The Rev. Jerry Falwell, Lynchburg's leading export, says that his religious, educational, political lobbying and broadcasting empire is the third largest employer in a community that also manufactures ChapStick, Fleet's Enema, General Electric products and nuclear parts. He loves to tell the story of how his little Thomas Road Baptist Church began in the Donald Duck Cola bottling plant 28 years ago and is now one of the largest in the nation, with a membership of 20,000 -- a quarter of Lynchburg's population.
His "Old Time Gospel Hour" -- carried on 392 TV stations plus Ted Turner's and other cable stations -- is the fund-raising arm of his empire. More than $72 million in contributions pours in annually (plus another $12 million into his Moral Majority political lobbying enterprise). Last fiscal year the "Old Time Gospel Hour" netted $2 million; much of that was plowed back into expanding Falwell's Liberty Baptist College. Expenditures, according to Falwell and his staff, include $30 million annually underwriting missionaries in 65 nations and the work of the Thomas Road Baptist Church in the United States and abroad, including financial help for churches started by graduates of the college; $10 million annually to subsidize the college; $18 million for TV and radio air time; and a payroll of $15 million for 2,200 employes.
Falwell's dream is to expand the college -- a major drain on "Gospel Hour" contributions -- from 4,566 to 50,000 students.
In earlier times, though, all was not smooth in Falwell's domain; financial security was elusive.
For its first six years, wrote Frances Fitzgerald in The New Yorker, "the college had two entirely independent existences -- one on paper, the other in reality -- and the students fell into the gap between the two." Falwell's ads included a catalogue with a picture of what seemed to be a wooded campus and a book that pictured students playing basketball in a gym. According to The New Yorker, students instead found rented buildings scattered around the city; there was no gym (they used gyms belonging to a public high school and Lynchburg academy); the catalogue photo was not the campus but a city park. But in 1977, contributions enabled Falwell to start construction. The campus now includes classrooms, gym and dormitories.
In 1973, the Securities and Exchange Commission charged Falwell's ministries with "fraud and deceit" and "gross insolvency" in the sale of $6.6 million in church bonds to raise money for Falwell's operation. Following the SEC lawsuit, a committee of five Lynchburg businessmen, the equivalent of a receivership, took over the ministries' financial operations.
In 1977, the committee was disbanded by a federal judge. As the result of a consent decree, Falwell agreed to pay back money raised in the church bond sale and the SEC agreed to erase the words "fraud and deceit" from its complaint. Falwell said that financial ignorance caused his troubles. "I did not know you could not borrow money across state lines."
His greatly expanded media exposure and repeated appeals to viewers did much to balance the books. In 1980, the "Gospel Hour" sold $6.5 million in five-year bonds to repay other loans and consolidate debts.
In 1979 Falwell transferred the health insurance policies of "Gospel Hour" employes to Ministers Benefit Trust, a Texas-based "Christian" insurance company that was placed into receivership a year later by a Texas judge. An investigation revealed the company was unlicensed, had assets of $128 and almost $300,000 in unpaid claims.
Another embarrassment involved the late F. William Menge, who called himself a "Christian" businessman. In 1977, while on probation for securities fraud in Missouri, Menge moved to Lynchburg. He became a friend of Falwell's, arranged a $500,000 loan for the ministry and traveled to the Middle East with Falwell -- a trip that included Falwell meetings with Israeli Prime Minister Menachem Begin and Egyptian President Anwar Sadat.
Menge, though, also used his "Gospel Hour" connections to arrange nearly $9 million in loans on which he later defaulted. When he filed for bankruptcy in June 1980, he and Falwell were no longer on speaking terms; Falwell said that in 1978, Menge was voted off the "Gospel Hour" board. In September 1980, Menge was decapitated after being thrown from his tractor, a death ruled accidental by the coroner. Falwell said his alliance with Menge was "bad judgment," according to a 1981 Washington Post article.
Now, he says, his operations are in the black. There have been impassioned pleas for contributions -- in language that could be compared to that at fire sales -- but Falwell says he is in no danger of going out of business, thanks to cutbacks on employes and expenditures.
The "Gospel Hour" warehouse, about a half-block long, amounts to a counting house and is manned 24 hours a day. Under heavy security, employes open the 60 million pieces of mail that pour in annually. Other employes are at the ready at 80 telephones -- a sophisticated phone-bank operation that would be the envy of any politician -- to take contributions from those toll-free numbers on the TV screen. The "Gospel Hour" take ranges from a low of $100,000 a day to $1 million one day during the Christmas season. One floor holds the books, Bibles, records, cassettes and "Jesus First" pins that are sent out. Every week computers spit out "personalized" fund-raising letters that go to the 7 1/2 million families on Falwell's mailing list. In the "stewardship and development" department, employes track supporters who want to give Falwell pieces of property or remember Falwell and his college in their wills.
Across town, in an unmarked old warehouse, the main headquarters of the Moral Majority mails its report and fund-raising appeals to its 1 million donors. Falwell says there is an 18 percent overlap with "Gospel Hour" followers. It is a separate and taxable political lobbying enterprise, but Falwell's critics say that his politicking is so endemic to the whole operation that the "Old Time Gospel Hour" should lose its tax-free status.
"Falwell is using his organizations, facilities and money in behalf of a candidate," says one critic, Rabbi David Saperstein. "He endorses from the pulpit and is trying to arrogate God's authority to one particular candidate or partisan political line."
Falwell says, "My various roles would seem to run together. That is what happens with well-known public people. As a person I do openly support Ronald Reagan. As pastor I do not coerce my people to do the same. But my critics are on pretty solid footing when they say it all blurs."
What about the tax exemption?
"It's a tough question. I've had our constitutional lawyers look at it once a month for five years. As long as the church itself uses no resources for political purposes it is okay."