Should Churches be Charities? – Part 2

In my last blog post, I looked at the general question, “Should churches (or religious organizations) be designated as charities?” and concluded, for practicality reasons, in the affirmative, on the basis of history, and the widening (a long time ago) of the legal definition of charity from being of just helping the poor and needy to being for the community good.

In this blog post, assuming this conclusion, I would like to examine the specific case question: when should a church, or a religious organization for that matter, not qualify to be a charity?

First, the charity sector and the charity regulator have pretty much set out the standards and criteria which charities, once qualified, are expected to meet to continue to be designated as charities. These include good corporate governance practices, accountability to donors and other stakeholders, financial management, and staying true to their missions. There are enough of these rules and expectations, and most board members of charities will tell you that we do not need any more for charities to properly function.

All charities, whether religious-based or not, have to abide by these rules and standards. Errant charities can, and will be, dealt with. In this context, any discussion of which organization should not be charities should apply equally to religious and non-religious charities.

What is it then about religious charities that they provoke so much discussion on the question of religious organizations as charities?

 In my view, the reason lies with religious leaders and their link with divinity.

The leader of a regular nonprofit organization may very well be charming and popular with his people (staff, donors, beneficiaries, etc) but he is nevertheless a mortal who is expected to follow the rules. If he abuses his position, he can, and will, be taken to task, not just by the regulator but also by his own people and the public at large. Case in point is the old NKF where excesses of its management led to a public outcry and what has come to be known as the NKF saga.

A religious leader has a lot more going for him. He is often regarded as the earthly representative of God (or equivalent). He is less likely to be questioned by his flock that sees itself as being a part of a cause that is greater than the leader and the organization. The leader’s pronouncements on many matters can be near-absolute as they are deemed to have come from “above.” The prospect for abuse of such power in such situations can be high.

For charities, the upmost concern in the eyes of the public tends to be financial wrongdoing. The risk for financial abuse in the mainstream churches, however, tends to be generally low because of the selection, formation and code of conduct of their religious leaders. For example, in the Catholic Church, a priest is ordained only after an intensive period of scrutiny and formation of eight or more years, upon which he takes a vow of chastity, obedience and, sometimes, poverty. He is expected to live less than modestly. In Singapore, Catholic priests are paid $500 per month although their board and lodgings are provided by the Church. I only know this because I am Catholic (making my declaration here) but I reckon the situation is similar for the other mainstream (Anglican, Methodist, etc) churches. That is not to say that there is no abuse, but hopefully these churches have also built into their internal structures and systems, the mechanisms to prevent, surface and deal with such occurrences.

On the other hand, some “new age” churches and religious organizations may not have the same set of entry requirements, formation process, lifestyle expectations and controls in their selection of the leaders. Indeed, in some cases, leaders emerge by virtue of their charisma and ability to win followers who believe that their leaders’ messages are divinely inspired. Should such a charismatic leader have a flawed character, he (or she) can do untold damage. In extreme cases, these will be classified as cults, which are, of course, banned in Singapore, but not some other countries.

Coming back to the question of charitable organizations, the public expects charity leaders to function with financial prudence, if not, frugality. They would generally take a dim view of charity leaders who reward themselves handsomely from the largesse of their followers and donors, and live extravagant lifestyles. On the other hand, it is unlikely for the mesmerized followers of religious leaders to either notice or reject such extravagance.

This then is the conundrum for regulators and those outside looking in: What do they do about any perceived financial improprieties when scrutiny, objections and even information are not forthcoming from the inside?

There is no easy answer. What I think may be best is greater scrutiny and rules requiring greater transparency and accountability of those religious (and non-religious) organizations where the risk of abuse is higher.

This, however, does not appear to be the current approach of the charity regulator. Currently, charity regulations are skewed by the size of the charities: the bigger the charities are, the more controls and scrutiny are needed. Yet, it is in the smaller organizations (which are able to keep under the regulator’s radar) where there is often more room for manipulation.

In monitoring charities and in the rules requiring transparency and accountability, the basis should be the risk profiles of the organizations. Size count, but that should not be all. There are also other risk factors such as the governance structure and the people involved. And of course, we should also take into account the particular nature of the sector and its players. Yes, the religious sector has the peculiarity with respect to the power of its leaders. But when we get to the other sectors, there are elements of each which will also affect their risk profiles.

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Should Churches be Charities?

With the interest surrounding the recent investigation of the City Harvest Church in Singapore, I have been pulled into quite a few discourses on the subject of churches as charities.

It seems to me that the subject can be tackled on two levels: general (should churches be charities?) and the specific (which churches should not be charities?).

In this blog post, I will focus on the general question: Should churches or, for that matter, religious organizations, be designated as charities?

My short answer is: theoretically, “no,” but, practically, “yes.”

Let me explain.

For the theoretical answer, we need to go back to an understanding of what charity means. If you ask the man in the street, he will likely say that charity is about helping the poor, the disadvantaged and the needy of society. This is the most common understanding of what charity is about.

Using this yardstick, it is hard for most churches (or religious institutions) to qualify as charities. To be sure, church congregations include some, maybe even many, who are poor and needy, but that is just a coincidence. Membership of churches is not based on an individual’s particular station in life; rather it is based on a person’s subscription to certain religious beliefs.

Of course, many religious organizations are charitable in that they can be kind and giving towards the poor and needy – they raise money from among their followers to give to the poor and needy, and they have specific programmes such as shelters and soup kitchens for those in need. In such cases, these particular arms of religious institutions can properly qualify to be charities, but not the main institution which caters to a more diversified membership base.

Why, then, do the authorities generally allow a church to register as a charity?

The answer is historical. Sharifah’s chapter on “Different kinds of kindness” in the book provides a good historical account of how the definition of charity has evolved.

The significance of this legal definition is that the reach of charity was expanded from being merely about the alleviation of poverty (the first category and what most people understand charity to be) to include all and sundry causes that benefit the community. Over time, Commonwealth governments have used the last category (“other purposes beneficial to the community”) to specifically add new causes. For example, Singapore added sports as a charitable cause in 2005.

There are, however, unintended consequences of broadening the definition of charity. First, community resources and support that could have benefited the poor are diverted to other more glamorous but non-poor causes. Secondly, it reduces the accountability and due process for public projects that obtain money under the charity umbrella. (See here for a further read on this)

The reason for including religion as a major category of charitable clauses was that, at the time of the Act, much of the charitable work of providing for the poor and needy were being done by the Church of England. The government and the courts saw benefit in extending this feature and provided recognition for the Church’s efforts.

Today, the situation has changed; we have a plethora of churches and religious organizations. Most are not targeted specifically at helping the poor and needy and, some are arguably not even good for the community. In such a context, one can make a strong case for excluding religion from being a charitable cause.

But, in my opinion, it would be wrong to narrowly target religion for exclusion as a charitable cause.

If religion is excluded – meaning we revert to the layman’s notion of charity as helping the poor and needy – we need to also exclude sports, the arts, heritage, animals, education, environment, healthcare and a whole gamut of other causes of “community good” that have grown over time in the broad-based legal definition of charity. In my view, many of these other causes should go first before we remove religion.

As long as we do not change the legal definition of charity from the community good to only being about the poor and needy, we should keep religion as a charitable cause. Most religions do exist for the community good. They mostly preach goodwill and kindness towards our fellowmen and their leaders are generally selected for their good human qualities. Of course, some do not meet these criteria, but that’s when we get into a discussion about which specific religious organizations should not qualify to be charities.

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Different Kinds of Kindness

 

Charity has come to mean different things to different people.

At its core, charity is about kindness and providing for the poor and needy. However, over time, this idea of kindness has been stretched to cover all aspects of community good, leading to some unintended results in closing the rich/poor divide.

At the same time, charity work has not often been sufficiently extended to deal with the root causes—rather than just the symptoms—of social issues. For charity work to be effective, it must draw more on the head, rather than rely merely on the heart. In addition, a more hands-on approach will connect the giver more to the cause and the real needs of charities.

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