Evangelical Groups Avoid Legislation For Now

January 7, 2011       Mark Hrywna      

Three years after a senator’s inquiry into finances of some of the nation’s largest media-driven ministries, a new panel has been established to tackle significant issues as an alternative to Congress passing legislative reforms.

Sen. Charles Grassley (R-Iowa), ranking member of the Senate Finance Committee, requested the help of the Winchester, Va.-based Evangelical Council for Financial Accountability (ECFA), which today announced the Commission on Accountability and Police for Religious Organizations. The senator’s office this week released a review of activities and practices of six media-based Christian ministries and reports concerning other churches and religious organizations. According to Grassley, he wrote to the ministries in November 2007 after constituent inquiries to him because of his tax-exempt oversight responsibilities.

Grassley said tax-exempt policy involving churches and religious organizations is an area Congress has not looked at since the late 1970s when then-Sen. Mark Hatfield’s request to evangelical groups to be more transparent sparked the creation of the ECFA.

The commission will be tasked with gathering input from the sector and providing feedback to the senator’s office, with the goal of improving accountability and policy in the religious sector.

Three members of the commission were announced today, with another four to six members to be announced soon. The commission’s chairman will be Michael Batts, a member and former chair of the board of ECFA and a managing shareholder of Batts Morrison Wales & Lee, an Orlando, Fla. accounting firm dedicated to serving nonprofits. He also served on the Legal Framework Workgroup of the Panel on the Nonprofit Sector, an independent legislative advisory group convened at Grassley’s request earlier this decade to address previous legislative proposals related to the nonprofit sector.

Also appointed to the commission were Dan Busby, president of ECFA, and Mark Holbrook, ex-officio, who is president and CEO of Evangelical Christian Credit Union (ECCU) and current chair of the board at ECFA.

“It is our hope, as well as the senator’s, that solutions will be found without the need for burdensome legislation that creates excessive entanglement between the church and the government,” said Batts. “One obvious area that will be explored carefully is the concept of self-regulation,” he said.

The commission will not limit input to Christian organizations. It will also seek information from the broader, secular nonprofit sector, “particularly as it would relate to issues not uniquely religious,” Busby said.

The issues raised by Grassley’s review “may potentially affect every house of workshop in America,” Batts said, adding that the conversation in the coming months will include how to address those issues. Among them:

* Whether the Internal Revenue Service (IRS) should establish an official advisory committee for churches and religious organizations. The report indicates a perceived high level of district between religious organizations and government, Batts said, while a committee may result in a proactive, collaborative approach to tax laws, focused on education and outreach as opposed to a reactive, enforcement-based approach.

* Whether churches should file detailed financial information, such as in the Form 990? Grassley’s staff expressed concern about the government’s ability to effectively monitor compliance for organizations that don’t file the nonprofit tax form. One option may be to exempt churches but make them accountable to another accreditation body, such as ECFA or other groups.

* Whether to limit the clergy housing allowance exclusion. The report raised questions about whether the exclusion should be eliminated to prevent abuse, amid a current constitutional challenge to the exclusion.

* Whether to repeal or modify the current prohibition of political activity for churches and religious organizations, allowing for limited political activities.

* Whether legislation is needed to clarify “love offerings” to ministers, in which funds are sometimes given directly to a minister, without processing by a church. Some say they are nontaxable gifts by attendees, and not compensation for a minister’s work.

A timeline for the commission has not yet been determined as it could create unrealistic expectations, said Batts, and so the report should not be rushed, instead it must be done professionally and objectively to be done well. Specific processes will be announced as more information becomes available, he added.

There was not much significant news in the Grassley report, according to Busby, as much of its substance was released in some form over the last three years. ECFA was formally asked to be involved in the process three weeks ago by Grassley’s office.

Joyce Meyer Ministries and World Healing Center Church both responded fully to the senator’s inquiry and also initiated significant governance reforms within their organizations. The other four ministries either did not provide any information or incomplete information.

“Self-correction can be more effective than government action,” Grassley said. “It’s something that’s worked with other entities I’ve looked at, such as The Nature Conservancy and the Smithsonian Institution and some top colleges that were amassing large endowments without increasing student aid,” he said.