Did you know churches are underregulated?

Perception is reality – I really dislike that statement since it excuses people from trying to understand things they don’t understand, but then that is just my perception (yes, the last phrase is a joke!).

God knows, an article in The Economist, shows us the magazine’s perception of the church community.  Their perception is likely to be representative of many people. For background, churches are not required to file a form 990 with the IRS reporting their income, expenses, assets, and salaries of senior staff.  The article says that the report from Sen. Grassley’s staff shows this lack of reporting:

“…highlights a serious regulatory failure at the heart of America’s charitable sector.”

The magazine seems to approve of increasing regulation and oversight of churches. The conclusion of the article says that Sen. Grassley is opening up a contentious issue and

“..his reward may be a much-needed burst of transparency. Let there be light! “

For us to be wise in running our churches and para-church ministries, we need to be attentive to the world around us.  We should be aware the perception others have of the church world is:    we are underregulated.

2 thoughts on “Did you know churches are underregulated?

  1. Having audited churches myself, I’m afraid I have to agree with this perception: churches ARE underregulated, and it leads to sometimes shocking abuses of donated resources.

    On the other hand, additional regulation would be extremely burdensome to the vast majority of churches, which are too small for even a paid bookkeeper. It’s a dilemma with no easy solution.

  2. Thanks for your comment. I’ve been waiting for other comments before I posted again.

    I have seen some of the same things you describe. I think I know the kind of behavior your are referring to. Sometimes there is willfulness and at other times a lack of knowledge can create compliance issues.

    My concern is that preparing a 990 would not prevent those things. Just as preparing a 1040 or 1120 with the risk of audit roulette does not prevent some people from cheating on their taxes, I don’t know if a requirement for 990s in churches would eliminate the unethical behavior that sometimes occurs. At the same time, there would be a large burden on the vast majority of churches.

    Thanks again for your comment.

    Anyone else have any thoughts?

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