The Washington Post has an interesting article (via Christianity Today's Weblog) on church finances. The following paragraph made me wonder about disclosure regulation. There ought to be a rule requiring churches, and other tax-exempt nonprofits, to report their income and the salaries of the five highest-paid employees, similar to rules for public corporations. Good organizations do this anyway; bad organizations do not. For example:
."Tithing is very important to operate the church proper, but we borrow public money to finance things like the community development corporation, and something like our seniors buildings is financed through tax credits," Williams said. "We report everything that we do and we have annual reports that are available to the members."
The Internal Revenue Service has published a tax guide book that lays out how houses of worship, which generally are tax-exempt except when they operate profit-making ventures, should govern themselves. While churches don't have to report funds raised for ministry, they do have to report tax information for employment and for unrelated businesses worth more than $1,000.
but a more dubious organization is this one:
The issue of church money management spilled into the public eye in July 1999, when a rift developed between the Rev. John A. Cherry and most of the 24,000 members of Full Gospel AME Zion Church in Temple Hills, and the parent church, the African Methodist Episcopal Zion organization. Cherry and many congregation members broke off and renamed their congregation From the Heart Church Ministries. A court battle ensued over $40 million in assets, including several church buildings and a Lear jet.
The New York Stock Exchange is another example. Apparently members did not know of the gigantic salary of the president-- yet information disclosure is more important to the efficient and honest operation of a nonprofit than it is for a for-profit corporation, since the nonprofit corporation does not have the benefit of the investigation of market analysts.
[ permalink, http://php.indiana.edu/~erasmuse/w/03.11.25a.htm ]
To return to Eric Rasmusen's weblog, click http://php.indiana.edu/~erasmuse/w/0.rasmusen.htm.