Thinking Out Loud

January 6, 2020

Evangelicals in a Nation of Tax Loopholes

Note to readers in countries outside the United States: What follows is not fiction. What is described below is believed to be an accurate recounting of the statements issued by an Evangelical organization which has already been a trusted brand in ministry.

Wade Mullen is my new hero. His exposé on one of the charity sector’s most unusual accountability loopholes published as a Twitter thread last week. It took time and research to write. It took courage to print. But then I shouldn’t be surprised. As his “about” page on his website notes:

I earned a PhD researching the ways in which organizations seek to escape a scandal with their legitimacy in tact. My dissertation is titled: “Impression Management Strategies Used by Evangelical Organizations in the Wake of an Image-threatening Event.” You and can download it for free HERE.

(Warning: That dissertation is 279 pages!)

The gist of the thread is summed up thus:

Focus on the Family received approval from the IRS to be reclassified as a church in 2016.

For many of my readers here, that may seem a little strange, but it doesn’t appear to be a world-shaking observation. But as most of my American readers know, the difference is in the responsibility for transparency. The site The Balance Small Business notes:

In other words, churches, to be considered 501(c)(3) charities, must act like other charities. If they do so, they may qualify for tax-exemption.

But, unlike other charities, Churches do not have to register with the IRS by submitting Form 1023. However, many do file to make their status clear to their donors and supporters. Churches that do officially register as charitable organizations are included on the IRS list of registered charities.

Churches that do not register with the IRS do not have to file yearly 990s, the tax document that all other charities must submit yearly. If the church has registered as a 501(c)(3), it does have to file a 990.

Okay, so far so good. A church is a church is a church, right? Not exactly. In the years since the end of World War II, we’ve seen a massive explosion of we insiders call parachurch organizations. The website continues:

Religious groups [organizations] are not places of worship. They do not usually belong to a particular denomination. They often try to bridge particular belief systems, although they can also be groups that study or promote a particular religion.

To be considered tax-exempt, a religious organization must register as a 501(c)(3) charity. That means filing Form 1023 (groups with income below $5000 annually are not required to file although they may wish to). Once registered, the organization must file an annual 990.

The last few years have shown that the leadership of both churches and parachurch organizations is fallible. Have a sex scandal and the IRS isn’t particular interested, unless money changes hands. But be guilty of financial impropriety and donors, potential donors, watchdog organizations and the IRS will investigate. So if you can hide behind the idea of being a church you can escape many of those watching eyes.

Wade Mullen then went through each of the IRS criteria of Church, criterion by criterion and Focus on the Family’s response. I’m not going to reproduce each of the accompanying images here, but this is well documented; in fact, I would suggest if you have Twitter (and even if you don’t) skipping what follows and reading this starting with this Tweet. However, I’m reproducing the text here because Twitter and blogs are often an entirely different audience, and this deserves, in my humble opinion, wider exposure. [Note: Bold face type added.]

Wade Mullen
[photo: Lancaster Bible College]

A church needs an established congregation.
According to FoF, their personnel make up their 594-member congregation overseen by the elders (aka Board of Directors) and deacons/deaconesses (aka Executive Cabinet). Radio listeners are their mission field.

A church needs a place of worship.
According to FoF, their dining hall doubles as a worship auditorium. They call it a “chapelteria.”

A church needs a process for membership.
According to FoF, their “congregants” become members when they go through the employee or volunteer hiring process.

Churches give their members certain rights.
According to FoF, their “congregation” are encouraged to “participate in the religious functions of Focus on the Family,” like Monday prayer meetings and devotional opportunities.
As expected, this “congregation” does not vote.

Members of one local church typically don’t become members of another local church.
According to FoF, however, it’s normal for people to be members of more than one church.

Churches usually conduct baptisms, weddings, funerals, etc.
According to FoF, their “congregation” participates in communion every Easter during a chapel service. All other functions (baptisms, weddings, funerals) are supposedly conducted by the “congregant’s” other church.

Churches should have a school for the religious instruction of the young.
According to FoF, their radio programs, like Adventures in Odyssey, constitute their religious instruction for the young members of their “congregation.”

A church typically has ordained or licensed ministers.
According to FoF, they refer to the leadership team as deacons/deaconesses and the board of directors as elders. Jim Daly, President/CEO, is the head elder and they follow the “model of an elder-led church.”

Churches typically required their ministers to receive formal preparation culminating in ordination, licensing, or commissioning.
According to FoF, they do not find such requirements necessary for their “church.” Elders (BoD) are selected from the “congregation.”

Churches are sometimes affiliated with other churches.
According to FoF, the offices they have in 13 other countries are the “churches” they affiliate with.

A church should primarily function as a church, with most activity being religious.
According to FoF, their “daily work is worship.” This is one of their strongest claims throughout the application.
They view all employee activity as religious activity.

A church usually has a religious history.
According to FoF, their organization has been evolving into a church in the same way that John Wesley started his “Holy Club” that evolved into Methodism, and is beginning to resemble other churches as it continues to institutionalize.

A church usually has a creed.
According to FoF, their statement of faith and “Six Pillars” are their creed and one of their distinctive is the belief in “work as worship.”

Churches should have both an equipping and service role.
But according to FoF, they are one of two blades in a pair of scissors. FoF is the “service and mission” blade and the “congregant’s” other church is the “teaching and equipping” blade. Together they comprise the Church.

■ When the IRS brought up the fact their employees attend other churches on Sundays, FoF claimed not all churches have services on Sundays, like the Seventh-day Adventist, and that “it has been quite common for believers to be involved in more than one church body…concurrently.”

■ When the IRS asked about membership being tied to employment, FoF claimed that since they invite visitors and volunteers to join their “services,” then membership is not “in fact contingent on employment.”

■ When the IRS asked about religious leadership being the same as directing business operations, FoF claimed that “nearly all congregational churches…have a board of directors that doubles as a board of elders or board of deacons”

■ When the IRS suggested there was nothing distinctive that would cause “a group of believers to coalesce around you,” FoF chided them for their “ecclesiastical judgment” and argued their group of believers are among the largest in the world – 5.5 million nationwide.

■ When the IRS pointed out that these congregational activities appear to be incidental to the business operations, FoF argued their church activities are fundamental to their operations and that thinking of church as a building to gather to hear a sermon on Sundays is antiquated.

■ Finally, when the IRS questioned their real purpose for using facilities for “some religious activity in the course of their work day,” FoF chided them again for their “ecclesiastical judgment” and argued their members engage in “religious activity, all day, every day.”

My take:
This is an incredible twisting of the biblical view of the nature and purpose of a local church for the apparent purpose of forcing one’s ecclesiology into IRS codes.
Not surprisingly, others like BGEA, Samaritan’s Purse, and RZIM have followed.

■ If Focus on the Family truly believes it is a church, its employees and volunteers are its congregants, their executives are their pastors and elders, and their listeners are their mission field, then they should immediately stop requesting donations from their 6m+ listeners.

■ The lawyer offering these answers is Stuart Mendelsohn, legal counsel to the Evangelical Council for Financial Accountability (EFCA), a group that offers accreditation for ministries and churches.

■ Here is the letter FoF sent to the IRS requesting the reclassification from a 509(a)(2) to a 509(a)(1), stating “Focus on the Family was established and has been historically operated as a church.” [Attaches link to this 125-page .pdf file]

[end thread]

Here are some responses Wade received:

► From Rachel: “This is bananas. This is also why some people are anti-tax exemption for churches. It’s not because they want to blur the line between Church and State; it’s because of ethically dubious loopholes that religious orgs take advantage of.”

► Diane quoted N.T. Wright: “When you pretend evil is not there you merely give it more space to operate.”

► Albert noted: “…PLOT TWIST, they used the Seventh-day Adventist Church as a tiny part of their justification.”

► Bill wrote: “Focus on the Family is not a church. And claiming that it is for tax purposes is lying. A “Christian” ministry shouldn’t be lying for financial gain.”

► Julia asks: “It is such a tragedy that churches are becoming more secretive while secular non-profits are demonstrating transparency. Why are these “churches” considered Godly?”

► Hannah reasoned: “When anything with a vaguely religious cast can be a “church,” then nothing is.”

► Craig wrote: “I’m embarrassed reading the arguments. This is incredibly dishonest.”

► Rachel aptly notes: “I’m here thinking the fact that the IRS has a “church” designation in the first place is a bit unsettling.”

► Lucrezia wrote: “I look forward to FoF ceasing all political activity since it is apparently a church.”

[end responses]

And those are just the ones Wade retweeted. I’m sure there were hundreds more. To me this is every bit as scandalous as many of the other scandals of 2019. It brings me no pleasure to share this, but having discovered it, I felt there should be some additional recognition and highlighting of all these things that were made available to Twitter account holders last week.

Something is seriously wrong and as I said at the outset, Focus on the Family has long been a respected brand in Evangelicalism, and ought feel shamed by the responses it made to the IRS. 

Ask yourself, who benefits by all this?

 

February 10, 2010

Wednesday Links

But February made with shiver
with every link that I’d deliver…

Time for another look at some things that caught my eye this week.   Recommendations can be sent anytime during the week to the e-mail address on my “about” page.

  • I like a book trailer that really makes me want to read the book, and that’s what I found in the promo vid for the comic novel, The God Cookie by Geoffrey Wood.
  • Not so sure about this one, though.  A somewhat backdoor approach to outreach by Lifechurch.tv under the website Satan Hates Life.  Tell me what you think.
  • Got King James Version Only friends?  Here’s some material to help you make a rational response to their issues — if rationality will help at all — from the blog Gazing at Glory.
  • Blogger Rich Dixon thinks we’re only considering two-thirds of a popular quotation from Augustine.   Check out his thoughts at Bouncing Back.
  • Pornography.   It’s not just a guy thing anymore.   Here’s an article from Rachel Zoller at Focus on the Family, Girls Snared by Porn and Cybersex.
  • Speaking of which, writing Monday’s Jewish-flavored post uncovered this page of recommended internet filtering software.   (The referrer liked the K9 (free) program.
  • New Blog of the Week:  Downhill Both Ways.  Let’s just say the author, who most of you know, uses more than 22 words to tell a story.
  • Here’s a flashback to October, a Tullian Tchividjian post about How to Identify A Reliable Preacher.   “…if we are going to grow we need to be sitting at the feet of reliable carriers of God’s truth.”
  • Afraid?  Anxious?  Worried?  Fearful?   Check out this short post at Justin Taylor’s blog at The Gospel Coalition.
  • You shouldn’t be a manipulator.  But neither should you be manipulated.   Sometimes manipulation comes disguised as the proverbial wolf in sheep’s clothing.   Check out the discussion at Resolved To Worship.
  • A sad story out of Florida last week where two young street preachers were murdered, as reported in the Palm Beach Post.
  • Jim Daly.  Get to know that name.   He replaces another J.D., James Dobson, as the voice — he’s been president since ’05 — of Focus.   Here’s the 411 on him from The Wall Street Journal.
  • Okay, so here’s the deal, I like to end each Wednesday Link List with a cartoon, and this week is no exception, with one from The Back Pew by Jeff Larson.   But does anyone know why there’s two versions circulating out there for this week’s cartoon? ????

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