Sunday, January 9, 2011

Grassley Staff Reports of Media-Based Ministries

On January 6, 2011, the staff of Senator Chuck Grassley issued several reports regarding six "media-based ministries", including those run by Joyce Meyer, Benny Hinn, Creflo Dollar,  Eddie Long, Paula White, and Kenneth Copeland.  These reports are the result of an investigation of these churches begun in November 2007, when Senator Chuck Grassley issued letters of inquiry to them in response to reports he had received that the leaders of these organizations had been engaging in some extravagant spending, such as buying a private jet, driving a Rolls Royce or Bentley, or installing a $23,000 commode. Senator Grassley expressed concern that perhaps the tax-deductible contributions to these organizations were being misused to support luxury lifestyles. The senator requested information from these organizations regarding the compensation of pastors and other individuals associated with these churches.  Two of the organizations, Joyce Meyer and Pastor Hinn, complied fully with Senator Grassley's request. The remaining four either did not respond, or provided incomplete responses. The staff summary memo, together with reports on each of the individual ministries and correspondence between Senator Grassley and the Evangelical Council for Financial Accountability (ECFA) are available on the Senate Finance Committee website.

These reports are likely to initiate further inquiry and could lead to new legislation with regard to the federal oversight of not just of religious and church entities, but of all 501(c)(3) tax-exempt organization.  The staff summary memo raises several issues in regard to reporting and accountability of churches, as well as the standards applicable to all charitable organizations. 

In particular, Appendix C of the staff summary memorandum (pdf)  raises the following issues:
  • Whether there should be a federal advisory committee for churches and religious organizations.
  • Whether the parsonage allowance under IRC 107 should be limited to a single residence or a specific dollar amount, or whether it should be limited to a more select group of individuals.
  • Whether churches should be required to make some kind of informational return filing requirement. 
  • And whether the "church tax inquiry" protections of IRC 7611 should be removed in regard to excess benefit transactions.
Appendix D raises several issues which impact all 501(c)(3) organizations, including:
  • Whether all 501(c)(3) organizations must include specific language in their organizational documents prohibiting engaging in acts of self-dealing (currently only private foundations are required to do so)
  • Whether a penalty tax should be imposed on charitable entities where there has been an excess benefit transaction. 
  • Whether the rebuttable presumption of reasonableness for transactions should be replaced with minimum standards of due diligence. 
  • Whether guidelines should be developed for compensation studies used to set reasonable compensation under the rebuttable presumption standards. 
  • And whether the practices of "love offerings"should be excluded from gross income of a recipient when a charitable organization has facilitated the offering. (A practice mainly seen in religious organizations)
Finally, Appendix E of the report addresses whether the electioneering prohibition should be eliminated or circumscribed.  It is worth noting that political activity was not a significant issue raised in regard to the 6 media-based ministries. Nevertheless, the staff proposes either replacing the prohibition with a limitation similar to the lobbying restrictions on 501(c)(3) organizations, or retaining the prohibition, but defining "participate in" and "intervene in" a political campaign in terms of federal election law.

The individual reports of the 6 media-based ministries suggest that at least some are taking advantage of their religious and a tax-exempt status in order to provide personal benefits to the individuals who are running them.  As part of the process and in order to initiate further action, Senator Grassley has formally asked the ECFA to consider the issues raised by his staff and spearhead a discussion about how to address those issues.  ECFA has begun to establish an independent commission to review and provide input on major accountability and policy issues affecting church and religious organizations.

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