Wednesday, July 30, 2008

The Church and the IRS - Part 2

I am very pleased to see that my blog entry last week has sparked replies both on the blog site and via email. I very much appreciate the feedback and encourage other users of our site to feel free to join in the discussion as well. I list below some of the points I have made in the email and blog exchange regarding this issue:

[In my last blog entry] I was indicating what I consider to be basic common sense. We believe that donors to all public charities should be well informed before they give, so it seems wrong (to my common sense at least) when the lion’s share of private contributions goes to entities that have no obligation to inform their donors. I see no down side to this or infringement on the freedom to worship as one chooses. I believe that there is a veil of secrecy here, under the guise of separation of church and state, that needs to be removed for the good of all.

Anyway, in answer to the question of why “churches” (i.e. houses of worship) are not required to file (BTW, religiously affiliated organizations in most cases ARE required to file which is why we have a section on our web site for religious organizations), I am currently reading up on the history of this myself. However, I suspect it gets back to the separation of church and state. There are various interpretations as to the meaning of this and my opinion is, the “church” should be free from any state encumbrance in regards to how it chooses to worship (as long as it does not violate laws of public safety), but as a tax exempt public charity, they should have an obligation as all other such charities do, to provide an informational report as to their finances [if their annual revenues exceed $25,000].

Regardless of historical rationales for the right of privacy to extend to church finances and the legal interpretation (Lord knows we have changed our legal interpretations over time) by some of the possible violation of the First Amendment, it doesn’t make sense. I believe it just makes plain sense that an entity with tax exempt status should disclose its financial information to the IRS. I think one of the hallmarks of our country has been that, at the end of the day, common sense often wins out over a certain philosophy or specific political viewpoint.

Furthermore, back when this was all first set up, the money involved was miniscule by comparison to today’s record breaking amounts over $100 billion. Circumstances change and our policies should change accordingly. Continuous improvement of our policies as a nation!

The fact that SOME churches do provide SOME financial information to their congregants (or some leadership body) does not eliminate the need for the standardized reporting I suggest. This is an added layer of information and transparency that can be more broadly scrutinized and reviewed.


Meg said...


I found the original C&IRS post (and was subsequently led to this one) during research for a piece I'm writing on my blog. I would like to say that I greatly agree with you on this matter and see no reason why churches wouldn't voluntarily make their workings known not only to congregants but potential congregants, potential donors. Part of a company's fiscal report is to show how the money is spent, potential investors can decide whether the company uses the funds wisely and based on that invest or not, and the same can be said for churches.

Religious contributions are an enormous part of the American spending pattern, and unless people can have laid bare before them a representation of what money goes where (though this does, I suppose, lie in a broader spectrum) I don't know that we can fully grasp a) how much we are spending and b) what that money is doing.

Ken Berger said...


Glad to hear from a fellow traveler on the road to transparency! Anyway, in your research on this topic one trail I plan to follow that you might find helpful is from an article in the National Catholic Report,
March 21, 2008 issue. The article is entitled "The pitfalls of shrouded finances."