Alabama ranks #1 out of the 51 U.S. jurisdictions for its friendliness towards faith-based nonprofit organizations, making it one of the best places in which to operate a faith-based nonprofit in the United States. Alabama has several policies that facilitate the contributions of faith-based nonprofits, including strong constitutional protections for free exercise of religion, a state constitutional amendment requiring government burdens on religious exercise to satisfy strict scrutiny, and an automatic income tax exemption for organizations with federal 501(c)(3) status. Additionally, Alabama does not impose audit requirements as a condition of maintaining authorization to fundraise in the state. Alabama, however, has some policies that are burdensome to faith-based nonprofits operating in the state, such as a state Blaine Amendment and an imposition of sales tax on religious organizations’ sales and purchases.
Religious Freedom:
State Constitutional Protection of Free Exercise:
5
/5
The Alabama Constitution, in the constitutional text itself, provides stronger protections for religious free exercise or worship than the federal First Amendment, as incorporated.
State Religious Freedom Restoration Act:
5
/5
Alabama has enacted a constitutional amendment that protects the religious free exercise of all individuals and entities by requiring government burdens on religious exercise to satisfy strict scrutiny, providing one of the highest standards for religious freedom protections in the country.
Religious Freedom for Nonprofits with Public Programming:
5
/5
Alabama has no nondiscrimination laws related to public programming and facilities.
Religious Freedom for Faith-Based Employers:
5
/5
Alabama’s nondiscrimination laws related to employment are narrow and generally would not jeopardize the autonomy of religious organizations.
Protections for Religious Exercise in State of Emergency:
0
/5
Alabama law provides that religious worship can only be prohibited or restricted by an emergency order that applies equally to all comparable secular entities in the jurisdiction, as required by Tandon v. Newsom.
Blaine Amendment:
-3
/5
The Alabama Constitution contains a Blaine Amendment that could prevent the participation of faith-based schools in generally available public benefit programs on the same terms as similarly situated secular schools. This is not as broad as a general Blaine Amendment, which prohibits all aid to faith-based institutions, but is still detrimental to the work of faith-based institutions. Current US Supreme Court precedent has rendered this language ineffective, but it could become effective in the future if Court precedent changes.
Regulatory Freedom:
Nonprofit Religious Corporation Act:
0
/5
Alabama’s nonprofit corporation law mentions the option for nonprofit corporations to incorporate for religious purposes. However, the law lacks both: (a) specific provisions to protect the right of nonprofits incorporated for religious purposes to self-government in internal affairs and (b) an option to incorporate expressly as a nonprofit religious corporation.
Standards of Conduct for Directors of Religious Organizations:
3
/5
Alabama law permits a director, in the fulfillment of the director’s fiduciary duties, to rely on the opinion of individuals who can reasonably be assumed to have expertise on a certain matter but does not expressly allow a director to rely on guidance from religious figures within his or her faith tradition.
Charitable Registration Law:
3
/5
Alabama generally requires charitable solicitation registration but, upon application, generally provides religious organizations with a registration exemption.
Audit Requirements Pursuant to Charitable Registration:
5
/5
Alabama does not impose review or audit requirements as a condition of maintaining authorization to fundraise in the state.
Corporate Income Tax:
5
/5
Alabama imposes a corporate income tax but automatically exempts organizations with federal 501(c)(3) exempt status. Some exempt organizations may need to fill an annual “no tax due” form.
Sales and Use Tax, Sales:
-3
/5
Alabama imposes a sales and use tax on religious organizations’ sales and only provides limited exemptions for certain items.
Sales and Use Tax, Purchases:
-3
/5
Alabama imposes a sales and use tax on religious organizations’ purchases and only provides limited exemptions for certain items.
Property Tax:
3
/5
Alabama imposes property tax but, upon application, generally provides an exemption to religious organizations for property used for religious and/or charitable purposes.
