August 3, 2010; Source: Dallas Morning News | The headline of this Dallas Morning News story suggests an important question for charitable accountability. Nonprofits with 501(c)(3) tax exempt status have to file a form 990 with the IRS that reveals executive salaries. Tax deductible contributions also can go to religious organizations, but they don’t have to reveal executive salaries as churches and other religious groups are exempt from form 990 disclosures. Should that be changed?
The Dallas Morning News asked religious leaders in the Dallas area about how they felt about disclosing salary information for the highest paid employees at places of worship. Some of the answers were disturbing, suggesting that some education about tax deductible contributions and the concept of public disclosure is needed in religious circles.
A Presbyterian leader said that church leaders reveal their salaries to the IRS when they pay their income taxes, so the government knows even if the public doesn’t. He also contended if the church submitted grant requests of $425 million to the government like the Boys and Girls Club, the church would be willing to disclose too, assuming it is government funding that compels nonprofit disclosure, not their tax exempt status. A rabbi said he would be willing to let anyone read the budget, including salaries, of his synagogue, but compulsory disclosure really ought to be limited to entities that solicit donations from the public, failing to note that churches and synagogues also solicit donations from the public.
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A professor of theology at an Austin seminary admitted that she didn’t know that the IRS required public disclosure of the salaries of their top executives. She contended that churches are different from nonprofits in that they don’t solicit donations from the general public, but only the membership and constituencies of the churches themselves, failing to recognize the different kinds of fundraising memberships and constituencies of nonprofits. A Baptist leader said that government should ensure that the employees of religious institutions are treated fairly according to the law and that “financial accounting be lawful, (b)ut accountability and transparency are not . . . governmental concerns.”
Why? Because “(h)ouses of worship have a higher calling to answer, and the ethical standards inherent to religion require they be above financial reproach.” The various comments in this article could not have been more revealing about how little many church leaders know about nonprofits and their own institutions’ tax exemptions and how much they have to learn.—Rick Cohen