Most churches do good works—soup kitchens, food banks, and so on—so they’re like charities. But they also provide a social connection like a country club. Which is the better fit?
Let’s look at the financial statements of organizations that are clearly charities. The American Red Cross has an annual budget of $3.3 billion. Of this, 92% goes to program services, with the rest going to “management and general” and “fundraising.” Or Save the Children—91% of its $450 million budget goes to program services. Or World Vision—85% of $1 billion. Or the Rotary Club of Eagle Grove Iowa—100% of $3.3 million.
Organizations that help the disadvantaged are just one kind of nonprofit. The ACLU (86% of $70 million) defends individual rights and liberties. Or, for an organization on the other side of the political aisle, take the Alliance Defense Fund (80% of $32 million).
Surely many country clubs host bake sales for good causes, organize projects that help charities, or even donate money, but let’s assume that the good works done to society by country clubs amounts to a few percent of income or less. We have 80 to 100% of revenue going to good works for regular nonprofits vs. (say) 2% for country clubs—that’s why donations to nonprofits are tax exempt and dues to country clubs are not.
How do churches compare? The short answer is, we don’t know. With very few exceptions, the financial statements of churches and religious ministries are not available to the public.
But there are estimates. For example:
Every year churches collect some $100 billion in donations. But most donors do not know that the average congregation in the U.S. gives only two percent of donated money to humanitarian projects. Some 98% goes to pay staff, upkeep of buildings, the priest’s car, robes, salary and housing.
This came from Roy Sablosky. But he’s on the board of the American Humanist Association of Greater Sacramento. Might he be biased?
Christianity Today is another source. A survey gave this breakdown of the average church budget: 43% for salaries, 20% for facilities (mortgage, etc.), 16% missions, 9% programs, 6% administration and supplies, 3% denominational fees, 3% other.
So where is the money to good works? Presumably “missions” includes this, but this is a nebulous category. A dollar spent on the First Baptist Church soup kitchen certainly counts as a charitable expense, but the dollar spent supporting a missionary doesn’t.
That estimate of 2% to humanitarian projects may not be too far off.
These survey numbers are suspect in my mind because less than a quarter of the 1,184 surveys were returned. Did churches who were embarrassed by their numbers—perhaps the fraction devoted to salaries or facilities was even higher—not bother to respond? I’d like to have more reliable numbers, but when they’re kept secret, we simply don’t know.
What are churches embarrassed about that they need to make up excuses to avoid showing how they spend their tax-exempt donations? Again, it’s hard to tell. But there are estimates:
The January 2011 issue of the International Bulletin of Missionary Research reported that Christian religious leaders will commit an estimated $34 billion in financial fraud in 2011.
(I presume that’s worldwide, not just in the U.S.) And that’s just fraud. The money going to inflated salaries, lavish living, and other embarrassing expenses may be a far larger amount.
There are groups within Christianity that are also working on financial transparency. For example, MinistryWatch said,
We wish Senator Grassley success in his quest for the truth [in his investigation of six high-profile televangelists]. It is time for these televangelists to come clean; otherwise it could seem that they are running nothing more than money laundering schemes in the name of Christ.
But MinistryWatch has an uphill battle. They’re told by fellow Christians that it’s not right for anyone to judge, that it’s not Christian to be critical, that examining a ministry shows distrust in God, and that they should focus on God and not the works of man.
But shouldn’t churches be on the forefront of modeling what’s right within society? When pastors enumerate all that’s bad with American society today, the list should include the financial secrecy of their own organization.
The overseer must be above reproach as God’s steward
— Titus 1:7
See the first post in this series: What do Churches Have to Hide?
Photo credit: Wikimedia
- Phyllis Ten-Elshof, “Church Budgets: You Are What You Spend,” Christianity Today, 1/1/00.
- “Death and Taxes 2012: The most open and accessible record of government spending ever to exist”
- “Grassley’s Requests of Televangelists are Well-Founded,” MinistryWatch, 12/07.
- “An Overview of Religious Financial Fraud: The $34 Billion Scandal,” Christian Headlines, 1/8/11.
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I recently read that, if religions were taxed like any other business, the tax revenue in the USA alone would be $71 billion a year. That would pay for a lot of healthcare, education, and help for the poor. But maybe the religious reich simply does not support these things?
What would Jesus do? I think he’d want society to help out the poor, but American conservatives seem to disagree …
I also like the quote from Steven Colbert, “If this is going to be a christian nation that doesn’t help the poor, either we have to pretend that Jesus was just as selfish as we are, or we’ve got to acknowledge that he commanded us to love the poor and serve the needy without condition and then admit we just don’t want to do it.”
Romans Ch. 13 versus 1-7. While here Jesus payed taxes, and instructed his disciples to do so as well telling them to five to Ceasar Ceaser’s things, and give to God God’s things. If our Government was to require religion to pay taxes, then Christians would not be in God’s favor, if not complying to the law. Churches have taken advantage of the loophole way too long!! Time for them to stop prospering!!
It’s not government’s job to make sure that Christians are right with God.
The Math on that “$71 Billion” is fictitious. The Number is based on annual donations maxed out at the highest corporate tax rates. It uses the highest property taxes. It uses the highest everything to arrive at that number.
But here’s the catch folks . If you want to treat a church LIKE A BUSINESS, you have to allow them to DEDUCT EXPENSES LIKE A BUSINESS!!!
So of the revenues taken in, 43% is salaries – ALL DEDUCTED. 28 % is Property light heat – ALL DEDUCTED.
The only “allowable expense” in that nightmare of analysis is the occurance of donating the monies to other charities.
Why is running a church more costly than the American Red cross? Because the Church is ONLY USED A SMALL FRACTION OF THE TIME .
The “analysis” also includes in the estimate the tax advantage of donations to churches. Why? How is that a subsidy to the church? It’s a tax break to an individual. Does anyone include the Medical expense deduction as part of the cost of healthcare?
It’s easy to run at this issue half cocked and demand something be done, but try to look at it from both sides. Governments tax incomes – which are an exchange of service or product for monies. Exactly what “fee” are you proposing churches obligate their congregation?
Sounds like we’re in agreement that the overhead makes a church or ministry not in the same category as a conventional charity.
I can’t deduct country club dues; why can I deduct church donations when the net effect to society is similar?
BTW, this site is an archive. C’mon over to the new location: http://www.patheos.com/blogs/crossexamined/
The first thing I would demand of churches and all religions is Truth in Advertising. Naturally, they would oppose that with the usual screams of “Persecution!” and “Why do you hate god?” That would be because having to substantiate their ludicrous claims would be the death of all religions.
I think it’s a good mental exercise. I don’t have a problem in dialoguing. I do think the discussion starts with a simplistic “catch” of $71B taxes unpaid.
It cannot be the worst of both worlds. If we say they are tax exempt…. then so be it. If we say they are taxable entities, we must allow them the same deductions that we allow all taxable entities. Most churches have no “margin”. Meaning, they are NOT stockpiling huge sums of money into bank accounts. The reason so little makes its way to other charities is that there is often little left.
CHurchs do not put “food pantry” “salvage sales” “fund raisers” on the books, because oftentimes they use those funds to directly benefit the needy or poor.
I do think it’s an excellent idea to create a federal mandate of “lifestyle” where anyone associated with ministry is limited to the first say a value on the home and the organization pays a tax for any value that exceeds that amount.
I have no problem with churches being permitted the same deductions as other businesses. That means they will have to obey the same laws and be subject to the same penalties for income tax evasion. I doubt is very many could pass that test today. Yes, they have a lot to hide, and many do accumulate huge reserves of wealth.
They also support their leaders in great luxury and ignore the biblical admonition that “It’s easier for a camel to pass through the eye of a needle than for a rich man to enter the kingdom of heaven.” But they always pick and choose what parts of the bible to use, so what’s one more?
I have yet to see a politician of either gender with enough testicular fortitude to even hint at taxing religions. As much as I would like to see that happen, I only expect to live another 30 or 40 years, so no chance for that.
Oh it’s coming!! Sooner than we expect…Much sooner. According to Revelations They will get in bed together.
Let’s not worry about taxing religion until we have Step 1 resolved: getting religious organizations to open their books. Churches, ministries, televangelists–all of them sure seem to have something to hide. Of course, the average Christian will protest that they don’t. There’s an easy solution: open the books, just like every other nonprofit. The exemption for religion makes no sense … unless you’ve got something to hide.
I didn’t say it was the Governments Job to make sure Christians are right with god. Thus the word “:IF” Government were to tax religion. What I’m saying is that Jesus told the disciples that Christians are to obey the laws and requirements of current worldly Governments while waiting for Gods Kingdom to come. So, when the Government does turn on religion and tax it , those scriptures will then be referenced when Christians complain or fail to comply. That’s what I’m saying. 🙂 And getting religious organizations to open books isn’t and easy solution without Laws. Laws that will eventually come into play when the Government finally does Tax Religion. I agree with you that they sure do seem to have something to hide. 🙂
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First of all I want to greet you, I am Saraphia from Africa, I was born in 1968, I need financial support, to open Small business, for me to support my kids going to school, and for them to eat, please help me
Bogus. Churches have budgets that are readily available to any member. Denominations also have budgets of its church members which are available. Many churches have their budget on websites. That they are not transparent is bullshit. Also, the two percent actually going to charity is very bogus as well. Much of the work is done by volunteers for free .. Come on man, if you are going to attack the church at least inject some sense of reality ..
our church spends well over 100,000 on social programs, and that does not include the volunteer efforts that are not paid. And anyone can see the budget. . WE spend more than 2 percent on indigent care alone .. that is helping people who need some money right now sort of thing.
but if you knew anything at all about budgets you would know how easy it is to cook the books
As someone said .. the numbers dont lie, but liars figure.
Nope–many churches don’t have budgets available, even to members. And “open to members” doesn’t help an outsider, who’s picking up the slack. Further, navigating a site that *does* have the budget, somewhere, can take a long time. At an aggregator site like Charity Navigator, you can find the information for any organization in 30 seconds.
Why aren’t the figures available to everyone? That’s true for other nonprofits. Do churches have something to hide?