On Christian Colleges and Tax Exemptions

Okay, let’s talk about Beto O’Rourke. Last Thursday night, at a Democratic presidential candidates forum on LGBT issues, CNN host Don Lemon asked the former Texas congressman whether “religious institutions like colleges, churches, charities—should… lose their tax-exempt status if they oppose same-sex marriage.” O’Rourke answered:

Yes. There can be no reward, no benefit, no tax break, for anyone, any institution, any organization in America, that denies the full human rights, that denies the full civil rights, of everyone in America. So as president, we’re going to make that a priority. And we are going to stop those who are infringing upon the human rights of our fellow Americans.

With conservatives warning of the state making war on the church and even some progressives questioning whether this was constitutional or politically smart, O’Rourke tried to clarify his position Monday on MSNBC:

It’s still not clear what this means for churches that refuse to marry same-sex couples. (Is conducting weddings “providing services in the public sphere” or “[practicing] your faith within your place of worship”?) But one way or another, even this version of O’Rourke’s comment seems to have dire implications for private colleges and universities whose religious beliefs compel them to discriminate against non-celibate gay, lesbian, and bisexual Americans to the extent of not hiring them as employees or housing same-sex couples on campus.

Ordinarily, I wouldn’t pay much attention to an unemployed politician and what he’s desperate enough to say or do in his quest to break out of the third tier of the Democratic presidential field. Even at an event co-sponsored by the leading gay rights group in America, no other candidate — including front runner Joe Biden — said anything like this. I don’t think the topic even came up in last night’s debate, but two other leading candidates had already distanced themselves from O’Rourke. Pete Buttigieg (the openly gay and devoutly Episcopalian mayor of South Bend, IN) warned that O’Rourke’s stated policy “means going to war not only with churches, but I would think, with mosques and a lot of organizations that may not have the same view of various religious principles that I do.” The campaign for progressive senator Elizabeth Warren stated that “Religious institutions in America have long been free to determine their own beliefs and practices, and she does not think we should require them to conduct same-sex marriages in order to maintain their tax exempt status.”

But even as Buttigieg disclaimed any desire to “[go] after” tax exemptions for churches, mosques, and other “religious facilities,” he also made clear that “if we want to talk about anti-discrimination law for a school or an organization, absolutely they should not be able to discriminate.” Warren’s campaign didn’t make clear if she included religious schools, colleges, or seminaries among the “religious institutions… free to determine their own beliefs and practices.” And as Ed Stetzer pointed out in response to O’Rourke, all leading Democrats support the Equality Act, which aims to protect LGBTQ Americans against discrimination but makes no provision for exceptions rooted in religious liberty.

Inazu, Confident PluralismEven more significantly, the Supreme Court is currently considering several cases where LGBT equality and religious liberty seem to come in conflict, with lawyers for the Council for Christian Colleges & Universities (CCCU) arguing that “It should not be surprising that religious universities seek to hire employees who support their religious missions. Refashioning the statute [Title VII of the 1964 Civil Rights Act] to equate ‘sex’ with sexual orientation and gender identity would create new conflicts for many religious universities that hire employees whose beliefs and practices will advance their religious mission.” Instead, the CCCU, among other religious groups, has backed compromise legislation that would recognize both non-discrimination on the basis of sexual orientation or gender identity and protect the freedom of religious organizations — including education providers — to continue to discriminate on this basis in their own hiring and other practices. (As they already discriminate on the basis of religion, and other colleges discriminate on the basis of sex.) It’s unclear just when this proposal will reach the floor of the Republican-controlled Senate — or whether the House would even vote on it. (Nearly five months after the House passed it, the Equality Act still hasn’t reached the Senate floor.)

I’d like to think that John Inazu is right that Americans can figure out a way to maintain a system of “confident pluralism,” in which we can all “be steadfast in our personal convictions, while also making room for the cacophony that may ensue when others disagree with us.” But I need to recognize that (unlike Inazu) I’m no expert on constitutional law, and I clearly have a vested interest in the outcome of this debate.

So I want to encourage myself — and readers associated with Christian colleges and universities who want to join me — to step back from discussions of constitutionality and legality, political calculation, and even economic viability. Instead, I think we’d do better to use this moment as a prompt to ask two more fundamental questions:

Should we continue to function if our existence depends on tax exemptions?

I’m not sure what I would have said if this had all come to a head back when I started my career in 2003, when Bethel was still several years away from reaching its enrollment ceiling and could continue to hire additional faculty, even in fields like history. If maintaining the sexuality clause in our Covenant for Life Together, with what it means for hiring and other policies, had meant that Bethel were no longer exempt from paying property taxes, no longer had access to federal and state financial aid, and no longer could promise tax benefits to donors, we might have tightened our belts and still been able to carry on. Here in 2019, that’s probably still the case for well-endowed colleges like Wheaton or universities like Baylor.

But Bethel and most other CCCU members are contemplating this problem in the midst of a seemingly perpetual fiscal crisis. If some combination of legislation, executive action, and/or judicial decision goes against us, many (most?) such schools will soon have to close their doors.

Approximately once a year at this blog, I try to have the courage of my convictions and face up to the worst possible future. For example, in a recent post suggesting questions that any prospective Christian college president should have to answer, I closed with this one: “Under what circumstances would you recommend that the board close this university?” I argued that such leaders “need to accept that, at some point in their tenure, the most faithful act would be to accept the death of a college — with its assets distributed for the good of other ministries that will do as much to extend the kingdom of God.” I don’t want to see that happen. But institutional self-preservation isn’t our mission. And if we can’t fulfill our mission except with the economic assistance of the state, perhaps this model of Christian education is ready to join others on the dust heap of history.

In fact, we should probably use this as a moment to consider if and how we have already compromised that mission in order to serve the needs of the state. Perhaps not much — I’m glad, for example, that Bethel finally set aside an old policy and let our faculty apply for federal research funding; that seems like a clear case of how we can partner with the government to further our mission. But if I think there are many good reasons on both sides for church and state to be separate, then I shouldn’t leave unexamined the ways in which they may have grown too cozy with each other.

1040 tax form being filled out
Creative Commons (Ken Teegardin)

Why should we continue to benefit from a tax exemption?

Okay, enough big talk. I don’t want Bethel to close. Not only would that outcome be terrible for hundreds of employees and thousands of students, but it would be bad for many other people in the Twin Cities, Minnesota, the United States, and beyond. And I trust that’s true of the 120+ other members of the CCCU. If Christian institutions like ours don’t exist to serve the needs of the state, we do exist to serve the needs of others: to glorify God, I’ve claimed, but also to seek our neighbors’ good — all of them.

(And, like Baylor professor Alan Jacobs, I don’t think that we should “place our good ahead of the common good,” if it means that religious liberty can only be protected by supporting a president who is “cruel to the helpless, treacherous to longstanding allies, cozy with authoritarian regimes, incapable of sticking with a plan, prone to judge everyone he meets strictly by their willingness to praise and defer to him.”)

Again, I’m no constitutional scholar. But some quick research suggests that there have historically been compelling (secular) reasons to give (religious) nonprofit organizations tax exemptions and other benefits.

Burger served as chief justice from 1969 until his retirement in 1986 – Wikimedia

In the 1970 Supreme Court case that is key to the church claim for tax exemptions, Warren Burger wrote for the majority that “certain entities that exist in a harmonious relationship to the community at large, and that foster its ‘moral or mental improvement,’ should not be inhibited in their activities by property taxation or the hazard of loss of those properties for nonpayment of taxes.” Here too, it’s tricky when we leave the realm of “churches” and enter that of, say, “church-related schools and colleges.” But if nothing else, I would do well to spend a little less time protesting the violation of my employer’s tax rights and think instead about how Bethel might better nurture a “harmonious relationship” with communities that look less and less like the Christendom that still existed in 1970.

In part, what this requires is that I ask honestly if Bethel is contributing as much as it can, as winsomely and compellingly as it can, to what Inazu calls “a diversity of viewpoints and ideas.” (He makes this argument in his book on Confident Pluralism, but you can also read a short version in one of his responses to the 2015 Obergefell decision.) Are we enriching the pluralistic discourse that not only conduces to the pursuit of knowledge, but to the functioning of American democracy?

But I think we should also ask ourselves if we are contributing to the common good even beyond “moral or mental improvement.” One of the reasons that John Inazu warned against O’Rourke’s policy (in a weekend piece for The Atlantic) is that the damage to Muslim, Jewish, Christian, and other religious organizations would consequently harm millions of Americans who depend on the work of socially conservative religious groups:

O’Rourke’s stance—if played out to its end—would decimate the charitable sector. It is certainly the case that massive amounts of government funding flow through religious charitable organizations in the form of grants and tax exemptions. But anyone who thinks this is simply a pass-through that can be redirected to government providers or newly established charitable networks that better conform to Democratic orthodoxies is naive to the realities of the charitable sector.

I don’t doubt that that’s true of religious organizations that clearly fulfill Jesus’ mandate to serve the hungry, sick, and poor. But as easy as it is to imagine why any reasonable person should want conservative, compassionate Christians to continue to meet their fellow Americans’ need for food, shelter, and health care, it can be harder to see the compelling need met by expensive private colleges housed on wooded, lakeside campuses.

Are we doing something necessary and good for our neighbors that couldn’t be done as well by other nonprofit educational agencies that don’t impose a religious test that may discriminate against a category of citizens?

Again, I’m no expert on any of this. But as law professor Miranda Fleischer explained in her response to Obergefell, another commonly accepted rationale for the state using tax policy to (in effect) subsidize the work of religious and other nonprofits “is that by doing so, we help them to provide public goods otherwise subject to market failure — where the amount produced is less than the amount needed.” While she doesn’t actually think that many churches deserve an exemption on this basis, she does think this “‘public goods’ rationale is more objective” than Burger’s.

Cover of The Pietist Vision of Christian Higher EducationSo do Christian colleges provide a public good that would otherwise be subject to market failure?

Yes. It’s called a liberal arts education.

Why a “public good”? As a leading national higher ed group argued in 2013, it’s the humanities and social sciences that function as “the heart of the matter, the keeper of the republic—a source of national memory and civic vigor, cultural understanding and communication, individual fulfillment and the ideals we hold in common.” Because most Christian colleges insist, like Bethel, on requiring all their undergraduates to study widely in those fields — plus the arts and natural sciences, they prepare citizens who better understand themselves and others, have the capacity to recognize and respond to injustice, and possess the empathy, humility, hospitality, and comfort with complexity to contribute to a religiously plural society. And in the process, we do contribute to the thriving public square of ideas.

Yet that model of education increasingly flies in the face of a market that embodies other values. (For a fuller elaboration of this argument, see my recent talk on the “three economies” in which our colleges participate.) We need only look to similar-sized, publicly-funded neighbors to see that disciplines like philosophy, theatre, anthropology, history, literature, and even certain hard sciences are losing ground to programs offering more direct pathways to the job market.

“In spite of these trends—or perhaps because of them,” theologian Kelly Capic argues, in this month’s issue of Christianity Today, “the distinctively Christian liberal arts college is more valuable than ever.” But institutions like mine have made the argument less compelling precisely because we’re trying to be relevant on non-religious (or indirectly religious) grounds. The less Christian colleges resist market pressures to provide a genuinely distinctive public good and the more that they instead emphasize their ability to train people for the immediate, particular needs of a changing economy, the more similar they will seem to their many competitors that aren’t threatened in the least by O’Rourke’s proposal. And the easier it will be to ask why the government doesn’t revoke the tax exemption and instead offer better funding to state schools that do much the same thing for many more students, including non-Christians and LGBTQ individuals.


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