Recommended Reading

Preparing for Natural Disasters—And Responding to Them

Churches are often the first to offer relief. Here’s how to become part of the effort.

As you prayerfully consider how best to serve and minister to communities ravaged by a natural disaster, use this resource page to guide relief plans and strategies, prevent burnout, inform ministry efforts, and embolden church members to look first to their neighbors’ needs as they join hands and rebuild.

Also available at

Why That “Gift” to Your Pastor Requires Caution

Churches often bless their ministers with gifts—here are the tax- and compensation-related issues to note.

Q: We are giving our pastor and wife of 40 years a cruise. Is this gift taxable to them?

It’s great your church wants to do this. But caution is needed—at least two significant issues are triggered when churches give gifts to ministers.

A gift poses potential income tax consequences for the pastor. It also raises concerns about reasonable compensation.

Chapter 12 of Church Law & Tax Senior Editorial Advisor and CPA Elaine Sommerville’s Church Compensation, Second Edition, does an excellent job of explaining the tax and reasonable compensation issues surrounding gifts:

Where the church pays directly to a minister or an employee, the amounts are not gifts, according to the Internal Revenue Code. This classification includes any payment of cash or transfer of a noncash item unless it is a qualified employee achievement award or a small de minimis item. (emphasis added)

In chapter 2 of her book, Sommerville also notes concerns related to excess benefit transactions, in which a person with presumed influence receives a benefit valued above a reasonable range of compensation for his or her position. An excess benefit transaction occurs “when a church pays a worker more than is reasonable for the services rendered, or when the church fails to report a taxable fringe benefit.”

The penalties for an excess benefit transaction are severe, both for the recipient (the pastor) and the church.

Retirement gifts

Church leaders also often ask whether the analysis changes for a gift when it involves a pastor who is retiring. Unfortunately, the answer is usually no.

Sommerville notes: Confusion arises when working with retirement gifts. An old IRS revenue ruling states it is possible that a gift to a retiring minister may not be taxable (Rev. Rul. 55-422, 1955-1 CB 14). (The revenue ruling has never formally been made obsolete by the IRS.) The ruling is often cited to support a tax-free retirement gift, but its application has changed with the 1986 change to the definition of a gift in the Internal Revenue Code. Since employers may not give a tax-free gift to an employee, a retirement gift may not be a tax-free payment. (emphasis added)

Also note that how a church collects, handles, and distributes funds matters a great deal in how any special-occasion gifts are analyzed. This article dives deeper into why.

Lastly, in very limited instances, there may be times when a gift associated to a retired pastor may not cause taxable income. A 2018 Tax Court ruling about a pastor who received monetary gifts from church members included an analysis discussing prior federal court decisions involving former ministers who received gifts from their former congregations that did not trigger income tax liability for the ministers.

Attorney and senior editor Richard Hammar, in reviewing the 2018 Tax Court decision, noted that gifts to a retired pastor may not be taxable when specific facts and circumstances are involved. Regarding one of the federal cases cited by the Tax Court (Schall v. Commissioner, 174 F.2d 893 (5th Cir. 1949), Hammar made this observation about the Fifth Circuit court’s analysis and its reason for concluding the gifts were not taxable: “[The pastor] made no request of the congregation that any amount be paid to him after his resignation, and he had no knowledge that the church would agree to do so. He did not agree to render any services in exchange for the gift and in fact did not do so.” 

While the 2018 decision is insightful, churches still should evaluate their situations carefully, preferably in consultation with qualified local tax counsel, before reaching a similar conclusion.

Similarly, as noted above, for gifts involving employed pastors, it’s strongly recommended churches retain qualified local counsel to assist them with the income tax treatment of those gifts.

Matthew Branaugh is an attorney, and the content editor for Christianity Today's Church Law & Tax.

Advantage Member Exclusive

Getting Ahead of the 2023 Tax Season

On-Demand Webinar: Ten tax developments church leaders should know for filing taxes this year- and for meeting tax requirements for the year ahead.

Loading the player...

For churches, January usually brings a flurry of related activities: providing W-2s to employees and 1099-NECs to self-employed persons; sending out charitable contribution statements to donors; and ensuring that other tax deadlines are met, including Form 941 filings.

Additionally, church leaders should note other updates, reminders, and developments throughout tax season–as well as the rest of the year–whether they relate to clergy housing allowances, charitable contributions, or other issues.

This video features Richard Hammar, renowned church attorney, and author of the Church & Clergy Tax Guide 2023, discussing the most important developments for church tax filing in 2022 and compliance in 2023.


Richard Hammar | Attorney & CPA

Matthew Branaugh | Attorney & Content Editor for Church Law And Tax

Reading & Resources: 

Download the resources and templates mentioned in this webinar below. Or read one of the articles to get a handle on the basics of developing fair compensation in your ministry.

Advantage Member Exclusive

Get Answers to Your Church’s Most Pressing Employment Law Questions

On-Demand Webinar: Attorney and CPA Frank Sommerville addresses key questions—including yours—about churches as employers.

Loading the player...

Every day, churches face a variety of employment issues. Many questions arise regarding employee classifications, overtime regulations, workplace accommodations, hiring and firing protocols, etc. It seems as if the list is endless.

Though the list is long, church leaders can also avoid many of the most pressing and common employment issues that face their congregations. In this exclusive webinar for Advantage Members, you’ll learn helpful information that will assist you in preparing answers to these frequently asked questions.

Senior editorial advisor for Church Law & Tax, attorney Frank Sommerville, provides insight into Title VII and FLSA in light of their impact on churches, as well as answer employment-related questions submitted by Advantage Members.

Watch now and learn how to address employment matters your church faces.


Frank Sommerville | Attorney

Reading & Resources: 

Download the resources and templates mentioned in this webinar below. Or read one of the articles to get a handle on the basics of developing fair compensation in your ministry.

Advantage Member Exclusive

Meetings Matter: A Crash Course for Church Leaders

On-Demand Webinar: Quick tips and insights for effectively running anything from a board meeting to a congregational meeting.

Loading the player...

Editor’s note. This video is part of the Advantage Membership. Learn more on how to become an Advantage Member or upgrade your membership.

Church meetings play a crucial role in the life of the church. Yet leaders rarely receive training to help them organize and run meetings crucial to their ministries’ directions. The lack of preparation can unintentionally cause problems—or worse, conflict.

Attorney Sarah Merkle helps churches, ministries, and nonprofits get organized and ready for meetings. In this webinar recording for Church Law & tax advantage members, Merkle provides a crash course on meeting leadership that will help leaders improve their skills fast.

Through case studies and examples, Merkle demonstrates how your church can make its next board meeting productive and fruitful. Learn how to create effective agendas, set meeting orders, make and discuss motions, take minutes, and more by watching this recording now.

Reading & Resources: 

Download the resources and templates mentioned in this webinar below. Or read to learn more about this important topic:

Sarah E. Merkle is a professional parliamentarian and presiding officer. One of five lawyers worldwide to have earned the credentials Certified Professional Parliamentarian-Teacher (CPP-T) and Professional Registered Parliamentarian (PRP), she helps boards, associations, corporations, and public bodies navigate rules applicable to governance and business meetings.

Mastering Meeting Basics

A five-part series providing simple and straightforward guidance to church leaders.

Church business meetings take place any time church members, boards, or committees get together to conduct official church business—from annual member meetings to weekly or periodic board or committee meetings where votes are taken and decisions are made.

This five-part article series is designed to provide simple and straightforward guidance to church leaders on parliamentary procedure and best practices for business meetings.

Sarah E. Merkle is a professional parliamentarian and presiding officer. One of five lawyers worldwide to have earned the credentials Certified Professional Parliamentarian-Teacher (CPP-T) and Professional Registered Parliamentarian (PRP), she helps boards, associations, corporations, and public bodies navigate rules applicable to governance and business meetings.

Advantage Member Exclusive

Retirement Planning for Pastors and Staff

On-Demand Webinar: Setting successful strategies as your church’s workforce ages.

Loading the player...

Editor’s note. This video is part of the Advantage Membership. Learn more on how to become an Advantage Member or upgrade your membership.

In America, the retirement boom has begun. Yet statistics from and elsewhere indicate that most Americans are not financially ready for it.

Unfortunately, this trend rings true in churches as well. But this doesn’t have to be the case. With a little forward thinking, churches can set their pastors and staff up for success during the retirement years.

In this webinar featuring CPA Elaine Sommerville, you will learn what to do–or not do–as your workforces age. Watch now to gain an overview of plans that can assist pastors and staff members with setting aside retirement funds, as well as critical considerations they must make regarding housing, spouses, health insurance and Medicare, and life insurance.

Elaine L. Sommerville is licensed as a certified public accountant by the State of Texas. She has worked in public accounting since 1985.

Can Churches Assist with Medicare Premiums for Eligible Employees?

There are specific rules and other qualifying factors churches must understand.

It is estimated that almost 64 million citizens were enrolled in Medicare in October of 2021, according to the Centers for Medicare & Medicaid Services, and many still remain in the workforce. With an aging workforce staying in the marketplace longer than past years, churches are facing—or will face—the question of how to handle health insurance coverage for employees reaching Medicare eligibility. Upon reaching Medicare eligibility, a person’s health coverage becomes a maze of options for both the employer and the employee.

Churches often desire to encourage an employee to leave a group health-care plan and enroll in Medicare to take advantage of cost savings. Many times, the employee also desires this path because it is less expensive than his or her portion of the cost of the church’s group health-care plan. When discussing Medicare as a health-care option, the topic of the church’s ability to assist with Medicare-related premiums invariably comes up.

While employers may not pay Medicare premiums directly for active employees, they may in some circumstances establish reimbursement plans for the related costs. However, employer assistance with these costs requires great caution and an understanding of multiple, little-known laws.

Navigation of this complex subject is dependent on several factors requiring skilled analysis and well-thought-out planning. The analysis is intricate and easy to misstep. The purpose of this article is to raise awareness of the rules involved and assist a church in knowing when to seek guidance from a benefits professional.

Rules to consider in the analysis

There are two primary sets of rules to consider when deciding whether to assist an employee with Medicare-related premiums and supplemental coverage.

The first is the Affordable Care Act (ACA). Created in 2010, most churches are now accustomed to navigating the ACA’s intricate rules relating to health-care coverage.

The second set of rules, which is not as familiar to church employers, is the Medicare Secondary Payer (MSP) rules.

The ACA and Medicare

Medicare is not a group health-care plan under the ACA, so Medicare reimbursements or payments are considered reimbursements of an individual health insurance plan. Therefore, if a church agrees to pay an employee for Medicare premiums, it is reimbursing an individual health insurance plan. If a church has more than one employee, then the provisions of the ACA kick in, and those provisions generally prohibit the reimbursement of individual health insurance premiums.

In the past few years, two avenues have been approved that allow employers to provide for individual health insurance coverage. These avenues are specific versions of health reimbursement arrangements (HRAs): the Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) or the Individual Coverage Health Reimbursement Arrangement (ICHRA).

Both HRAs have specific qualifications and operating rules. Reimbursing individual health insurance premiums outside of a qualifying HRA creates an employer-paid health plan subject to the ACA’s penalty of $100 per day ($36,500 per year) per employee.

Additional ACA rules apply to employers with 50 or more full-time equivalent employees because they must offer group health insurance to all full-time employees.

Medicare Secondary Payer rules

Outside of the ACA rules, any arrangement involving Medicare and employees must also comply with the MSP rules. No one should be surprised to learn that the government does not approve of employers transferring their insurance responsibilities to the government. MSP rules define when Medicare can be the primary payer versus when the federal government insists that Medicare operate as a secondary payer behind other employer-provided insurance plans covering active employees.

For an employer with 20 or fewer full- or part-time workers that offers group health insurance plans, MSP rules allow greater latitude in working with employees eligible for Medicare. Medicare rules require an employee to enroll in Medicare when eligible and Medicare serves as the primary payer of medical needs.

But the provisions clearly state that employers of 20 or more employees may not actively encourage or compensate employees for exiting their group health plan in favor of Medicare. The employer must offer the same health-care benefits to those 65-and-older employees that they do to employees under 65. A church’s group health plan must be the primary payer and Medicare the secondary payer. While an employee may choose to exit the group health-care plan in favor of a Medicare option, the employer may not compensate or reward the employee for this decision.

Note. An employer meets the 20-or-more-employee requirement when an employer has 20 or more full-time and/or part-time employees for each working day in each of 20 or more calendar weeks in the current or preceding year.

Potential solutions

So, what are a church’s options for employees who desire to enroll in Medicare?

Churches with fewer than 20 employees that offer group health insurance

A church with fewer than 20 full- or part-time employees (as defined above)—and that offers group health insurance not consisting solely of benefits excepted from the ACA rules—may take the following steps:

  • establish a group health insurance plan for employees not eligible for Medicare; and
  • create an integrated health reimbursement arrangement for those employees enrolled in Medicare Part A and Part B or D that reimburses the premiums the employee pays for Medicare Parts B and/or D only. (This is a specifically authorized method of integrating this type of HRA into an employer’s group health plan.)

Churches with fewer than 50 employees not offering group insurance

A church with no more than 49 full-time equivalent employees and not offering group health insurance may consider establishing an ICHRA or a QSEHRA (see above sidebar). Both types of HRAs may reimburse individual health insurance premiums and the employee’s benefits may be used to pay for Medicare Parts B, C and/or D. However, these plans may not be limited to simply covering Medicare premiums and must comply with nondiscrimination rules.

Churches with 20 or more employees offering group insurance

For employers that offer group coverage and meet the 20-employee rule above, compliance with MSP rules is more challenging. To comply, the health-care options offered to qualifying employees and their spouses (if applicable) may not differ based on whether or not employees are eligible for Medicare. Any HRA must comply with ACA rules. The interplay of these rules makes it difficult—if not impossible—to create a plan providing for the reimbursement of Medicare-related premiums for active employees.

Employer size is the determining factor

In summary, an employee may enroll in Medicare when he or she becomes eligible and may still participate in his or her employer’s group health plan—or choose to leave the employer’s plan.

However, the size of the employer determines which plan provides primary coverage for health expenses and which one provides secondary coverage, and it determines the options available (or not) for the employer to reimburse costs.

Assisting employees with Medicare-related premiums should only be undertaken when a church has actively sought the assistance of a benefits professional skilled in working with these specific rules. Churches and employees may also find assistance through a State Health Insurance Assistance Program (SHIP) that provides free health insurance counseling services. Locate a local SHIP by visiting or by calling (toll-free) 1-800-633-4227.

Elaine L. Sommerville is licensed as a certified public accountant by the State of Texas. She has worked in public accounting since 1985.


Politics and the Church: Activism, Speech, and the Tax Code

Sometimes, the lines blur between politics and the church. This recommended reading – and viewing – list can help.

Sometimes, the lines blur between politics and the church to the point that church leaders can wonder what types of political activities and political speech are allowed under section 501(c)(3) of the tax code.

It’s a question we often receive because of the federal tax-exempt status that churches automatically receive under section 508 of the Internal Revenue Code.

This recommended, carefully-curated members-only reading list, devoted to politics and the church, lays out the do’s and don’ts as described in section 501(c)(3), as well as relevant IRS rulings and court decisions.

Lead Your Church With Confidence – Become a Church Law & Tax Member Today.

The list includes a thought piece on whether your church should get political at all, along with a series of analysis pieces on the tax implications of getting political in the first place.

All are were created in partnership with experts whose hearts are geared to inform church leaders who, in turn, must weigh how God is calling them to speak into elections and other political matters.

Checklist: How Various Political Activities Might Affect Your Church’s Tax-Exempt Status

Which political activities may affect your church’s tax-exempt status, based on IRS guidance.

Last Reviewed: April 25, 2024

Election years frequently prompt a common question among church leaders and pastors: What types of political activities and speech are allowed under section 501(c)(3) of the tax code?

While political activities and speech by churches and pastors are protected by the US Constitution’s First Amendment, the Internal Revenue Code contains specific language that either prohibits or limits certain activities conducted by tax-exempt entities. Violations can lead to excise taxes, the revocation of federal tax exemption, or both. While few public examples exist of the enforcement of these rules over the years by the Internal Revenue Service (IRS), churches and church leaders still should understand the prohibitions and limitations, including any potential tax consequences any violations may trigger.

This chart provides a variety of examples of political activities churches might wish to do and briefly details the related IRS guidance, including the potential effects of those activities on a church’s tax-exempt status. The goal is to provide a quick reference for church leaders that helps them make informed decisions.

To go deeper on these issues, don’t miss “The Tax Implications of Churches and Political Involvement,” by attorney, CPA, and senior editor Richard R. Hammar, and “Churches, Politics, and Constitutional Protections,” by attorney Erik Stanley on’s Recommended Reading page.




A church makes contributions to a candidate’s campaign fund


IRS Publication 1828

A church makes public statements of position (verbal and written) in favor of or in opposition to candidates for office through official church publications, at official church functions, or both


IRS Publication 1828

A church’s pastor delivers a sermon series addressing what the Bible says about abortion, criminal justice reform, sexual orientation and gender identity, and other topics with social and spiritual implications


First Amendment of the US Constitution

A church provides a nonpartisan forum for all candidates to address the church


IRS Publication 1828

A church invites all candidates for a political office to address the congregation and informs the congregation before each candidate’s speech that the views expressed are those of the candidate and not the church, and that the church does not endorse any candidate


Revenue Ruling 74-574; IRS Publication 1828

A church invites only one candidate in a political campaign to address the congregation


Revenue Ruling 2007-41; IRS Publication 1828

A church provides an opportunity for a candidate to speak in a noncandidate capacity (for example, as a member of the church, public figure, or expert in a nonpolitical field) without providing equal access to all political candidates for the same office. The church ensures that the candidate speaks in a noncandidate capacity; no reference is made to the person’s candidacy; the church mentions the capacity in which the candidate is appearing (without mentioning the person’s political candidacy); and no campaign activity occurs.


IRS Publication 1828

A church distributes a compilation of voting records of all members of US Congress on major legislative issues involving a wide range of subjects; the publication contains no editorial opinion, and its text, design elements, and structure do not imply approval or disapproval of any members or their voting records


Revenue Ruling 78-248; IRS Publication 1828

A church distributes a voter guide containing questions answered by all candidates. The questions cover a wide range of topics, but the wording of the questions demonstrates bias on certain issues.


Revenue Ruling 78-248; IRS Publication 1828

A church endorses a candidate (by any variety of ways, including verbal or written statements, references to the candidate’s political party, references to the candidate’s distinctive platform or biography, and/or showing the candidate’s picture)


Int. Rev. News Release IR-96-23; IRS Publication 1828

Church employees carry on campaign activities for a candidate within the context of their church employment


FSA 1993-0921-1; IRS Publication 1828

A church fails to “disavow” the campaign activities of persons under “apparent authorization” from the church by repudiating those acts “in a timely manner equal to the original actions” and taking steps “to ensure that such unauthorized actions do not recur”


FSA 1993-0921-1

A church engages in fundraising on behalf of a candidate


Int. Rev. News Release IR-96-23; IRS Publication 1828

A church conducts a neutral voter registration drive


11 C.F.R. § 111.4(c)(4); IRS Publication 1828

A church buys and places newspaper ads urging voters to vote for or against a candidate


Branch Ministries, Inc. v. Commissioner, 99-1 USTC ¶50,410 (D.D.C. 1999), aff’d, Branch Ministries v. Rossotti, 2000 USTC ¶50,459 (D.C. Cir. 2000)

A church website contains information either supporting or opposing candidates for public office


IRS Publication 1828

A church website contains links to candidate-related materials, and does not include any text, design elements, or structure indicating support of or opposition to any of the candidates


Revenue Ruling 2007-41; IRS Publication 1828

A church website links to third-party websites containing materials supporting or opposing candidates


IRS Publication 1828

A minister who is known well in the community attends a press conference at a political candidate’s campaign headquarters and states that the candidate should be reelected. The minister does not say he is speaking on behalf of his church. His endorsement is reported on the front page of the local newspaper, and he is identified in the article as the minister of his church.


Revenue Ruling 2007-41; IRS Publication 1828

A church maintains a website that includes biographies of its ministers, times of services, details of community outreach programs, and activities of members of its congregation. A member of the congregation is running for a seat on the town council. Shortly before the election, the church posts the following message on its website: “Lend your support to your fellow parishioner in Tuesday’s election for town council.”


Revenue Ruling 2007-41; IRS Publication 1828

A church urges its members to contact members of the state legislature and urge them to reject a proposed bill legalizing marijuana


IRS Publication 1828

A church provides its members with educational materials about the legalization of marijuana and hosts an educational meeting on the topic


IRS Publication 1828

A church gives a pro-life advocacy group permission to place pamphlets on vehicles in the church’s parking lot during Sunday worship services. The pamphlets urge congregants to support a “pro-life” slate in the upcoming election.

Unclear based on IRS regulations and current law—but likely prohibited

A church owns space suitable for events and makes it available for rent to the public on a first come, first served basis. A candidate pays the standard fee to host a campaign dinner.


IRS Publication 1828

A church sets up a booth at the state fair where citizens can register to vote. The booth only contains the church’s name, the date of the next statewide election, and notice of the opportunity to register. No reference to any candidate or political party is made in any materials or in any statements given by volunteers.


IRS Publication 1828

A church maintains a list containing contact information for its members and has never rented it to a third party. The church allows one candidate to rent the list to send campaign information, but declines similar requests from other candidates.


IRS Publication 1828

A church sets up a telephone bank to conduct a “get-out-the-vote” effort and contacts registered voters in its district. Church volunteers are instructed to ask the registered voters about their positions on certain moral issues, and if the voter’s positions align with a specific candidate running for office in the district, to then remind them about the upcoming election, the importance of voting, and the availability of church-sponsored transportation to the polls.


IRS Publication 1828

For a more detailed discussion about political activities and the church, visit’s Recommended Reading page, “Churches and Political Activities,” as well as chapter 12 of Richard R. Hammar’s annual Church & Clergy Tax Guide.

The Tax Implications of Churches and Political Involvement

The tax implications for churches that engage in political campaigns and legislative lobbying.

To maintain their exemption from federal income taxes, churches and other religious organizations must comply with several requirements specified in section 501(c)(3) of the tax code. One requirement is that the church not participate or intervene in any political campaign on behalf of (or in opposition to) any candidate for public office. Another requirement limits how much a church can lobby for or against legislation, referendums, and ballot measures.

Many churches have violated these requirements in the past with few, if any, adverse consequences. Over the past 30 years, for instance, there has been only one high-profile case involving the revocation of a church’s tax-exempt status letter by the Internal Revenue Service (IRS) due to the church’s engagement in prohibited political campaign activities (a decision that, notably, was later upheld by an appellate court).

Enforcement of the prohibitions on lobbying activities also has been limited at best. Even with such limited enforcement by the IRS, though, the tax consequences for a violation can be significant. As leaders evaluate the ways in which they believe their congregations are called to address political matters, they should carefully note the requirements—and the potential consequences triggered if they violate them.


The participation by churches and church leaders in political campaigns is an American tradition dating back to the founding of the republic. Common examples include:

  • inviting candidates to speak during worship services;
  • distributing “voter education” literature reflecting candidates’ views on selected topics;
  • voter registration activities;
  • enlisting volunteers for a particular candidate’s campaign;
  • collecting contributions for a particular candidate; and
  • statements made by ministers during worship services either supporting or opposing various candidates for office.

Unfortunately, it is not well understood that some of these kinds of activities, as well-meaning as they may be, may jeopardize a church’s exemption from federal income taxation.

This is because section 501(c)(3) of the tax code specifies that a church or other public charity is exempt from federal income taxation only if “no substantial part of the activities of which is carrying on propaganda, or otherwise attempting to influence legislation, and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of any candidate for public office.”

Note that there are two distinct limitations here. First, churches may not engage in substantial efforts to influence legislation. Second, churches may not participate or intervene in any candidate’s political campaign, even to an insubstantial degree.

It should be emphasized that none of the political activities is “illegal” for churches to conduct. The primary consequence of church political activity is that the church’s exemption from federal income taxation may be jeopardized.

Evaluating IRS enforcement

To be sure, there have been violations of these limitations by churches with hardly a word of protest from the IRS. That appeared to change in the 1990s, when the IRS for the first time revoked a church’s exemption letter for its involvement in a presidential campaign. However, in the years since, the IRS typically has only made several pronouncements indicating that politically related activities by churches no longer will be ignored.

In part, the IRS’s inaction over the years was due to a provision in a federal law (the Church Audit Procedures Act) that imposes limitations on IRS examinations of churches. The Act provides that the IRS may begin a “church tax inquiry” only if an appropriate “high-level Treasury official” (a regional IRS commissioner, or higher Treasury official) reasonably believes, on the basis of written evidence, that the church is not exempt, may be carrying on an unrelated trade or business, or is otherwise engaged in activities subject to taxation.

In 2009, a federal court in Minnesota ruled the IRS Director of Exempt Organizations (Examinations) was not a “high-level Treasury official” and therefore was not authorized to initiate a church tax inquiry on the basis of a reasonable belief determination that sufficient written evidence existed to warrant a church tax inquiry.

Frustrated by the 2009 federal court ruling, the Freedom From Religion Foundation (FFRF) in 2012 sued the IRS to compel it to enforce the ban on campaign intervention by churches. Two years later, the parties reached a settlement approved by a federal court in Wisconsin. The court’s order said FFRF was satisfied that the IRS “does not have a policy . . . of non-enforcement specific to churches and religious institutions.” A separate brief from FFRF said the organization believed “the IRS has a procedure in place for signature authority to initiate church tax investigations/examinations.”

The message seemed clear: The IRS was ready to monitor political campaign activities by churches, investigate possible violations, and enforce penalties. However, in the years to follow, a group of ministers openly and intentionally defied the campaign prohibition on the ground that it violated their constitutional rights to speak and to exercise their religion—with little, if any, response by the IRS.

While IRS enforcement of churches apparently remains limited, the possibility remains that political activities by churches can trigger IRS scrutiny. It is essential for church leaders to understand the ban on church involvement in political campaigns, the limitations on substantial lobbying activities related to legislation and ballot measures, and then to accordingly evaluate their church’s practices.

Political campaigns

In 1954, US Congress passed the “Johnson Amendment.” It is the basis of the income tax regulations in section 501(c)(3) of the tax code that limit political campaign intervention by tax-exempt entities, including churches. The language provides that neither a church nor any other organization can be exempt from federal income taxation if its charter empowers it “directly or indirectly to participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of or in opposition to any candidate for public office.” The regulations further provide:

The term “candidate for public office” means an individual who offers himself, or is proposed by others, as a contestant for an elective public office, whether such office be national, state, or local.

Activities which constitute participation or intervention in a political campaign on behalf of or in opposition to a candidate include, but are not limited to, the publication or distribution of written or printed statements or the making of oral statements on behalf of or in opposition to such a candidate. Treas. Reg. 1.501(c)(3)- 1(c)(3)(iii).

This regulation provides some clarification. In particular, it clarifies that:

  • A “candidate” for public office includes local, state, and national candidates;
  • The prohibited intervention or participation in a political campaign can be satisfied either by the making of oral statements or by the publishing or distribution of written statements; and
  • Statements made in opposition to, as well as on behalf of, a particular candidate are prohibited.

Additionally, church leaders should note the IRS has determined political campaign intervention can be found even in very early stages of elective processes. IRS General Counsel Memorandum 39811.

IRS Guidance on Political Campaign Activities

IRS Publication 1828 (the “Publication”) includes IRS guidance regarding political campaign activities.

Below is a summary of some of the Publication’s most relevant parts for churches with respect to political campaign activities.

Political campaign activity: individual political activity by religious leaders

The Publication acknowledges that the campaign activity prohibition “is not intended to restrict free expression on political matters by leaders of churches or religious organizations speaking for themselves, as individuals. Nor are leaders prohibited from speaking about important issues of public policy.” However, “religious leaders can’t make partisan comments in official organization publications or at official church functions.”

To avoid potential “attribution” of their comments outside of church functions and publications, “religious leaders who speak or write in their individual capacity are encouraged to clearly indicate that their comments are personal and not intended to represent the views of the organization.”

Political campaign activity: inviting a candidate to speak

Many churches have invited political candidates to address the congregation during a worship service. Sometimes the candidate is a member of the church. In other cases, the candidate contacts the senior pastor and asks for permission to address the congregation.

Do such activities jeopardize a church’s tax-exempt status? The Publication addresses this question directly in two separate contexts:

  1. political candidates who address a church congregation as a candidate; and
  2. political candidates who do not address a church congregation as a candidate.

Speaking as a candidate

Churches “may invite political candidates to speak at its events without jeopardizing its tax-exempt status,” the Publication says. “Candidates may also appear without an invitation” at public events hosted by the church.

The Publication notes that when a candidate is invited to speak at a church as a political candidate the church must take steps to ensure that:

    • it provides an equal opportunity to the political candidates seeking the same office;
    • it does not indicate any support of, or opposition to, the candidate (stated explicitly when the candidate is introduced and in communications concerning the candidate’s attendance);
    • no political fundraising occurs;
    • the candidate is chosen to speak solely for reasons other than candidacy for public office;
    • a nonpartisan atmosphere is maintained on the premises or at the event where the candidate is present; and
    • the church clearly indicates the capacity in which the candidate is appearing and does not mention the individual’s political candidacy or the upcoming election in the communications announcing the candidate’s attendance at the event.

The Publication notes that in determining whether candidates are given an equal opportunity to participate, a church should consider the nature of the event to which each candidate is invited, in addition to the manner of presentation.

For example, “a church that invites one candidate to speak at its well-attended annual banquet, but invites the opposing candidate to speak at a sparsely attended general meeting, will likely be found to have violated the political campaign prohibition, even if the manner of presentation for both speakers is otherwise neutral.”

Speaking as a noncandidate

The Publication acknowledges that a church may invite political candidates (including church members) to speak in a noncandidate capacity. For example, some candidates are invited to speak at church services because they are “public figures” (such as “an expert in a non-political field,” a celebrity, or one who has “led a distinguished military, legal, or public service career”). When a candidate is invited to speak at an event in a noncandidate capacity, it is not necessary for the church or religious organization to provide equal access to all political candidates.

However, the church or religious organization must ensure that:

    • the individual speaks only in a noncandidate capacity and the church clearly maintains that noncandidate capacity through its promotions and any distributed materials;
    • neither the individual nor any representative of the church makes any mention of the individual’s candidacy or the election;
    • no campaign activity occurs in connection with the candidate’s attendance;
    • the “individual is chosen to speak solely for reasons other than candidacy for public office”; and
    • the church maintains a “nonpartisan atmosphere,” either “on the premises or at the event where the candidate is present.”

Public forums

Sometimes a church invites several candidates to speak at a public forum. The Publication warns that if such a forum is operated to show a bias for or against any candidate, then it would be prohibited campaign activity since it would be considered intervention or participation in a political campaign. The Publication suggests that when a church invites several candidates to speak at a forum, it should consider the following factors:

    • “whether questions for the candidate are prepared and presented by an independent nonpartisan panel”;
    • “whether the topics discussed by the candidates cover a broad range of issues that the candidates would address if elected to the office sought and are of interest to the public”;
    • “whether each candidate is given an equal opportunity to present his or her views on the issues discussed”;
    • “whether the candidates are asked to agree or disagree with positions, agendas, platforms, or statements of the organization”; and
    • “whether a moderator comments on the questions or otherwise implies approval or disapproval of the candidates.”

Voter education

The tax code notes that churches “are permitted to conduct certain voter education activities (including the presentation of public forums and the publication of voter education guides) if they are carried out in a nonpartisan manner.”

Churches may conduct voter registration and get-out-the-vote drives, but only if “conducted in a nonpartisan manner.” Any voter education or registration activities that favor or oppose one or more candidates “is prohibited.”

During an election season, some churches distribute voter guides, often with information covering how candidates stand on various issues. This type of activity will not jeopardize a church’s tax-exempt status unless the guide “attempt[s] to favor or oppose candidates for public elected office.”

The following factors are considered when evaluating whether a voter guide constitutes prohibited political campaign activity:

    • whether the candidates’ positions are compared to the church’s positions—if so, it constitutes prohibited political campaign activity, and in guidance issued in 2006, the IRS said prohibited comparisons can arise through the content shared, the design and format of the guide, or the manner in which the guide is distributed;
    • whether the guide covers a variety of issues that the candidates would address if elected;
    • whether “the description of issues is neutral”;
    • whether all candidates running for the office are included; and
    • whether the descriptions of the positions use “the candidates’ own words in response to questions” or “a neutral, unbiased and complete compilation of all candidates’ positions.”

Also in 2006, the IRS made an important clarification regarding third-party voter guides. The agency said “[e]ach organization that distributes one or more voter guides is responsible for its own actions. If the voter guide is biased, distribution of the [third-party] voter guide is an act of political campaign intervention.”

Pamphleteering on church premises

The Publication is silent about whether churches can permit individuals (whether church members or not) or outside groups to distribute campaign literature on church property before and after worship services. In understanding how the IRS views political campaign activities (including public forums and, as addressed below, websites), church leaders should exercise caution.

Individuals and outside groups often are not subject to the ban on intervention in political campaigns, and so they can freely distribute campaign literature no matter how biased it may be. However, when they do so on church premises, they are jeopardizing the church’s tax-exempt status since the church, by allowing them to distribute biased campaign literature, may be viewed as indirectly intervening or participating in a political campaign. As a result, church leaders should not assume that they can safely permit others to do on church property what the church itself cannot.

Key point. Many church members have returned to their vehicles in the church parking lot following a worship service to find political campaign literature on their windshield. How does this affect the church’s exempt status? If church leaders were not aware of the pamphleteering, and did not condone or authorize it, there is no problem. However, if a person or group obtains permission from the pastor or other church leader to distribute literature on windshields, and if the literature is biased in favor of one candidate or political party, then the church’s exempt status is jeopardized.

Business activity

The Publication notes certain business activities by churches can constitute prohibited political campaign activity. The Publication does not give an exhaustive list of business activities, but includes the following in a general description:

    • “the selling or renting of mailing lists”;
    • “the leasing of office space”; and
    • “the acceptance of paid political advertising.”

The IRS also notes the possible tax treatment of any income received by the church from such activities.

The agency outlines the following four factors it considers when determining whether such business activities constitute prohibited political campaign activity:

    • “whether the good, service or facility is available to the candidates equally”;
    • “whether the good, service or facility is available only to candidates and not to the general public”;
    • whether any fees charged by the church are at “customary and usual rates”; and
    • whether the church regularly conducts the activity or does so “only for the candidate.”


Most churches today operate websites. It is common for many to use their sites to share information, statements, and links to other websites. The Publication describes the ways in which a church website can run afoul of the political campaign prohibition. It notes:

    • A church posting content favoring or opposing a candidate for public office “will be treated the same as if it distributed printed material, oral statements or broadcasts that favored or opposed a candidate.”
    • A church is responsible “for the consequences of establishing and maintaining” links to other sites, “even if the [church] doesn’t have control over the content of the linked site[s].” The Publication suggests churches should regularly monitor links to other websites to “reduce the risk of political campaign intervention.”
    • A church will not necessarily violate political campaign prohibitions by linking to candidate-related material. However, the IRS will evaluate the “facts and circumstances,” including (but not limited to) “the context for the link on the [church’s] website, whether all candidates are represented, any exempt purpose served by offering the link, and the directness of the links between the [church’s] website and the web page that contains material favoring or opposing a candidate.”

Lobbying activities

A church will lose its tax-exempt status “if a substantial part of its activities” engages in lobbying, according to 501(c)(3) of the tax code. The lobbying limitation was enacted by the US Congress in 1934.

The Publication defines lobbying as “attempting to influence legislation.” It defines legislation as “acts, bills, resolutions or similar items (such as legislative confirmation of appointive offices)” considered by US Congress, state legislatures, or local councils. It also defines legislation to include referendums, ballot initiatives, and constitutional amendments voted on by the public.

However, excluded from the IRS list are activities carried on by executive or judicial offices as well as administrative agencies.

The IRS provides clarification about permissible and prohibited lobbying activities by churches. It notes:

A church or religious organization will be regarded as attempting to influence legislation if it contacts, or urges the public to contact, members or employees of a legislative body for the purpose of proposing, supporting or opposing legislation, or if the organization advocates the adoption or rejection of legislation.

However, general efforts to address public policy issues are not classified as lobbying, the IRS says, and may include educational meetings and educational materials if provided “in an educational manner.”

What constitutes “substantial”?

The Publication is vague about how much lobbying constitutes a “substantial” part of a church’s overall activities. The agency says it employs a “substantial part test” for churches, evaluating all “pertinent facts and circumstances” in relation to “a variety of factors.” Among the factors considered:

    • time devoted by employees and volunteers for the lobbying; and
    • money and resources spent by the church for the lobbying.

The IRS has never endorsed a specific percentage in its definition of “substantial.” At least two courts have attempted to do so, with one court concluding activities are not substantial if less than 5 percent of an organization’s time and effort is devoted to lobbying activities. Seasongood v. Commissioner, 227 F.2d 907 (6th Cir. 1955). The other court concluded “substantial” meant when an organization devoted 16 percent to 20 percent of its budget to lobbying activities. Haswell v. U.S., 500 F.2d 1133 (Ct. Cl. 1974).

A federal appeals court in 1972 rejected the Seasongood “5-percent test.” The IRS, in its Internal Revenue Manual (the “Manual”), notes the Seasongood decision “provides only limited guidance because the court’s view of activities to measure is no longer supported by the weight of precedent.” The Manual also says most courts have either avoided using a percentage test or concluded a percentage test is not conclusive.

Unfortunately, this means churches have no clear standard to guide them with respect to whether particular efforts to influence legislation are “substantial.”

Possible tax implications of church political activities

The IRS describes several potential consequences for churches that violate the political campaign and lobbying prohibitions outlined in the tax code.

Potential consequences for political campaign violations

Should a church be found in violation of political campaign limitations, it “jeopardizes both its tax-exempt status . . . and its eligibility to receive tax-deductible contributions. In addition, it may become subject to an excise tax on its political expenditures,” the Publication says.

The excise tax may be imposed along with revocation of the church’s tax-exempt status, or instead of revocation, according to the Publication.

The excise tax entails the following:

    • 10 percent of the church’s political expenditures, levied against the church;
    • 2.5 percent of the church’s political expenditures, levied against “organization managers (jointly and severally) who, without reasonable cause, agreed to the expenditures knowing they were political expenditures” (not to exceed $5,000 for any one expenditure);
    • an additional tax of 100 percent of the church’s political expenditures, levied against the church, if the expenditures are not corrected within the period allowed by law; and
    • an additional tax of 50 percent of the church’s political expenditures, levied against managers (jointly and severally) who refuse to make the correction (not to exceed $10,000 for any one expenditure).

The Publication says the correction of a violating political expenditure involves “recovery of the expenditure, to the extent possible, and establishment of safeguards to prevent future political expenditures.”

The Publication also advises churches to evaluate local and state election laws, which may impose their own limitations and penalties for political campaign activities by tax-exempt entities.

Potential consequences for lobbying violations

Should a church be found to be conducting excessive lobbying activity “in any taxable year may lose its tax-exempt status, resulting in all its income being subject to tax,” the Publication notes.

The Publication also says a religious organization and its managers are subject to excise taxes for the political expenditures. However, the Publication does not explicitly include churches with its remarks about the excise taxes for lobbying violations.

What would losing tax-exempt status mean?

Were a church to experience revocation of its tax-exempt status, whether due to violating political campaign or lobbying limitations, several potential penalties would arise, including the following:

    • the church’s net income would be subject to federal income taxation;
    • the church’s net income would be subject to state income taxation (except in those few states not having an income tax);
    • donors no longer could deduct charitable contributions they make to the church;
    • the church would be ineligible to establish or maintain “403(b)” tax-sheltered annuities;
    • possible loss of property tax exemption under state law;
    • possible loss of sales tax exemption under state law;
    • possible loss of exemption from unemployment tax under state and federal law;
    • loss of preferential mailing rates;
    • a minister’s housing allowance might be affected;
    • the significant protections available to a church under the Church Audit Procedures Act may no longer apply; and
    • the exemption of the church from the ban on religious discrimination under various federal and state civil rights laws may be affected.

These consequences should be considered when deciding whether or not to engage in political activities.

Matthew Branaugh, attorney and content editor for, contributed to this article.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Politics, Churches, and Constitutional Protections

The Johnson Amendment and other tax laws try to limit activities by churches that intersect with politics—but certain constitutional protections allow more engagement than some realize.

Every election year churches confront a dilemma summed up in a question: What can they do or say about the upcoming election and how far is too far?

Many churches earnestly attempt to navigate this dilemma while others are simply silent.

If I were to ask you what your church may legally do during an election year, could you answer with any clarity? Or would you wonder if you really understood what the law says and how it applies to your church?

Unfortunately, articles and guides about the Internal Revenue Service (IRS) regulations on election-year activities by churches often overlook the US Constitution and its safeguards of the free exercise of religion, freedom of speech, and protection from government intrusion into the church. Your church’s ability and freedom to address an election are broad, even under current tax law, but especially considering the constitutional guarantees churches enjoy.

Through exploring and explaining the Johnson Amendment, the legislation behind much of the confusion, leaders will learn more from this article about their constitutional protections—and the cautions to still note—with regard to candidates running for office. Leaders also will learn more about how other tax laws allow churches to engage in some lobbying and advocacy efforts tied to legislative matters and ballot measures.

What is the Johnson Amendment?

The Johnson Amendment is a federal tax law restricting a tax-exempt organization’s interactions with candidates and elections. The Amendment gets its name from Senator Lyndon Johnson, who was the motivating factor in adding the provision to the tax code in 1954.

The history behind the passage of the Johnson Amendment suggests that Johnson proposed the Amendment to silence two powerful, secular nonprofit organizations that were opposing his reelection to the US Senate because they believed he was soft on communism.

The Amendment was part of a massive tax overhaul bill and was inserted into the bill by a voice vote. There were no debates or committee hearings and no meaningful consideration of how the Amendment would impact the constitutional rights of churches.

President Eisenhower signed the tax bill, which included the Johnson Amendment, into law without comment in August 1954. Since that time, the Johnson Amendment has been part of federal tax law.

The Johnson Amendment is the last sentence of section 501(c)(3) of the Internal Revenue Code. It states that nonprofit organizations may not “participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.” Section 501(c)(3), of course, applies to churches.

How is the Johnson Amendment enforced?

The IRS enforces the Johnson Amendment along with the rest of the tax code. Its record of enforcement since 1954 has been spotty and uneven. For example, on its website, the IRS states that nonprofit organizations are “absolutely prohibited from directly or indirectly” violating the Johnson Amendment. Yet there is no explanation of what an “indirect” violation of the Johnson Amendment is or could be.

The Johnson Amendment itself prohibits a church from “participating in” a candidate’s campaign but the law contains no clear definition of what “participation” consists of. Despite this vagueness, the IRS warns that a violation of the Johnson Amendment “may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes.”

The predictable result of the inherent vagueness of the Johnson Amendment, and the ambiguous IRS regulations interpreting and enforcing it, is to chill the speech of America’s churches and pastors.

Just ask any number of pastors, and they will likely tell you they have no idea exactly what is or is not prohibited speech when it comes to candidates or elections. So, most just say nothing, and only an intrepid few may decide to shoot in the dark and hope for the best. This only magnifies the problem. Pastors are frequently intimidated because they do not know what the IRS thinks they can or cannot say.

This chill on speech is further exacerbated by the fact that churches cannot just sue the IRS to have the Johnson Amendment declared unconstitutional. The rules of federal court jurisdiction (when a lawsuit may be brought to court) prohibit lawsuits against the IRS until a provision of the tax code has been enforced against a taxpayer and a penalty has been levied and upheld during an internal IRS appeal process.

The result is that the IRS decides how, when, and with whom it will get into a lawsuit with. And the IRS has studiously avoided a lawsuit over the constitutionality of the Johnson Amendment, preferring a status quo in which the law is never clarified, and the result is self-censorship by most churches. In fact, no court to date has squarely confronted the constitutionality of government regulation of a church’s speech on elections or candidates during a church service or event. Yet this is precisely what the Johnson Amendment claims authority to do.

Moreover, some organizations that advocate for a radical enforcement of the “separation of church and state” take advantage of the vagueness of the Johnson Amendment. One organization even conducted a nationwide advocacy campaign one election year where it asked its supporters to turn in churches to the IRS. Never mind that its view of the Johnson Amendment was so extreme the IRS would not even act on such complaints. Merely the threat, or in some cases an actual complaint followed by a press release, was enough to perpetuate the chill on speech.

Is the Johnson Amendment constitutional?

Numerous legal scholars have written law review articles arguing that the Johnson Amendment is unconstitutional. These arguments focus on the Establishment, the Free Exercise, and the Free Speech Clauses of the First Amendment to the US Constitution.

What follows is a summary of some of the legal arguments for how the Johnson Amendment appears to violate each clause.

The Establishment Clause

The Establishment Clause prohibits excessive entanglement of the government with religion. The IRS cannot enforce the Johnson Amendment without an IRS agent parsing the speech of a church or a pastor’s sermon or other speech to determine if it crossed the line into a Johnson Amendment violation.

The US Supreme Court has held—in more than one case—that a law that requires pervasive government surveillance and monitoring of religion results in excessive entanglement of the government with religion.

Put simply, the government cannot enforce the Johnson Amendment without intruding into the internal activities and speech of a church to determine whether the church violated the law. Such enforcement of the Johnson Amendment would unconstitutionally entangle the government with religion.

The Free Speech Clause

The Free Speech Clause prohibits “content-based” restrictions on speech. This kind of restriction is one where the government must review the content of speech to determine if it violates the law. In cases like this, courts hold the government to the highest constitutional standard in order to justify why it needs to review the content of speech.

The Johnson Amendment certainly requires the IRS to review the content of a church’s speech. In fact, there is no way to enforce the Johnson Amendment without reviewing the content of a church’s speech. This content review, coupled with the vagueness of the Johnson Amendment’s text, gives the government broad censorship power to prohibit speech.

Content-based restrictions on speech are highly disfavored and are usually unconstitutional because these kinds of restrictions give the government far too much power to censor speech it does not like.

The Free Speech Clause also prohibits a speech restriction that creates an unconstitutional condition. Stated simply, the Johnson Amendment forces churches to give up their speech rights in order to retain their tax-exempt statuses—even though the Constitution (by virtue of the First Amendment’s Establishment Clause) requires the government to exempt a church from taxation.

Think about it this way: Would it be okay for the government to tell churches that they can retain their tax-exempt statuses only if they provide free housing for military troops (barred by the Third Amendment) or only if they allow the police to search their buildings without warrants (barred by the Fourth Amendment)? Those kinds of restrictions would be instantly condemned—and rightly so—as unconstitutional. Yet the Johnson Amendment says churches can retain their tax-exempt statuses only if churches forfeit their First Amendment rights of speech—an unconstitutional trade-off.

The Free Speech Clause also prohibits vague restrictions on speech. The reason is that vague restrictions may result in self-censorship and a chill on speech. As we have already discussed, the Johnson Amendment is full of the type of vagueness to create such a chill.

The Free Exercise Clause

The Johnson Amendment also violates the Free Exercise Clause because it expressly discriminates against religious speech and penalizes such speech with civil or criminal penalties.

Why hasn’t the Johnson Amendment been declared unconstitutional?

Given the serious constitutional violations inherent in the Johnson Amendment, why has it not been declared unconstitutional? The answer lies in the IRS’s refusal to allow a direct constitutional challenge to the Johnson Amendment.

Again, most churches self-censor, thereby doing the IRS’s enforcement job for it. Among the handful of churches that have been investigated by the IRS for Johnson Amendment violations, most if not all settled with the IRS to avoid the draconian tax penalties and their consequences.

But outside of those few examples, the IRS has essentially avoided direct enforcement action against churches. Earlier in my career, I represented churches that wanted to create a civil rights “test case” challenge to the Johnson Amendment. Over the course of several years, I represented over 4,000 pastors who preached sermons seemingly violating the Johnson Amendment and sent them to the IRS.

This effort was intended to foster a serious constitutional challenge to the Johnson Amendment, something the Constitution gives citizens the right to do.

These churches were willing to endure the consequences for the right to challenge the constitutionality of the Johnson Amendment. Yet the IRS did not investigate or punish any of the churches. The IRS did not allow one court case. Even so, the law persists to this day despite the attempt to create a constitutional test case.

The IRS prefers the status quo of self-censorship by churches and a chill on speech. It can enforce the Johnson Amendment easily by making threatening statements that result in churches enforcing the law against themselves.

What should happen with the Johnson Amendment?

The status quo is a burden on the constitutional rights of America’s churches and pastors. In the absence of a court challenge to the Johnson Amendment, which does not look to be forthcoming any time in the future, what should happen with the law?

Some have argued that getting rid of the Johnson Amendment would turn churches into pawns of the political parties. Yet the church does not need the government to protect it against itself. We should not allow an unconstitutional law to remain out of a misguided motivation to protect the theological purity of the church. That is not the government’s job anyway.

Others have argued that getting rid of the Johnson Amendment would allow churches to funnel “dark money” to political candidates, campaigns, and parties. Yet the Johnson Amendment applies to far more than just money.

Allowing an unconstitutional speech restriction that entangles the government with religion as a means of preventing political contributions by churches is overbroad. The simple answer is to prohibit political contributions by churches. Congress attempted to do just that when it introduced the Free Speech Fairness Act. The Act would have amended the Johnson Amendment to prohibit political contributions but remove the unconstitutional speech restrictions. The effort stalled, though, and has not moved forward to date.

The answer is not to jettison the Johnson Amendment entirely but to get rid of the provisions that prohibit the free speech and free exercise rights of America’s churches and pastors. Perhaps such an amendment will become politically viable in the future.

What about ballot initiatives and legislation?

In addition to the Johnson Amendment, section 501(c)(3) of the Tax Code also includes a limitation on legislative activities by tax-exempt organizations. This section was added to the tax code in 1934 and states that “no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation.” This restriction applies to activities that support or oppose pieces of legislation, such as bills and ballot initiatives.

The lobbying restriction was sponsored by Sen. David Reed, a Republican from Pennsylvania, in an attempt to silence a nonprofit organization, the National Economy League, that had come into direct conflict with Sen. Reed over the issue of benefits to veterans. The National Economy League was lobbying against a bill introduced by Sen. Reed who had made the issue, and his bill, the centerpiece of his reelection campaign to the US Senate.

Unlike the Johnson Amendment, the restriction on legislation is not an absolute prohibition, but just a limitation. The IRS does not define what an insubstantial amount of legislative activity is, but some guidance suggests that more than 5 percent to 15 percent of a church’s overall activities might be considered substantial.

Churches are allowed to directly support or oppose legislation, encourage congregations to vote for or against proposed laws, and speak into broader matters of public policy. None of these activities come close to the legislative limit included in section 501(c)(3).

What should churches do when it comes to an election?

Unless or until Congress amends the Johnson Amendment or a court declares it to be unconstitutional, it is still law. And the law regarding lobbying about legislation remains in place. When it comes to interacting with elections and candidates, churches should consider the following.

Recognize the significant and underappreciated constitutional protections churches have

Church leaders may be surprised by how much their churches may do in an election year. There are valuable resources that will help to cut through some of the vagueness and provide a roadmap as to what is permissible under current law. That’s true with respect to candidates for political office, as discussed above. That’s also true with respect to lobbying efforts related to legislative matters and ballot measures, as also discussed above.

Additionally, there are numerous activities that fall well within the bounds of current IRS guidance and tax law that churches also should contemplate. Such activities range from public forums inviting all candidates to speak, to compilations of voting records (absent editorial comment or approvals/disapprovals of those records), to neutral voter registration drives.

Even though the Johnson Amendment is unconstitutional, churches should appreciate the vast constitutional protections they currently enjoy without threat of losing their tax-exempt statuses. Doing so can help you avoid self-censorship and feel confident that there is a great deal your church may do should its leaders feel called to do so. Moreover, there are legal groups waiting and ready to provide pro-bono representation in the event a legal challenge ever arises.

Each church must decide for itself how to address politics and elections

For far too long, the Johnson Amendment and IRS guidance has made this kind of decision a legal decision, instead of a theological decision. The fact that this is true should be concerning.

Not every church will be called by its theology to speak about an election or candidates, but some will. Pastors and churches know their congregations best. Every church should have the choice to decide what to do for itself, not out of fear of violating the law, but out of its convictions informed by its theology.

Erik Stanley is an attorney at Provident Law, specializing in religious liberties, churches and nonprofits, commercial litigation, and business law, and the former senior counsel for Alliance Defending Freedom. He is an advisor at large for Church Law & Tax.

Advantage Member Exclusive

Learning From Mars Hill: Who Pilots Your Church?

On-Demand Webinar: Why quiet governance changes run the risk of eroding congregational trust.

Loading the player...

Editor’s Note. This video is part of the Advantage Membership. Learn more on how to become an Advantage Member or upgrade your membership.

In recent years, a growing number of churches have contemplated changing the governance structures contained in their bylaws. For practical reasons, these changes have often moved those structures from ones where voting rights for key decisions reside with members of the congregation to ones where that authority exclusively rests in the hands of a group of elders or the church’s board. To some church leaders, the changes make sense because they can reduce burdens and create efficiencies. But as Christianity Today’s podcast The Rise and Fall of Mars Hill powerfully demonstrates, significant problems can arise in a church when a move to consolidate decision-making power occurs with little or no warning to the church’s members.

In this exclusive webinar for Advantage Members, attorney Erika Cole dives deeply into this trend, examining the roles and purposes of governance, the reasons some churches consider changes, and why leadership must exercise great caution and transparency before ever proceeding with one.

You can download the presentation slides here.

More on this topic:

Find out more on this topic in Erika Coles article, The Dangers of a Quiet Governance Change.

Erika E. Cole, Esq., known as The Church Attorney®, is one of only a handful of attorneys in the nation who practices exclusively in the area of church law. She currently serves as a senior editorial advisor for Christianity Today’s

The Dangers of a Quiet Governance Change

Subtly shifting who has authority to make key decisions in your church may make sense—but may also erode congregational trust.

In recent years, and without much fanfare, many churches have quietly shifted their governance structures, moving from structures where voting rights for key decisions reside with members of the congregation to structures where that authority exclusively rests in the hands of a group of elders or the church’s board.

To church leadership, the shift may make sense on paper, reducing burdens and creating efficiencies. But making such a shift also threatens to erode the trust of a congregation if it is done for the wrong reasons, or if it is done for good reasons, but mishandled. When such a significant change goes awry—as has been witnessed at a handful of high-profile churches—the consequences can be devastating.

Christianity Today’s podcast The Rise and Fall of Mars Hill powerfully demonstrates the trouble that can arise in a church when decision-making power gets consolidated.

Situations like this one offer an important caution: Church leaders are wise to review and understand their church’s governance model, and why it exists, before making plans to change it. And if they choose to pursue a change, leaders must carefully contemplate how to communicate with their congregations to demonstrate transparency and integrity throughout that process.

What is church governance?

The word “governance” comes from a Greek word meaning “to pilot” or “to steer.” In the context of church operations, governance connotes who has decision-making authority in significant matters such as buying or selling church property, adopting the annual budget, the approval of a merger or acquisition, and the hiring or firing of key leaders.

A church’s governance structure most commonly gets set at the time the church is founded. How it gets set depends on several factors, including denominational affiliations.

The role of bylaws

Many churches incorporate at the time of their founding, but whether they incorporate or not, nearly all will adopt a governing document commonly known as the bylaws. It is within the bylaws that systems and processes for making and ratifying decisions for the church get set.

Generally speaking, one of the following governance models is most often set in a church’s bylaws:

  1. A board-led church. The board is authorized to act on behalf of the congregation. This governing body may be known as the board of elders, the board of trustees, the board of directors, or a similar title. As a general matter, and unless required by state statute or other related measure, the congregation is not advised of, or invited to participate in, the decisions regarding the church’s operations.
  2. A congregation-led church. As defined by the church’s bylaws, the church’s members vote on most, if not all, issues of significance, including major decisions.
  3. A denomination-led church (where the local church is a part of a denominational hierarchy). This usually means that there is a Book of Discipline or similar manual outlining the operations from the denominational level all the way to the local church level. There is usually little wiggle room for how a local church operates as the Book of Discipline outlines the mission, doctrine, structure, and membership.
  4. A healthy church typically should include three prongs of a sound governance ecosystem: (1) the pastoral leadership, (2) the governing board (often known as board of elders, board of trustees, or board of directors), and (3) the congregation. All three prongs can be present under each of the most common governance models.
  5. I have written, reviewed, and revised hundreds of church bylaws in my more than 20 years of representing churches as an attorney. While congregationally governed churches remain the most common model, especially among certain denominations, significant changes are afoot.
  6. More churches of varying sizes and denominations are contemplating—and in many cases adopting through revised bylaws—structures that consolidate the decision-making power to fewer individuals, such as a group of elders or the board of directors.
  7. When the governance structure is changed in a congregation-led church, either eliminating or significantly limiting the congregation’s role in making major church decisions, the implications can be significant. When one of those prongs of a healthy governance ecosystem quietly gets cut out, problems usually arise.
  8. The role of members
  9. Problems arise because church members often are the lifeblood of a church—and their sudden loss of input into church decisions can be jarring.
  10. Take, for instance, my childhood church. Some might say I was born into the church. I grew up in a small rural congregation with fewer than 200 members.
  11. Even though the church was small, the families in that church were significant in the way they connected to each other. They were the most dedicated members I have ever seen. There were lots of Sunday dinners where, quite traditionally, the ladies of the church would prepare food so that everyone could share a meal together. When someone took ill, the first persons to show up at the hospital were likely their fellow church members, with family filing in later.
  12. The church members kept the building clean, provided the worship music, and took care of administrative tasks—all without pay. They also deeply cared about the decisions that affected the church’s operations.
  13. Quarterly business meetings allowed members to vote on issues ranging from scheduling of special church events to whether the budget could support a contemplated purchase. The concept of membership was simple: the people who joined the church (generally noted by baptism and taking the right hand of fellowship) were the members.
  14. My experience vividly illustrates the congregation-led model in action. Churches will define membership different ways and set very different processes for how someone becomes a member. But no matter how it happens, if a church follows a congregation-led governance structure, its members expect to play direct and vital roles in the church’s direction and decision-making.
  15. When that structure is suddenly changed, and with little or no prior notice, members will understandably feel blindsided.
  16. Moving away from the congregation-led model
  17. Why would a church’s leadership move away from a congregation-led structure?
  18. One common reason is the desire to avoid conflict—the “brouhahas” that can erupt during some church meetings.
  19. Another reason is convenience. Many church leaders often want to remove the “red tape” of having to go to the congregation with important decisions. There is truth to this sentiment. It is a more complicated model and it likely takes more time to move matters forward in a congregation-led church.
  20. But many would argue that moving fast doesn’t always mean moving wisely. In fact, the requirements of seeking out a majority or two-thirds of a congregation’s support for major decisions is intentionally designed to ensure no ill-advised actions are made in haste. Perhaps just as importantly, the members—the lifeblood of the church—know what issues are under consideration and provide direct say regarding their outcomes.
  21. A cause of conflict
  22. As more churches contemplate changes to their governance structures, I have watched a corresponding increase in litigation. The lawsuits involve conflicts over the ways a church’s membership is defined, how the governance structure works, and how changes to the definitions of either—or both—were made, especially with little or no communication. The ensuing court battles often are protracted.
  23. In each instance, the question of membership (and, therefore, who has the right to vote on major decisions) has been a foundational decision to be made by the judge or jury asked to decide the outcome of the trial. In my experience, judges are suspicious when they learn that the people who have attended the church regularly and given donations to the church are no longer considered voting members.
  24. Courts are increasingly willing to weigh in on such lawsuits, too. Despite recent decisions from the US Supreme Court affirming the general right for churches to self-govern without government intrusion (the so-called “ecclesiastical abstention doctrine”), there are instances in which courts can make decisions regarding corporate documents when they do not require interpreting church doctrine or polity.
  25. Conflicts erupting from church meetings and elections is one major reason why some churches have shifted to a governance model where decisions generally do not involve the people in the pews. While there are certainly considerations to avoid church meetings going off the rails (Episode 5 of the Church Law podcast gives excellent tips on this specific issue), removing the congregation from decision-making should not be a first resort since it is likely to create a new series of problems.
  26. The decline of Seattle’s Mars Hill Church offers another cautionary tale with respect to governance and alterations made to decision-making structures. The church never used a congregation-led governance structure. However, a quiet change to further consolidate power within its elder-led model further illustrates how such an approach can go wrong.
  27. Founded in 1996 as a home Bible study, Mars Hill grew to more than 12,000 people at 15 locations in weekly attendance. After a series of internal conflicts and troublesome behaviors of its lead pastor, Mark Driscoll, the church experienced a dramatic collapse in 2014.
  28. One of the decisions initiated by Driscoll was to revise the church’s bylaws, taking its elder-led model of governance and further consolidating it into a smaller group of elders and pastoral leaders that included himself. As a result, this quietly increased power to the leadership role, which turned out to be implosive.
  29. The damaging repercussions of Mars Hill’s change were many, as Episode 7 of The Rise and Fall of Mars Hill podcast recounts. Fewer voices could speak into the church’s direction. And major decisions required convincing fewer people for approval. Ultimately, the church fell apart, not because of the governance change alone—but certainly the collapse of the church was enabled by the change.
  30. The issue of how a church defines (or redefines) its governance model, and to what degree it involves the membership, is a matter more important than many church leaders may have thought. If a church makes the decision to alter its governance structure in a manner that limits the voices at the table when critical decisions are made, then there are several key considerations.
  31. Six key considerations
  32. Pastors and boards should understand at least six key matters if they are considering changing from a congregation-led model to a board-led model.
  33. First, leadership should make a detailed assessment of the church’s current governance (its articles of incorporation, bylaws, and any denominational documents). Learn the church’s current legal structure, and what must be followed to implement a change if one is desired. Church leaders must make sure they don’t break any legal or fiduciary duties under the current model (because doing so will invalidate any action they take).
  34. Second, a review of the corporate requirements in the jurisdiction in which the church is based will be essential. While the law gives churches wide latitude to govern in a way that best suits the church, many states require congregational votes in certain instances, no matter the governance structure. Your church’s leadership will not want to run afoul of such regulations.
  35. Third, if a congregation-led model is currently set by the bylaws, consider (or reconsider) the reasons why.
  36. Fourth, church leaders should spend time evaluating the board- and elder-led governance models. What are the desirable characteristics of each model? What might be the downsides? Are there alternative ways of accomplishing what is desired within the current congregation-led model instead?
  37. Fifth, consider how the church should bring about discussion, deliberation, and a decision about a potential change. How will church leadership share the possibility with the congregation? What requirements are set out in the bylaws dictate how a change can be adopted? What potential fallout within the church may result? Will this change be communicated to the congregation? When? And consider what role the congregation will play in effectuating this change (per state regulations and the governance-related requirements discussed above).
  38. Finally, if a decision to shift from a congregation-led model to an elder- or board-led model is reached, leaders must be prepared for numerous legal and administrative tasks. For instance, the church’s articles of incorporation and other corporate documents will need to be reviewed and likely revised to ensure they work in harmony.
  39. Extreme caution is needed
  40. While The Rise and Fall of Mars Hill podcast highlights many cautions for a church that wants to remain healthy, one of the most significant points any church leader should walk away with is this: A change in a church’s governance structure without full transparency and extreme caution can have disastrous outcomes.
  41. Additional Insights and Cautions

    For more information on this important topic, listen to Erika Cole’s interview on the Church Law podcast with Mike Cosper, creator and host of The Rise and Fall of Mars Hill. Advantage Members can sign up for Cole’s Church Law & Tax webinar on April 27, which will cover church governance structures and the cautions churches should consider before making subtle, sudden changes.

  42. Quietly attempting to shrink who has a voice in major decisions regarding church operations is likely to be a cause for concern. A methodical examination of the sincere reasons for such a change, along with a detailed review of the internal governing documents and state law on the role of the congregation in certain decisions, should be conducted.
  43. Whether you need to carefully review your governing documents or if you are considering altering your governing model, here is one thing you should always do: Seek the guidance of seasoned legal counsel with knowledge of church governance matters.
Erika E. Cole, Esq., known as The Church Attorney®, is one of only a handful of attorneys in the nation who practices exclusively in the area of church law. She currently serves as a senior editorial advisor for Christianity Today’s

Navigating Vaccine and Mask Mandates

An attorney explores the best courses of action for churches to take.

Several years before the COVID-19 pandemic struck, I examined the question of what rights the government had to require vaccinations, particularly with regard to children. In a 2015 article for Church Law & Tax, I offered these reasons why parents may choose not to vaccinate:

Some have done so for religious reasons, some because of their personal beliefs, some because they are concerned about possible side effects from the vaccinations themselves, and a few for medical reasons.

Since then, the question of how parents choose to handle vaccinations has rapidly expanded in light of the pandemic. State governments, as well as the federal government, have explored ways to mandate the vaccine developed in response to COVID-19. Similarly, the federal government and state governments have worked to determine how other precautionary measures, such as masks, can be mandated.

These developments have posed unique challenges for churches and church leaders, especially those congregations that run nurseries, daycares, and schools. Do churches and church-run schools fall under government-mandated requirements, whether pertaining to the COVID-19 vaccination or masks? This article examines this question and provides nine considerations regarding how churches should respond.


When I wrote the 2015 article, it was clear that vaccine laws were in the purview of state governments. Each state’s law significantly varied. The state laws in effect at that time, which appear to have changed little since then, were almost exclusively focused on requiring children to have certain vaccinations in order for them to attend public schools. The required vaccinations were—and still are—for common diseases such as measles, mumps, chicken pox, and the like, many of which have had vaccines available for more than 50 years.

All states allowed medical exemptions to vaccinations, and the vast majority also provided for religious exemptions. A few allowed a broader personal exemption. For a religious exemption to be available, some states required that an individual belong to a religious organization that holds these beliefs; some required physician counseling as part of the religious exemption; and at least one state gave the local school authority the right to determine if there was actually a valid religious exemption. In other states, the officials took the exemption claim at face value.

The controlling law still is principally based upon a 1905 case in which the United States Supreme Court held that it is within the police power of each state to enact a compulsory vaccination (specifically addressing smallpox). Further, the Court stressed that it is up to the legislature, rather than the courts, to determine if vaccination is the best method of protecting public health and safety (Jacobson v. Massachusetts, 197 US 11 (1905)).

Even though this case was brought by an adult, the Court made approving references to the various state laws requiring smallpox vaccinations for children to attend public schools.

The Court also noted: “The safety and the health of the people of Massachusetts are, in the first instance, for that commonwealth to guard and protect. They are matters that do not ordinarily concern the national government.” Although there may be a reason to involve the federal government in some instances, this was acknowledged to be the exception.

Smallpox was ultimately eradicated, but other outbreaks of concern, particularly measles, have since arisen and often involved religious communities. In 1991, for example, unvaccinated students attending two church schools became ill from the measles, although the epidemic did not start with either church.

Prayer did not keep the disease at bay, and it spread to the students’ families as well. Among those infected, 486 belonged to the two churches, as did 6 children who died from the virus.

Despite the religious exemption, and to stop the spread, public officials “did something that had never been done before or since: They got a court order to vaccinate children against their parents’ will. Children were briefly made wards of the state, vaccinated, and returned to their parents,” according to the New York Times.

This was obviously an extreme and unusual situation. In fact, even in the 1905 Jacobson case where the state made the smallpox vaccine compulsory, the penalty for noncompliance was not the imposition of an unwanted vaccine, but rather, a $5 fine for adults (equivalent to $158.41 today). Children could be exempted with a note from their physician.

COVID-19 pandemic: an overview

As noted above, prior to the global pandemic’s arrival in 2020, most vaccine concerns and laws focused on requiring children to be vaccinated before they could attend public schools. Some state vaccination laws expanded to include vaccination requirements for students of private schools and colleges and universities, along with some healthcare workers.

This focus changed when COVID-19 began spreading worldwide throughout 2020. The old, the infirm, and those with underlying health conditions found themselves most at risk of becoming sick and dying.

Initial uncertainties about the severity of the virus for the general population, coupled with COVID-19’s rapid spread worldwide, led to significant concerns throughout the country.

Government entities developed mandates aimed at limiting the spread of the virus. This initially included limiting the ability of people to engage in activities outside their homes, designating some businesses as essential and closing others, limiting the number of unrelated people who could associate, requiring that everyone stay at least 6 feet apart, and requiring masks (both inside and outside).

The thought was that if everyone stayed at home for 14 days, it would prevent much of the spread and allow medical institutions to not be overwhelmed. Churches, among other entities, were required to comply with these mandates.

Concerns over unequal treatment for churches

The treatment of churches since that time have varied from state to state.

Many states recognized that religious organizations were essential and allowed them to begin to open on the same basis as other organizations.

However, with some states, the determination of what was essential appeared inconsistent. Big-box stores continued to operate but the small stores were shuttered; mass protests, liquor stores, movie studios and casinos were allowed, but not churches. For example, California banned all indoor religious services (including home Bible studies), despite allowing similar activities for other operations.

There was no change until after five appeals to the United States Supreme Court. The Court stated in Tandon v. Newsom (April 9, 2021):

This is the fifth time the Court has summarily rejected the Ninth Circuit’s analysis of California’s COVID restrictions on religious exercise. . . . It is unsurprising that such litigants are entitled to relief. California’s Blueprint System contains myriad exceptions and accommodations for comparable activities, thus requiring the application of strict scrutiny. And historically, strict scrutiny requires the State to further “interests of the highest order” by means “narrowly tailored in pursuit of those interests.” . . . That standard . . . really means what it says.

The bottom line is that, although states have a right to issue appropriate mandates to protect the health and safety of its citizens, churches must be treated equally to other institutions and cannot be subjected to more stringent restrictions.

State mandates vary greatly and continue to shift

To date, no state has taken the step of forcing their residents to get vaccinated. However, to strongly encourage people to get vaccinated, many states have taken positions that make it hard to remain unvaccinated. This has included requiring proof of vaccinations or a “vaccination passport” for activities such as eating in public, attending concerts and plays, or even continuing to be employed in various industries (including working for the government, health care institutions, and schools).

On the other hand, a significant number of states have taken steps to eliminate all mandatory vaccination policies. This includes prohibiting state agencies from requiring employees to be vaccinated, or requiring proof of vaccination to receive services, or issuing vaccine passports. Some have prohibited private businesses from discriminating on the basis of vaccination status or from enforcing vaccine mandates.

There has been pushback from both sides of the issue. Consider the following examples:

  • The Norwegian Cruise Line sued Florida over the state’s prohibition of vaccine mandates by private businesses.
  • Indiana University was able to require nonvaccinated individuals to submit to weekly testing to attend in-person classes (Klaassen v. Indiana University).
  • The new Virginia governor recently signed an order making masks optional (although he still encourages vaccination). Several school districts in the state, however, have stated that they still consider masks to be mandatory.
  • In Illinois, a number of public school districts have chosen to make masking optional, despite a state mask mandate.

The positions taken by states are not static, but they continue to change on a regular basis in response to the evolution of the pandemic and the pushback (including lawsuits) on any governmental actions either requiring or prohibiting mandates.

Federal vaccine mandates and the power to enforce

This brings us to the position that has been taken by the federal government and the recent decisions by the United States Supreme Court.

Before he took office, President Biden stated that he did not intend to mandate that all citizens receive a COVID-19 vaccine. Then, in April of 2021, his administration also ruled out having any type of a passport to verify vaccination status based on privacy and discrimination concerns.

However, as the months progressed, a significant number of citizens continued to refuse the vaccine. The federal government responded with vaccination mandates targeting a significant number of employees in the workforce:

  • By executive order, President Biden required that all federal government employees be vaccinated by November 22, 2021, unless granted a medical or religious exemption. A preliminary injunction was issued on January 21, 2022, enjoining the implementation or enforcement of the order until the case is resolved on its merits (Feds for Medical Freedom, et al v. Joseph R Biden, Jr. et al, District Court Southern District of Texas, No. 3:21-cv-356. January 21, 2022).
  • A separate executive order from the President required that all federal contractors be vaccinated by January 18, 2022. A preliminary injunction was issued in December suspending the order.
  • The Secretary of Defense issued an order requiring military personnel to be vaccinated. This order is still active.
  • The Occupational Safety and Health Administration (OSHA) issued an emergency order requiring employees of all businesses with 100 or more employees (affecting about 84 million Americans) to either obtain a COVID-19 vaccination or to undergo weekly medical testing at their own expense.
  • The Secretary of Health and Human Services (HHS) announced that any facility participating in Medicare and Medicaid funding must ensure that its staff was vaccinated against COVID-19 unless the person was exempted for medical or religious reasons.

The OSHA and HHS mandates were challenged on legal grounds and recently considered by the United States Supreme Court. The resulting decisions provide further insights into the legitimacy and effect of government actions during the pandemic.

OSHA’s action

In a per curiam opinion issued by a majority of the Court, it acknowledged the huge effects that OSHA’s emergency order would have on the states, employers, and millions of Americans. However, the decision was based entirely on whether OSHA, as an administrative agency created by Congress, had been given the authority by Congress to make such a decision:

The question, then, is whether the Act [creating OSHA] plainly authorizes the Secretary’s mandate. It does not. The Act empowers the Secretary to set workplace safety standards, not broad public health measures. . . . Permitting OSHA to regulate the hazards of daily life—simply because most Americans have jobs and face those same risks while on the clock—would significantly expand OSHA’s regulatory authority without clear congressional authorization.

The Court also noted there was a majority vote of the US Senate disapproving this particular regulation on December 8, 2021.

The Court went to great lengths to avoid finding that the police power being exercised was arbitrary or oppressive, but it made its decision solely on the basis that Congress did not authorize OSHA to issue its broad mandate (Nat’l Fed’n of Indep. Bus. v. Dep’t of Labor, Occupational Safety and Health Admin., 595 U.S. _____ (2022)).

HHS’s action

The Court’s majority took a similar approach with the HHS action. In Biden v. Missouri, the Court concluded HHS (unlike OSHA) had been delegated, and long exercised the authority to issue requirements to maintain and enforce an infection and prevention and control program designed to prevent the transmission of communicable diseases in healthcare facilities. Therefore, injunctive relief was not granted, and the matter was returned to the lower courts for further action.

Do local and state mandates follow proper procedure?

One consideration that Nat’l Fed’n of Indep. Bus. v. Dep’t of Labor, Occupational Safety and Health Admin. and Biden v. Missouri brings up for actions taken at the local and state levels is whether mandates are properly issued.

In some states and localities, mandates have not been issued by the legislature or council, but by the governor or mayor. Often this was pursuant to an emergency powers authorization. If there was no emergency powers authorization, the same objection could be made as was made to the OSHA regulations.

But even if there was such an emergency authorization, questions arise regarding how long an emergency lasts and whether a legislature intends for this power to last beyond a year or two, much less indefinitely.

Private mandates and voluntary compliance

In May 2021, the US Equal Employment Opportunity Commission (EEOC) stated that employers have the option to require their employees to be vaccinated unless an employee is covered by a medical or religious exemption.

Several private employers have instituted such a policy, even though it is not required by the government.

Relatedly, many colleges and universities have gone even further by requiring that their students receive the vaccine before attending in-person classes. Some have gone so far as to prevent their students from visiting off-campus facilities.

Various entertainment venues have also required proof of vaccination or a recent negative test of all performers and attendees.

In many instances, employers and venues also require masks to be worn, except when eating or drinking.

As noted above, some states have mandated these policies and others have prohibited them (with varying degrees of success). Local municipalities have also varied in what is mandated.

After the Supreme Court’s decision regarding OSHA’s emergency order, some large businesses, including Starbucks and General Electric, withdrew vaccine mandates for employees despite President Biden’s request that they voluntarily comply with what OSHA’s emergency order proposed.

Boeing dropped its mandate in December 2021. Several others, including Nike and Columbia Sportswear, announced they will immediately fire employees who refuse to vaccinate.

Other businesses and nonprofits now have to decide whether they will mandate masks or vaccines even if there are no longer any government mandates allowed by law.

How churches should respond

Opinions differ regarding which types of precautions and preventive measures should be followed, much less required.

And, as can be seen above, there is a morass of state, local, and federal rules, regulations, mandates, and numerous court opinions to sort through.

With that said, here are nine considerations for church leaders to contemplate throughout the remainder of the pandemic and beyond.

Stay informed about local and state mandates

Church leaders should first determine what, if any, mandates exist in their state, as well as their local municipality. This should be an ongoing process for the foreseeable future unless and until the pandemic ends.

Church leaders must stay informed of local and state positions in order to comply with the law. Church leaders who disagree with a mandate (whether requiring or prohibiting masks or vaccines) might consider taking action, such as has been done by California churches that appealed to the United States Supreme Court. Additionally, church leaders should contact local and state legislative representatives to express their positions.

Although the church itself should not do so, interested individuals might also consider encouraging the selection of local representatives who support their positions.

Weigh the costs of noncompliance

Churches have been declared by the United States Supreme Court to be essential. As a result, churches are no longer prohibited from opening their doors. Many people believe that the ability to attend services in person is not only preferable to online attendance but essential to being able to fully implement their faith.

Of course, as noted above, some states and localities may still mandate masks and other measures. Your church will need to decide whether having in-person services is something it believes to be beneficial to your congregants, and if so, whether or not to comply with any applicable mandates or implement its own requirements.

Church leaders must evaluate what consequences, if any, may be faced for noncompliance. Church leaders also should communicate it is important for individual attendees to take precautions they deem necessary for themselves, especially in situations involving underlying health conditions.

Continue or upgrade online services

Many churches launched online church services when the pandemic started. Some members prefer this, especially those who are elderly or have medical issues that would put them at high risk.

Many churches will continue to broadcast services online even if they have opened their doors for in-person services. Some churches, though, may require some technical assistance if the church has not already set up such a system.

Decide what policies are necessary, reasonable, and practical to deploy

Private entities have generally been allowed to make their own rules concerning their facilities—rules that can go beyond what is otherwise required by local or state mandates. If your church is not in an area that still requires masks, but the church wants to continue this requirement, this is allowed in most locations.

In California, at least one large church set aside different services and locations with varying requirements so that their congregants could select their preferred choice: mask, no mask; singing, no singing; vaccine required, no vaccine required.

Of course, continuing to offer online services provides the most protection for the most vulnerable. But if your church is not large enough to provide this type of option, then you may need to determine which option(s) you believe are best for your church and will allow you to meet the needs of the majority of your congregation.

If you decide to meet in person, will you have different policies depending on whether the service or activity is indoors or outdoors?

Furthermore, if your church decides it will open only to those who have been fully vaccinated, how will it monitor this? Are you going to rely upon the honesty of each person as to whether he or she received the vaccinations your church deems necessary? Will someone stand at the door to check in each person as he or she arrives? And, will your church also need to contemplate similar requirements for other vaccinations?

Similarly, if your church requires masks in a locale where a mask mandate does not exist, how will it enforce such a policy with congregants and guests? What tools and training will church leaders receive regarding how they approach someone who isn’t willing to abide by the church’s policy?

One church I am aware of actually had someone taking the temperature of each person who wished to attend and had them sign a release. However, that got old really fast, and the church no longer does this.

Leaders must balance between what is necessary, what is reasonable among their congregants, and what is practical to deploy.

Understand the issues of mandating employees get vaccinated

Can your church legally require pastors and employees to be vaccinated? Again, your church needs to review its state’s law. As with any other employer, your church is likely able to require vaccinations, with the same possible medical and religious exemptions, in most—but not all—states. It might sound odd that an employee of a church could claim a religious exemption if the church was otherwise requiring vaccination, but it still should be considered.

One consideration that all employers, including churches, should not overlook: If an employee receives the vaccination based solely on the employer’s mandate, and gets injured from it, that individual may have a plausible lawsuit to bring against the employer. Although I am not aware of such a claim being made to date, I would anticipate it as a possibility.

With the OSHA emergency order, an employer could have responded to a lawsuit by arguing that it was simply following the law. However, with this rule overturned—unless there is a similar state law still in effect—it is incumbent upon the employer to make a determination on whether to require vaccination. Again, this is likely to depend on your state law.

Evaluate the pros and cons of requiring masks for children

The question of whether masks are appropriate for children is also an important question, especially for churches that run nurseries, daycares, and schools, as well as your church’s Sunday school program. From a legal standpoint, unless your state or locality requires or prohibits mask-wearing, the individual church will need to decide whether to require them for children. If not legally required, the church might allow the parents to decide whether or not their child should be masked.

Know the mandates for children being vaccinated

Similarly, churches must grapple with whether vaccine requirements should extend to children. Unless prohibited by your church’s state, the church or church-run school may decide if students should be vaccinated. Since attending the school is voluntary, a requirement that any students choosing to attend the school be vaccinated remains permissible in most locations.

Whatever position the church or church-run school decides to take, it should communicate it to parents, especially before enrollment.

Be prepared to handle requests for religious exemption

What should your church do when it receives a religious exemption from a congregant? What should your church do if a congregant asks you to provide a letter supporting his or her claim of a religious exemption?

Any claim for religious exemption should be taken seriously. However, if someone has a sincere religious objection to vaccination, it is not sufficient for them to copy a letter prepared by someone else. This is a real challenge, since many people do not have confidence enough in their ability to write such a letter and would rather rely on a form letter. Some reports suggest employers reviewing religious exemption letters do not find the requests sincere when a form letter is used.

It can be hard to put into words why someone believes they are entitled to a religious exemption. It should be based on personal beliefs and backgrounds, not just a regurgitation of statements objecting to the vaccine and prepared by someone else.

If the church has firm religious beliefs against taking the vaccine, it should take time developing a form letter explaining these beliefs in a way that a nonbeliever can understand.

This letter then could be given to any congregant requesting such a letter from the church to use in addition to the congregant’s personal letter, and would normally not be personalized unless the church was aware of some special situation involving the particular individual.

Essentially the church would normally not be “vouching” for the sincerely religious beliefs of the congregant, but it would set forth the position of the church itself. Of course, if the church does not have such religious beliefs, then it should simply inform the congregant that it will not provide such a letter.

Know when to seek legal counsel when compliance is not possible

Lastly, for churches in states where mandates continue to be enforced, some have taken a very hostile position in their enforcement and application of their mandates. As a result, religious organizations may find themselves in the cross hairs of the state. Leaders should always consider if there are ways to meet mandates without violating sincere religious beliefs, which may mean going out of the way to comply. When compliance is not possible, either for practical or theological reasons—or both—leaders should consult with qualified local legal counsel to determine how to proceed.

Lisa A. Runquist has more than 40 years of experience as a transactional lawyer, both with nonprofit organizations and business organizations.

Advantage Member Exclusive

Getting 2021 Year-End Tasks Right

On-Demand Webinar: CPA and attorney Richard Hammar lists eleven critical tasks to focus on as 2021 draws to a close.

Loading the player...

Editor’s Note. This video is part of the Advantage Membership. Learn more on how to become an Advantage Member or upgrade your membership.

In this exclusive webinar for Church Law & Tax Advantage Members, renowned attorney, CPA, and senior editor Richard R. Hammar will provide key updates and reminders for a variety of year-end tasks, including:

  • the correct handling of business expenses;
  • the setting of minister housing allowances;
  • the documenting and processing of charitable contributions; and,
  • the records and paperwork needed for upcoming tax-filing season.

Watch now and learn how to finish well in 2021 and start strong in 2022.

Download the presentation slides to follow along and take notes as you watch.

More on this topic:

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Can Churches Bar Service Animals?

Before your church considers barring service animals, it is good to understand the legal and ministerial dimensions.

Responding to a churchgoer who wants to bring a service or support animal to church may not be a new challenge.

A fresco in the ancient Roman city of Herculaneum is one of the world’s earliest references to service animals. The fresco shows a guide dog helping a blind man cross a busy street. Since this fresco dates back to the late first century A.D. in a city not far from Rome and its fledgling Christian church, it is not unreasonable to assume that the church encountered the occasional presence of a service animal.

Lead Your Church With Confidence—Become a Church Law & Tax Member Today.

The New Testament does not mention service animals. But there are several points that may be helpful to modern church leaders when considering whether to bar service animals.

Background: You cannot discriminate in places of public accommodation

Title III of the federal Americans with Disabilities Act (ADA) prohibits discrimination based on disability by places of public accommodation.

ADA Title III Technical Assistance Manual categorizes the 12 different types of public accommodations organizations.

Churches—and religious schools controlled by religious organizations—are not among them.

Actually, the ADA explicitly affirms this exemption by specifying that the public accommodations provisions “shall not apply to … religious organizations or entities controlled by religious organizations, including places of worship.”

As a result, most religious organizations are excluded from the prohibition of discrimination in places of public accommodation. The House Report detailing congressional committee discussions prior to the law’s passage notes that “places of worship and schools controlled by religious organizations are among those organizations and entities which fall within this exemption.”

The House Report also says “activities conducted by a religious organization or an entity controlled by a religious organization on its own property, which are open to nonmembers of that organization or entity are included in this exemption.”

More from the ADA Title III Technical Assistance Manual:

III-1.5000 Religious entities. Religious entities are exempt from the requirements of Title III of the ADA. A religious entity, however, would be subject to the employment obligations of Title I if it has enough employees to meet the requirements for coverage.

III-1.5100 Definition. A religious entity is a religious organization or an entity controlled by a religious organization, including a place of worship.

If an organization has a lay board, is it automatically ineligible for the religious exemption? No. The exemption is intended to have broad application. For example, a parochial school that teaches religious doctrine and is sponsored by a religious order could be exempt, even if it has a lay board.

III-1.5200 Scope of exemption. The exemption covers all of the activities of a religious entity, whether religious or secular.

ILLUSTRATION: A religious congregation operates a daycare center and a private elementary school for [the congregation’s] members and nonmembers alike. Even though the congregation is operating facilities that would otherwise be places of public accommodation, its operations are exempt from Title III requirements.

What if the congregation rents to a private day care center or elementary school? Is the tenant organization also exempt?

No. The private entity that rents the congregation’s facilities to operate a place of public accommodation is not exempt, unless it is also a religious entity. If it is not a religious entity, then its activities would be covered by Title III. The congregation, however, would remain exempt, even if its tenant is covered. That is, the obligations of a landlord for a place of public accommodation do not apply if the landlord is a religious entity.

If a nonreligious entity operates a community theater or other place of public accommodation in donated space on the congregation’s premises, is the nonreligious entity covered by Title III?

No. A nonreligious entity running a place of public accommodation in space donated by a religious entity is exempt from Title III’s requirements. The nonreligious tenant entity is subject to Title III only if a lease exists under which rent or other consideration is paid.

Note that while schools and daycare centers are both on the list of 12 categories subject to the ADA, they are exempt if “controlled by a religious organization.”

Example. A church operates a school and preschool as ministries of the church. Both the school and preschool are subject to the church’s control. The church’s governing board serves as the board for the school and preschool, and it exercises plenary control over all their activities, including personnel, finances, and curriculum. The school and preschool operate under the church’s corporate and tax-exempt status.

The school and preschool are “controlled by a religious organization,” and therefore are exempt from the ban on discrimination by places of public accommodation. Among other things, this means that the school and preschool are not required to allow service dogs.

Example. For many years, a church has operated a private school. Recently, church leaders decided to separately incorporate the school to insulate the church from the school’s liabilities. The school selects its own board and operates independently of church control. The school no longer is “controlled by a religious organization” and therefore is subject to the ADA’s public accommodations provisions.

Note. While religious organizations are not subject to the ADA’s public accommodation provisions, they may be subject to similar provisions under state or local law.

Applying the ADA requirements to service animals

The ADA requires covered entities that provide goods or services to the public to make “reasonable modifications” in their policies, practices, or procedures when necessary to accommodate people with disabilities. This requirement applies to service animals. As noted above, religious organizations are exempt from Title III of the ADA, and so they are not subject to any requirement under Title III of the ADA pertaining to service animals.

Key Point. Whether or not a church is required to allow service animals in church services or at church-sponsored activities, leaders should still have a basic understanding so they can make both informed and compassionate decisions.

What is a service animal?

The ADA defines a service animal as a dog trained to do work or tasks for a disabled person. The disabled person can train the dog. The task(s) performed by the dog must be directly related to the person’s disability.

The dog must be able to assist the person with a disability.

For example, a person with diabetes may have a dog trained to alert him when his blood sugar reaches high or low levels.

A depressed person may have a dog trained to remind them to take their medication.

Or, someone prone to seizures may have a dog trained to detect an oncoming seizure.

What about animals providing “emotional support?”

A fairly common misunderstanding is that a comfort pet is a service animal.

However, service animals are working animals, not pets.

Animals whose sole function is to provide comfort or emotional support do not qualify as service animals under the ADA.

The ADA does not view emotional support, therapy, comfort, or companion animals as service animals. However, some state and local governments do allow such animals in public places. Review local and state laws to find out.

How to determine if a dog is a service animal

In situations where it is not obvious that the dog is a service animal, church staff may ask only two specific questions:

  1. Is the dog serving someone with a disability?
  2. is the dog doing work or performing a task?

Caution. Churches are not allowed to request any documentation for the dog, require that the dog demonstrate its task, or inquire about the nature of the person’s disability.

The ADA does not require service animals to wear a vest, ID tag, or specific harness.

When can a church exclude service animals?

Someone asked the DOJ: “Are churches, temples, synagogues, mosques, and other places of worship required to allow individuals to bring their service animals into the facility?” Its response: “No. Religious institutions and organizations are specifically exempt from the ADA. However, there may be state laws that apply to religious organizations.”

Applying the Americans with Disabilities Act to a congregational setting

Animal’s Owner: Unpaid volunteer workers (i.e., some teachers, musicians, ushers), and/or church members.

Application: ADA Title I does not apply since there is no employment relationship.

ADA Title III states that the public accommodations provisions “shall not apply to . . . religious organizations or entities controlled by religious organizations, including places of worship.”

Be sure to check state and local disability laws.

Remember this: If admitting service animals would fundamentally alter the nature of a service or program, service animals may be prohibited under the federal ADA.

Further, if a service animal is out of control and the handler does not take effective action to control it, or if it is not housebroken, the church may request that the animal be removed from the premises.

The ADA requires that service animals be always under the control of the handler. In most instances, the handler will be the individual with a disability or a third party who accompanies the individual with a disability.

The service animal must be harnessed, leashed, or tethered while in public places unless these devices interfere with the service animal’s work or the person’s disability prevents use of these devices. In that case, the person must use voice, signal, or other effective means to maintain control of the animal.

For example, a person who uses a wheelchair may use a long, retractable leash to allow her service animal to pick up or retrieve items. She may not allow the dog to wander away from her and must maintain control of the dog, even if it is retrieving an item at a distance from her.

Under control also means that a service animal should not be allowed to bark repeatedly in a lecture hall, theater, library, or any other quiet place. However, if a dog barks just once, or barks because someone has provoked it, this would not mean that the dog is out of control.

To help guide your church’s decision-making regarding a service animal’s presence, consider the following examples.

Example. A church’s volunteer worship leader recently began bringing his pet dog to church as a support or comfort animal. Several members who find the presence of the dog a distraction complain to the pastor. Can the pastor ask the volunteer to discontinue bringing his dog?

Yes, for two reasons.

First, Title III of the ADA specifies that the public accommodations provisions “shall not apply to . . . religious organizations or entities controlled by religious organizations, including places of worship.”

Second, the volunteer’s dog is not a “service animal” protected by the ADA unless it has been trained to do work or perform tasks for an individual with a disability. The tasks performed by the dog must be directly related to the person’s disability.

Example. A church member begins bringing her large dog to church services. The dog sits up on the pew next to the owner. Several members find the presence of the dog a distraction and complain to the pastor. Can the pastor ask the member to discontinue bringing her dog?

Yes. See the analysis in the previous example.

Example. A church member begins bringing his miniature horse to church with him in order to provide comfort. The horse sits up on the pew next to the owner. Can the church ask the member to discontinue bringing his horse?

Yes. See the analysis in the previous example.

Also, see the “Miniature Horses” section in the ADA revised requirements for service animals.

Example. A church places a “no pets” sign at all of its entrances. Since religious organizations are not subject to the ADA’s public accommodation provisions, the sign is permissible. Note, however, that the church may be subject to similar provisions under state or local law.

Example. A church with 10 employees has an employee who suffers from anxiety. This employee has asked for permission to bring a service animal to work with her. This question implicates the ban on employment discrimination based on disability under Title I of the ADA. Employment discrimination under the ADA is addressed below.

Caution. It is important to remember that while religious organizations are not subject to the ADA’s public accommodation provisions, they may be subject to similar provisions under state or local law. More details below.

Churches may need to comply with state and local laws

While religious organizations are not subject to the ADA’s provisions regarding public accommodations, including service animals, they must still carefully evaluate whether they are subject to similar provisions mandated under state or local laws—and, if such laws exist, whether they provide any religious exemptions under them.

It is highly recommended church leaders consult with a local ADA attorney who understands local and state public state public accommodations laws, and religious organizations.

Can church employees bring service animals to work?

The ADA specifically permits religious organizations (including religious educational institutions) to “give preference in employment to individuals of a particular religion to perform work connected with the carrying on by organization of its activities.”

The ADA further provides that “a religious organization may require that all applicants and employees conform to the religious tenets of such organization.” 29 CFR 1630.16(a).

Note that Title I’s religious exemption is narrower than Title III’s blanket exemption of “religious organizations or entities controlled by religious organizations, including places of worship.”

Title I of the ADA prohibits private employers (among other entities) from discriminating against qualified individuals with disabilities in job application procedures, hiring, firing, advancement, compensation, job training, and other terms, conditions, and privileges of employment. The ADA covers employers with 15 or more employees.

An individual with a disability is a person who:

  • Has a physical or mental impairment that substantially limits one or more major life activities;
  • Has a record of such an impairment; or
  • Is regarded as having such an impairment.

A qualified employee or applicant with a disability is an individual who, with or without reasonable accommodation, can perform the essential functions of the job in question. Reasonable accommodation may include, but is not limited to:

  • Making existing facilities used by employees readily accessible to and usable by persons with disabilities
  • Job restructuring, modifying work schedules, reassigning to a vacant position
  • Acquiring or modifying equipment or devices, adjusting or modifying examinations, training materials, or policies, and providing qualified readers or interpreters

If a reasonable accommodation of a known disability of a qualified applicant or employee does not impose an “undo hardship” on the employer’s business operation, the employer must do it.

Reasonable accommodations are adjustments or modifications provided by an employer to enable people with disabilities to enjoy equal employment opportunities.

Accommodations vary depending upon the needs of the individual applicant or employee. Not all people with disabilities (or even all people with the same disability) will require the same accommodation.

Service animals may be considered “reasonable accommodation”

The DOJ has stated that service animals may be a reasonable accommodation of some employee disabilities. (See this FAQ.)

Employers that agree to allow service animals can put limits in place to protect other employees and company property.

Applying Americans with Disabilities Act to paid church employees

Animal’s Owner: Paid employees

Application: The ADA’s employment discrimination provisions (Title I) only apply to employers that have 15 or more employees.

Covered employers must provide reasonable accommodations. Sometimes, these may include service animals that help an employee or job applicant do the essential functions of the job.

However, note: (1) The ADA permits religious organizations (including religious educational institutions) to “give preference in employment to individuals of a particular religion to perform work connected with the carrying on by organization of its activities,” and (2) the ADA provides that “a religious organization may require that all applicants and employees conform to the religious tenets of such organization.”

Be sure to check state and local disability laws.

Employers do not have to sacrifice quality or production standards to make an accommodation.

Employers do not have to provide personal use items, such as glasses or hearing aids.

An employer does not have to provide a reasonable accommodation unless an individual with a disability has asked for one. Sometimes, a medical condition may cause a performance or conduct problem. If that is the case, the employer may ask whether the the employee needs a reasonable accommodation.

Unlike Title III, there is no requirement in Title I (see below) that an employer grant the request of an employee for a service animal. Instead, such a request triggers an “interactive process.” This process involves discussing the employee’s needs and possible accommodations that will not impose an undue hardship on the employer.

Note. Where more than one accommodation would work, the employer may choose the one that is less costly or that is easier to provide.

Note. Employers must recognize that they now have an affirmative duty to make reasonable accommodations to the known physical or mental limitations of an otherwise qualified individual with a disability who is a job applicant or employee, unless they can demonstrate that the accommodation would impose an undue hardship on the operation of their business.

Determining if Title I of the ADA applies

When does—and doesn’t—Title I of the ADA apply to a church and its employees? Consider these examples.

Example. A church with 10 employees has an employee with a disability. This employee has asked for permission to bring a service animal to work.

This question implicates the ban on employment discrimination based on disability under Title I of the ADA. However, Title I only applies to employers having 15 or more employees, and so it does not apply to the church in this example.

Most states, however, have enacted legislation banning discrimination in employment based on disability, and many of these laws apply to employers with fewer than 15 employees.

Example. A church with 20 employees has an employee with a disability. This employee has asked for permission to bring a service animal to work with her to manage her symptoms. This question implicates the ban on employment discrimination based on disability under Title I of the ADA.

Title I applies to employers having 15 or more employees, and so it applies to the church in this example. The employee’s request for accommodation triggers an “interactive process” in which the employee and church informally discuss what accommodations the church could adopt (including allowing the employee to bring a service animal to work) that would render her capable of performing the essential functions of her job without undue hardship to her employer.

Example. A church with 20 employees terminates its pastor, who became disabled in recent years.

The pastor sues, claiming that his termination constituted discrimination based on disability since the church refused to provide reasonable accommodations to enable him to perform the essential functions of his job. One of the specific accommodations the pastor requested was a Seeing Eye dog. The court declined to offer this accommodation based on the “ministerial exception.”

In Hosanna-Tabor Evangelical Lutheran Church and School v. E.E.O.C., 132 S.Ct. 694 (2012), the United States Supreme Court unanimously recognized the so-called “ministerial exception” barring civil court review of employment disputes between churches and ministers. The case involved a claim by a “called” teacher at a church-related school in Michigan that the school committed unlawful disability discrimination in terminating her employment. This case effectively bars claims of disability discrimination by ministers against their employing church.

Seek legal assistance

Church leaders should seek legal counsel when responding to requests by employees, job applicants, church members, and visitors.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

What if Your Church Receives a Large Donation of Virtual Currency?

So your church just received a large donation of virtual currency. What next? What are the tax implications?

Whatever you may think about virtual currencies, one reality is that a significant number of people have invested in them. A sizable portion of those investors have seen their investments increase in value dramatically (despite extreme volatility). And a growing number of investors holding virtual currencies that have appreciated in value are considering donating some of their holdings to their church or favorite charitable organization.

Charitable organizations, including churches, must be prepared in the event an investor wishes to donate a sizable amount of virtual currency.

Logistical aspects of accepting a donation of virtual currency

In order to accept any donation of virtual currency, a church must take certain steps. The church can establish its own “wallet” (the term used in the virtual currency arena for an account)—either directly or with an exchange like Coinbase (not an endorsement). Establishing and maintaining its own virtual currency wallet is the most challenging approach for most churches.

Alternatively, the church can work with a donor-advised fund sponsoring organization to accept such gifts and convert them to cash for the benefit of the church. Or the church can utilize third-party donation processors like The Giving Block or Engiven (not endorsements) that allow the church to add a virtual currency giving button to its website. The processor receives the virtual currency donation on behalf of the church, converts it to cash, and transfers the funds to the church’s bank account—all for a fee, of course.

Each approach has its own challenges and risks. Regardless of the approach a church may take to accepting virtual currency donations, the church should keep data security and internal controls top of mind.

Virtual currencies are considered noncash property

The Internal Revenue Service (IRS) considers virtual currencies to be noncash property. So, if a taxpayer buys units of a virtual currency and later sells them at a gain, the taxpayer will be subject to tax on the gain pursuant to the rules for taxing capital gains.

The advantage of donating appreciated virtual currency over selling and donating the sales proceeds

If a taxpayer donates the appreciated virtual currency directly to a qualified charity, he or she will not be taxed on the appreciation in value. And the even better news: neither will the charity! That is because capital gains of 501(c)(3) public charities (which include churches) are not typically subject to federal income tax. The amount deductible by the donor will vary depending on the facts, but if the donor holds the virtual currency for more than a year prior to donating it, he or she may be entitled to a deduction of the full fair market value of the virtual currency contributed, with no tax on the gain!

When a virtual currency donation is valued by the donor at more than $5,000

Churches and other nonprofits need to understand the rules for substantiating a charitable contribution deduction of virtual currency valued by the donor at more than $5,000. Keep the following points in mind.

The IRS is a stickler

Federal income tax law requirements for substantiating charitable contribution deductions are strict, especially for noncash contributions. A donor who plans to take a charitable contribution deduction on his or her tax return should carefully follow the substantiation requirements.

The IRS frequently limits charitable deductions or denies them altogether where it finds that the donor (and his or her tax preparer) have not closely followed the law. Courts generally back the IRS in strictly applying the charitable contribution substantiation rules to donors

The $5,000 threshold

This article focuses on contributions of virtual currency. The rules described here generally apply to contributions of noncash items (other than publicly traded securities) valued by the donor at more than $5,000, and for which a charitable contribution deduction will be claimed.

The $5,000 threshold can be met if a single noncash item valued by the donor at more than $5,000 is donated, or if a group of similar items (for example, books) with a combined value of more than $5,000 is donated during the year. The similar items do not all have to be donated at the same time, or even to the same organization, for the $5,000 threshold to be triggered.

Special rules apply to contributions of automobiles, boats, and airplanes—a subject outside the scope of this article.

Substantiation requirements

In order to properly substantiate the deduction on the donor’s tax return of a noncash contribution in excess of the $5,000 threshold, the donor must:

  1. Obtain a qualified appraisal,
  2. Obtain a contemporaneous written acknowledgment from the charitable organization,
  3. Prepare and submit Form 8283 with his or her tax return, and
  4. Maintain specific records.

Each of these requirements is described further below.

1. Obtain a qualified appraisal

For purposes of determining the fair market value of virtual currency donated to a charitable organization and valued by the donor at more than $5,000, the IRS requires donors to obtain a written qualified appraisal.

The donor is responsible for obtaining a qualified written appraisal prepared by a qualified appraiser. A qualified appraiser for this purpose is an individual who has earned an appraisal designation from a recognized professional appraiser organization for demonstrated competency in valuing the type of property being appraised, or that has met certain minimum education and experience requirements.

Further, the appraiser generally cannot be the donor, the charity receiving the donation, or an employee or agent of the donor or charity.

A qualified appraisal must be prepared in accordance with generally accepted appraisal standards and must include certain information, including: a description of the type and condition of the property; the valuation effective date; the fair market value of the contributed property on the valuation date; the method and basis of valuation; the terms of any agreement between the donor and the charity regarding the future use or sale of the donated property; identifying information regarding the qualified appraiser and the appraiser’s qualifications; and a statement that the appraisal was prepared for income tax purposes.

The qualified appraisal must be made, signed, and dated no earlier than 60 days prior to the date the appraised property was donated, and no later than the due date of the taxpayer’s return (including extensions) for the year of the donation. Further, the appraisal fee generally cannot be based on a percentage of the appraised value of the property.

Charitable Solutions, LLC (not an endorsement) is one firm that provides appraisals for virtual currency.

2. Obtain a contemporaneous written acknowledgment

It is important to note that a donor must obtain a written acknowledgment from the charity for all cash and property contributions of $250 or more, including those for which an appraisal must also be obtained.

The acknowledgment must be obtained by the earlier of the date on which the donor files his or her income tax return for the year in which the contribution was made or the due date (including extensions) of the return.

The acknowledgment should include the legal name of the charity, the name of the donor, the date and amount of the contribution, a description (but not the value) of any noncash contributions, and a statement (if true) that no goods or services were received by the donor in exchange for the donation.

If the donor received anything from the charity in return for the donation (other than certain de minimis items), the acknowledgment must include a “good faith estimate” of the value of the goods and services the donor received and a disclosure indicating that the donor may only deduct as a charitable contribution the excess of the amount donated over the fair market value of the items or services received in exchange for the donation.

3. Prepare and submit Form 8283 with the donor’s tax return

In addition to the above requirements, a donor of noncash property valued at over $5,000 must complete Section B of Form 8283 and submit it with the donor’s income tax return for the year in which the contribution was made. Section B of the Form 8283 must be signed by both the qualified appraiser and the charitable organization that received the donation. Both the appraiser and the charitable organization must also provide their address and tax identification number.

Additionally, the following information must be reported in Section B of the Form 8283: a description of the donated property; a brief summary of the overall physical condition of the property (if the donated property is tangible personal property); the appraised fair market value of the property; the date and manner of acquisition by the donor of the property; the cost or adjusted basis of the donated property; the amount claimed by the donor as a charitable contribution deduction; and the date of the contribution.

Generally, the qualified appraisal itself is not required to be submitted with the donor’s tax return unless the value of the property contributed exceeds $500,000.

Note. Completing Form 8283—even one signed by the recipient charity—does not eliminate the donor’s requirement to obtain a contemporaneous written acknowledgement as described above.

4. Maintain records

The donor is required to maintain certain records in connection with the charitable contribution deduction taken on the return. Generally, these records must include the contemporaneous written acknowledgment obtained from the charity, as well as the information included in Section B of Form 8283 outlined above. A copy of the qualified appraisal should also be retained by the donor.

For additional information on individuals contributions of noncash property valued by a donor at more than $5,000, see chapter 8 of Richard Hammar’s annual Church & Clergy Tax Guide.

Strict requirements

Charitable donations of virtual currency are on the rise. Until and unless the IRS or Congress simplifies the substantiation rules for such donations, strict substantiation and documentation requirements apply for charitable deductions related to such donations particularly those valued at greater than $5,000. Donors and their tax preparers must carefully follow the rules in order to avoid challenges by the IRS of deductions for charitable donations of virtual currency.

This information was adapted from an article that originally appeared in the Batts Morrison Wales & Lee Nonprofit OnPoint e-newsletter. Used with permission.

Mike Batts, CPA, is the managing partner of Batts Morrison Wales & Lee (BMWL) and a senior editorial advisor for Church Law & Tax. Michele Wales, CPA, is a partner and the national director for tax services at BMWL. BMWL is an accounting firm dedicated exclusively to serving churches and nonprofit organizations nationwide.

How Well Does Your Church Prevent Financial Misconduct?

What we learned from a recent survey—with expert guidance on how to protect the church.

A nationwide survey of more than 700 church leaders conducted by Church Law & Tax showed that nearly one-third have served in congregations that suffered from some form of financial misconduct. Half occurred within just the past 10 years.

Those victimized by some type of fraud said their congregations didn’t utilize internal controls and other precautions necessary to prevent misconduct, often because there was a belief such misconduct “couldn’t happen to us.”

Below is a collection of articles, webinars, and training designed to increase your church’s awareness of how financial misconduct happens, red flags to watch for, ways to prevent malfeasance, and steps to take when suspected or actual fraud arises.

May this collection help your church wisely steward its resources.

Every Church Is at Risk for Fraud. Here’s Why.

Church Law & Tax’s nationwide survey shows churches of all sizes, ages, and locations are susceptible to financial misconduct.

A new nationwide survey of more than 700 church leaders conducted by Church Law & Tax shows nearly one-third serve in congregations that have suffered from some form of financial misconduct.

Among those experiencing it, half said an incident occurred within the past 10 years.

Prior research conducted by other organizations throughout the past 20 years has usually pegged the figure closer to 10 percent or 15 percent for houses of worship. Still, church financial experts have long estimated that the figure was at least one-third or even higher for all congregations across the nation—a figure that appears to track closely with the new study.

“It was disheartening to see 30 percent of churches responding had experienced fraud,” said CPA Vonna Laue, a senior editorial advisor for Church Law & Tax who co-led the survey project. “It did confirm to me how prevalent this situation is in churches.”

Churches of all sizes, ages, and locations are susceptible, according to the survey’s findings—and fraud prevention experts say the vulnerabilities that perpetrators commonly exploit are ones easily remedied.

“The primary types of financial misconduct that occurred are the most preventable with a good internal control structure,” Laue said.

Yet many churches do not install simple safeguards out of a perceived high level of trust among their ranks, a noted frustration among the financial experts who reviewed Church Law & Tax’s results and provided comment.

“It will never happen here”

Two-thirds of survey respondents who said they weren’t aware of fraud in their churches also said they believe the problem is unlikely or “will never” happen in their churches. Ironically, among those who endured misconduct, half said they shared a similar “it-will-never-happen” sentiment before uncovering a case—and 80 percent then implemented several basic measures after the fact.

“This is one of the most important takeaways from this study,” noted Rollie Dimos, a Certified Fraud Examiner (CFE) and author of Integrity at Stake: Safeguarding Your Church from Financial Fraud. “Most people think that their church is immune from the risk of fraud because [their] staff and volunteers are trustworthy. . . . We trust people to do the right thing, but we can fail them if we don’t hold them accountable or provide controls to protect them.”

Nathan Salsbery, a CFE and a partner and executive vice president for nonprofit CPA firm CapinCrouse, said many congregations “do not implement effective internal controls until they feel the pain of fraud firsthand.”

Salsbery is currently assisting fraud investigations at three different churches. “Had these churches implemented a few basic internal controls, they would have either prevented the fraud or would have detected it much sooner,” he added.

A costly toll

The failure to prevent or quickly detect financial misconduct exacts heavy tolls on congregations. In a 2022 study, Gordon-Conwell Theological Seminary’s Center for the Study of Global Christianity estimates church fraud globally will total $70 billion a year by 2025.

The fallout extends beyond pure dollars, though, and often with devastating effects. In an analysis of the language used by respondents to Church Law & Tax’s survey, words associated with anger and sadness appeared repeatedly among respondents who experienced fraud.

“The financial losses can be staggering,” Salsbery said. “While the financial losses are bad enough, there are usually many other losses that result from the inevitable broken trust and relationships damaged by such long-term acts.”

Such damage is understandable, given the typical identity of the perpetrator and the amounts that he or she steals.

As the Church Law & Tax research shows, the profiles of offenders frequently included treasurers, board members, and middle-aged pastors. Financial losses were the largest among perpetrators with long tenures at their churches (see “Loved and Trusted: What Shocks Us Most about Fraud Perpetrators”).

As for the amounts stolen, Church Law & Tax’s research showed 69 percent of those victimized said their losses measured less than $100,000. About 14 percent said the amounts topped $100,000, while another 15 percent said they did not know how much was taken.

Precise financial losses are difficult to pinpoint since the perpetrator may not know or may lie. And churches that choose not to contact law enforcement likely will miss out on learning the full extent because a thorough investigation never happens. Nearly 70 percent of victimized churches chose not to report their cases to police. Overall, only 22 percent of all respondents said their boards would contact law enforcement in the event a future suspected or actual case arose (see “Reporting Financial Crime as a Matter of Stewardship”).

Easy opportunities

Nearly 42 percent of cases involved “inappropriate expenses or inappropriate expense reimbursements,” the survey showed. Slightly more than 30 percent involved stealing contributions. Payroll fraud and inaccurate timesheets combined constituted 12 percent of the cases. And another 11 percent took tangible church property, while about 9 percent forged check signatures. (Note: Respondents to the “Types of Financial Misconduct” infographic were asked to check all that apply.)

While the type of theft men and women committed against their churches varied, according to the survey, it generally boiled down to one thing: easy opportunities.

“While TV shows often depict fraud as grand and complicated schemes, most fraud committed in the church is simply an individual taking advantage of a situation where no one is looking,” Salsbery observed.

Just assigning another set of eyes to monitor a variety of financial activities could greatly reduce easy opportunities. For instance, the leading “red flag” for persons who committed fraud was excessive control over his or her duties or an “unwillingness to have others cover his/her job duties.”

“Nearly half of fraud schemes found were detected as a result of another employee performing a person’s duties” in their absence, noted CPA Michael Batts, another Church Law & Tax senior editorial advisor who reviewed the results. “The rotating duties of workers performing certain financial duties is, itself, an effective internal control mechanism, especially where adequate segregation of duties for a particular position is not in place.”

Encouraging signs—but much room for improvement

While the ease with which perpetrators stole from their churches is troubling, many of the practices best positioned to thwart such efforts do not require extensive time or expense.

On an encouraging note, many respondents indicated at least some best practices are already in place.

About 86 percent of all respondents regularly generate and review financial statements, and 83 percent make certain two unrelated people work together to handle financial tasks.

Around three-quarters of those who had experienced fraud said they use separate individuals—the “segregation of duties” in accounting parlance—for authorizing cash disbursements, maintaining custody or control over cash, and handling accounting responsibilities. (Note: Most of those who responded to the question about “segregation of duties” were in churches that had experienced fraud. Respondents highlighted in the “Top measures churches take to prevent financial misconduct” infographic were asked to check all that apply.)

Still, the responses for these categories show between 17 percent and 25 percent of churches are not performing these basic measures.

The percentages worsen when considering other areas of financial accountability or internal controls recommended by experts. For instance:

  • Slightly more than half of respondents said one person in their church has the ability to perform all aspects of cash disbursements without requiring another individual’s involvement. “That is a staggering statistic,” Laue noted.

Dimos said this problem, along with improper expenses or expense reimbursements—the leading type of fraud found in the survey—can be easily prevented by “[r]equiring a second person to review and approve all credit card purchases or reviewing invoices or reimbursement requests before signing checks.”

Additionally, “disciplined monthly reviews of cancelled checks (or images) and reviews of monthly credit card statements and related documentation and support [can] significantly reduce risk,” Salsbery said.

  • Only one-third of churches store their collections in a safe and secure manner and require dual controls for access when they cannot be immediately deposited at the bank (again, stolen contributions constituted the second-highest type of fraud in the survey).
  • Only one-third of churches have their payroll approved by someone other than the preparer and then reconciled to the church’s accounting system.
  • Only 22 percent apply accounting procedures to tangible property susceptible to theft, such as electronic equipment or bookstore inventories.

“The addition of internal controls to protect your church will not cost the church anything,” Dimos observed. “Having a second person—like a staff member, trusted volunteer, or board member—be responsible to review the bank reconciliation and bank statements, or review a general ledger detail report, can provide a great deal of accountability, but not add any extra expense for the church.”

Audits and assessments

Financial audits and fraud risk assessments offer additional protections for churches, although unlike the previously mentioned preventive steps, these typically come with a cost.

An ongoing audit process “can help a church greatly reduce the risk of misappropriation and embezzlement,” Batts said. Dimos agreed, adding the use of fraud risk assessments can go one step further and “help a church test their controls and identify potential weaknesses and risk areas.”

In the survey, about 24 percent of respondents conducted outside audits with a CPA, which involves documentation and third-party support of the financial information, Laue said. Thirty percent hired a CPA or financial expert to perform a less intensive outside review, which relies on inquiries and analytical procedures, Laue noted. Almost 38 percent said they perform internal audits using church staff and volunteers.

In terms of fraud risk assessments, nearly 51 percent said they do not use them at all.

Learning from “hard lessons”

Church Law & Tax’s survey “presents a strong case for churches to be proactive in preventing fraud,” Dimos said.

The fact that 30 percent of churches reported experiencing financial misconduct at some point, and that the possibility exists even more experience it without realizing it, reveals “the risk of fraud is very real in all churches,” Salsbery said.

While many will think the steps are unnecessary, or shouldn’t be necessary because people should know better, Salsbery pointed to examples of fraud contained in the Bible—including Judas’s thefts from Jesus and the disciples’ ministry account or Ananias and Sapphira’s attempt to deceive Peter—as reminders that anyone can succumb to temptation.

“Just as policies are put in place to help prevent other sins from damaging the church, controls are needed to protect churches from the sin of fraud,” Salsbery said.

And taking time now to review practices and strengthen them—especially when no apparent problem exists—only ensures church leaders are stewarding resources well, Laue added.

“Let’s learn from the hard lessons of others,” Laue said. “I strongly encourage churches to take the step and carefully review internal controls or even hire someone to help assess and implement better internal controls now. Even if fraud was never to occur, it won’t hurt for us to operate with good processes in place.”

NEW! Safeguarding Your Church’s Finances—a multi-session video course for pastors, board members, staff, and volunteers on the basics of fraud prevention. LEARN MORE!

Matthew Branaugh is an attorney, and the content editor for Christianity Today's Church Law & Tax.
ajax-loader-largecaret-downcloseHamburger Menuicon_amazonApple PodcastsBio Iconicon_cards_grid_caretChild Abuse Reporting Laws by State IconChurchSalary Iconicon_facebookGoogle Podcastsicon_instagramLegal Library IconLegal Library Iconicon_linkedinLock IconMegaphone IconOnline Learning IconPodcast IconRecent Legal Developments IconRecommended Reading IconRSS IconSubmiticon_select-arrowSpotify IconAlaska State MapAlabama State MapArkansas State MapArizona State MapCalifornia State MapColorado State MapConnecticut State MapWashington DC State MapDelaware State MapFederal MapFlorida State MapGeorgia State MapHawaii State MapIowa State MapIdaho State MapIllinois State MapIndiana State MapKansas State MapKentucky State MapLouisiana State MapMassachusetts State MapMaryland State MapMaine State MapMichigan State MapMinnesota State MapMissouri State MapMississippi State MapMontana State MapMulti State MapNorth Carolina State MapNorth Dakota State MapNebraska State MapNew Hampshire State MapNew Jersey State MapNew Mexico IconNevada State MapNew York State MapOhio State MapOklahoma State MapOregon State MapPennsylvania State MapRhode Island State MapSouth Carolina State MapSouth Dakota State MapTennessee State MapTexas State MapUtah State MapVirginia State MapVermont State MapWashington State MapWisconsin State MapWest Virginia State MapWyoming State IconShopping Cart IconTax Calendar Iconicon_twitteryoutubepauseplay