When churches are charities

Religious organisations which operate as charities have special features, hence a different approach may be needed in terms of regulation

By Willie Cheng, Published The Straits Times, 7 Jul 2012

THE City Harvest Church court case has resurrected the periodic question: Why should a church, or for that matter, a religious institution, be accorded charity status?

The naysayer's reasoning goes like this: Charity is about helping society's poor and needy. Sure, churches can be charitable and give some money to those in need, but so do many other organisations which are not charities. Religion, after all, is fundamentally about God and spiritual matters.

A proper discourse on this subject however requires an appreciation of how the definitions of charity and church have evolved over the centuries.

Charity and church defined

SINGAPORE and about 60 other countries trace their legal heritage to England. Specifically, the legal definition of charity harks back to the Statute of Charitable Uses 1601 of Elizabethan England and its subsequent refinements in common law.

Chief among the common law cases was Income Tax Special Purpose Commissioners v Pemsel (1891) where four categories of charitable uses were defined:

- the relief of poverty; 

- the advancement of education; 

- the advancement of religion; 

- other purposes beneficial to the community not falling under any of the preceding heads.

Over the years and across the world, the fourth category has been used to cover an increasing variety of causes such as vulnerable groups (the disabled, elderly, etc), animal welfare, environment, the arts and heritage. Singapore, for example, specifically added sports as a charitable cause in 2005.

One reason for including the advancement of religion as a charitable cause in early England was that much of the charitable work of providing for the poor and needy was being done by the church. Religion, in those days, meant the Church of England.

However, over the centuries, the religious scene has changed significantly. For starters, there has been a proliferation of and diversity in churches.

In the first few centuries after Jesus Christ died, Christianity was consolidated and became widespread with the establishment of the Roman Catholic Church. Starting in the 16th century, a movement by certain priests to reform the Catholic Church led to the formation of several Protestant denominations such as the Lutherans, Presbyterians, Anglicans and Methodists. In time, these denominations sprouted further subdivisions and sects, alongside untold numbers of independent 'non-denominational' churches. Larger ones with weekly attendances of 2,000 or more, such as City Harvest Church, are called 'megachurches'.

These churches may differ in opinion regarding theology and/or liturgical practice. But they mostly subscribe to Jesus Christ as the saviour and the Bible as God's word (even if they may interpret its contents differently).

Some critics consider independent churches shallow in theology while being deep in secular models of entertainment-based worship and marketing. For example, critics take issue with the doctrine of the 'prosperity gospel' some of these churches around the world subscribe to. The prosperity gospel teaches that financial blessings are the will of God and more donations to the church result in increased material prosperity to the individual. It is a philosophy which some theologians argue has no sound Biblical basis.

Another key distinction among the various forms of churches lies in their structures and leadership.

The Catholic Church and the mainstream Protestant denominations have fairly well-established organisational structures and processes for the formation and conduct of the clergy. For example, a Catholic 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 given a stipend of $500 per month, with their board and lodging provided by the church.

On the other hand, most of the non-mainstream churches are essentially independent congregations, some loosely affiliated to each other, but mostly with their own rules and practices. Many of these churches do not have the same kind of rigorous institutionalised approach to selecting and developing leaders. Indeed, leaders often emerge by virtue of their charisma and ability to win followers. It is the congregations, rather than institutional rules, which determine leaders and lifestyle expectations of the leaders.

Should such charismatic leaders have flawed characters, they can do untold damage. In extreme cases, such organisations are classified as cults. Cults are banned in Singapore, but not in some countries. Yet, by granting charity status to such cults or near-cults as some countries do, regulators confer on them tax benefits and, more significantly, legitimacy.

Keep religious groups out of charities?

GIVEN the historical broadening of the definition of charity, it would be, in my opinion, wrong to narrowly target religion for exclusion as a charitable cause.

Yes, (most) religions are about God and the afterlife, but they are also fundamentally about goodwill and bringing out the goodness in man. Which is to say: they are about the community good.

If religion is excluded - say, 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 and health care. We would, in fact, exclude the whole gamut of other causes of 'community good' that have grown over time.

At the same time, we also need to recognise that there are churches and there are churches. What then do we do about the errant religious organisations that may not be extreme enough to be classified as cults (and thus be banned) but, in all other respects, qualify to be charities? The default answer is: Treat it as any other errant social service charity or sports charity.

In other words, have a clear set of rules and regulations for how charities are to be governed and managed. And if there is a breach by any of the charities or its personnel, throw the book at them.

Special features of religious groups

HOWEVER, the application of such rules and regulations to religious charities is not so straightforward. There are three related and distinctive features of religious organisations that regulators have to grapple with.

The first is the basis of donations. An inviolable principle in the charity sector is 'donor intent'. This means respecting the basis for which a donation is given. In the case of religious institutions, most believers give with a blanket fiat for their leaders to do with the donation as is deemed fit rather than for specific or even general charitable purposes.

The second is evangelisation. The missions of most religious organisations include evangelisation, not just of the converted, but of the broader community. Evangelisation sits uncomfortably with regulators in the more secular countries. Yet, it can be argued that evangelisation is no different from, say, the advocacy of other charities, such as the healthy lifestyles (to avoid certain diseases) promoted by health-care charities like the Singapore Heart Foundation and Sata CommHealth.

The third is the leadership of these organisations. The governance and management of religious institutions tend to be bound together, rather than be separated, as is considered best practices by secular bodies. Religious leaders also have a sway over their followers which can sometimes be seen by regulators and outside parties as bordering on the irrational.

The interplay of these three factors has challenged regulators when they seek to implement a single sector-wide approach to regulating charities.

In Singapore, the same set of regulations is applied to all charities, regardless of sub-sectors (for example, the religious, social service and arts sub-sectors).

There is, however, differentiated treatment in the Charity Code of Governance based on the size of the charities: the bigger the charities, the more controls and scrutiny are needed.

As highlighted above, there are unique aspects of religious charities, as there could be for charities in other sub-sectors.

It might be timely to review these sub-sectorial differences for a more targeted and meaningful approach to charity governance and regulation.

The writer, a former partner at management and technology consulting firm Accenture, is author of Doing Good Well. He sits on the boards of several commercial and non-profit organisations, including Singapore Press Holdings, Singapore Institute of Directors, and Catholic and secular charities.