In December 2012, the Commission on Accountability & Policy for Religious Organizations presented a 91-page report to Senator Charles Grassley addressing various regulatory issues affecting the religious and broader nonprofit sector. Entitled Enhancing Accountability for the Religious and Broader Nonprofit Sector (the “Report”), the Report responds to various issues raised by Senator Grassley regarding the financial and tax accountability of religious institutions, which are broken down into the following nine categories:
- Executive compensation and excess benefit transactions
- Clergy housing exclusion
- Churches, accountability, and donor engagement
- IRS advisory committee for religious organizations
- Independent accreditation and ECFA’s model
- Religious organization examinations and third-party oversight
- Examinations of church leaders
- Love offerings
- Public disclosure of highly sensitive information
Senator Grassley asked the Evangelical Council on Financial Accountability to convene the Commission following his three-year investigation of six high-profile Christian media ministries. The Commission’s Panel of Religious Sector Representatives includes leaders from virtually every major faith group in America. Commission Chairman Michael Batts stated that throughout the entire process of meetings, discussions, and presentations, there was an “extraordinarily high degree of agreement among those participating.”
The Commission concluded that additional legislation is not the solution to rectify current instances of financial misconduct. Rather, it suggests, self-regulation, coupled with effective administration of existing laws, increased education about the law, and increased donor engagement, can effectively address the concerns of misconduct raised by the regulatory community. The Commission rejected many of the ideas for additional or revised legislation raised by Senator Grassley’s staff as being more problematic than helpful. In support of this non-legislative approach, Commission Chairman Michael Batts writes, “We cannot allow the behavior of a few outliers in the religious and nonprofit sector to threaten the freedoms of those who are not the problem – those who are doing the good work. The number of organizations that engage in egregious financial misconduct is miniscule in comparison to the sector as a whole.”
Senator Grassley issued a statement in response to the Report, thanking the Commission for its work, but noting that “[t]he report gives less attention to resolving some of the thornier questions, such as how to build accountability from entities that exploit vagueness in current laws and regulations for individual benefit rather than the greater good.”
