Johnson homes

As recently as 1988, New York City lead evangelist and World Sector Leader Steve Johnson claimed that he and his wife Lisa had no savings account – and no apparent desire to own property:

• click here to hear this quote in

“We don’t have a savings account. We don’t have CDs – either kind. I don’t think that’s wrong, to have a CD. I mean all I’m saying is: I want the day I die not to own any property. I don’t want to own anything. I want all of my real estate to be invested in heaven.”

Steve Johnson (World Sector Leader), Jesus Was Not a Nice Guy, New York City, audio tape, 1988. (about audio clips)

Irionically, by the early-90s, Johnson was living in a disputed West 98^th Street Manhattan co-op apartment. Although Johnson has denied ever owning the apartment (20) – it may be true that the apartment was not in his name when it was sold in November 1994 for the price of $365,000 (21) – his subsequent move to the suburbs is curious. Around the same time the apartment was sold, Johnson bought a home in suburban West Nyack, apparently for a similar price. He wrote that he was eager to move because of the controversy over the apartment and because his new residence was “inexpensive to the church.” (22) However, a deed for the property at his new address says it cost him $346,000. (23) Years later in 2000, Johnson told the New York Daily News that he had bought the West Nyack home with help from his father-in-law and was quoted as saying, "it's kind of junky," and that "if I ever get rich, it won't be because of the church. It'll be because I won the lottery." (23a) Johnson ultimately moved away from New York and the home at this address was sold for $900,000 in May 2004, according to an online home price database. (23b)

Chicago evangelist’s house

The ICC in Chicago purchased a $400,000 home for evangelist Byron Parsons to live in. In 1999, Chicago Church of Christ elder John Mannel acknowledged the home’s $400,000 cost at a midweek service, and defended it, saying it was necessary in order for the church to “establish a beachhead” in Chicago’s affluent North Shore area, and calling it a good investment for the church. (24)

[To see a transcript of this meeting including the "marking" of former World Sector Administrator Isaiah Pickett, click here.]

Kip McKean condominium

Kip McKean in 1998 moved into a Pacific Palisades, California condominium bought for $480,000. (25) The publicly available Grant Deed listed the owner as “International Churches of Christ, a California Non Profit Religious Corporation.” (26) Media/Law World Sector Leader Al Baird acknowledged the cost of this home and its ownership by the ICC in a written statement. (27)

Although Baird as ICC spokesman tried to justify Kip McKean’s home, more questions than answers remain:

• Baird has said “the ICC purchased the apartment as a parsonage, and the McKeans pay fair-market-value rent,” (28) but a parsonage is something a church provides for its minister, by definition – a parsonage is not typically rented to a minister. Even if McKean rented it, what is “fair-market-value rent" on a home this expensive and how could Kip McKean afford it, if not ultimately through member contributions? Furthermore, if McKean had truly needed to rent a $480,000 condominium, wouldn't it have been better stewardship to have had him rent directly from a third party, instead of tying up nearly a half-million dollars ofCC resources in a home for its leader?

• Did the ICC purchase this condo as an investment? If so, how does this reconcile with ICC claims not to earn income from investments or real estate as a matter of policy? (29)

• The ICC says it rents worship spaces rather than owning them so that “money collected does not go to pay for lavish, impractical facilities with their accompanying high mortgages and overhead. Rather the majority of funds go to increase numbers of ministry staff or to other projects that are directly involved in ministering to people's needs.” (30) But how did Kip McKean’s condo minister to people’s needs? How many Third World churches could the ICC plant for $480,000?

• Baird has defended the $480,000 price tag, saying “it may sound expensive; but that is just what real estate costs in West LA and many other parts of LA.” Yet actual median home prices in Los Angeles that year were $181,000 according to Newsweek (31) – $300,000 less than the cost of the McKean condo. If real estate prices in Pacific Palisades were so high, then why did Kip McKean need to live there?

[To see a great many ICC leader homes and their values as reported by New Covenent Publications, click here.]

In spite of the ICC organization's denial of "extravagant" lifestyles among leadership, the homes, salaries and other perks given to top leaders allow them to live lifestyles largely unattainable to the very members who foot the bill.

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HOPE Fundraising

[For a separate RightCyberUp article on HOPE fundraising, click here.]

Notes:

(1) ICC founder Kip McKean says that much of the $30 million was used to construct church buildings needed to establish the organization in Japan and Korea [Celebrating the Fifteenth Year, Boston, DPI Archive Cassette Series, Cassette # 9192, September, 1994].

(2) American Association of Fundraising Council, A Donor Bill of Rights, aafrc.org, 2001.

(3) “Frequently Asked Questions About the International Churches of Christ,” The Disciple’s Handbook, DPI, Woburn, MA, 1997, p. 123.

(4) International Churches of Christ, “Financial Analysis,” World Report for March 1999, File # ICC 08.02, April 12, 1999, p. D-1.

(5) “Frequently Asked Questions…,” 1997, p. 123.

(6) Some members may pay a lower tax rate; others may pay more.

(7) International Churches of Christ, World Report Financial Analysis for December 1999, 2000 & 2001, World Total of "Weekly Actual $" times 52, and "Spec C Actual $."

(8) Los Angeles International Church of Christ, "Statements of Activities," 1999 Annual Report, p. 7.

(9) Boston Church of Christ, Presentation on Church Growth, Congregational Workshop, January 6, 1995, p. 17.

(10) Ibid.

(11) ACES World Sector, “Great news from the Bahamas!!”, acesonline.org, February 18, 1999.

(12) Steve Boggan, "Cult church 'planned to divert cash for UK use'; Mission funding discussed on tape", The Independent (London), Monday, September 27, 1993, p. 7.

(13) Tony Yorke, “Religious Cult used UK funds to bribe Indonesian Police”, Sunday Business News (London), June 9, 1996.

(14) Thomas A. Jones (Editor in Chief), letter to Internal Revenue Service, January 20, 1999, p. 3.

(15) Los Angeles International Church of Christ, “Notes to Financial Statements," 1999 Annual Report, p. 15.

(16) Hope Worldwide, Ltd., IRS Form 990: Return of Organization Exempt from Income Tax, tax year 1997, August 14, 1998.

(17)Kip McKean (ICC founder), The Focused Few, Boston Church of Christ bulletin, Vol. IX, No. 35, Boston, MA, September 4, 1988.

(18) Discipleship Publications International, “Part V – Officer Compensation from Related Organizations,” IRS Form 990: Return of Organization Exempt from Income Tax, tax year 1999.

(19) “Frequently Asked Questions…,” 1997, p. 122.

(20) Dave Saltonstall, “New York congregation grows from 18 to 6000,” New York Daily News, October 22, 2000, p. 9.

(21) America Online, AOL Home Price Check, October 13, 2001

(22) Steve Johnson (World Sector Leader), Upside Down, New York City Church of Christ, Inc. annual report, 1995, p. 3.

(23) Rockland County Recording Certificate, Transaction # 941007171112, October 7, 1994.

(23a) Dave Saltonstall, “New York congregation grows from 18 to 6000,” New York Daily News, October 22, 2000, p. 9.

(23b) Domania, Home Price Check, October 19, 2005.

(24) John Mannel (Chicago Church of Christ Elder), Chicago Midweek Service, North Shore Region, audiotape, October 6, 1999.

(25) First American Title Company, Property Profile, December 29, 1998.

(26) Grant Deed, A.P.N. 4412-4-65, Order No. 47610-12, Escrow No. 9814754-S.

(27) Al Baird (World Sector Leader), statement, acesonline.org, January 28, 1999.

(28) Al Baird, statement, 1999.

(29) “Frequently Asked Questions…,” 1997, p. 123.

(30) Ibid.

(31) John McCormick & Daniel McGinn, “Through the Roof”, Newsweek, August 9, 1999, p. 48.

Copyright © 2001, 2005 Dave Anderson. All rights reserved.