Every non-profit group has a deal with the government. In return for not paying taxes, they publicly document on their Form 990s how much money they take in, give out, and how they use it. They also can’t tell people which candidates to vote for, though they can always take a side on a political issue.
We’ve seen conservative Christians make a concerted effort to strike down that latter rule, known as the Johnson Amendment. But it’s also worth mentioning that while all non-profits have to fill out that financial paperwork, places of worship get a pass on that. They don’t have to tell the public how much money they take in or — more importantly — where that money goes. If they want to conceal the salary of a megachurch pastor, as many have, they have that right.
It’s an unfair perk that only houses of worship receive.
My Patheos colleague Bob Seidensticker just wrote a lengthy post detailing the pros and cons of this special benefit. (One of the cons? It wrongly assumes churches are trustworthy.)But he also points out how Christians ought to be the ones demanding their churches play by the rules because it would also offer them some advantages. For example:
PRO #11: More transparency might mean more revenue
Is the IRS 990 bitter medicine, or is it the route to greater church income?
Financial transparency helps revenue in two ways. First, it gives members more confidence that their money is being spent wisely. Second, it reduces the chance that one church scandal will contaminate the entire community. Members can state that their church isn’t like the one with the scandal and back that up with data.
One study found that “giving rates within the Catholic Church varied in proportion to transparency and accountability” and almost half of respondents to another said they’d be more generous “if [they] understood better what the church does with its money.” [Link]
At a time when churches nationwide are scrambling for members, wise financial stewardship is a nice selling feature. Your church might be more generous in helping the less fortunate than other churches in your neighborhood, but without universal 990s, how would anyone know?
It’s a fascinating read, especially if you’re unfamiliar with this religious loophole.
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