H.R. 41: The State Demands Church Disclosures

Watergate cover-ups and clandestine Central Intelligence Agency activities have thrust us into an era when baring the organizational soul to the public has become a virtue—and the eighth deadly sin is refusing to do so.

Despite traditional protection from state interference, religious organizations are not immune to these pressures for disclosure. During the last year religious groups have been the targets of proposed legislation in Congress, notably the charity disclosure bill, H.R. 41, introduced into the House of Representatives by Charles H. Wilson (D-Calif.), chairman of the Committee on Post Office and Civil Service.

Wilson’s bill seeks to regulate any charitable organization, including churches and other religious groups, that solicits “in any manner or through any means, the remittance of a contribution by mail.” In plain language, this means that a religious group asking in any way for money to be donated to it through the mail is subject to the disclosure requirements of the bill. Groups covered by the bill would have to include with their solicitations the following information: the legal name and address of the charity; the purpose of the solicitation and intended use of the money contributed; and the percentage of contributions “which were directly applied” to the charitable purpose, after deducting “all fundraising and management and general costs during the most recent complete fiscal year.”

This information must be provided at the point of solicitation, or when the appeal for funds is made, rather than at the demand of prospective contributors or investigators. The bill requires groups that solicit on radio to make their communications clearly audible. Those that use television must make their disclosures in clear lettering and for a sufficient period of time to allow the viewer to read the wording. The bill exempts some very short radio and TV appeals, and also “bona fide membership organizations,” including churches, that make exclusive solicitations to their members.

Any charitable organization, including churches, that falls under the bill would find its records subject to the watchful eye of the Postal Service. At the request of postal authorities, churches would have to supply “audit reports, accounts, or other information as the Postal Service may require to establish or verify information which such organization is required to include in solicitations.”

From a legal point of view, there are two main problems with H.R. 41. In the first place, there is good reason to believe that the courts would find the bill unconstitutional. Secondly, even if the bill is constitutional, some of the key words and phrases are so vague that the courts would have to work overtime to give them meaning in future lawsuits.

The possible conflict of the bill with the Constitution centers on the First Amendment, which prohibits Congress from passing laws “respecting an establishment of religion, or prohibiting the free exercise thereof.” If H.R. 41 becomes law it seems likely to restrict the freedom of churches and other religious organizations in fundraising. Television appeals would have to be interrupted by an extensive disclosure statement, and the impact of the appeal would be blunted. Also, the additional accounting and paperwork in delineating management and “direct” charitable costs will put an added financial burden on religious groups. In a kind of religious Catch-22, as churches spend more money on administration to comply with the disclosure law, the percentage of money they can apply directly to their charitable purpose will decrease. And in the public eye they may appear to be spending an inordinate amount of money on administration, partly because the disclosure law requires them to do so. The power of churches and other religious organizations to raise money freely to support their activities is necessary if they are to remain an independent force in society. Otherwise, financial pressures may force these groups to rely more on foundations or even government aid, and our constitutional principle of strong, separate spiritual institutions will be lost.

The eyes of the government are turning their watchful sight churchward. Under H.R.41 any church or religious group that asks for money through the mails must make full public financial disclosures.

The U.S. Supreme Court has traditionally avoided taking an active role in restricting or regulating the activities of religious groups. On the contrary, most active steps by the court have been to broaden the power of religious groups. For example, in the 1952 Zorach v. Clauson case, the court held that a New York City ruling which allowed students to leave school for religious instruction during regular school classes was constitutional. The court again approved a form of state aid to religion in Sherbert v. Verner in 1963. Writing for the majority the late Justice Tom C. Clark said it was a violation of freedom of religion not to allow a woman who was a Seventh-day Adventist to receive state unemployment compensation. She had been fired by her employer because her religious convictions prohibited her from working on Saturdays.

H.R. 41, in contrast, would cast the federal government in an active role opposing religion. This role appears to be in conflict with the Supreme Court’s landmark 1947 decision of Everson v. Board of Education, in which the late Justice Hugo Black declared that “State power is no more to be used to handicap religions than it is to favor them.” Chief Justice Warren Burger reinforced this line of thought in 1970 in Walz v. Tax Commission, which upheld tax exemptions for property used solely for religious worship. Burger wrote, “We must also be sure that the end result—the effect—is not an excessive government entanglement in religion.” He established two tests to determine excessive state entanglement in religion: “whether the involvement is excessive, and whether it is a continuing one calling for official and continuing surveillance leading to an impermissible degree of entanglement.” Although Justices Byron White and William Rehnquist criticized this entanglement standard in a later case, Burger’s ruling still stands as the law of the land.

The Chief Justice concluded in Walz that a principle of “benevolent neutrality” should control the state’s dealings with the church. The provisions of H.R. 41 seem anything but “benevolently neutral” as they attempt to impose an active fundraising and accounting burden on religious groups.

But the constitutional problems that surround H.R. 41 are only part of the problem. The language of the bill is so vague that considerable litigation is inevitable on that ground alone. One phrase that poses serious problems of interpretation is the statement that charitable organizations that solicit “in any manner or through any means” the remittance of contributions by mail must include the various financial disclosures with the solicitations. But what about the lay chairman of a local church pledge drive who stands in front of his congregation and tells them to take pledge cards from the ushers and mail them to the church? If nonmembers are present, must the chairman exclude them explicitly from his appeal, or recite the disclosure litany from the pulpit? Will missionaries writing of their financial needs on the field be under similar obligations? Which federal agencies will implement and police such requirements?

Or how about the pastor who is pulled aside by a nonmember who wants information about giving money to the church? If the pastor suggests that the inquirer drop his contribution in the mail, will this suggestion be a solicitation “in any manner and through any means”—a solicitation that would require a full, on-the-spot disclosure of management percentages? If so, the pastor’s freedom in asking for contributions will be severely limited.

What it all boils down to is this: the phrase “in any manner or through any means” is so sweeping that it is bound to be challenged in court by religious groups that are understandably reluctant to surrender control over their fundraising.

An even more difficult section of the bill to define is the requirement of disclosure of the percentage of all contributions that were directly applied to the charitable purpose “after deducting all fundraising and management and general costs during the most recent complete fiscal year of the organization.” In any charity, there is a large gray area of costs that cannot be defined clearly as either “management” or purely charitable. In a local church, is the minister’s salary a management cost, when a large part of his time is devoted to counseling and preaching? If the costs attributable to counseling and preaching are not being “directly applied” to the charitable purpose, it is difficult to imagine what would be. But the pastor is also an administrator. So to comply with H.R. 41 it will probably be necessary to allocate his salary between charitable and administrative functions.

Also, what about the church secretary’s salary? Granted, the secretary may be doing “fundraising” work, like typing appeal letters. But the job may also include typing the minister’s sermons and putting together the Sunday bulletin. That part of the secretary’s salary required for both of these latter tasks would seem to be money “directly applied to the charitable purpose,” but some postal investigator might well decide otherwise. If the bill becomes law, the failure to define these terms clearly could create a nightmare of paperwork and accounting costs for religious groups, and will make enforcement by the Postal Service even harder.

The problem of enforcement and surveillance brings up another difficult problem raised by the language of the proposed law. Recent amendments, apparently in response to constitutional questions about excessive state entanglement in religion posed by the Walz case, give lip service to restricting the Postal Service’s power under the bill to oversee religious groups. For example, the Service cannot audit charities “at regular intervals” and can intervene only where there is a “specific need.” But postal authorities still retain broad discretion under H.R. 41 to demand “such audit reports, accounts, or other information as the Postal Service may require to establish or verify information which such organization is required to include in solicitations.”

Taken at face value these words seem to give the Postal Service the right to demand such confidential records as contributors lists. If these lists should become public, and there is reason to think that they might under the provisions of the Freedom of Information Act, a church or other religious organizations would lose control over who would have access to their hard-earned and carefully-guarded donor lists. Donors to unpopular or controversial evangelistic groups might find themselves being harrassed by the group’s opponents.

Finally, though churches and other religious groups that solicit “exclusively” from their “members” are excluded from the bill, the definition of the word “members” raises a knotty question. There are some churches with different classes of membership. The United Methodist Book of Discipline, for example, provides for “affiliate members” who can participate fully and hold office in one United Methodist church while staying on the rolls of another. There are also “associate members,” who are members of a different denomination but who elect to participate in a United Methodist church on the same terms as an affiliate member. H.R. 41 is unclear whether the term “members” includes all these types. Defining the term precisely is essential to determine whether solicitations to one or more classes of “members” require disclosure under the bill. Furthermore, in some organizations all donors are regarded as members of a contributors’ organization or club, and their membership gives them certain privileges and recognition. If the word “members” in this bill can be read so broadly, religious groups might be well advised to use the same escape hatch to avoid compliance with disclosure requirements.

But looking for ways to escape the requirements of H.R. 41 is not really the answer to this proposed legislation. Instead of imposing onerous, vague, and constitutionally questionable disclosure requirements on religious organizations, the federal government should concentrate on enforcing mail fraud and other statutes that are on the books. The most that is called for on the federal level is a statute that would preempt the various state laws now in force so that charity regulations would become more uniform nationally. Any such legislation, however, should only give federal authorities power to compel disclosure and investigate religious groups when there is evidence of some criminal or civil violation. Bills like H.R. 41 that require disclosure with no evidence of wrongdoing and give the Postal Service broad discretion in auditing confidential church records seem more an overreaction to the enthusiasm for disclosure than a measured proposal for effective long-term reform.

Pillar of Cloud

A wonder when the cloud halts,

A time of rest and fruit

While herds grow fat

And ewes suckle young.

Away on nervous hills

The watchmen pace

While lovers below

Give leave to spring.

But what to do

When the cloud moves on?

Strike the set! Break camp!

Move out and mount the hill.

Zion’s milk waits over the brow.

Zion’s honey flows at the end

Of a misty trek.

MICHAEL GRAVES

Immediacy

As I was saying,

what I want, God,

what I really want

is always the immediacy

of the short sight,

of the softly heard,

the immediacy of the human race

that charges its destiny into wreckage

several times a century.

I of the short sight and dim hearing

would do likewise, Lord,

if You permitted.

CAROLE SANDERSON STREETER

D. Bruce Lockerbie is chairman of the Fine Arts department at The Stony Brook School, Stony Brook, New York. This article is taken from his 1976 lectures on Christian Life and Thought, delivered at Conservative Baptist Theological Seminary in Denver, Colorado.

Have something to add about this? See something we missed? Share your feedback here.