Foundation disavows separatists

Controversial, non-profit organization drops Schell City church

The Joplin Globe/December 24, 2000
By Max McCoy

The National Heritage Foundation, a controversial non-profit organization that has come under fire for helping its clients help themselves to tax breaks, has dropped the Church of Israel at Schell City as a designated charity.

A spokesman said the Virginia-based foundation would not knowingly support any racist or anti-Semitic group, and that the Southwest Missouri whites-only church was dropped for fear of offending its Jewish clients.

The church has consistently been cited as among the most racist in America by hate watch groups such as the Southern Poverty Law Center. Led by 63-year-old patriarch Dan Gayman, the church teaches a set of beliefs shared by the far right Christian Identity movement.

But, the foundation may also have a practical motive for dropping the church: IRS guidelines prohibit any organization that discriminates based on race from receiving federal nonprofit status.

In 1994, more than a half-million dollars was funneled through a fund now administered by the National Heritage Foundation to the Schell City church. The money came from Texas millionaire Jerry Gentry to finance the construction of two parsonages and to build a music and video production addition to the church annex.

Last week, a split within the church over the ownership of one of the parsonages exposed the relationship between the church and Gentry, its richest patron. It also pitted Gentry against the church trustees, who believed departing minister Scott Stinson shouldn't have been given $20,000 in cash and the deed to the building.

The settlement was "coerced" by Stinson and Gentry, church leaders claimed, because of an alleged "misappropriation" of church records and threat to reveal church secrets. Gentry, however, denies blackmailing the church, and says his motivation is simply that Stinson be treated fairly.

Stinson has been with the church since 1993, and was attracted by the beliefs of Gayman, who is considered a leading theologian in the Christian Identity movement.

Chief among those beliefs are:

White Anglo Saxons are the true chosen people of the Bible, and not modern Jews;

Eve was seduced by Satan in the Garden of Eden, and that some races on earth today are the biological children of Satan;

The gospel of Jesus Christ applies only to whites.

Another common belief in Christian Identity is that America is on the eve of a cataclysmic battle between good and evil over the "New World Order."

Like others who create donor-advised funds with the National Heritage Foundation and other groups, Gentry was able to take an immediate tax cut - although the Church of Israel is not a federal or state non-profit. He also directly supervised the building of the parsonages, and other projects. Such intimate control over donor funds is one of the reasons the Falls Church, Va., foundation has come under attack by many conventional charities.

The foundation also allows donors to set up "charities" for pet causes under its parent umbrella, and to pay themselves and family members a salary for administration. Critics accuse the foundation of doing very little for others besides their clients, and cite tax records that indicate, for example, the foundation disbursed only $3 million of $128 million in assets in 1998.

But John Houk, NHF president, told the Globe on Thursday the organization had gotten a bad rap. The half-million dollar disbursement to the Church of Israel, he said, was actually made by another organization, the National Foundation Inc., before NHF acquired the Gentry fund in 1995.

The NHF Web site, however, cites the National Foundation Inc., as part of the evolution of the foundation.

"The National Heritage Foundation was set up in 1968 by Dr. Houk," it says, and replaced during our IRS battle (1983-87) by a successor corporation called "National Foundation Inc." When Dr. Houk reincorporated the National Heritage Foundation in the fall of 1993, NHF then re-acquired many of the former foundations. . . former staff members, and most of the marketers, according to the site.

Although the Church of Israel was listed as one of the NHF's 4,000 designated charities last week, it had been removed as of Friday. The move, however, is unlikely to have any real effect on church operations; Houk said there was only $1,500 left in the fund, and that no disbursements had been made since 1994.

Janne Gallagher, deputy general counsel for the Washington-based Council on Foundations, a membership and lobby organization, said donor-advised funds have become increasingly popular in recent years.

"The donor-advised funds were for many years the province of community foundations and their Jewish counterparts," she said. "But in 1969, Congress enacted laws governing private foundations and in 1974, the IRS defined the characteristics that would allow them to be counted as public charities."

Part of the public test is how much control the donors have over their funds, she said, and represents just one of the confusing areas that apply to donor-advised funds.

Although there is no law requiring the umbrella foundations to actually disburse any money, the National Heritage Foundation and others operate under an agreement with the IRS that at least 5 percent will actually go to stated causes.

To qualify as a public charity, Gallagher said, the IRS cites a 1970s ruling involving Bob Jones University that prohibits an organization from discrimination based on race.

Earlier this year, President Clinton urged stricter guidelines for donor-advised funds, Gallagher said, but so far lawmakers have been unwilling to take up the challenge for fear of hurting more traditional charities.