In November, 2007, Senator Chuck Grassley (R-Iowa) asked six high-profile televangelist organizations to provide more information about how they work. Grassley said: “My goal is to help improve accountability and good governance so tax-exempt groups maintain public confidence in their operations.”
The investigated organizations (I’ll use the names of the public faces) were:
- Joyce Meyer. She responded fully to Grassley’s questions, joined the Evangelical Council for Financial Accountability (ECFA), and discloses her annual revenue to MinistryWatch (about $110 million per year).
- Benny Hinn also gave complete answers to Grassley’s questions. However, MinistryWatch gave him a transparency grade of F. His ministry’s income is about the same as Meyer’s.
- Kenneth Copeland: incomplete information. He claimed (go here and search “Torpedoed!”) that his 40-year-old ministry has taken in a total of about $1.5 billion. MinistryWatch grade: F.
- Creflo Dollar: incomplete information. MinistryWatch grade: F.
- Eddie Long: incomplete information and not listed in MinistryWatch.
- Paula White: incomplete information and not listed in MinistryWatch.
Let’s dwell on this a moment. A U.S. senator asks for information, as the Senate Finance Committee is empowered to do, and he is (more or less) given the finger. And there is no fallout? These ministries can tap dance away from this request for information with no meaningful loss of face? The faithful still shower them with $100 million per year? What kind of disconnect from reality is this?
This is a contract between U.S. taxpayers and these nonprofit organizations, mediated by the IRS. We provide the nonprofit status and, in return, they prove that they deserve that status. If religious organizations policed themselves and they made their finances public (by voluntarily submitting their information to the IRS like all other nonprofits), this wouldn’t be a problem. But they don’t. With $100 billion in tax-exempt contributions to the religion industry every year, shielded from inspection, it’s obvious that this exemption is a bad idea.
A memo prepared by Sen. Grassley’s staff highlights some of the foundational principles that are relevant to this discussion.
The Constitution does not require the government to exempt churches from federal income taxation or from filing tax and information returns.
Requiring churches to file an annual information return does not offend either the Free Exercise Clause or the Establishment Clause [of the First Amendment].
Some ministries have complained that an obligatory filing would entangle the government in church business, but the opposite may be more accurate. Today, the IRS must define what a church is, since the legal code doesn’t. For example, after a long legal battle, Scientology was granted tax-exempt status as a church. Putting churches in the same bin as other nonprofits would eliminate this unwelcome role for the IRS.
The Grassley memo admits that there should be no constitutional problem with a level playing field, but it argues that some problems will remain:
- Eliminating the exemption “would unnecessarily burden the overwhelming majority of churches.” Why? The 1.5 million nonprofits with less than $100,000 in annual income can follow the rules. Surely a church that can keep its books can fill out a four-page 990-EZ form. The only tough part is taking that deep breath and disclosing to the world how you spend your income.
- This would burden the IRS’s Exempt Organizations Office, which is stretched as it is. When a ministry is simply a piggy bank for a few people at the top, no laws are being broken. Things change if we can force the churches to commit publicly. Let’s let a little sunshine in and let public scrutiny (and possible condemnation) do its work. Could a sleazy ministry lie? Of course, but when it does, it’s now breaking the law. At that point, there’s a crime that the IRS can go after and assets that can help fund the process.
- This would be contrary to the intent of Congress. True, but the desires of Congress can change. If ordinary Christians, embarrassed by the secrecy of churches, demanded a level playing field for all nonprofits, Congress just might turn around. Without public demand, there will be no energy for this initiative.
The IRS has a form 990 and 1.5 million nonprofit organizations already using it. It works. It should be our window into the operation of all nonprofits, including churches.
What are the next steps? An atheist organization like the Freedom From Religion Foundation could file lawsuits, but a push for this from within the Christian community would be far more effective. Christians, you have the power. Aren’t you embarrassed by being lumped in with the worst of the televangelists? Wouldn’t you like to see some public scrutiny on Scientology and other organizations hiding behind this loophole?
You won’t like me when I’m angry,
because I always back up my rage
with facts and documented sources.
— the Credible Hulk
Photo credit: Wikimedia
- See the first post in the series: What do Churches Have to Hide?
- Douglas Frantz, “Scientology’s Puzzling Journey From Tax Rebel to Tax Exempt,” NY Times, 3/9/97.
- “Weigh in on church’s lack of financial accountability,” Freedom From Religion Foundation, 3/29/12.
- “Grassley Releases Review of Tax Issues Raised by Media-based Ministries,” Senator Grassley’s site, 1/6/11.
- Adam Lee, “How We All Pay For the Huge Tax Privileges Granted to Religion – It’s Time to Tax the Church,” AlterNet, 12/14/11.
- “Give Money Unto God, But Send It To My Address,” Agnostic Review web site.
- “SFC Staff Memo to Grassley re Ministries 01-06-11.”
- “Political Campaign Activity,” IRS Tax guide for Churches And Religious Organizations.
- “Grassley’s Requests of Televangelists are Well-Founded,” MinistryWatch newsletter, 12/07.