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.
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.
To put this into perspective, the combined total of government subsidies to agriculture in the United States in 2009 was estimated to be $180.8 billion.38 Religions receive at least 40 percent of the subsidy that agriculture does in the United States.