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Ron Luce, World Magazine Debate Why Teen Mania Is One of America's Most Insolvent Charities

(UPDATED) Acquire the Fire leader says investigation 'included false statements, errors and misperceptions.' World reveals audit advice as evidence.
Ron Luce, World Magazine Debate Why Teen Mania Is One of America's Most Insolvent Charities
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[Editor's note: Reference to Prison Fellowship 990s updated May 29.]

Teen Mania's finances are on the rocks. The Acquire the Fire organizer, recently named one of the most influential ministries of the 21st century, is currently No. 5 on Charity Navigator's list of 10 Charities in Deep Financial Trouble—and has been on the list since December 2012.

But why the ministry's finances are so rocky has become a subject of public debate, after an in-depth investigation by World magazine of the foreclosure of Teen Mania's sprawling campus headquarters—among the termination of its ECFA accreditation and other financial concerns—sparked a public rebuttal from cofounder and president Ron Luce.

Luce said World's article—which detailed expenses such as $100,000 for T.D. Jakes to speak at a 2008 New York City event, $21,000 for his private jet, and $10,000 for gifts for Jakes's family—"included false statements, errors and misperceptions regarding the current state of our ministry."

"Teen Mania never paid the stated amounts for guest speakers nor provided gifts as alleged," Luce wrote in a public letter to alumni earlier this month.

He also responded to a charge from a former Teen Mania development director, who said Luce raised $250,000 to "raise awareness and support for reaching America's 26 million teens with the gospel of Christ" but spent it instead on campus carpeting, a coffee shop, and a new conference room.

Teen Mania "always sought to utilize ministry donations for initiatives and headquarter improvements which would further allow us to fulfill our mission 'to provoke a young generation to passionately pursue Jesus Christ and to take His life-giving message to the ends of the earth,'" Luce wrote.

Luce also gave his explanation of the investigation's hook: the recent foreclosure on the minstry's 472-acre Texas headquarters.

World reported that Luce's announcement to move the headquarters to Dallas for ministry purposes obscured the real reason for the move: foreclosure on the Garden Valley property.

Luce allegedly fired communications director Cindy Mallette 10 days later when she prodded him to acknowledge the foreclosure, according to the article. Mallette told World that Teen Mania's mortgage went into default after it stopped making payments in November in order to meet payroll.

But Luce said the foreclosure was a "friendly" one, done by the bank at the request of Teen Mania's board when they decided to relocate to Dallas last December. (Teen Mania has yet to announce the exact location of its new headquarters, but the move is scheduled for August.)

He explained:

Like a number of ministries, Teen Mania has faced many financial challenges over the last several years due to both 9/11 and the 2008 economic downturns. As financial restructuring occurred to accommodate budgetary changes, the day-to-day expenditures associated with the facilities and maintenance has become burdensome and costly for the ministry to maintain. Rather than pass along an increase in fees to those who are studying at the Academy, we chose to make additional changes to our organizational structure and operations in order to minimize our financial risk and vulnerabilities and to implement improved financial standards and best practices.

In response to Luce's rebuttal, World released a list of recommendations from an audit that Calvin Edwards & Co.'s did for Teen Mania in 2012. "A discerning donor will quickly see that TMM is technically bankrupt," writes Calvin Edwards. "This is a matter that demands explanation."

"We originally had no intention of releasing this document, but since Ron Luce questioned WORLD's credibility, we present it to allow our readers to decide for themselves," wrote the magazine.

The 32 recommendations include shoring up Teen Mania's core programs, reviewing Luce's job performance, and replacing Luce's wife Katie as a voting member on the board.

Teen Mania's "poor financial position" is due to the economy, staff turnover, and "weak ATF (Acquire the Fire) call center results," but also greatly impacted by the decision to purchase 50 percent interest in an annual Christian music festival in 2005. The $4.5 million investment in Creation Festivals resulted in a $2.5 million writedown in 2008 and a $6 million write-off in 2008 due to a dissatisfied donor, according to the audit.

The audit also recommended removing some of Luce's power, which allows him to appoint any assistants and requires his approval before anyone can speak, teach, or minister at a Teen Mania meeting.

Teen Mania lost its accreditation with the Evangelical Council for Financial Accountability (ECFA) in March for "failure to provide complete renewal information." Luce said the ministry will start a new financial audit in September and pursue reaccreditation with ECFA.

Teen Mania is currently ranked No. 5 on Charity Navigator's list of America's most insolvent charities, with a working capital of about -$4 million.

These charities are insolvent, Charity Navigator explains. "Not only do their total liabilities, or what they owe, exceed their total assets, they also maintain negative working capital—that is, the bills they owe exceed available assets that can be used to pay those bills. While these charities may not be facing bankruptcy, their fundamental insolvency puts these charities in a very dangerous position."

However, while being on the list is dangerous, it doesn't mean a charity is facing bankruptcy, according to Charity Navigator. For example, Agape Villages has been on the list since May 2007. Christian Research Institute was No. 1 back in July 2008. [UPDATED] Prison Fellowship was No. 10 in November 2012 and again in March/April 2013, but told CT it was removed from the list by Charity Navigator once the separate 990 of the Prison Fellowship Foundation was consolidated and taken into account.

This month, Ministry Today named Teen Mania one of the 21 most influential ministries of the 21st century. According to Luce, this summer the ministry will "welcome 1,200 to 1,400 students for summer camp at Garden Valley prior to our move and send 1,000 teens to 25 countries for short-term missions work." "Since we started Teen Mania 28 years ago, every single month young people have come to Christ," Luce wrote in his rebuttal. "And we have at times been challenged with the mandate to build an organization to keep up with all this."

CT previously covered a 2012 plane crash that killed everyone except Luce's daughter, and responded to Luce's 2006 claim that "Christianity in America won't survive another decade."

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