Scientology has attracted a lot of criticism over the years due to allegations that it brainwashes people and mistreats members, and there have been a number of media exposés on it. However, the church has a money-making business model, which speaks to its resonance with a number of people who seek something in an uncertain world. Even prominent personalities, such as actors John Travolta and Tom Cruise, have become associated with this movement, helping generate a high profile for Scientology and attracting more members.
What is Scientology?
Scientology likes to call itself a religion, but not a dogmatic one. The distinction, according to the Church of Scientology, is that Scientology is something that a follower does, rather than something a follower believes in. The movement defines itself as an approach to life based on a spiritual understanding of oneself and one’s relationship to others and the universe. It is based on principles that include the immortality of humans as spiritual beings and the limitlessness of our capabilities. “Salvation,” in the Scientology worldview, depends on “attaining brotherhood with the universe.”
Scientology’s founder L. Ron Hubbard launched the movement with the publication of Dianetics: The Modern Science of Mental Health in 1950. This book attracted enough attention that it led to the establishment of the first Church of Scientology in 1954 in Los Angeles. Since then, other Scientology churches have also been set up worldwide, in places as widespread as Johannesburg, Madrid, and Brussels.
The Business Model
The primary source of publicly acknowledged funding for Scientology’s activities are the “donations” of those who receive training or “auditing” from the church. These donations are based on the premise that those who make the most use of church facilities should also bear the brunt of its maintenance. Auditing includes tests, counseling, and training sessions. While the fees can start off low, they can end up costing participants thousands of dollars over time. According to Scientology, these fees support the cost of trained “auditors” and the overhead costs of maintaining church buildings.
Though these auditing fees and donations garner as much as $75 million annually, there are estimates that the church generates up to $200 million in total annual revenue. Scientology churches are run as non-profit organizations, and the church runs some humanitarian programs that provide free labor and also use volunteers, which helps keep labor costs down.
Another source of revenue for the movement is its associated organization, the World Institute of Scientology Enterprises, or WISE. This organization says it disseminates information on Ron Hubbard’s management techniques to businesses and professionals so that they can benefit from his approach too. It charges corporate members fees and enrolls individual consultants to disseminate this information.
Benefits from Tax-Exempt Status
The business model has been so successful that there are estimates of a $1.75 billion book value for the church, which is largely based on its real-estate holdings. The movement owns property at its Clearwater, Florida headquarters and in Hollywood, as well as in cities such as Seattle, New York, and London.
The Church of Scientology also benefits from its tax-exempt status, which the US Internal Revenue Service (IRS) granted in 1993, after a long period of resistance. With the IRS recognition, Scientology also won tax-exempt status from US state and local governments. This tax-exempt status means that the church saves a significant amount on income tax, as well as on real-estate property taxes.
The Bottom Line
Scientology presents itself as a religion, but it is more of a fringe movement. Nonetheless, it has managed to develop a revenue-generating business model based on its “auditing” and consulting services, and it has avoided paying taxes to a large extent, making it more profitable. Although its business model has raked in money, the movement has attracted a lot of negative publicity for its activities.