Former Big 4 Auditor: Dark Clouds Loom Over Harvest Bible Chapel

A former “big 4” accounting firm auditor is raising red flags about the future of Harvest Bible Chapel. Jason Watkins, who has analysed Gospel for Asia’s finances on this blog in the past, predicts tough financial times ahead.

Given reduced offerings and the outstanding $42-million in debt, the church may need to further reduce staff in order secure additional financing and live within their means. There is also the matter of severance payments for James MacDonald and other departing pastors which will encumber the church.

Watkins prepared a series of charts to depict the situation. They show that the church’s giving is 79% off from the budgeted amount for their Closer campaign. Regular giving is off by 50% compared to previous years. Here are two images with links to the supporting charts:

Donations are down 50% over 2016 and 2017 at the same time of the year.  More figures supporting these charts can be viewed here.

The response to the Closer campaign is even more distressing. Additional figures from HBC sources showing giving from 2016-2017 can be viewed here. That chart also shows the pledges for the Closer campaign.

Members and leaders of HBC face a reality check over the next several months. This information is provided in this format to assist members in this process. Faced with a similar reality, Mars Hill Church fragmented into autonomous local churches. Some didn’t make it and some have thrived. Perhaps HBC will follow that path.

It has been reported that Lawrence Swicegood from Gateway Church is involved in assisting HBC. Mr. Swicegood helped Gateway put a good face on their recent layoffs and he may find a way to assist HBC. A potential pitfall for HBC would be to be acquired or bailed out by Gateway and compromised in doctrine by such a link. In any case, it seems likely that dramatic changes are in store for HBC.

 

 

48 thoughts on “Former Big 4 Auditor: Dark Clouds Loom Over Harvest Bible Chapel”

  1. If you haven’t seen this video made by HBC in the aftermath of the excommunication of a pair of HBC elders, it’s worth watching in the context of what has recently transpired:

    https://archive.org/details/JamesMacDonaldHarvastBibleChapel

    I hope the four elders to took part in the presentation are thoroughly ashamed of themselves.

    For context, this is the letter the video was responding to:

    https://world.wng.org/sites/default/files/assets/Letter_to_HBC_Elders_2013.pdf

    1. That was September of 2013. MacDonald’s bullying and threats kept him in power for another 5 1/2 years…
      WTH is wrong with the sheeple in the pews??? How can you tolerate this???

      Is the Cult of Personality that strong with these independent evangelical ministers???
      Geez. Unbelievable.

      1. I have Sadly been around Harvest for many years. As a believer gifted with discernment, I tried to understand why he was so popular with a huge following. He was a gifted speaker, charismatic, entertaining , spoke with conviction, had leadership qualities, was business savvy and had tons of biblical knowledge. But I realized through many sermons he was a very self centered man for someone in his position. Perhaps we have witnessed the most grevious sin of all which is to blaspheme the Holy Spirit and have a hard heart. I really have doubts as to wether he is saved at all. So many of us wanted to believe he made mistakes but was changing areas he needed to grow. It is sad to realize how much damage he has caused and those in leadership left still bring upon those people now who want to believe they can be different. I pray for all involved daily as this is a horrible situation. James is such a coward . Where is he? He has not the decency to “Act like a man” at all and speak to his church once. He doesn’t care about anyone but himself and the Almighty dollar. So sad on many levels!

    2. The only thing left in that church after that were puppets:

      ‘We warn the people of Harvest Bible Chapel to separate themselves from these false messengers. Don’t stand in the middle, don’t seek to mediate. Please avoid these former Harvest elders at all cost, lest you incur great detriment to your own soul.’

      Would you stick around after hearing something like that?

  2. Week 7 results are trending slightly worse; only $305K in regular donations is DOWN 55%, and closer got only $28K, DOWN 83%. The tone-deaf actions by leadership post-MacDonald do not bode well; having Rick Donald preach was a major negative and sign that the old patterns aren’t going away – and much of the “new” elder board is the same as the “old” elder board, with bogus reasons given as to why they won’t all step down. When you’re in the worst position, and you can’t even start to come clean, open the books, apologize to those who were harmed, etc. makes it clear that the current remaining leadership doesn’t listen, doesn’t want to listen, and insists the abusive MacDonald methods must stay. Wrong direction. The ship keeps taking on more water and will eventually sink at this rate.

    The decrease in donations is an indication that more and more people are waking up to the concept of “Stop throwing good money after bad.”

    1. If all the money and time that went to churches went to homes and care for the homeless, there wouldn’t be any homeless. I see Church, Inc as an act of theft and ergo an embodiment of organized crime.

      1. You could say the same thing about the government: “If all of the money they spent on buildings and employees went to homes and care for the homeless, there wouldn’t be any homeless.” Except in the case of government, they really do take it away from people by force. At least the churches got the money given to them voluntarily.

          1. I wasn’t around 100 years ago. My point is that (incorporated) churches are not “organized crime” any more than governments are.

          2. My apologies — I sometimes get a little triggered from debating too many libertarian types online.

          3. They are organized crime if they are misappropriating resources. Let’s count how many homeless people Jesus fed and compare it to the number of churches He planted, then consider how far the churches’ allocation of resources deviates from His example.

            Are you His body or the body of Church, Incorporated?

            Remember why God destroyed Sodom and Gomorrah?

            Ezekiel 16:49:

            Behold, this was the iniquity of thy sister Sodom, pride, fulness of bread, and abundance of idleness was in her and in her daughters, neither did she strengthen the hand of the poor and needy.

            The reason church, incorporated always falls apart is because it’s off mission and its authoritarian centralized $tructure attracts scammers.

            The number of homeless in my city is equal to the number of churches in it, and I don’t find it a coincidence.

            When Jesus says to those on His left, “you never fed me”, will a good excuse be that they gave it all to James MacDonald?

        1. Coercing people to give with threats of eternal damnation is less voluntary than coercing them with threats of momentary imprisonment. The other difference between the two cases of course is that the government wants you to give the government the money, whereas God wants you to give the homeless the money.

          The former is being obeyed, the latter disobeyed.

      2. You could say the same thing about the government: “If all of the money they spent on buildings and employees went to homes and care for the homeless, there wouldn’t be any homeless.” Except in the case of government, they really do take it away from people by force. At least the churches got the money given to them voluntarily.

  3. Warren, you need to be a little bit careful with this information.
    Firstly, their total income was $43m in 2016 and $44m in 2017 (leaving
    out the Net assets acquired). So that gives them another $9m a year;
    whether it will all continue is another matter. Secondly, they say they
    only need $23m a year ($1.92m each month). Last year, the giving
    seemed to be well ahead of needs. Lastly, there is $0.6m of Interest and
    other income. Assuming this is mainly interest, otherwise they would
    need to declare the ‘other’ separately, they must have a lot of
    financial assets. That should help with any shortfall. Without seeing
    the rest of the accounts, it is hard to be definite, but it isn’t
    perhaps quite as bad as your graphs show.

    1. Incorrect. The tuition revenue also has school costs associated with it, so to assume that it’s all “free cash flow” is improper and not supported in the data. Most private schools this size do not spin off loads of cash; many break even or even need subsidies from other sources.

      The proper comparison is between donation income in previous years vs. donation income in the current year (which is all the data available). Other income is not necessarily recurring so to rely on that would be unwise. The trend shows over $8.8M short in the general fund by June 30, little help from Closer, plus a $3.2M note due in July – that is an $12M iceberg ahead of the sinking Titanic, and growing. As more people leave, expect it to get worse; little new sources of cash, attendance dropping for good reason, as more people realize they have been “played,” and without James to land any new “whales” like the Van Kampen fortune in prior years, it looks more and more like an impending financial disaster is ahead.

    2. Incorrect. The tuition revenue also has school costs associated with it, so to assume that it’s all “free cash flow” is improper and not supported in the data. Most private schools this size do not spin off loads of cash; many break even or even need subsidies from other sources.

      The proper comparison is between donation income in previous years vs. donation income in the current year (which is all the data available). Other income is not necessarily recurring so to rely on that would be unwise. The trend shows over $8.8M short in the general fund by June 30, little help from Closer, plus a $3.2M note due in July – that is an $12M iceberg ahead of the sinking Titanic, and growing. As more people leave, expect it to get worse; little new sources of cash, attendance dropping for good reason, as more people realize they have been “played,” and without James to land any new “whales” like the Van Kampen fortune in prior years, it looks more and more like an impending financial disaster is ahead.

      1. Writers at The Elephant’s Debt who are members of Harvest said that closing the school is one of the first things they have to do to save money and noted that it would probably be the biggest money saver after selling off properties to pay off debt.

        1. There are other Christian schools in the area. There is also an amazing homeschool community (I miss it so). But it is still a shame for those kids.

        2. There are other Christian schools in the area. There is also an amazing homeschool community (I miss it so). But it is still a shame for those kids.

      2. Sorry, not visited this thread for a little while. I have no access to their accounting information, and nothing seems to have been published so far this year. They did manage to save themselves $0.5m a year by this action and seem to be going in the right direction regarding positive actions:ECFA and financial investigation update.

        They have also formed a finance committee recently, which does not include anyone external to the church.

        There does not seem to be any notes of panic in their reports (that could, of course, be a front) and they seem to have survive the $$3.2m note repayment, unless it is still due?

        They are expecting a report on their financial management in the next two or three months, so it will be interesting to see the outcome: Finance review in last paragraph.

        If anyone has any information on the finance at the half year it would be interesting to see it. But for now, I will stand by view that I am not sure the information shows red flags, maybe a little yellow, but not red yet.

        1. Not sure anyone is interested in this anymore 🙂 , but you can find the September Church Financial Statement here. They certainly aren’t pulling in the giving they were, but seem, after the first three months, to have brought their expenses to a level comparable with the giving. They are honest enough to admit they will spend $1.8m more than expenses this year. I think they are being a little optimistic to expect $3m in December as that is only $1m less than last year, but who knows.

          It would appear that the steps they have taken and are taking, seems to have enabled the church to stabilize their finance in a manner that gives them a reasonable chance of continuing.

        2. Not sure anyone is interested in this anymore 🙂 , but you can find the September Church Financial Statement here. They certainly aren’t pulling in the giving they were, but seem, after the first three months, to have brought their expenses to a level comparable with the giving. They are honest enough to admit they will spend $1.8m more than expenses this year. I think they are being a little optimistic to expect $3m in December as that is only $1m less than last year, but who knows.

          It would appear that the steps they have taken and are taking, seems to have enabled the church to stabilize their finance in a manner that gives them a reasonable chance of continuing.

  4. It frankly disturbs me that I understand every part of this process using the strategic M&A part of my reptilian lawyerly brain. Don’t need the Holy Spirit to grasp any of this, it’s the world doing as the world does.

    1. Ding Ding Ding… we have winner.

      “Don’t need the Holy Spirit to grasp any of this, it’s the world doing as the world does.”

    2. Yep, “church” as just another form of business… they rise like a commercial enterprise and now they fall like them too… sad

      1. Was it ever different? Perhaps the only differences these days are scale, and the fact that trust in church leadership is more brittle than it was when religious leaders were considered beyond reproach.

        Over the last 50 years, politicians have discovered that the press is no longer willing to help cover up their scandals and shenanigans the way they used to. The same goes for religious leaders too.

        1. I doubt it was ever otherwise. Follow the same path and the destination will be no different; the passage of time changes nothing.

        2. I doubt it was ever otherwise. Follow the same path and the destination will be no different; the passage of time changes nothing.

  5. One of the things that hasn’t been touched on was the clean bill of health the ECFA gave Harvest Bible Chapel recently.
    You’d think the ECFA would have learned lessons from Gospel for Asia, but I guess not.

    Along with a precipitous drop in giving,Harvest Bible Chapel must have loans due at some stage.

    Harvest announced today they reduced their elder board to an interim 9 people. 4 have been part of the situation all along, and the executive elders aren’t out the door for awhile yet.

    Mr. Jesperson is right, this is a corporation in deep trouble. It is also a church that wounded and brainwashed a lot of people who are hurting and who will find other churches. I think those of us watching can pray that churches receiving the wounded are equipped to minister to all kinds of levels of pain, grief, anger, confusion and theological gobbleygook.

    1. “I think those of us watching can pray that churches receiving the wounded are equipped to minister to all kinds of levels of pain, grief, anger, confusion and theological gobbleygook.”
      Amen. In addition, they should also be equipped to minister “correction” as well. There are those who remained at HBC for reasons other than what the Lord intended for fellowship and discipleship. It is important for their growth to work through those things.

    2. God is going to teach the church that His Spirit is the real deal and these religion-businesses are fake, and He’s going to keep teaching them this until they all get it. These corporations are not churches, and every claim to such is a fraud.

      Church is the act of coordinating acts of Love with fellow believers. It is done, not owned, built, bought, sold, administered, led, or commanded. It is nothing more and nothing less than being Jesus to other people, because if you were made in the image of God and inhabited by His Spirit then that is Who you are and what those gifts were for. That is the only reason church is holy, and the modern religion-business does everything it can to stop it from happening. This is the very reason religion exists, to kill the spiritual growth of as much of mankind as it can ensnare and bring them utterly under submission.

  6. None of this is surprising. I suspect the big org. will be out of business before the end of the year. Some campuses will be closed. Others will become independent churches. I am frankly very concerned, not for those leaving and the many already gone, but for those who stay. There is some serious psychological damage to deal with for these folks. The skill set in leadership to help them get over that and recover is not inside their church. Those were not the kind of people who were hired and put into positions of power. It is unlikely that people like that will soon come in from the outside either. I suspect that for many that stay they will just keep getting abused but by different people this time.
    Welcome to reality. I have had some tough wake up calls in my own life when it comes to fraud and abuse inside what claims that Jesus is Lord without actually letting Him be their lord. It is my prayer that these people will begin seeing the real Jesus and not the plastic pretend one that the hypocrites talk about in the third person. Jesus is the Life, and nothing else. Being part of a big church or following some bigger than life celebrity will not bring that to you. Only interacting with Jesus directly can.

    1. The Lord periodically asks, “will you follow a man, a movement, or me?” He is asking this question of those who are still attending HBC.

  7. “…and compromised in doctrine by such a link.” (with Gateway)

    Any specifics on that, Warren?

    1. Just off the cuff… GW can be big tongue talkers and the whole secondary experience of the baptism of the holy spirit. They are not reformed nor in a cold day in Hades will ever be elder led.

      Than being said they/he went to Mark Driscoll’s aid also.

        1. Driscoll always had a bit of a charismatic streak, with his “visions” and whatnot. I never understood where he was coming from with all of that.

          1. Acts 29 tends to elevate the “Pastor of Vision” above all others. It lets them seclude themselves from the flock, only coming out to teach, kick people out of the church, make all the decisions, and go on frequent paid sabbaticals which are also encouraged. And I’m talking about a small Acts 29 church that was very much a Mars Hill clone in San Diego.

      1. Got it… thanks. Yeah, not a real fit with Harvest’s doctrine, but neither were Jakes, Furtick or Driscoll. Steven Furtick preached what was literally the absolute worst, least biblical sermon I have ever heard in person when he came to Harvest. My wife and I walked out of there shaking our heads, but we knew that’d be his last time in the Harvest pulpit.

        1. Really it’s not about doctrine anymore… I think it’s more about numbers and numbers equals power and money. Look at Jakes… to me being a WELL KNOWN modelist, (which frankly is more important to me than anything) is a clear separation of serious doctrine… they (The other mega celebrity preachers) except him and his preaching like it was from Paul himself. To me that is telling. It seems to me anyway that they all hang together for credibility and dare I say it…star power.

          Sometimes I wonder why people stay. I stayed for 17 years and NOT until I left did I see the proverbial forest from the trees. The think I hope for as more and more people leave they can see they same thing as I did and proclaim what they have been through..

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