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In the journal Stanford Social Innovation Review last year, Masaoka argued for a federal law requiring religious institutions to file the same tax form (known as Form 990) that is required of other nonprofit groups.

Requiring uniform accountability across the nonprofit world would not violate the First Amendment, Masaoka told Christianity Today.

"We don't exempt churches from safety laws. They are accountable to labor laws and property management laws," she said. "It's not really true that we have a separation of church and state." If churches share the same tax advantages as non-profit organizations, they should be subjected to the same disclosure rules, she argued. And it's especially important, she argued in the journal article, that billions of dollars in federal grants are going directly to faith-based organizations.

Diana Aviv, President of Independent Sector, a leadership forum for charities, foundations and corporate giving programs, agrees that President Bush's faith-based initiative may drive a push for disclosure.

"When houses of worship get public funds, then the question becomes, does the public have a right to know how those institutions how they use the money," she said.

But bills like the one proposed in Massachusetts unconstitutionally entangle the government in church business, says Paul Nelson, president of the Evangelical Council for Financial Accountability. Even if it had passed, he said, it would have had a long future in the courts.

"It is probably reflective of an increasing mood driven by abuse or perceived abuse," Nelson said. "The charitable community is lightly regulated and the lawmakers are saying, 'Wait a minute.'"

Nelson said such efforts demonstrate the responsibility for churches to operate above par so they will not be charged with abuse. Some religious organizations do have skeletons in their financial closets, he said, but "the bigger problem is the precedent that the government is stepping in and imposing on local churches."

Representative Byron Rushing, the leading opponent of the Massachusetts bill, said many local Protestants didn't recognize the potential reach of that precedent until the Massachusetts Council of Churches rallied them.

"I think most people thought this was just a legislative attempt to force the Roman Catholic Church make its books available," said Rushing, a Democrat. "What the legislation did was to redefine religious institutions in Massachusetts."

Diane Kessler, executive director for the Massachusetts Council of Churches, which represents approximately 1,700 Orthodox and Protestant congregations, warned that regularly compiling and releasing financial statements would make church volunteers less inclined to serve.

"Everybody would've been swept up in the reporting requirement. It wouldn't have matter whether you were independent or denominational," Kessler said. "The religious leaders thought it was an unwarranted intrusion into the religious communities."

The burden would fall most heavily upon smaller congregations, not big ones, said Daniel Herrell, associate minister of Boston's Park Street Church.

"Given that most congregations in New England are under 75 people, to hire an independent auditor is a luxury that many don't have," he said. "It was extraordinary to see how one bill drew everybody together like nothing else has."

That unity has dissipated now that the bill is no longer under consideration. Whether a similar coalition can rise among those who want to see disclosure requirements remains an open question—as does the matter of what would happen if the disclosure debate went national.

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March (Web-only) 2006, Vol. 50