The Law Can Help Religious Organizations Flourish

The U.S. Supreme Court will soon hand down its decision in 303 Creative LLC v. Elenis. The relevant statute in the case, the Colorado Anti-Discrimination Act, “prohibits businesses that are open to the public from…discriminating on the basis of…sexual orientation,” and does not include broad exemptions for religious business owners. The Court will decide whether the statute’s lack of a religious exemption violates the First Amendment by compelling a Christian wedding-website designer to design websites for same-sex “weddings.” 

In another recent religious-liberty case, Yeshiva University was sued by the Yeshiva University Pride Alliance after the university concluded that formally recognizing the student organization would violate its Jewish faith. This quickly became a First Amendment issue, and the case remains in litigation. 

There is an important legal distinction between the New York and Colorado cases: Under the relevant New York City Human Rights Law, which prevents discrimination by places of public accommodation, “a religious corporation incorporated under the education law or the religious corporations law shall be deemed to be in its nature distinctly private.” The New York court that initially decided this case had reviewed Yeshiva’s corporate documents and concluded that the university is not “a religious corporation as defendants contend.” As the Napa Legal Institute, where I am privileged to serve as counsel, summarized the case, “Whether by misunderstanding or mistake, Yeshiva’s corporate governance failed to hardwire its religious identity into the university’s organizing documents clearly enough to persuade the local judge.”

While we watch these high-profile religious cases play out in high courts, there is a fundamental lesson to be learned: State laws, and the way religious organizations comply with them, have drastic consequences for religious organizations’ ability to function in our society.

Nonprofits formed for religious purposes, from churches to schools to charitable organizations of all kinds, have been and remain sources of incalculable moral, social, and economic benefit to our nation. While we occasionally watch a high-profile legal battle over religious liberty, there are countless instances, exemplified by the two cases above, where mundane, often overlooked state laws have a tremendous impact on religious faith in the public square. 

It is crucial that we be aware of these laws and how they vary among the states. This is why Napa Legal published an extensive analysis of these laws, culminating in the Faith and Freedom Index. The Index evaluates and scores all fifty states (plus Washington, D.C.) on fourteen legal criteria that affect religious organizations. By comparing each states’ laws involving religious liberty—including non-discrimination laws, corporate governance laws, charitable registration laws, and various tax laws—one can see the many ways in which state laws either help or hurt the work of religious organizations.

Religious organizations and those who care about those organizations’ ability to thrive need to know what relevant laws are on the books. It is important to be aware of laws that harm religious organizations and of good laws that can benefit them.

Cases like 303 Creative offer a warning: A religious person or organization might end up winning a religious liberty battle at the Supreme Court, but few want to suffer in court and the public eye for years to become a precedent-setting test case. This does not need to keep happening. Responsible state governments can lessen these burdens on religious people and organizations by repealing, or refusing to pass in the first place, burdensome non-discrimination statutes that leave little room for religious exercise in the public square. The treatment of website designers and cake bakers in Colorado should not be considered inevitable. Red states can and should use their majorities to create laws more friendly to religion.

The Yeshiva case offers a different warning: Religious individuals and organizations are under constant scrutiny, and therefore ought to be as compliant as possible with tax law, charitable registration, corporate governance—all the boring and technical areas commonly overlooked by religious organizations. Yet these things matter greatly. As the district court in Yeshiva stated, it was not clear from the university’s corporate governance documents that the university had explicitly organized itself as an educational or religious corporation. If it had, Yeshiva would have been exempt from the relevant non-discrimination law and could have avoided the litigation that has plagued it for over a year now.

Religious individuals and organizations have a clear incentive to know the laws that affect them in various states. And those who care about the ability of religious organizations to thrive ought to take a close look. Some of the factors evaluated in the Faith and Freedom Index, such as state Religious Freedom Restoration Acts and non-discrimination laws, are hot-button issues. Others, such as various tax exemptions and charitable registration laws, are often less controversial and easier for states to revise. Enacting broader tax exemptions for religious organizations, lessening the burdens of state charitable registration requirements, and providing broader protections for religious organizations’ internal self-governance are all ways legislatures can make their states more friendly to the work of religious organizations. These organizations have done charitable, moral, and social work that has been a foundation of American society for centuries. Our laws should reflect that and facilitate, rather than hinder, those good works.

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