OPINION: Phil Johnson’s Defense of MacArthur’s Salaries & Nepotism Raises More Red Flags ~ Julie Roys

“Sadly, Johnson’s interview does not resolve any of the financial issues raised in my article on MacArthur’s finances, but instead reveals Johnson’s continued pattern of deception and false accusations.

Equally sad, Justin Peters, who posted the video of his interview with Johnson on his ministry’s YouTube channel, has refused to interview me so I can present the facts to his audience. “

Phil Johnson, director of John MacArthur’s broadcast ministry, Grace to You (GTY), argued in a recent videotaped interview with Justin Peters that MacArthur’s large salaries don’t reveal greed, but instead restraint, and his alleged nepotism is a farce. Yet when examined, the arguments Johnson presented are full of holes and raise even more red flags.

For example, Johnson’s argument that MacArthur was magnanimous when he declined to take a 10-percent royalty on the sales of his sermons is surprising, given that doing so would violate IRS rules.

Also, Johnson’s argument that MacArthur’s $400K+ compensation from GTY in 2012 was not exorbitant because it included a rare Bible that MacArthur “turned around and gave away” is misleading. It seems MacArthur didn’t give away the Bible until four years later—after news of MacArthur’s $400K+ compensation from GTY became public.

In addition, Johnson omitted key facts when explaining MacArthur’s practice of stacking GTY’s board with family members. And he made dubious claims when dismissing questions of nepotism for GTY paying MacArthur’s son-in-law millions.

Plus, as is his pattern, Johnson accused me of having a motive “that is totally evil and probably rooted in bitterness” for raising questions about payments to MacArthur’s son-in-law.

The apostle Paul commended the Bereans for searching the Scriptures to see if what he was saying was true. But apparently to Johnson, even daring to question MacArthur and/or his ministries is a grievous sin.

I addressed Johnson’s distressing pattern of bullying, name-calling, and assuming evil motives in part one of my response to Johnson’s video. I also showed how Johnson’s allegations against me are demonstrably false.

In this article, I explore how Johnson’s defense of MacArthur and his financial dealings doesn’t resolve any of the issues in my original article, but actually raises more.

The King James Bible Gift

In the year ending 2012, GTY paid John MacArthur $402,444 in compensation for working 20 hours a week. That’s in addition to the $103,280 MacArthur received from The Master’s University and Seminary (TMUS), the undisclosed salary he received from Grace Community Church, as well as book royalties and speaking fees. (Johnson states in his video with Peters that MacArthur makes “millions . . . on book royalties.”)

In the video with Peters, Johnson explains MacArthur’s large 2012 GTY salary the same way he does in a statement he released in 2014: MacArthur’s salary topped $400K in 2012 because the ministry gave MacArthur a rare, first-edition King James Bible worth about $200,000.

I reported Johnson’s explanation about the Bible in my original article, so this was not new information. The new claim is that MacArthur donated the Bible, seemingly, in short order.  

“He’s not a very good miser if greed is his motivation because he turned around and gave it away,” Johnson said. “He put it in the seminary’s rare book collection.”

Johnson said nothing about MacArthur donating the Bible in his 2014 statement. And after examining TMUS’ 990 tax forms, it’s clear why he didn’t. In 2014, MacArthur apparently hadn’t yet given away the Bible.

Johnson said nothing about MacArthur donating the Bible in his 2014 statement. And after examining TMUS’ 990 tax forms, it’s clear why he didn’t. In 2014, MacArthur apparently hadn’t yet given away the Bible.

From the first part of 2012—when MacArthur was given the Bible—through June 30, 2015, there are no large, non-cash donations of “historical artifacts” reported on TMUS’ 990s.

However, on TMUS’s 2015 990 tax form—the year after MacArthur came under intense scrutiny from bloggers for his large GTY compensation—it shows an “historical artifacts” donation worth $210,000.

So MacArthur received the $210,000 Bible from GTY in 2011/2012. But he apparently didn’t donate it until 2015/2016—approximately four years later. And he did so only after being called out publicly for taking more than $402K in one year for his part-time job at GTY.

MacArthur Foregoes Royalties?

Another factor Johnson cites to ameliorate MacArthur’s large GTY salary is MacArthur’s decision not to take royalties of 10% on sales of his sermon recordings.

Johnson says this in the context of trying to explain his comment from 2014 that for the first 30 years of GTY, MacArthur took no salary.

GTY incorporated in the 1980s and MacArthur has been taking a salary for at least the past 19 years, so the statement is factually incorrect. However, Johnson states that he’s dating the beginning of GTY as the year MacArthur became pastor at Grace Community Church (GCC) and the church started selling cassettes of MacArthur’s sermons.

Johnson said elders at the church suggested MacArthur take 10 cents on every dollar for the cassette sales, but MacArthur declined to do so.

“That’s the amount I’ve heard—10 cents a tape—which sounds like not much,” Johnson said. “But when you’re selling, you know, 10 million tapes, that’s a million dollars that he decided to forego right away.”

However, giving a pastor royalties on sales of his sermons is forbidden by the IRS, according to Michelle Adams, a nonprofit attorney specializing in Christian ministries and churches.

“Many people seem to think that the following one builds through one’s role in the church belongs to that person alone,” she stated. “But the truth is, in tax-exempt law your employer (the nonprofit) owns the work that you produce on the job.  Specifically, when you are paid to be a pastor, the intellectual property produced through your pastoral duties (which certainly includes sermon-making) belongs to the organization that commissioned you to create it.”

“(W)hen you are paid to be a pastor, the intellectual property produced through your pastoral duties (which certainly includes sermon-making) belongs to the organization that commissioned you to create it.”

Similarly, Frank Sommerville, a Dallas-based attorney specializing in nonprofit law, states in Christianity Today that if a sermon qualifies as work for hire, the intellectual rights for that sermon belong to the church.

He adds that intellectual property rights are considered “charitable assets” and by law, must be used for “charitable purposes” not “private inurement.” (Despite this, the article notes that some celebrity pastors, like Chuck Swindoll, have been able to negotiate contracts with their churches, granting them ownership of their sermons.)

Clearly, MacArthur taking royalties on cassettes of his sermons would be an abuse of the law. But the intellectual property issue also raises another question.

Adams adds that books, study guides, and commentaries resulting from time working for a nonprofit belong to the nonprofit, as well. Given that MacArthur is paid a salary for jobs at three nonprofits, this raises the question: On whose time did MacArthur write all his books, study guides, and commentaries?

As I wrote in my original article on MacArthur’s wealth, MacArthur claims to work from 30- to 60 hours/week for just GTY and The Master’s University and Seminary (TMUS). Assuming MacArthur works a mere 20 hours a week at GCC, MacArthur is then claiming he works a combined 50 to 80 hours a week for all his nonprofits.

Given this fact, it’s almost inconceivable that MacArthur wrote all his books, study guides, and commentaries on his own time and that none contain intellectual property that belongs to his nonprofits.

So, MacArthur isn’t being magnanimous when he takes three salaries from his nonprofits, as well as millions in royalties.

What would be magnanimous would be to forego royalties on books like John Piper. Or, like prosperity preacher Joel Osteen, MacArthur could have stopped taking a salary from his church. Even more magnanimous, he could have followed the example of Rick Warren, who reimbursed his church for his salary once he began making millions in royalties.

Instead, MacArthur for decades has not only taken sizable salaries from every ministry in which he’s been involved, but also has pocketed millions for the many products that bear his name.

All in the Family

Johnson similarly obfuscates and misleads when he defends MacArthur’s practice of placing his sons on the GTY board and paying his son-in-law millions in contracts.

MacArthur’s two sons—Matt MacArthur and Mark MacArthur—have served on the GTY board for decades. Matt MacArthur has consistently served as treasurer for GTY. And Mark MacArthur just rolled off the GTY board last year after being charged with fraud by the Securities and Exchange Commission for his involvement in a $16 million investment scheme.

Yet, in the video, Johnson makes it sound like the practice of having both sons on the board was a one-time thing.

Johnson repeatedly states that “one of John’s sons is on our board” and “there is one family member on the Grace to You Board.” Then, almost as an aside, he mentions, “At one point, two of (MacArthur’s) sons were on the board.”

But both MacArthur’s sons didn’t serve on GTY’s board “at one point”; they served on the GTY board for decades. And Mark MacArthur stopped serving only after being charged with defrauding investors of millions.

But both MacArthur’s sons didn’t serve on GTY’s board “at one point”; they served on the GTY board for decades. And Mark MacArthur stopped serving only after being charged with defrauding investors of millions.

Johnson also defends Matt MacArthur’s role as GTY treasurer with a dubious argument. He says the reason Mark was chosen to serve as treasurer was simply pragmatic: “It has to do with geography,” Johnson states. “He’s the one who’s close by, who can sign check and do things like that when it needs to be done.”

Johnson adds that it would be a “logistical nightmare if one of our board members from, say Atlanta, was our treasurer.”

Yet other GTY board members live in Southern California where GTY is headquartered. This includes longtime board member Christopher Parkening and Peter Coeler, who owns a business in nearby Studio City, California.

Johnson’s explanation seems yet another attempt to obfuscate, rather than deal with the concerning reality that Matt MacArthur, who clearly has a conflict of interest, controls the finances of GTY.

A similar conflict of interest exists with the longstanding contract GTY has with Kory Welch, John MacArthur’s son-in-law. From 2009—2019, GTY paid more than $8.3 million to Welch’s businesses to produce videos for the ministry.

Johnson says my motivations clearly are “totally evil” for questioning this nepotistic arrangement, which is absurd. Anyone who wouldn’t question this arrangement is foolish.

In fact, Welch’s similar contractual relationship with The Master’s University and Seminary (TMUS), another nonprofit MacArthur heads, was a main reason the accrediting body for TMUS—the Western Association of Schools and Colleges (WASC)—placed TMUS on probation in 2018.

In its report, WASC stated: “The team notes with concern a pattern of operational irregularities, including the 2017 auditor’s specific finding on appearance of conflicts of interest with the President’s son-in-law supervising a contract from which he benefits . . .”

“The team notes with concern a pattern of operational irregularities, including the 2017 auditor’s specific finding on appearance of conflicts of interest with the President’s son-in-law supervising a contract from which he benefits . . .”

Johnson justifies GTY hiring Welch by explaining that “the great advantage to using Kory is he can get John to videotape special things at a drop of a hat, whereas John, you know, he’s gonna say ‘no’ if some Hollywood producer . . . says, ‘I need you to come down here and sit for a three-hour video thing.’”

This is essentially arguing, “We’re not hiring Welch just because he’s MacArthur’s son-in-law but because he’s MacArthur’s son-in-law.”

If GTY must hire a family member of MacArthur’s so that MacArthur will cooperate with the demands of his extremely lucrative, part-time job, that’s a problem.

However, Johnson also argues that hiring Welch saves the ministry money.

Johnson asserts that GTY had conducted a cost-benefit analysis before hiring Welch. And the ministry determined that hiring Welch as an independent contractor to produce videos was cheaper than employing Welch as a GTY employee and producing the videos in-house.

This is a dubious claim, given that GTY employed Welch for $84K in 2008 to produce videos and paid his wife, Melinda Welch, a mere $17K. But in 2009, GTY paid Welch’s company $741K for “post-production services.” Also, at the time, GTY had already purchased the video equipment necessary to produce the videos, according to Johnson.

I contacted Johnson and GTY CFO David Fisk, specifically requesting documentation for the costs to produce videos in-house at GTY in 2008, but they did not respond. I also asked for documentation for the alleged cost-benefit analyses Johnson referenced in the video, but they did not respond to that request either.

Johnson additionally asserts that when GTY first hired Welch, it collected bids from other video companies and Welch’s bid was competitive.

I asked Johnson and Fisk for documentation of those bids, but neither replied.

Red Flags Remain

Sadly, Johnson’s interview does not resolve any of the financial issues raised in my article on MacArthur’s finances, but instead reveals Johnson’s continued pattern of deception and false accusations.

Equally sad, Justin Peters, who posted the video of his interview with Johnson on his ministry’s YouTube channel, has refused to interview me so I can present the facts to his audience. To date, the video of Peters’ interview with Johnson has received more than 214K views.

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