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  • Carl H. Esbeck (a1)

Australia adopted the Charities Act of 2013, consolidating and restating the country's governing statutes on the registration and qualification of charities, but leaving to the future any reconciliation between faith-related charities claiming religious liberty and others demanding marriage equality and no discrimination based on sexuality. Concurrent to this development, but with an eye to the direction of charity law in common law systems throughout the world, major works have come to us from two Australian scholars. In this review I offer much about these two monographs, but the discussion that immediately follows concerns the law of charitable nonprofits in the United States, the basic structure of that law, and current issues implicating religious freedom.

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1 With respect to terminology in the United States, the law of nonprofit organizations or law of tax-exempt organizations is used rather than charity law.

2 Grim, Brian J. and Grim, Melissa E., “The Socio-economic Contribution of Religion to American Society: An Empirical Analysis,Interdisciplinary Journal of Research on Religion 12 (2016), and

3 The IRC is found in title 26 of the United States Code, thus the preceding provisions are 26 U.S.C. §§ 170(c), 501(c)(3) (2012).

4 The Internal Revenue Service, as the administrator of the IRC and gatekeeper for tax-exempt organizational status, has discretionary power, power enhanced by the federal courts giving the IRS considerable deference. It is not without precedent that employees of the IRS, in a misplaced effort to advance the party in power, abuse their office. Consider, for example, the ongoing investigation into the IRS for slow-walking applications for nonprofit tax-exempt status received from those in the Tea Party political movement. See “The IRS Hit List,” Wall Street Journal, June 9, 2016,; Kimberley A. Strassel, “The IRS's Ugly Business as Usual,” May 19, 2016, Wall Street Journal,

5 U.S. Treasury Regulations, 26 C.F.R. §§ 1.501(c)(3)-1, 1.501(c)(3)-1T (2015).

6 See Hopkins, Bruce R., The Law of Tax-Exempt Organizations (Hoboken: Wiley, 2007), 1215 , 19–21.

7 397 U.S. 664 (1970).

8 Id. at 675.

9 Id. at 673.

10 Id. at 675.

11 Id. at 676.

12 Id. at 674.

13 Id. A separate concurrence by Justice Brennan did rely on the reward-for-works justification, but no other justice joined that opinion. Id. at 680, 687–88.

14 The rule denying civil authority to pass on religious questions arises frequently, and it appears in cases decided under the Free Exercise Clause, the Establishment Clause, and the Free Speech Clause. See Thomas v. Review Board of Indiana, 450 U.S. 707, 715–16 (1981) (Free Exercise Clause); Hosanna-Tabor Evangelical Lutheran Church & School v. EEOC, 565 U.S. 171 (2012) (Establishment Clause barred question whether minister's duties were exclusively religious or a mix of religious and secular.); Widmar v. Vincent, 454 U.S. 263, 269 n.6, 271 n.9, 272 n.11 (1981) (Free Speech Clause).

15 See, for example, Hosanna-Tabor, 565 U.S. at 188–92 (finding that a religious elementary school was autonomous with respect to matters of its internal governance, including the employment of ministers).

16 483 U.S. 327 (1987). See Carl H. Esbeck, “When Religious Exemptions Cause Third-Party Harms: Is the Establishment Clause Violated?,” Oxford Journal of Church and State (March 15, 2016), (distinguishing between religious exemptions, which the Court has always upheld, and religious preferences, which are often unconstitutional).

17 Donors are incentivized to give because their contribution is deductible, thus IRC § 170(c) does indirectly benefit religious organizations. However, the Supreme Court has determined that such an indirect benefit to religion, when this occurs as part of a larger program where all sorts of organizations are benefited without regard to some being religious, does not violate the Establishment Clause. See, e.g., Mueller v. Allen, 463 U.S. 388 (1983) (upholding, in face of Establishment Clause challenge, state income tax deduction for parental expenses of sending children to school, including private religious school); Zelman v. Simmons-Harris, 536 U.S. 639 (2002) (upholding, in the face of Establishment Clause challenge, state voucher plan to enable parents to select school for their child, including selecting a private religious school).

18 Through the 1970s to the early 1990s, the conventional wisdom was that government funding of faith-based social service organizations was prohibited by the Establishment Clause. That began to breakdown with the decisions in Bowen v. Kendrick, 487 U.S. 589 (1988) (allowing federal aid to adolescent counseling centers, including religious centers), and Agostini v. Felton, 521 U.S. 203 (1997) (allowing federal funding of special education teachers that went to religious school campuses to provide services). The sea change was confirmed by Mitchell v. Helms, 530 U.S. 793 (2000) (plurality opinion) (allowing federal aid to primary and secondary schools, including religious schools), and Zelman v. Simmons-Harris, 536 U.S. 639 (2002) (allowing school vouchers for parents to select their child's school, including religious school). Parallel to these case law developments, and a few years ahead of the courts, were the efforts by Congress and then the three presidential administrations pushing forward “charitable choice” as described in the text.

19 42 U.S.C. § 604a(b), (d)(B), and (f) (2012).

20 42 U.S.C. § 604a(e) (2012). The faith-based initiative assumes a federal program, federal funds to operate the program, and program beneficiaries. A beneficiary is extended a statutory right to not receive services from a religious provider to which he or she has a religious objection. This “choice” in charitable choice is an accommodation to any sensitivity among beneficiaries, be that sensitivity rooted in religion or in a rejection of it.

21 Executive Order 13279, “Equal Protection of the Laws for Faith Based and Community Organizations,” 67 Fed. Reg. 77,141 (December 12, 2002), as amended by Executive Order 13672, 79 Fed. Reg. 42,971 (July 20, 2014).

22 See “Final Regulations Implementing Executive Order 13559, Fundamental Principles and Policy Making Criteria for Partnerships with Faith-Based and other Neighborhood Organizations,” 81 Fed. Reg. 19,353 (April 4, 2016).

23 See Carl H. Esbeck and Stanley Carlson-Thies, “Two Decades of Bipartisan Cooperation on Government Funding and Religion … This Can't Possibly Be about the U.S.,” Cornerstone (blog), August 22, 2016, The Religious Land Use and Institutionalized Persons Act, 42 U.S.C. §§ 2000cc to 2000cc-5, was signed into law September 2000, still the twentieth century.

24 Sections 702(a) and 703(e)(2) of Title VII, 42 U.S.C. §§ 2000e-1(a), 2000e-2(e)(2) (2012), exempt religious employers from employment discrimination claims when using religious criteria in their employment practices. See Esbeck, Carl H., “Federal Contractors, Title VII, and LGBT Employment Discrimination: Can Religious Organizations Continue to Staff on a Religious Basis?Oxford Journal of Law and Religion 4, no. 3 (2015): 368–97 (discussing the case law and those issues that remain contested).

25 42 U.S.C. §§ 2000bb to 2000bb-4 (2012). The Office of Legal Counsel at the US Department of Justice has determined that an employer's RFRA claims override in cases of religious staffing by a federal grantee. See Office of Legal Counsel, Opinion of June 31, 2007,

26 If being transparent, Harding could have at least acknowledged various alternatives such as conservatism (tradition), nationalism, democracy (populism), and socialism. See Koyzis, David T., Political Visions and Illusions: A Survey and Christian Critique of Contemporary Ideologies (Downer's Grove: InterVarsity Press, 2003).

27 The US Bill of Rights, for example, is composed of negative liberties. It tells the state what it cannot do. It does not tell the state what it must do. The latter is “positive liberty,” and is best understood in the United States as an entitlement. Negative liberty makes the state smaller. Positive liberty requires taxes to pay for the entitlement, so the state is stimulated and grows.

28 The fifth book of the New Testament, appearing in the biblical canon directly after the four Gospels. The Acts of the Apostles is a historical account of events in the first century church.

29 I have in mind Native American and aboriginal religions, as well as Orthodox Judaism, Amish, Seventh-day Adventists, and Islam. All report how they experience modernity as an ever present gravitational force pulling them away from religious obedience. None are characterized by their individualism.

30 O'Halloran later acknowledges that apart from England and Wales any ambitious reforms—as distinct from attempts at reform—have been spotty, more a codification of the case law, an expansion of the definition of religion, and an upgrading of the regulatory machinery (47–53).

31 As discussed above, the US Supreme Court held in Walz v. Tax Commission of the City of New York that the First Amendment prohibits a “public benefit test” to qualify for a tax exemption. See notes 7–13 and accompanying text.

32 In an unbroken line of six cases, the US Supreme Court has held that statutory religious exemptions are constitutional. See Esbeck, “When Religious Exemptions Cause Third-Party Harms.” Rather than thought of as affirmatively advancing religion, statutory religious exemptions are seen as the state choosing to leave religion alone. Exemptions thereby expand liberty by reducing entanglement between church and state, and thereby reinforcing the desired distance between the two.

33 In the United States, a religious organization's authority to appoint clergy of its own choosing is not a privilege but a constitutional right. See Hosanna-Tabor Evangelical Lutheran Church & School v. EEOC, 565 U.S. 171 (2012). In this unanimous decision, the Supreme Court held that a religious school had an unmitigated First Amendment right to select its clergy and other ministers, notwithstanding a conflicting civil rights statute prohibiting discrimination on the basis of disability.

34 In this push to usher “religious freedom” out of the set of international “human rights” so as to make room for a liberty of sexual expression, O'Halloran is altogether riding the wave of modern populism. See Mary Ann Glendon, “Reclaim Human Rights,” First Things no. 265, 19 (2016).

35 See note 30 and accompanying text.

36 For the reader looking for a current and thorough overview of US law concerning individual religious liberty as well as church-state relations, see Conkle, Daniel O., Religion, Law, and the Constitution (St. Paul: Foundation Press, 2016); Bittker, Boris I., Idleman, Scott, and Ravitch, Frank S., eds., Religion and the State in American Law (New York: Cambridge University Press, 2015).

37 See notes 3–5, 17 and accompanying text.

38 See Bassett, William W., Durham, W. Cole, and Smith, Robert T., eds., Religious Organizations and the Law (Eagan: Thomson West, 2013), §§ 18:3543 .

39 See 42 U.S.C. § 604a. See notes 19–20 and accompanying text.

40 “Charitable choice” safeguards are a matter of regulation, albeit the authority for the regulations is executive orders by presidents Bush and Obama, as opposed to congressional legislation. See notes 19–24 and accompany text.

41 See note 18 and accompanying text.

42 The US government lists more than 1,500 active social service programs. See Executive Office of the President of the United States, Office of Management and Budget, Catalog of Federal Domestic Assistance (Government Printing Office, 2016), Add to that number the Affordable Care Act, Social Security, Medicare, Medicaid, and the Veterans Administration. Counting state and local governments, along with private-sector charities, only increases this number.

43 This funding arrangement was upheld as consistent with the Establishment Clause in Freedom from Religion Foundation v. McCallum, 324 F.3d 880 (7th Cir. 2003) (indirect funding to religious drug treatment center) and Columbia Union College v. Oliver, 254 F.3d 496, 508 (4th Cir. 2001) (direct funding to religious college).

44 See note 34 and accompanying text.

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