University of Pennsylvania sociologist Ram Cnaan has been researching the economic value of churches for more than two decades. Because some congregations would almost certainly close their doors without tax exemptions, Cnaan thinks proponents of taxing churches are misguided.
Your research looks at the “halo effect” that churches have on their communities. What is the “halo effect”?
It is the way that congregations contribute to the local economy. Churches spend money locally, and since they spend money locally, they enhance the local economy. So on a small scale, every church buys flowers. Where do they buy flowers? From a local florist. No one mentions this, but across the country there are florists in business because of local congregations.
People don’t look at the value of the congregation financially. They look at the spiritual aspect. Now, I’m not a person of faith, I’m a social scientist. I started to look at the congregation as an economic engine. What is the value that an urban congregation on average contributes to the local economy?
In the first study [in 1996], we went to 10 congregations in Philadelphia and we looked at the replacement value of social services like finding people jobs. On average, it was $140,000 per year. Of course, social services is only a small component of what congregations do. So next we looked at 90 churches in Philadelphia, Chicago, and Fort Worth, and all the ways they contribute to the local economy. There was a range—each generated between $1.2 and $2.5 million annually.
How did you arrive at those numbers?
There are about 100 things that we measure. First, we said, “What should be included?” And then we work with experts in valuation and ask them, “What is the lowest credit I can give for this?”
For example, a pastor tells me a member of the congregation was thinking strongly about suicide. The pastor worked very hard to help this person, and this person did not commit suicide. How much credit, valuation, should I give to the church?
We found a source on the cost of suicide. For the sake of discussion, let’s say it’s $100,000—that’s what it costs the family and community. Then I say, I’m sure that other people, family and friends, helped this person as well, so I’m only going to give the church half. Then I’m going to say, well maybe next year the person will commit suicide, so give the church credit for one year only. I divided it by 20 years and gave the church 1/20 of 50 percent of the cost of suicide for that social work. That’s the valuation.
You do that for 100 things, and add it up. We were as conservative as possible.
What do you say to people who want to tax churches?
I think they are miscalculating. If you tax a church, maybe you get $6,000 or $7,000 in taxes, but the loss to the community will be greater.
The taxes won’t change the budget of the local municipality. But the church buying flowers, and food for fellowship, and paying the clergy—that will impact the town. Most congregations don’t have a surplus at the end of the year.
I always ask, why does no one want to tax museums? I’ve never seen any museum serving soup to the hungry. And I’m not talking as somebody who hates museums! But there’s no museum in Philadelphia where you can drop your kids off at 1 p.m. and pick them up again at 6 p.m. And for churches, this is not so strange a thing.
Are churches different than other nonprofits?
There are many nonprofits and they’re all tax exempt. No other organization does as much as a congregation. Congregations are—I want to say weird, but not in a negative way.
I cannot call the head of the museum at 2 a.m. and tell them I have a personal problem. Even if I’m on the board, I cannot call. But people can call a clergy and say, “My father is dying at the hospital, will you come?” The fact that it is not considered out of the norm to expect clergy to be available for something like this explains how unique this kind of organization is.
Daniel Silliman is news editor for Christianity Today.
