There are around 400,000 churches in the United States and very few of these file any kind of tax return but there are some who think it would be beneficial to congregations if they were brought under the protective wing of the Internal Revenue Service. While I’ve known a couple of IRS folks over the years and they have been quite helpful, professional, and agreeable, I’m not inclined to think that the IRS could help churches.
But consider why some would think the government could help churches:
The case cited in this article is one where church members showed up one Sunday to see a “for sale” sign on the parsonage next to the church. Seems the pastor had arranged to deed the property to himself and was going to sell the property and cash out. It was an ugly, messy situation. Church members sued and prevailed
Those who would “help” the church avoid such things say churches are defrauded of billions and the rates of such are rising.
Research cited by Brotherhood Mutual Insurance Company, the second largest U.S. provider of property and casualty insurance to Christian churches and related ministries, says reported cases of church financial fraud has been rising by about 6 percent annually and is expected to reach the $60 billion mark by 2025.
The level of reported fraud in churches is dwarfed, however, by the 80 percent of church fraud cases that are estimated to go unreported.
No question about the problem. Church staff, including clergy staff are known to lie, cheat, and steal from the church. That beloved deacon who takes the money to the bank every week, by himself, sometimes takes a few twenties out of it. Some church financial secretaries and treasurers steal from the church by the unsophisticated means of simply writing checks to themselves. Sometimes they are caught and prosecuted and we read about it.
But, how can the IRS help, one asks?
The experts say that it would help avoid fraud if churches were required to file the same forms that other non-profits file. The most important of these is the Form 990 in which non-profit organizations disclose their revenues, the officers of the orgainzation, salaries, and a lot of other stuff. The idea is that if churches were forced to be “transparent” with their finances their members would be safer from fraud.
I rather like the Form 990. It is useful for checking on non-church non-profit organizations. For example, one can see that Charles Stanley’s ministry has annual revenues of about $100 million and nine people on staff that make six-figure incomes. You could see that Beth Moore’s ministry had about $1.5 million in revenues for the most recent year and has assets of around $13 million in cash and investments. Both Stanley and Moore are shown as earning modest salaries. Anyone can access these forms online. Are family members on the payroll? Look ’em all up if you want to gawk a bit.
As an aside, I’m a greedy capitalist pig myself and have absolutely no problem with Stanley or Moore earning or accumulating large sums. They are highly skilled, entrepreneurial individuals whose products are valued by many.
But, no thanks on the IRS helping the church. The truth is that the vast majority of churches are already excruciatingly transparent to their members. In many of these churches members see the check register every month or quarter. They know what the pastor makes. They know how much the custodian is paid. They know what the power bill is. They even know how much is spent on toilet paper every year. They know how much money is in the bank and how much the weekly offerings are. If a member doesn’t like how his church handles money, the don’t have to give or stay around as a part of the group. I wouldn’t be a member of a church where I was denied the knowledge of how tithes and offerings were spent.
Besides, I’m not seeing Albert the welder, who handles all the finances for Podunk No. 2 Baptist Church, as being capable of filling out the 990 which means that church of 40 or 50 has to hire some accountant to do it. I’m also not seeing that it is anyone else’s business to know what Podunk’s preacher is paid or how much money is given to that church. The IRS isn’t going to do anything but cause unnecessary expenses for Podunk, money that could have been spent on ministry.
So, no thanks, Uncle Sam. We will manage on our own. Seems Ronald Reagan said something about the government’s help…
But the article linked above does provide a valuable service in that it shows that every church should pay attention to their finances. To avoid being defrauded (in ways such as this) the pastor and church leadership should have measures in place to guard against it.
Here are a few of the usual suggestions to avoid problems (and keep the IRS out of the vestibule):
- The pastor should not handle any money.
- Funds should be received and counted by a group, not an individual.
- Regular reports should be made to the church.
- An annual financial review should be conducted by a rotating group of members.
- The pastor should pay attention to all financial matters, even if he finds it boring.
- Divide the tasks of collection, depositing, and writing checks.
There are more suggestions and every state convention has folks that can help the church set up proper internal controls for their finances. Rely on them, not the IRS. It will not cost the church a nickel.
…and drop kick into the Puerto Rican trench the ridiculous suggestion that churches need to file 990s for their own protection.
IRS logo shown above. Is it just me or does the logo seem unnecessarily brutalist?