How Mark Driscoll pockets the money he gives to Mars Hill 47

Mark Driscoll and Mars Hill have been defending some of their actions relating to the deceptive marketing of the Real Marriage book by claiming that Driscoll had given much or all of the money he had made from the book to the church. Driscoll told a meeting of church leaders that he and his wife were “tithing 100 percent” of their earnings to the church.

Just like the #1 New York Times ranking, it’s a claim that’s accurate but untrue.

Yes, Mark Driscoll has given some of his book money to the church, but almost all of it is funneled back to him through a tax vehicle called a Charitable Remainder UniTrust (CRUT for short). If you endured with me through the inurement post, I think you can make it through this one, too. I’ll tell you what a CRUT is, what we know about Driscoll’s CRUT, then we’ll go through a timeline of Mark Driscoll’s multi-state corporate entities to show you what he is doing with his book money.

How CRUTs work

Perhaps the best way to explain a CRUT is to take each term separately.

Charitable. A donor selects a nonprofit charity as the ultimate beneficiary from what is considered a donation. CRUTs are a common mechanism for nonprofit organizations to manage donations from wealthy donors, so there’s nothing inherently dishonest or unethical about them. They were created by an act of Congress, so they are entirely legal and they help a lot of great organizations. If you’ve ever seen offers by charities to help you with estate planning and planned giving, a CRUT is one of the things they will offer to create for you. Driscoll’s CRUT, which was created in Colorado, is registered to the same address as Mars Hill Church, so we can assume that the church is the official charity for this CRUT.

Unitrust. We need to take the terms out of order for the next step to make sense. At least once a year, the CRUT must distribute a percentage of its assets to what is termed the “non-charitable beneficiary.” This is a person (or persons) that was living at the time that the CRUT was established, and is living at the time of the annual distribution. Most CRUTs designate the person establishing it as the non-charitable beneficiary, so it functions as an annuity or pension for the rest of that person’s life. The CRUT must pay between 5 percent and 50 percent of the value each year. The rate of distribution cannot vary once the CRUT has been created, hence the uni in the title.

For example, let’s say you establish a CRUT with $500,000 with a 10 percent annual distribution rate. At the end of the first year, you’d get a check for $50,000. Let’s say, though, that the CRUT had invested its assets well so that at the end of the second year its assets were worth $750,000. You’d get a check for $75,000 at the end of year two. On the other hand, the market may have done poorly, so you could get a check of $30,000 if the assets were valued at $300,000.

We don’t know who the Driscolls have designated as the non-charitable beneficiaries, though, given that he has said that he could retire and live off his book income, it is certainly one or more members of his family. In Elephant Room One, Driscoll, who was supposed to be moderating a discussion between David Platt and James MacDonald on wealth, seemed to argue with Platt about the need for parents to set aside wealth for their children to benefit them to “a thousand generations.” (Watch at around 8:50.) Driscoll also owns a Washington corporation called Lasting Legacy, which, based on its title, may be his vehicle for protecting his income for his children. There’s nothing wrong with that, but it does show that he is intentional about saving money from his endeavors for his family, and a CRUT is a perfect way to do that.

Remainder. Why do charities promote CRUTs if the money is paid to the donor? Because they eventually get value from it when one of two things happens. First, if the recipient of the annuity dies, whatever is left in the CRUT goes to the charity. Second, when payouts or market fluctuations deplete the value to 10 percent of the original donation, the payouts cease and the 10 percent goes to the charity. This is the remainder after either death or depletion. In our $500,000 example, the charity would know that it will eventually get at least $50,000, though it may get much more if the donor dies before the balance reaches that threshold.

One of the reasons donors use CRUTs is that they can protect large influxes of wealth from immediate taxation. So rather than having to pay taxes on $500,000, the donor would pay taxes on the $50,000 paid in the first year, though that payment will vary from year to year. One explanation of the system described the donor as “renting” the charity’s nonprofit status, with the rent being the eventual 10 percent remainder. (This is a simplified layman’s explanation. Don’t go out and start a CRUT based on what you read here. Consult a real expert first.)

What we know about the Driscoll CRUT

Thanks to research assistance by a helpful PP reader and the work of Wenatchee the Hatchet, we know a little bit about the income and ownership structure of Driscoll’s various personal corporate entities. To spare you some of the details for now, you can review the timeline of how these came to be a little later in this post.

For now, it is sufficient to understand that Driscoll’s Real Marriage book was published in early 2012, though he would have received his first income in the form of an advance from the publisher in 2011. The book is copyrighted to On Mission LLC, which is 75 percent owned by On Mission CRUT, and 25 percent owned by Living Legacy LLC.

For the 2012 tax year, On Mission CRUT reported income of $464,340. This is almost certainly from the Real Marriage advance. If we assume that Driscoll’s literary agent collects a standard 15 percent commission and that the advance was split 75/25 by On Mission LLC, the owner of the book (with OMCRUT getting 75 percent), we find that the probable advance for the book was around $720,000.

This is in line with my estimated royalty earnings of around $500,000 from just the New York Times listing alone. We know from the contract that Result Source coordinates with the publisher to ensure enough copies are printed for its initial mass purchases, so the publisher would have known that the NYT campaign was going to happen when it negotiated the advance with Driscoll’s literary agent. We learned from NewSpring that it was Noble’s literary agent that suggested the Result Source campaign, and it’s  likely that Noble and Driscoll share the same agent, cross promoting each other’s books, as they do. I think that Driscoll’s agent negotiated the advance with the publisher and promised that the church would contribute the money necessary for the RSI campaign, promote it in a sermon series, and create a national Real Marriage tour to promote it long after its January release. If the publisher was assured that all that would happen, a $720,000 advance to Driscoll would not have been a terribly risky bet.

On several occasions Driscoll has said that all or most of his book income goes to Mars Hill. For example, he said this in 2009:

Mars Hill gets half of all the royalties so the books that I publish, about 75% of the revenue goes to Mars Hill Church, not me. Not me.  Because I’m worried about this issue, greed, shameful gain.

Though this statement predates the On Mission CRUT, the 75 percent figure perfectly matches OMCRUT’s 75 percent ownership share of Driscoll’s books. This is surprising, because the claim that most of the money is going back to the church doesn’t match his more-recent claim that his book income is sufficient for him and has family to live off. Simply giving half of it away probably wouldn’t give him enough income to live off comfortably, nor would it provide for his children and grandchildren.

Just before the Real Marriage book was released, he told Mars Hill leaders that “Grace and I are tithing 100 percent of any proceeds we receive from that pre-sale campaign back to Mars Hill Church.” At the time, it seemed strange that he would refer to a 100 percent donation as a tithe, especially because a tithe means just ten percent.

Now that you understand how his CRUT works, those statements make more sense. In a sense, everything that goes into the CRUT is donated to Mars Hill. Once money enters the CRUT, Mars Hill is guaranteed a payout, though it doesn’t know when. That minimum payout, as you know now, is 10 percent — a tithe. By using the CRUT, Driscoll can say that he donated 100 percent to the church, though it does truly constitute a tithe, because 10 percent is all that Mars Hill may eventually get.

By putting his book money into a CRUT, Driscoll can reassure us that the church is getting the lion’s share of his earnings, though the church can’t actually touch his gift until the CRUT has paid most of the money to the Driscoll family, assuming, as we hope, they live long enough for that to happen.

The lesson is that next time you hear a celebrity pastor claim that he’s giving his earnings back to the church, you need to ask, “How, and when?”

Timeline of Driscoll Inc.

Here’s the timeline of what we can establish through public records of how all of these entities work:

On or before Jan 28, 2011 The On Mission Charitable Remainder Unitrust is established with Driscoll as the trustee.

Jan 28, 2011 On Mission LLC is created in the state of Colorado to “manage book royalties, printing and publishing.” Driscoll contributes $125 of $500 and OMCRUT contributes $375, giving us the 25/75 ownership split.

Sept 30, 2011 OMCRU Investments LLC is filed with Colorado Secretary of State, and is set up to manage property and investments. The manager is Mark Driscoll, and OMCRUT owns all of the initial $500 in capital.

Oct 10, 2011 This is the first evidence of the Real Marriage campaign. This is significant for its proximity to the Sept 30 activity, and suggests that these entities were being created in anticipation of having to manage the large income from the book.

Oct 13, 2011 The Result Source contract is signed.

Late November, 2011 Driscoll describes the Real Marriage campaign to his church leaders and expects them to help him push the book.

End of 2011 On Mission CRUT reports income of $464,340 for the 2011-12 tax year.

Jan 3, 2012 Real Marriage is released.

April 17, 2012 Lasting Legacy LLC is registered in the State of Washington with Mark Driscoll as the governing person.

Dec 6, 2012 OMCRU Investments LLC is registered in the State of Washington with OMCRUT as the governing person.

Dec 6, 2012 On Mission LLC registered with the State of Washington with OMCRU Investments and Lasting Legacy as governing persons.

Feb 21, 2014 On Mission CRUT is noted as having income of $4,643.

UPDATE 5/29/14 I hadn’t noticed this earlier, but the last-reported income of $4,643 is exactly one percent of the 2011 income of $464,340. This suggests that the CRUT paid out the standard 10 percent to the Driscolls in 2012, which would have been $46,434. (The date of the $4,643 isn’t indicated on the report, except that it was before 2014.) If the Driscolls tithed this back to Mars Hill via the On Mission CRUT, they would have made a contribution of $4,643, which is exactly what we see reported. IRS regulations do allow contributions back into the CRUT from the original donors. Is it possible that Mark Driscoll is tithing his tithed book income back to himself?

47 thoughts on “How Mark Driscoll pockets the money he gives to Mars Hill

  1. Clark Mar 21, 2014 8:35 pm

    I would love to know Perry Noble’s salary. But maybe not. It would probably just anger me. The salary a pastor makes should be around the average salaries of those in a congregation. That’s just a good rule of thumb.

  2. Clark Mar 21, 2014 8:38 pm

    It seems that if you don’t fit the cute, hip, related to a staffer, big money mold, you won’t every be on staff and will be shunned if you question anything. Just drink that Kool Aid and shut your trap.

  3. Russell Mar 21, 2014 9:13 pm

    1. Openness and truth should be seen in all churches.
    This is the message we have heard from him and proclaim to you, that God is light, and in him is no darkness at all. If we say we have fellowship with him while we walk in darkness, we lie and do not practice the truth. But if we walk in the light, as he is in the light, we have fellowship with one another, and the blood of Jesus his Son cleanses us from all sin.

    2. Christians have a duty before God to warn of darkness.
    “Son of man, I have made you a watchman for the people of Israel; so hear the word I speak and give them warning from me.

    3. As with Israel, some will never see it coming, even in the face of warning.
    I set watchmen over you, saying, ‘Pay attention to the sound of the trumpet!’ But they said, ‘We will not pay attention.’

    4. Men will take advantage of those searching for Christ. ( Its all about the money)
    Pay careful attention to yourselves and to all the flock, in which the Holy Spirit has made you overseers, to care for the church of God, which he obtained with his own blood. I know that after my departure fierce wolves will come in among you, not sparing the flock; and from among your own selves will arise men speaking twisted things, to draw away the disciples after them.

    5. We sometimes think all of this is new. But its not, Pastors have fleeced flocks from the beginning. Using tithe money to purchase their newest Dr. Phil type rant in order to make a name for themselves is just the newest attack. Most of these men set the churches up with a board that has no real authority to oversee the Pastors. To quote ” They own the vision of the church” And frankly these churches would mostly disappear if their visionary was compromised in some indiscretion. So what could they really do to any of these guys?? That would not destroy a multimillion dollar corporation.
    So yes, we can point out the darkness and try to hold these men of God accountable for their number fixing. But until judgment is brought to the house of God…. That’s really all we do …Proclaim a warning…

    • Mark Prez Mar 21, 2014 9:22 pm

      Russell, that was what I was trying to say…obviously you are much better in terms of everything…kudos to a talent I fail to have…in all seriousness…very thoughtful, accurate, and with the added comments is placing Dr. Duncan’s comments section at a all time high…must have touched some nerves…thank you for your wisdom…well said.

  4. SallyVee Mar 22, 2014 11:34 pm

    CRUT overload! I read the beginning and the end and trust that everything in between is as accurate and judicious as all of your investigative work, Dr. Duncan.

    It does not surprise me in the least that Driscoll has sunk to this level of craven greedy sleaze. If [or I should say when] Driscoll finally quits in a snit, I think he could be fast tracked straight to Congress. Think about it, he’s mastered corruption. He’s got the gift of idiotic gab. He doesn’t hesitate to throw people who get in his way under the bus. He has a tight group of rich, loyal cronies. He knows his way around a teleprompter, cameras and lights. The only people he is accountable to are as corrupt as he is (or beholden to him). And he has the “I need to spend more time with my family” all-purpose excuse down pat, whenever the spotlight gets too hot to handle. Also, this CRUT deal smells a LOT like the “Leadership PACs” which 80+ percent of all congresscritters have. (Look up Peter Schweizer’s latest book, Extortion.) These PACs are simply legal ways of raising money from donations and funneling it into their own pockets… sounds vaguely familiar.

  5. Terry Austin Mar 23, 2014 3:07 pm

    Manipulating best seller lists is not a new thing in the publishing world, it has just taken preachers a longer time to figure it out. See this article from 1995 – link to businessweek.com

    • James Duncan Mar 23, 2014 3:55 pm

      That’s an interesting article, Terry. These sections tell us why they have an inurement problem, even if they give the book money back to the church:

      Before Discipline was even off the presses, Treacy, with some legwork from Wiersema, focused his expertise on a tough marketing problem: How to ensure that their $25 book made it onto The New York Times best-seller list. Getting there wouldn’t make them rich–even a best-selling business book rarely sells very many copies. But inclusion on the Times list would be money in the bank in terms of new clients for CSC and lucrative speaking engagements for Treacy and Wiersema.

      and

      Why did Treacy and his partner go to all the trouble? “The New York Times has the preeminent national best-sellers list; getting on the Times list has many potential financial rewards beyond prestige and personal cachet,” says Stuart Applebaum, a spokesman for Bantam Doubleday Dell Publishing Group.

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