Church Accountability

church financesIn 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.”

Targets of the Grassley investigation

Here are the investigated organizations (I’ll use the names of the public faces) and the results of the inquiry.

  • 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, his organization gave MinistryWatch no information to evaluate. 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: no information.
  • Creflo Dollar: incomplete information. MinistryWatch grade: no information.
  • 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.

Grassley’s concerns

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.

And:

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.

Next steps

The ECFA is a good step. Though it’s expensive to join, it provides what amounts to a Good Housekeeping seal of approval to ministries that abide by its code. But even they don’t demand that salaries be revealed, and members need only provide financial information on written request. It’s a baby step, when a level playing field is the obvious solution.

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

(This is an update of a post that originally appeared 5/9/12.)

Photo credit: Wikimedia

About Bob Seidensticker
  • CodyGirl824

    Bob,

    You say this: “This is a contract between U.S. taxpayers and these nonprofit organizations, mediated by the IRS.” You are missing the most fundamental point here. The “contract” between churches and the public is the Constitution of the United States and its Bill of Rights, most specifically the First Amendment, the so-called “establishment clause.” The First Amendment prohibits the government both from establishing a state religion or inhibiting the free and open practice of religion. We don’t want the IRS being the mediator of this freedom, which inevitably involves a tension between two prohibitions.

    • Greg G.

      From the same paragraph:

      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.

      I would hazard a guess that the reason churches do not voluntarily submit information is that they do not wish to be policed by other religious organizations. Why do you think churches do not make their finances public?

      There should be transparency in the charity business.

    • smrnda

      I don’t get the objection. Making porno movies is free expression covered by the 1st amendment, but the fact that Porno Pictures Limited is required to file taxes with the IRS isn’t infringing their rights. A right to express yourself or practice a religion can’t mean a right to avoid filing taxes, or else nobody who does any sort of expression would have to file.

      • CodyGirl824

        Have you investigated the reasons why religious institutions and organizations are tax exempt in the first place?

        • ZenDruid

          Sure. In the first place, the local parish was expected to care for the down-and-out people. Seeing as how the federal and state governments have had to step up with some pretty comprehensive welfare programs, it doesn’t look like the religious institutions have held up their end of the bargain.

        • Kodie

          Pretty nifty tax shelter. You said yourself that humans can’t be trusted, and you know who runs these things – opportunistic socially dominating humans looking to make a buck and keep it away from the government.

        • CodyGirl824

          You don’t appear to understand the basics of separation of church and state.

        • Kodie

          I don’t? Explain it to me!

        • Kodie

          I guess we’ll never hear from Jenna about this.

        • CodyGirl824

          Religious organizations are not taxable because to tax churches, synagogues, mosques, etc. is to subject religion to government interference and open up the potential for violation of the First Amendment protections of freedom of religion “…or prohibiting the free exercise thereof…”

        • Kodie

          Holding churches accountable to the law of the land is not a violation of their rights. Only in your fevered wishful thinking, churches can operate in shadows, free of the encumbrance of obeying the law. What are they afraid people will find out? That they do pretty well for themselves producing absolutely nothing?

        • CodyGirl824

          I have no objection to churches being held accountable for obeying the law. I also expect our government not to violate our rights (endowed to us by our Creator) by not prohibiting our free exercise of religion.

        • Kodie

          You seem to be paranoid, and ineducable.

        • smrnda

          So they should file the same paperwork as other non-profits then?

        • CodyGirl824

          I don’t know. What does the law require?

        • http://www.patheos.com/blogs/crossexamined Bob Seidensticker

          What do you mean, “What does the law require?” We’ve been over this. The law requires financial transparency. Why do churches get a break on this? Why would churches want a break on this?

        • http://www.patheos.com/blogs/crossexamined Bob Seidensticker

          Let me share a secret with you: our rights come from the Constitution. Your religious freedom in the U.S. exists because of the Constitution, not because of the Creator.

          Thanks, Constitution.

        • CodyGirl824

          May I once again remind you of the very first proclamation we made as a nation, the Declaration of Independence, where we state this: “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”

          You may disagree or attempt to dismiss this statement of our belief, but there is it, for posterity. Now, feel free to give us your atheists’ argument and rationale as to why we should uphold our human and civil rights as they are articulated in the Constitution.

        • MNb

          “why we should uphold our human and civil rights as they are articulated in the Constitution.”
          That’s quite an open door. Because every single nation that does so is better off than any single nation without a constitution. Why do you think the Thais protest on the streets these days? Because some god told them so? No, because no matter how f**ked up their politicians were a military regime is worse and no god will protect them against it.
          No constitution doesn’t need any god. If any constitution mentions Him/Her/It – or if a DoI does so – that mention is superfluous and meaningless.
          I have told you before. Several democracies in the world do not mention god in any form in their constitutions. They don’t function any worse. At the other hand quite a few military regimes claimed divine approval. Spain during Franco is the example I am most familiar with. What was your god doing to protect the civil rights of the Spaniards between 1939 and 1975?
          Nothing. That’s enough to make your god irrelevant for civil rights, even if He/She/It exists.

        • Kodie

          Who established the United States of America? You sort of like words when they tell you what you want to hear, but you ignore what they actually meant and said – men wrote the document. Men established our basic rights as human beings. Men took these rights from kings. They can or do not have to believe in any god, nature’s god, for example, which you don’t know what that means, you just think it sounds nice, it doesn’t follow logically that there is a god.

        • Cafeeine

          “Men took these rights from kings.”
          Kings, I might add that also claimed their right to rule came from God.
          It’s almost as if God is just a figurehead for whoever is holding the pen…

        • Cafeeine

          I don’t know about you, but my creator isn’t a metaphysical divine concept, but my mother.

        • http://www.patheos.com/blogs/crossexamined Bob Seidensticker

          Is it reminding time? Cool! Let me remind you that (1) we’ve already been over all this and I’d prefer you pick up from where we left this last, (2) the DoI is irrelevant to governance today, (3) the “Creator” is a deist concept, not a Christian one, and (4) the DoI also says “government derives its just powers from the consent of the governed, not Je-e-esus.

        • Cafeeine

          “I also expect our government not to violate our rights (endowed to us by
          our Creator) by not prohibiting our free exercise of religion.”

          You know the best way to do that? If the government didn’t have special treatment for churches, which places it in the position of having to decide what counts as a church and what not.

          If I decided to call my carpenty business “Cafeeine’s first Church of Lumber and Nails” and filed paperwork to be classified as a church, the U.S. Government has to assess whether my goals are sincere or not. Is that not a prohibition of religious freedom? Remember that the biggest infringements on religious freedom happened when a majority religion decided a minority religion was not legitimate and should be snuffed out. This is the position you want to place the U.S Government in.

        • smrnda

          Did anyone say they wanted to tax churches like for-profit entities here? This ENTIRE POST is about requiring churches to file the same paperwork as other non-profits.

          But even still, by the logic of your objection, taxing a publisher of books is interfering with the right of free press. That’s an absurd claim.

        • CodyGirl824

          False analogy. Publishers are for-profit businesses. Taxing their profits doesn’t interfere with the content of their publications.

        • Kodie

          Taxing church profits would? Anyway, if they say they are running non-profit agencies, they need to prove that they are, like any other charity. Otherwise I assume they are for-profit too but they are cheaters and liars, as well.

        • CodyGirl824

          And you call me paranoid?

        • Kodie

          I think it’s well-documented.

        • smrnda

          I don’t see how a basic separation of church and state means that religious organizations must be permitted to operate without providing financial information to the IRS, like other non-profits. Freedom doesn’t mean freedom sans paperwork.

        • Carmen

          tax exempt status for religious organizations is not because of separation of church and state….

        • smrnda

          The reason for any organization being tax exempt is (ostensibly) that they are not money-making ventures but are providing something in terms of social services. Existing court rulings state the ALLOWING churches to have a tax exemption does not violate separation of church and state, but it does not mean that freedom of religion only exists if you get a bunch of tax breaks.

          My opinion is that churches should have to provide the same level of transparency to the IRS as all other non-profits. If secular non-profits and charities have to disclose their finances, why should churches be exempt?

        • MNb

          Just compare a church with an amateur orchestra. The finances of the latter have to be transparant. Then why not the finances of churches?

        • smrnda

          Good point. An even better one – I help run a non-profit that handles prison literacy programs. We’re not even a club, we are a charity, but yet we must keep our books totally open when it comes to money even though what we provide is a clear social service, unlike churches which possibly *might* provide charity of some kind, but function a lot like social clubs.

          I don’t buy any argument that ‘freedom’ must come with it the ability to shield yourself from any sort of financial accountability. that’s just absurd. If you want special tax exempt status, with perks come responsibilities.

        • Kodie

          If the church is breaking the law, why shouldn’t the government get involved? Is the church its own government only beholden to its own laws? No, we give you freedom of practice, that doesn’t give anyone freedom to break the law under the cover of that practice.

    • Plutosdad

      How is treating them the same as they treat everyone else infringe on the 1st amendment? There is no reason to exempt churches from paperwork and a requirement to actually help others, no one is going to say that holding services is not a public service or not a valid use of the money. They MIGHT question the huge salaries some pastors receive, which are also tax exempt, unlike the salaries of people who also devote their lives to helping others, but work at non religious nonprofits.

      In fact, having the government decide which organizations are actually religious and which are not is what should scare you, not religious organizations having to fill out a form. Who is the IRS or judge to say your non profit is not religious enough to qualify for an exemption, or not the right sort of religion?

      We created separation of powers in our constitution precisely because people cannot hold themselves accountable. Never in history have humans been able to do this, and that applies to people who run religious organizations as well. power corrupts, bureaucracies bloat and focus more on perpetuating themselves than they do on carrying out the original mission for which they were formed.

      Ask yourself this: why does everyone with power not want to submit to authority? What are they actually afraid of?

      Police have their own “internal” affairs, effectively policing themselves, which is a joke and does not result in any accountability except in the most serious of offenses. Churches and Universities want to investigate rape allegations on their own, internally, and not get police involved. Churches do not want to be audited. The list goes on and on.

      I work at a non profit. Do you have any idea how seriously we take our audits? We have massive audits every year. We want to pass with flying colors. We do everything to make sure decisions are in line with our mission, people cannot misuse or access data they shouldn’t, and hire external auditors to go over our policies and verify our practices are in line with policy. And finally our audit results are made public.

      We do that so people trust us and want to donate to us, let alone because the law demands some of it. That is actually pretty normal among non profits. (every for-profit company I’ve worked at also hires EXTERNAL auditors every single year, for the same reason: to hold management accountable).

      Contrast that with the actions of the above organizations, who don’t want you to know what is going on inside.

      As someone who goes through audits every year at a non profit, I find the churches’ objections both laughable and sinister. It is no different than anyone else who has power but wants to keep important practices and money in the dark.

      • MNb

        It all boils down to the same principle: check and balances. Whether churches (or chess clubs for that matter) should be exempt from taxes is one thing. Whether they should be exempt from financial accountability should be a non-issue. Chess clubs aren’t either. Financial accountability doesn’t affect freedom of religion anymore than it does freedom of playing chess.

  • http://www.Kamenriderrecap.com Sneezeguard

    It saddens me that there isn’t a cry from the people in these organizations to see how their own money is being spent. If you were giving your money to someone wouldn’t you want to know what they’re doing with it?

  • Greg G.

    Churches are following the Bible.

    Ecclesiastes 10:19 (NIV)
    A feast is made for laughter,
        wine makes life merry,
        and money is the answer for everything.

    Ecclesiastes appears to have been written by an atheist with a few pious interpolations.