Written by: Peter Kahrl
If you have ever been to a megachurch, you would notice that they often stray from traditional church architecture in favor of large complexes with stadium-style worship centers, sometimes even taking over actual sports arenas like the former NBA arena now used by Lakewood Church in Houston. This architectural change was intentional, as these complexes are designed to hold a much larger congregation. The specific threshold that classifies a congregation as a megachurch is 2,000+ weekly attendees. Currently, there are an estimated 1,800.0 such congregations throughout the United States, and this number is expected to continue to rise (Hartford Institute for Religion Research [HIRR], 2024). While there are earlier examples of large congregations led by a charismatic preacher, the “megachurch movement” really took off in the 1970s-1980s, when the number surged likely due to postwar suburbanization and cheap land (HIRR, 2024). This rapid growth raises the question: how do these unusually large congregations finance themselves, and how are they affecting ordinary churches?
The amount of capital commanded by these megachurches is remarkable, with the mean annual budget being about $7 million, although this number can go much higher, in some cases, even over $100 million. The majority of this money, 96.0%, comes from participant contributions in the form of tithes or dues. 50.0% of this money typically goes to personnel, 20.0% to buildings and operations, 15.0% to program materials, 11.0% to missions, and 4.0% to other categories (Bird & Thumma, 2020).
While the spending and revenue models remain largely the same, the resources for an average church are dwarfed in comparison. National congregational surveys find that the median congregation has about 70.0 members and a budget of about $100,000 (Wingfield, 2022). This means that most of the religious dollars and resources are concentrated in the relatively small number of very large congregations. This difference in resources can make it difficult for average churches to compete with megachurches, as they are not able to offer the same range of programs or the same level of production quality.
National survey data suggest that it is not just that megachurches are getting larger, but that people are shifting from smaller congregations to larger ones. Although the majority of congregations are small, the average churchgoer now attends a congregation with several hundred people, as roughly 9.0% of all congregations contain about half of all churchgoers (Wingfield, 2022). Researchers have argued that it is partly due to rising fixed costs like rent, technology, and buildings, which are much easier to spread across thousands of contributors rather than a few dozen. This is a classic example of economies of scale: as attendance rises, the average cost per person falls because high fixed costs are spread among more people.
This consolidation of churchgoers can be attributed to the megachurchs’ method of attracting new members, often called the “seeker-oriented” approach. This method is designed to attract non-members by making their experience inviting and comforting through the usage of contemporary music with large productions and positive and entertaining sermons. Then, once people begin to attend more regularly, they are invited into smaller groups and encouraged to give money or time to the church. This is purposefully designed to convert the new members into core contributors and prevent a free rider problem from occurring (von der Ruhr & Daniels, 2010).
The free rider problem is a main concern for megachurches because, as the number of members increases, the marginal return of each member decreases, meaning that when a church is very large, each additional member is less likely to contribute sufficient time and money to cover the costs they add. To address this problem, many megachurches have implemented a style of preaching that is associated with the “prosperity gospel,” where giving to the church is expected to result in returns or blessings of some kind (Biblical Research Institute, n.d.). This encourages members to give more because it is framed as a sort of investment where their giving will be rewarded.
In addition to money, megachurches are highly reliant on voluntary labor to support operations. Members are encouraged to volunteer to teach children’s classes, work as greeters, produce music, organize parking, and perform other tasks, all without being paid. If these positions were compensated, it would significantly cut into the church’s budget and limit the number of programs and services that the church could provide. This voluntary labor system allows for much lower production costs and enables megachurches to offer programs to their members for free or at low cost. The large size of megachurches also means more potential volunteers, which translates into a larger variety of programs and typically better production, further adding to the appeal of joining a megachurch.
Another advantage that megachurches benefit from is the favorable tax environment surrounding their existence. Megachurches do not pay federal income tax on their donations, and their land and buildings are often tax-exempt as well. This is because churches are classified as tax-exempt organizations under section 501(c)(3) of the Internal Revenue Code (Internal Revenue Service [IRS], 2015). However, there are some notable differences between churches and secular nonprofits with regard to the tax code. Most significantly, churches are not required to file the standard financial disclosure form (Form 990) with the IRS, as other nonprofits have to (Freakonomics Radio Network, 2025). This means that there is much less oversight into how churches are spending their money than there is for similar-sized nonprofits. Essentially, megachurches are able to spend all their income they receive from donations without being taxed and with comparatively much less visibility or accountability.
The lack of financial accountability is one of the central issues surrounding megachurches that is often discussed. Scandals regarding pastors and staff embezzling funds or misusing the church’s money have made headlines in recent years, leading to a decrease in trust amongst church members, which often lowers donations. To combat this and increase members’ trust, many megachurches subject themselves to audits by outside organizations. According to the Hartford Institute, about 78% of megachurches have their financial statements audited by an external source (Bird & Thumma, 2020). Many megachurches with favorable reports choose to publish these reports on their website to signal to members that their donations are handled responsibly.
The combination of these features demonstrates that megachurches operate with a distinct, scalable business model that has allowed them to flourish and continue to expand. Their massive budgets, unique approaches to preaching, large voluntary labor force, and favorable tax environment allow them to attract a huge number of people and offer a variety of programs that are tough to compete with. Studying megachurches provides valuable insight into how economies of scale, incentives, and regulations have reshaped the religious sector.
References
Biblical Research Institute. (n.d.). Prosperity gospel: A brief critical analysis. General Conference of Seventh-day Adventists. Retrieved November 30, 2025, from https://adventistbiblicalresearch.org/articles/prosperity-gospel-a-brief-critical-analysis
Bird, W., & Thumma, S. (2020). Megachurch 2020: The changing reality in America’s largest churches. Hartford Institute for Religion Research; Evangelical Council for Financial Accountability; Leadership Network. https://hirr.hartfordinternational.edu/wp-content/uploads/2024/10/2020_megachurch_report.pdf
Brackett, J. (2019). Worship service at Lakewood Church [Photograph]. Wikimedia Commons. https://commons.wikimedia.org/wiki/File:Worshipatlakewood.jpg
Freakonomics Radio Network. (2025). Megachurches (The Economics of Everyday Things) [Audio podcast episode]. Freakonomics Radio Network. https://freakonomics.com/podcast/megachurches
Hartford Institute for Religion Research. (2024). Megachurch research. Hartford International University for Religion and Peace. https://hirr.hartfordinternational.edu/research/megachurch-research/
Internal Revenue Service. (2015). Tax guide for churches & religious organizations (Publication 1828). U.S. Department of the Treasury. https://www.irs.gov/pub/irs-pdf/p1828.pdf
von der Ruhr, M., & Daniels, J. P. (2010). Examining megachurch growth: Free riding, fit, and faith (Marquette University Working Paper No. 1002). Department of Economics, Marquette University. https://www.marquette.edu/library/mrq/Old%20Folders/workingpapers/wpaper1002.pdf
Wingfield, M. (2022, March 17). Another major study confirms: Most American congregations are small, but most churchgoers attend large congregations. Baptist News Global. https://baptistnews.com/article/another-major-study-confirms-most-american-congregations-are-small-but-most-churchgoers-attend-large-congregations