Tax-Exempt Ministries Avoid New Regulation

A three-year investigation into financial improprieties at six Christian ministries whose television preaching bankrolled leaders’ lavish lifestyles has concluded with the formation of an independent commission to look into the lack of accountability by tax-exempt religious groups.

Sen Charles Grassley (R-Iowa), the ranking member of the Senate Finance Committee, issued a report saying that “self-correction” by churches and religious groups is preferable to legislative or regulatory solutions. But his report found that only two of the six ministries cooperated with his investigation and volunteered to institute reforms. The others continued to hide behind tax laws that allow religious organizations to operate tax-free with little transparency or public accountability -- a status that sets them apart from other nonprofit groups and charities that must file detailed annual reports of expenditures to the Internal Revenue Service. In a move that is sure to spur controversy, Sen Grassley recommended repealing or modifying IRS rules that prohibit churches from endorsing political candidates. Repeal has long been sought by groups on the Christian right that regard the prohibition as an intrusion on their freedom of speech. But the suggestion outraged groups that advocate separation of church and state. The outcome of Sen Grassley’s investigation was disappointing to those who had thought that it might lead to some changes in the rules governing tax-exempt religious groups.