UNITED STATES
Washington Post
January 17, 2020
By Sarah Pulliam Bailey
Several major evangelical organizations have in recent years moved to a new strategy where they shift from a nonprofit status to a “church” status with the IRS, allowing them to keep private exactly how their money is being spent and the salaries of their most highly paid employees.
That strategic shift was highlighted recently by MinistryWatch, an independent, donor-based group that monitors evangelical institutions. The IRS status change allows these groups, including Focus on the Family and the Billy Graham Evangelistic Association, to avoid filing a form that makes details of their institution’s finances public.
Leaders of the groups say they are changing their status to avoid administrative costs; some also believe that this status with the IRS could allow them extra religious-freedom protections in potential lawsuits over LGBT rights. The potential cost of applying to be a church is that the organizations cannot campaign on behalf of politicians or devote a substantial part of their work to lobbying on legislation. Critics say the option deprives the public of important information about how the tax-exempt organizations are operating.
“Transparency and accountability send an important message to the world, which is why this trend is so potentially destructive,” said Warren Cole Smith of MinistryWatch.
For decades, the U.S. tax code has allowed nonprofit organizations, including religious ones, to be exempt from most taxes. Donors can also deduct gifts to the nonprofit groups on their own taxes.
But tax-exempt organizations that are not houses of worship must also complete an annual Form 990. The form includes information about annual revenue, salaries of the highest-paid employees, names of board members and large contractors, and the amount of money the organization spends on administrative costs and fundraising. In lieu of a 990, some houses of worship (which are all generally described as “churches” by the IRS) choose to publicize their own audits, but doing so is not required.
MinistryWatch recently published a list of highly paid Christian ministry executives, but several pastors and nonprofit executives were excluded because many don’t file 990s. While these kinds of ministries range in purpose, they typically do not operate the same way most churches do, with at least one weekly worship service that is open to the public.
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