WASHINGTON, D.C. - The work of faith-based nonprofits matters more than ever, but many states burden and hinder these organizations, rather than protecting and supporting them. The Faith and Freedom Index, an unprecedented study from Napa Legal, shows what needs to change.
“The work of faith-based nonprofits matters, which means that states’ friendliness to these nonprofits also matters,” Napa Legal Executive Director Mary Margaret Beecher explains. “Faith-based nonprofits face threats to their religious freedom and the often-crushing weight of regulatory burdens. If we value faith-based organizations’ contributions to building and sustaining our communities, our state laws should encourage, not hinder, these organizations. In the Faith and Freedom Index, we explain what needs to change and how,” Beecher says.
The first edition of the Faith and Freedom Index, which will be updated annually, evaluates each of the 50 states (plus Washington, D.C.) on fourteen factors that impact the abilities of faith-based organizations to operate successfully and efficiently. “The Index is unprecedented in that it takes the perspective of faith-based nonprofits themselves,” Beecher states. “We evaluate state laws not from an ivory tower but with a focus on their practical impact.”
Some factors relate to day-to-day operations at a faith-based organization, while others deal with some of the most contested issues of our time. High scores go to states that support and facilitate the work of faith-based organizations; low scores go to states that burden faith-based organizations or leave religious freedom without clear or adequate protections.
The factors are divided into categories: religious freedom and regulatory freedom.
The religious freedom score encompasses key issues related to a nonprofit’s freedom to pursue its mission in accordance with its sincerely-held religious beliefs.
Top scores for religious freedom went to Alabama and Texas. Both states require government burdens on religious freedom to pass the most rigorous legal tests. Texas features a state constitutional amendment expressly protecting religious worship. Low scores in the religious freedom category went to Nevada and Maryland—states with only weak and ambiguous protections for faith-based nonprofits’ religious freedom.
The regulatory freedom category evaluates the laws that impact day-to-day operations at a faith-based nonprofit—do state laws make it straightforward or difficult for a nonprofit to successfully operate and comply with the law?
In this category, the Pacific Northwest stood out, with Oregon, Montana, and Wyoming taking three of the top ten rankings. These states set up nonprofits for success by featuring simple, user-friendly fundraising requirements and tax regimes. By contrast, complicated tax requirements and burdensome fundraising obligations led to low regulatory freedom scores in several states, including Michigan and Wisconsin.
The religious freedom and regulatory freedom scores are combined to form the overall scores for each state.
The highest overall scores went to Alabama and Texas, which were also the top-scorers for the religious liberty category. These states unambiguously protect religious freedom while also setting up nonprofits for success through straightforward corporate, tax, and fundraising regimes. The lowest overall scores went to Maryland, Michigan, and Nevada because the states feature both complicated regulatory regimes and only minimal protections for faith-based organizations.
“The overall conclusion of the Faith and Freedom Index is that every state can and should do more to facilitate the work of faith-based organizations,” Beecher stated. “Faith-based nonprofits bring education, spiritual and moral formation, and humanitarian services to our communities. The Faith and Freedom Index shows how we can do more to value this important work.”
For further information, please contact Mary Margaret Beecher at mary.beecher@napalegalinstitute.org