The Master's University, Headed by Pastor John MacArthur, Plans Corrective Actions After Being Placed on Probation by Accreditation Commission

November 8, 2018

On July 18, 2018, the Master's University (TMUS) received a probation letter from the WASC Senior College and University Commission, the regional accrediting agency for higher education institutions throughout California and Hawaii. This probation does not revoke the school's accreditation status, but requires them to take action to correct the identified deficiencies within two years to avoid the withdrawal of their accreditation by the Commission in keeping with U.S. Department of Education regulations. The school has been accredited by the WASC since 1975 and have responded to their suggestions for improving the academic effectiveness of the institution in previous assessments. However, these concerns are not related to academic quality but the governance and operation of the institution as a whole, and raises questions about the relationship between the university and Grace Community Church which John MacArthur also pastors.

Ministries like MacArthur's which have a number of different organizational structures - a church, a non-profit (Grace to You), and a university - can run into complications like these when overlapping staff can raise governance questions. Many of the problems listed below come from this sort of overlap, where one person may hold a position or influence at multiple organizations. While such arrangements are common, and even sometimes appropriate, between a church and para-church ministry, it poses a significant problem with institutions which need public accreditations like universities. That fact compounded with MacArthur's close circle of family and friends who are employed by both his ministry and the university can raise concerns about transparency like those found by the WASC commission.

The commission report identified four areas of concern that must be addressed by The Master's University: board independence, personnel and management practices, operational integrity, and leadership.

Board Independence: The board of TMUS does not meet the requirements for independence since many members of the Board are employed by the institution or another organization for which the president, John MacArthur, has authority - namely, Grace Community Church and Grace to You Ministries. In their full report, the Commission states the relationships between the board members and John MacArthur "have resulted in less oversight of the administration than is expected… Board members stated unequivocally that they could say "no" to the president, but could not identify any occasions on which they actually had done so and self-identified as President MacArthur's closest friends in the world" (pg. 12). The intertwined relationships between senior leaders of the university with MacArthur and the church create competing loyalties that prevent independent and impartial evaluation for which the board is responsible.

MinistryWatch's View: MinistryWatch believes this criticism of The Master's University is accurate. Good governance of all three related organizations requires board members who are responsible only for the organization on whose board they sit. Divided loyalties inevitably create conflicts of interest and sub-optimal allocation of resources. Moreover, history is replete with ministries which have gone astray due to the lack of independence among board members. While we suspect the risk of serious trouble resulting from this situation is low at MacArthur's three charitable groups, it is a risk that should not be ignored. We trust the University, as well as Grace to You, will utilize the two year probationary period from the accreditor to make meaningful improvements in board independence.

Personnel and Management Practices: The commission also cites that they "received reports of a climate of fear, intimidation, bullying, and uncertainty among significant numbers of faculty and staff." This is combined with a pattern of "seemingly arbitrary personnel actions (hirings, terminations, promotions, demotions, and lack of regular evaluations)" which violate the University's Employee Handbook and a lack of accountability structures where staff can raise their concerns. Such a culture is compounded by the dual relationships faculty and staff have with many of the institutional leaders by attending Grace Community Church. Since MacArthur and other administrative leaders of TMUS are on staff at Grace Community Church, employees' supervisors may also be their pastors. Staff reported this was the reason many did not openly express their concerns.

MinistryWatch's View: MinistryWatch agrees with the accrediting agency that these are serious issues which need to be addressed promptly. In an environment where a strong leader such as John MacArthur has been in place for a significant period of time and has enjoyed great success, the probability of problems such as those noted above, which can often lead to much more serious failings, rises dramatically. The boards of the three organizations should seek to quickly take corrective actions to restore a far less authoritarian environment.

Operational Integrity: The 2017 financial audit of TMUS revealed conflicts of interest with MacArthur's son-in-law Kory Welch supervising contracts from which he benefits. The audit also found multiple students related to donors of close friends of TMUS received financial aid above what is typically offered to all students according to current policy. Finally the 2017 auditor identified a "significant deficiency" regarding "several instances of management overriding or circumventing controls that were in place to process payments or contracts outside established policies" (pg. 14). While the auditor's concerns were received six months prior to the WASC evaluation, no significant response had been taken at that point. The accreditation commission urged prompt action to align with financial audit standards.

MinistryWatch's View: Once again, MinistryWatch agrees wholeheartedly with the findings of the accreditation agency. These are the types of very serious issues which arise in an organization where too much power resides in one or a few people. Positive changes have already begun to be made regarding these matters and payments to MacArthur's son-in-law Kory Welch were likely actually beneficial to the University (see below). Nevertheless, appearances are important when it comes to situations like this in order to keep the university from being a subject of criticism from outsiders who may leap at any opportunity to discredit the University and MacArthur's ministry efforts.

Leadership: According to accreditation standards, the university must have a full-time CEO and CFO. As John MacArthur currently serves as President of TMUS along with his other ministry responsibilities, and the CFO is also on the pastoral staff of Grace Community Church, this is seen as a significant conflict. They also noted some institutional leaders "lack higher education experience, preparation, and knowledge of key higher education regulatory expectations" (pg. 45).

MinistryWatch's View: MinistryWatch believes this is a very sensible recommendation and it has already begun to be implemented (see below).

University Response

TMUS has issued a number of statements in response to the probation. In a public letter from the Board of Directors, they acknowledge the probation and express a commitment to resolving the issues raised in the WASC report. They voiced their particular concern for the report's findings about a culture of fear among staff and express that this is "not in keeping with our tradition as an institution or our commitment to honor Christ." However, they noted that they "still believe that majority of our Board members are independent" after studying WSCUC policy on board independence and plan to raise this issue with the commission. Finally, they announced they have hired an independent educational consulting firm to assess the institution and have developed a clear action plan and timeline, but have not yet revealed what exactly the course of action might be. The most recent public statement from the school on November 2nd uplifts the positive aspects of the WASC visit along with the growth of the school generally in order to calm the fears of parents and students, but still neglects to say exactly what is being changed.

The University has also published a piece titled "An Inside Perspective on Kory Welch" which explains the conflict of interest found in the report concerning MacArthur's son-in-law, who supervised a contract between his marketing company WeKreative Design Group and TMUS while COO of the University. It states that the company was contracted prior to Welch's position at TMUS starting in March of this year, and notes they were billed $180,000 - approximately 1,200 hours at WeKreative's non-profit rate - while receiving more than 3,000 billable hours of voluntary labor, as many WeKreative staff are alumni of TMU. They have since implemented a process to find another marketing company to contract with, and Welch has moved from Chief Operating Officer to the role of Special Assistant to the President.

Most significantly, MacArthur issued a public statement on October 22nd announcing his transition from President to Chancellor of the university to make room for a new president, which will occur over the next 18 months. We can assume this is meant to move TMUS into compliance with WASC requirements for a full-time CEO.

Conclusion

These are significant charges concerning the operations and transparency of the University that must be taken seriously, particularly the "climate of fear, intimidation, bullying, and uncertainty" reported by members of the faculty. Christian institutions just like Christian individuals should seek to "be above reproach" in the eyes of the world, and the expectations of the WASC Commission seem eminently reasonable to expect of any university and not overly burdensome (1 Tim. 3:2). In our view, the public statements from the board and higher-level staff have so far been unfortunately vague in regards to what specific actions they will take to enact necessary changes in their operations and policy. They should be more transparent about those actions in order to foster greater trust in the institution from faculty, students, and donors. In addition, moving John MacArthur from President of the University to Chancellor as well as the title change for Kory Welch will appear to many as simply cosmetic alterations with no real practical improvement.

With that said, the commission from WASC noted TMUS's history of responding to requests for changes in institutional practice, and MacArthur himself has a long history of practical integrity. MinistryWatch will continue to observe what changes are put in place in the future as all three organizations hopefully seek to improve their governance, transparency and operations. At the moment, MinistryWatch does not believe the shortcomings noted above have led to any behavior which would cause us to advise donors to prayerfully consider donating elsewhere. Since the history of TMUS is tightly bound up with the growth of John MacArthur's church and ministry, creating more independence between the school and the rest of these organizations will be a significant shift which will take time to implement. However, such changes are necessary to protect the school's reputation as an accredited institution which furthers their mission to "empower students for a life of enduring commitment to Christ, biblical fidelity, moral integrity, intellectual growth and lasting contribution to the Kingdom of God worldwide," with a lasting impact long after MacArthur's tenure has ended.

We look forward to reporting on favorable developments at The Master's University, Grace Community Church and Grace to You ministries in the months ahead.

In the interest of MinistryWatch's own transparency, we would like to note the founder and CEO of MinistryWatch is a personal friend and former business colleague of one of John MacArthur's sons.