The home in
the photo (above) is the $1.75 million mansion of the Reverend Randy White, the former head pastor of Without Walls International Church in Tampa, Florida. While some people may be bothered by the fact that there are pastors who live in multimillion dollar homes, this is old news to most. But here is what should bother you about these expensive homes: You are helping to pay for them!
You pay for them indirectly, the same way local, state, and federal governments in the United States subsidize religion—to the tune of about $71 billion every year.
We mention Rev. White because he was the impetus for this article. White and his mansion came up in a class taught by lead author Ryan T. Cragun. In that discussion, the other authors asked how much Pastor White pays in taxes on his income. The answer wasn’t readily available. Only a handful of publications in the sociology of religion have examined the finances of religions, and they are largely aimed at telling religions how to increase donations.1 Nowhere did we find prior research summarizing and detailing religious finances and tax policy, so we decided to investigate it ourselves. This article is the result. It took some digging, but we think we now have a moderately clear understanding of the tax laws regarding religions in the United States. What we found suggests that religious institutions, if they were required to pay taxes the same as for-profit corporations do, would not have nearly as much money or influence as they enjoy in America today. In this article we estimate how much local, state, and federal governments subsidize religions.
However, before we get into our calculations, we think it best to address a criticism that is likely to be raised about this article. By suggesting that these groups should pay taxes, we are likely to be criticized by those who think that religions are largely charitable institutions engaged in beneficial service or charitable work and should therefore be exempt from taxes. This criticism requires responses at two levels, because there are two ways to think about religious “charity.” The first type of charity is the type that most people think of when they hear the phrase “serving people’s physical needs” (feeding and clothing the poor, building schools, and the like). The second type is different and involves addressing people’s “spiritual concerns.”
Do religions engage in charitable work that addresses the physical needs of the poor? Many do, but that is not their primary focus. Religions are quick to trumpet when they do charitable work—ironically for Christians, since the Bible explicitly says not to (Mathew 6:2). But they don’t do as much charitable work as a lot of people think, and they spend a relatively small percentage of their overall revenue on such work. For instance, the Church of Jesus Christ of Latter-day Saints (the LDS or Mormon Church), which regularly trumpets its charitable donations, gave about $1 billion to charitable causes between 1985 and 2008. That may seem like a lot until you divide it by the twenty-three-year time span and realize this church is donating only about 0.7 percent of its annual income.2 Other religions are more charitable. For instance, the United Methodist Church allocated about 29 percent of its revenues to charitable causes in 2010 (about $62 million of $214 million received).3 One calculation of the resources expended by 271 U.S. congregations found that, on average, “operating expenses” totaled 71 percent of all the expenditures of religions, much of that going to pay ministers’ salaries.4 Financial contributions addressing the physical needs of the poor fall within the remaining 29 percent of expenditures. While these numbers may be higher as a percentage of income than typical charitable giving by corporations, they are not hugely higher (depending on the religion) and are substantially lower in absolute terms. Wal-Mart, for instance, gives about $1.75 billion in food aid to charities each year, or twenty-eight times all of the money allotted for charity by the United Methodist Church and almost double what the LDS Church has given in the last twenty-five years.5
We recognize that there is a lot of variation in how much religions engage in charitable work, and we don’t want to discourage religions from doing so. However, comparing their charitable giving to the performance of secular charities is informative. The American Red Cross spends 92.1 percent of its revenue directly addressing the physical needs of those it intends to help; only 7.9 percent is spent on “operating expenses.”6 If you use a generous 50 percent cutoff for indicating whether an institution is primarily a charitable organization or not (that is, they spend more than 50 percent of revenue on charitable work addressing physical needs), we doubt there is a single religion in the world that would actually qualify as a charitable organization.
But what about the spiritual concerns that religions address? Isn’t this activity a form of “spiritual charity”? And since most of the expenditures of religions are spent on addressing spiritual concerns (activities including worship services, pastoral counseling, baptisms, sacraments, and the like), couldn’t these expenses be seen as charitable, thus qualifying the religions as charities?
No. Why? Because charity is the giving of something
, not the exchange of something for something else. When religions give (money, clothing, labor, building materials) to address the physical needs of the poor, they are giving without receiving payment in return. There is no exchange of goods or services. Yes, those giving may feel good about what they’ve done, but that feeling is not given to them by the recipients of their charitable actions in exchange for the actions; it rather results from the charitable actions themselves. In contrast, when a pastor preaches a sermon or a priest performs a baptism, this is done out of obligation and is what these religious functionaries are paid to do. It is no more “charity” than a college professor teaching a class or a social worker helping a family is charity. If the people you are helping are paying you to help them, it’s not charity; it’s labor. You may like your job and feel that it offers value beyond what you receive in compensation, but that doesn’t change the fundamental nature of the exchange taking place. In short, if someone is paid to address spiritual concerns, it is not charity when they do so.
There is one other argument religions could use to claim they are “spiritual charities”: when religions pray for rain for the local community or when they baptize the dead to assure them salvation—as is done by the Mormon Church—isn’t this a form of spiritual charity in the sense that even people not donating to the religion benefit? These acts certainly seem closer to charity, but they don’t meet the criteria of what it means to be a charitable organization for tax purposes: If the function or service the charity provides were discontinued, would it result in a legal requirement for public funds to continue the function? Religious soup kitchens would probably meet this criteria but would praying for rain or baptizing dead people? Although Texas Governor Rick Perry may pray for rain7 and presidential hopeful Mitt Romney may want past presidents baptized, we think most people would agree that government has no interest in addressing such “spiritual concerns.”
In summary, religions spend a relatively small portion of their revenue on physical charity, and while they spend a larger portion of their revenue addressing spiritual concerns, most of that qualifies as labor, not charity. What little would qualify as “spiritual charity” would not be replaced by government if discontinued. In short, religions are, by and large, not engaged in charitable work.