(Photo: Pete Evans, President of Trinity Foundation)
How much is embezzled by “Christian” religious leaders? Researchers at the Center for the Study of Global Christianity, which study this problem, produce an annual estimate which is published each year in the January issue of the International Bulletin of Mission Research.
This year’s estimate: $59 billion in ecclesiastical crimes. Meanwhile, $52 billion will be spent on world missions.
Let those numbers sink it. More money is stolen by religious leaders than is spent on world missions.
Is there a way to dramatically reduce this crime? Our non-profit foundation has tried to avoid suggesting any national legislation over the years, but that has to change.
When Trinity Foundation assisted the Senate Finance Committee’s investigations of religious fraud and excess from 2005 through 2010, we offered to suggest possible changes to our US tax code to Senators Charles Grassley (R) and Max Baucus (D) in hopes that they might plug up huge holes in our religious non-profit tax laws.
Unfortunately, they never took us up on our offer. Instead, Senator Grassley obtained the help of the Evangelical Counsel for Financial Accountability (ECFA for short) and that was a disaster. ECFA’s task force, which was compromised by including attorneys and CPAs representing televangelists, came up with no real suggestions as to how to curb the excesses the Senate Finance Committee was investigating in the first place.
Special status!
For starters, churches, synagogues, mosques, and church-related organizations are privileged to receive a tax exemption without disclosing any public financial information whatsoever! ZERO, Zilch!
In a 1987 congressional hearing, IRS commissioner Roscoe Egger Jr., stated, ” … it is clear that these tax benefits have attracted the attention of unscrupulous and fraudulent operators …” At the same hearing, Assistant Treasury Secretary for Tax Policy O. Donaldson Chapoton addressed the INSANE audit rules, “Exempting churches from reporting requirements and placing restrictions on IRS audit activities reduce the ability of the IRS to administer and enforce the law.”
In 2005, while testifying before Congress, IRS Commissioner Mark Everson responded that because churches are not required to file annual returns, “we have little ability to monitor their operations against diversion of assets.”
In a 2011, Senate Finance Committee Memo to Grassley, IRS attorneys Theresa Pattara and Sean Barnett stated, “Currently, anyone can set up an organization, call the organization a church, solicit tax-deductible contributions, and – unless the organization voluntarily applies for recognition of tax-exempt status or files annual returns – that organization will be invisible to the IRS and operate virtually without government oversight because no state requires religious organizations to register and file annual financial reports with the state attorney general.”
New Reporting Requirements to Create Transparency & Accountability
We are proposing legislation that would increase transparency by religious organizations without putting excessive burdens on smaller ministries.
All non-religious non-profits in this country have to file the public form 990, 990EZ, or the “postcard” 990-N (which is not really a postcard, but only a brief online notice of gross income less than $50,000), depending on size and income. The 990 and 990EZ reveal the incomes of the highest paid employees and general contractors as well as how the money is spent in general.
It would be easy to continue to give religious organizations special status, while still promoting transparency and accountability. Similar forms 990REL, 990REL-EZ, or postcard 990REL-N, could be created and instituted depending on size and income, while allowing much larger income requirements.
Suggested dollar amount requirements for these forms…
In order for non-religious non-profits to qualify to file Form 990-EZ, organization need to have a gross income of more than $50,000, but less than $200,000 during the past fiscal year and the total valuation of all assets should be less than $500,000. These are already IRS requirements, but not for religious organizations. This might be particularly burdensome to some ministries and churches, so these amounts could be raised significantly for our proposed 990REL-EZ and 990REL.
The IRS 990 and 990EZ are not particularly easy to fill out (I know, I’ve filled out ours quite a number of times); however, these proposed corresponding church forms could be simplified.
Churches, synagogues, mosques, and church-related organizations having to file our proposed forms: in order to qualify to file form 990REL-EZ, the religious organization should have gross income of more than $3 million, but less than $10 million during the past fiscal year. Religious organizations with over $10M must file the more extensive 990REL but religious organizations with less than $5M in gross income, could file a simple newly designed “postcard” 990REL-N.
Any church with $3 million or more income should be able to hire a CPA to fill out and file the form. This would eliminate any onerous burdens on smaller churches with no means to hire a qualified CPA or bookkeeper with ability to file the form.
The asset valuation requirement could be increased proportionately as well. For example, religious non-profits qualifying for the 990REL-EZ could have assets valued at less than $5 million instead of less than $500,000.
Would this ever pass congress? Not until the general public gets fed up with the fraud and excess committed in the name of God. With this article, we are attempting to start a serious conversation about legislative changes to bring greater transparency and accountability to the church world.
The implementation details can vary from what are proposed here. But the time for action is now.