In the midst of a hyperpolitical year dominated by debate over taxation and government regulation, a voice for the religious community is staking a claim for self-regulation by faith-based organizations. That message — full accountability on financial matters combined with independence from undue political influence — will come later this year as the Evangelical Council for Financial Accountability (ECFA) offers recommendations to the U.S. Congress.
ECFA’s Commission on Accountability and Policy for Religious Organizations was formed in early 2011 at the request of Senator Charles Grassley, Republican of Iowa, a key member of the Senate Finance Committee. Grassley has long been troubled by a lack of accountability in the charitable world, and he turned to ECFA to help address the issue without treading on constitutional principles related to freedom of religion.
His request to ECFA came after Grassley accused a number of faith-based organizations — predominantly televangelism ministries — of tolerating “generous salaries and housing allowances and amenities such as private jets and Rolls Royces.”
ECFA appointed the 14-member commission to study and make recommendations on a number of related issues, and their work has been supplemented with research and analysis by panels of experts from the religious and nonprofit sectors. An electronic town hall meeting was held in February, hosted by the National Press Club in Washington, and online comments were solicited from the public through the end of March. The town hall meeting is available on the ECFA website (www.ecfa.org/Content/Virtual-Town-Hall), as are preliminary reports on topics under study. The commission itself has met quarterly since mid-2011.
Dan Busby, president of ECFA, says the study process has been on track with the organization’s plans for responding to the senator, although the original three-year timetable the commission set for itself has been shortened by a year. He says they will issue a report and recommendations later this year on 16 issues, to be followed shortly thereafter with a report and recommendations on a final concern.
A sample of the issues that will be covered in the initial report:
- Oversight. Does the Internal Revenue Service (IRS) need an ongoing advisory committee to work with the faith-based community?
- Housing allowances. Should income taxes on a “housing” portion of clergy compensation continue to be excluded from federal taxation?
- IRS Form 990. Should churches and related organizations be required to file Form 990 tax returns?
- Taxing offerings. How should “love offerings” be treated for federal taxation purposes? (A “love offering” is a donation given to a church or charity for the purpose of supporting an individual or group — for example, a visiting preacher, missionary, or musical team.)
- Debt-financed income. Should churches and religious groups have the same favorable tax treatment as schools for debtfinanced income?
- Charitable deductions. Should the tax benefits of charitable contributions be preserved?
- ECFA model. Should the model employed by the Evangelical Council for Financial Accountability — setting accountability standards and certifying compliance — be used more widely by churches, religious groups, and other nonprofits?
- Excess benefit transactions. Should overly generous salaries and luxury cars that some ministries provide be prohibited as a condition of tax-free status? Should these groups suffer other penalties? Should nonprofit managers who had “reason to know” be penalized for not reporting excess benefit transactions?
The final topic, political speech and freedom of religion, addresses highly charged political issues; the commission deemed it prudent to delay that report until after the November elections.
It poses the question of whether 501(c)(3) tax-exempt organizations should continue to be prohibited from speaking in favor of political candidates, or whether this restriction should be modified to permit limited speech in opposition to, or in support of, specific candidates.
Busby says the report on this issue should be ready for release before Inauguration Day in January 2013.