Summary

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Using Quidnunc's non-profit research API, Quidnunc researchers scraped the “government grants” field, which discloses funding from "local, state, or federal government sources, as well as foreign governments," in over 6 million electronic Form 990s (the tax return filed by 501(c) non-profit organizations).
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1. For all 501(c) organizations (not just religious groups), the sum of the government grants field totals an astonishing $2.5 trillion, drawn from all publicly-available electronic filings (but excluding paper filings, which were still being filed as late as 2019).
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2. Cross-referencing the IRS’s current system of non-profit categorization with Form 990 tax returns reveals at least $4.4 billion of government funding has financed self-identified “religious” non-profits in the United States since 2009, including churches and other explicit houses of worship.
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   • Notwithstanding, this figure may be an underestimate, as it excludes the vast majority of churches and various other religious organizations exempted from filing Form 990 tax returns.
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   • However, this figure is also inflated by international aid charities, hospitals and schools, which classify themselves as religious organizations rather than by their principal charitable activity.
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   • Hundreds of dedicated religious organizations, including churches, proselytization efforts and various dedicated religious services, report that government funding accounts for the majority (and in some cases the entirety) of their annual revenue.
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3. IRS form Schedule A, which includes an option for 501(c) non-profits to list themselves as a church, also fails to illustrate the full extent of government funding of religious organizations. Schedule A wildly under-counts the number of “churches” in the United States, even when taking into account the religious filing exemption.
   
   
   • Only 1,357 Schedule A “churches” claim to have received government funding. But the sum of this support, across 3,350 tax returns, still amounts to over $8 billion. This figure is dramatically augmented, once again, by institutions such as humanitarian aid charities, self-identified as churches.
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   • Schedule A is also not an efficient means of identifying religious organizations. Some 19,812 organizations with the word “church” in their name file a Schedule A form but do not declare themselves to be a church. Meanwhile, an additional 130,000+ non-profits with the word “church” in their name have not filed an electronic tax return at all.
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4. An overly broad search of organization names and declared mission purposes against a dozen keywords associated with the religious institutions of the Abrahamic faiths uncovered government funding disclosures that totaled over $71 billion. A more reasonable, conservative keyword search for dedicated houses of worship yielded a still imperfect dataset of 1,134 organizations disclosing over $3.4 billion of government funding.
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5. It is impossible to gauge the true extent of the taxpayer-funded subsidies enjoyed by religious institutions and services. But at the very least, and despite the limitations of available IRS data, it seems certain that religious institutions in the United States are heavily funded by hundreds of millions of government dollars. Suggesting an urgent need for further scrutiny, it seems that a significant chunk of this public funding likely finances, or at best subsidizes, explicitly religious activities.

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Identifying Religious Organizations and their Government Support

Billions of government dollars, drawn from federal, state, county and city coffers, bolster the finances of many of the millions of non-profit organizations across the United States.

While there are limitations placed upon the provision of taxpayer dollars to religious organizations, recent Supreme Court rulings have established that religious non-profits can be entitled to the same government funding as other institutions, albeit with various caveats attached. Ultimately, the courts appeared to rule, public monies can be used to fund religious organizations but should primarily fund a secular service or purpose. Although, across the nation, the law continues to be challenged.

So how much taxpayer money, whether legally or not, works its way into religious non-profits?

We looked at several options to identify religious organizations among the millions of registered non-profits, starting initially with the IRS’s preferred categorization system, known as the National Taxonomy of Exempt Entities (NTEE).

The NTEE system features 10 categories of non-profit organization, arranged in 26 “major groups,” further subcategorized by hundreds of “activity areas” and organization “types.” Religious organizations are classified under the major group “X,” and divided into the 21 subcategories, although IRS NTEE codes include various additional markers.

We conducted searches of over 6 million electronic non-profit tax filings, looking in particular at fields taken from the Statement of Revenue, a section in the Form 990 return filed by 501(c) organizations.

This particular section includes a “Government Grants” field. The IRS insists this field should include the sum of “grants or similar payments from local, state, or federal government sources, as well as foreign governments.”

The sum of all the amounts for this field in the available electronic tax return filings of all 501(c)s (not just religious organizations) over the last decade totals an almost unbelievable sum of $2.5 trillion.

A significant bulk of this wealth is eaten up by big budget non-profit organizations, such as universities, government-funded research and development, enormous public health initiatives, quangos, and various payout and reparation programs.

But billions still end up in the pockets of religious organizations. We want to investigate how much.

There are some caveats to consider. Many of the totals we calculate here may, and likely are, underestimates of the true sums. This is because:

1. Many religious non-profits are exempted from filing these 990 returns, including churches and other houses of worship, along with any “auxiliary of a church,” “school … affiliated with a church or operated by a religious order,” “Church-affiliated mission societies,” “an exclusively religious activity of any religious order,” as well as certain “religious or apostolic organization[s].”
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2. Most organizations with revenue under $200,000 do not file a Form 990 tax return, instead filing a shorter 990-EZ or, when under $50,000, a “postcard” form known as 990N. Neither of these forms discloses government grants totals.
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3. All the figures in this report do not include data from non-electronic (paper) filings. While, since 2019, all filings are now electronic, several years ago, paper filings counted for the majority of all filed Form 990s.
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4. Given the dearth of evidence that city and state governments share spending data with the federal government, there is little reason or evidence to suggest that the IRS polices the “government funding” field in the 990 forms. As a result, government funding may well be significantly underreported.

A contrasting consideration is that the government funding field, as mentioned, also includes foreign government funding. However, there is little extant public source evidence to indicate that foreign funding totals for religious non-profits in the United States are significant. Moreover, we suspect the underreported sums explained in the above items are likely to dwarf any foreign funding’s inflationary effect on our research question.

How, then, do we identify religious non-profit organizations among this $2.5 trillion of government funding to non-profit organizations?

NTEE

A search of over 1.8 million organizations listed in the IRS’s Exempt Organizations Business Master File Extract uncovers 183,902 tax exempt organizations with an NTEE code of “X,” the overarching category for “Religion-Related” organizations.

Only 34,572 of the tax-exempt “X” religious organizations have produced at least one electronic Form 990 tax return. And of those, some 3,583 organizations have filed a return that discloses the receipt of government funding.

‍The total amount of reported government funding for these “X” organizations amounts to over $4.4 billion, indicating an unlikely mean of over $1.2 million dollars of government support for religious non-profits that receive at least a dollar of government support.

That the standard deviation is over 10 million indicates a rather atypical mix of grantees, and a closer look at the top “X” recipients of government funding illustrates exactly that.

As the top recipients table shows, hospitals, schools, humanitarian aid charities make up a significant number of the top 500 recipients, attracting enormous grants. Indeed, the mean of just this top 500 dataset indicates almost $6 million of annual government support per organization.

Traditional religious institutions, dedicated almost solely to providing religious services or spreading religious ideas, appear to be in the minority among these top 500 beneficiaries.

Note also a few rare but significant examples of foreign government funding skewing our dataset. Near the top, over $36 million of funding was reported in 2013 to the Turkish American Community Center in Maryland. This institution, which also goes by the name “Diyanet,” is a mosque and community center under the direct control of the Turkish government’s Directorate of Religious Affairs. It is a (controversial) institution funded with at least $110 million of Turkish government monies. Although, such an extraordinary level of foreign funding to a single institution appears to be an outlier.

A rather different dataset is generated when we search for top recipients normalized by the average of government funding as a proportion of total revenue across all filings in which an organization received at least $1 of government support.

Dedicated houses of worship and proselytizing groups dominate the list of this top 500. The sum of government funding for these top 500 “X” organizations alone is $1.6 billion, with churches and other houses of worship patently among the leading grantees.

More extraordinarily, all the top 500 filings declare that government support accounts for the majority - and, in a lot of cases, the entirety - of the organization’s revenue across multiple years of filings.

Some filings even indicate that government support exceeded revenue. A cursory investigation into this phenomenon (as well as the normalized top recipient dataset more broadly) suggests that this dataset includes at least a few examples of disclosure confusions over loans; grants cancelled, revised, or awarded but not outlaid; as well as simple accounting errors or typos.

A search of total funding to “X” organizations by year, taking into account the total number of electronic tax returns filed each year, finds that funding for religious organizations has enjoyed a slow increase over the past decade.

The increases in 2019 and 2020 follow a 2017 Supreme Court decision (and subsequent important cases in 2018) in which the Court ruled that the Missouri state government should not be “denying the Church an otherwise available public benefit.” The 2020 increase might also be explained by measures taken during the COVID pandemic, during which time religious institutions were utilized by government in the distribution and advocacy for vaccines and other forms of aid. Non-profits could also apply for the Paycheck Protection Program and other COVID funding programs.

Does the NTEE system offer a full picture of government support for religious organizations though?

Almost 600,000 tax exempt organizations in the IRS’s Exempt Organizations Business Master File Extract have not apparently been assigned an NTEE code.

The NTEE system is also not a good means to gauge funding by religious affiliation. We find, for instance, that the average level of government support for organizations that identify as "X20 - Christian" and file a return is as high as $20,000.

But by no means does this result afford clear insight into the matter. For a start, many of the general “X” categories appear preferred by non-profits over specific religious affiliation categories. In addition, a search of IRS data, for instance, indicates that almost half of a random sample of synagogues did not use the “X” grouping at all.

And of course, as mentioned previously, we know that only a small proportion of religious institutions have ever filed an electronic tax return.

Conversely, as some of the top recipient tables above illustrate, a significant number of organizations that claim to be driven by a religious ethos but which primarily function as international aid charities that funnel tens of millions of government aid dollars, list themselves as a dedicated religious organization such as “X20”; rather than a more likely NTEE code, such as “Q33” – “International Relief.”

We can demonstrate the fault with the system.

847 non-profits that file electronic returns list themselves as X40: Islamic. Of these, only 75 Islamic organizations have reported receiving government support, totaling a mere $6.4 million.

Anecdotally, this is substantially less than the many tens of millions of dollars of foreign government funding that the Diyanet mosque in Maryland alone is reported to have received.

More empirically, a search of the federal government's awards database (usaspending.gov) for contracts and grants to Islamic 501(c) organizations (identified using keywords such as "Islamic", "Muslim", "mosque" and "masjid", and limited to recipients in the United States) reveals tens of millions of dollars from the federal government to Islamic organizations.

Similarly, a cursory keyword search of a half dozen state and city spending databases finds additional grants totaling many millions of dollars each year.

These findings appear far removed from the paltry $6.4 million suggested by the IRS’s X40 Islamic NTEE code.

Schedule A

Perhaps Schedule A offers more reliable figures, at least for those religious institutions that file electronic returns. Any organization filing a return which is not a private foundation must file this Schedule A form, which discloses details about a public charity’s status and the details of its public support. Among the options available under “reason for public charity status” is an unequivocal checkbox for “a church, convention of churches, or association of churches.”

Unlike NTEE codes, which includes all manner of “religious” organizations, it seems reasonable to presume this “church” identifier will provide insight into government funding exclusively provided for houses of worship.

However, only 20,558 organizations that electronically file tax returns have listed their institution as a “church.”

This appears a rather low figure, given the estimated 350,000 to 400,000 Christian churches in the United States. The discrepancy appears to indicate a very significant number of houses of worship take advantage of the religious filing exemption. Or, of course, many churches may simply operate under another association’s umbrella 501(c) status, or perhaps do not report enough revenue to have to file at all.

Nevertheless, the reporting is astounding. Just 1,357 “churches” claim to have received government funding. But this sum, across 3,350 tax returns, totals over $8 billion. Once again, the standard deviation is enormous, impelling us to take a closer look at the data.

A review of the top 500 Schedule A “church” recipients of government funding reveals, once again, the IRS’s system is lopsided. The top “church” recipients of government funding are once again humanitarian aid charities, schools and health centers; albeit a rather different collection than the earlier NTEE dataset.

At the very top is World Vision, an enormous international aid charity and prominent partner of the U.S. Agency for International Development (USAID). World Vision’s reported government funding alone adds up to over $4 billion, more than half of this (partial) dataset's total.

World Vision is evidently not a church. Indeed, a considerable number of the groups on that list of Schedule A “churches” are not actually churches.

Meanwhile, actual churches apparently don’t identify as churches, at least before the IRS. Some 19,812 organizations with the word “church” in their name file a Schedule A form but do not declare themselves to be a church. Meanwhile, an additional 130,000+ non-profits with the word “church” in their name have not filed an electronic tax return at all.

Keyword Search

Given this discrepancy, we turned to keyword searches, hoping such an approach would be more likely to identify religious institutions than any of the IRS’s own efforts to categorize and understand its 501(c)s.

A search of a dozen keywords associated with religious institutions of the three main Abrahamic faiths yields interesting results. Searches against both the organization names and mission statements yielded some 13,018 organizations that claim to have received government funding.

//Broad Abrahamic Keywords:
christ
jesus
church
bible
gospel
ministry
synagogue
congregation
torah
rabbi
chabad
imam
sheikh
quran
koran
dawah
mosque
masjid

‍The sum of this government funding totals an astonishing $71 billion. Certainly, then, a religious ethos underpins an enormous amount of the taxpayer-funded non-profit activity. Of the funded organizations, the standard deviation is over 9.2 million from a mean of $1.5 million, indicating, once again, enormous variance.

Once again, humanitarian aid charities, universities, schools and hospitals top the list.  But then again, the keywords are remarkably broad.

By refining the keywords and restricting the search fields to just the organization’s name, we hoped for a more likely list of organizations dedicated to providing religious services, rather than organizations with a claimed religious underpinning.

//Abrahamic Houses of Worship Keywords:
parish
church
cathedral
chapel
prayer
worship
synagogue
congregation
chabad
shul
mosque
masjid
jamaat
islamic center
muslim center

This similarly-makeshift approach was slightly more successful, with actual houses of worship appearing among the top 500 recipients; but the dataset is still filled with church-run charities and health centers. In total, this organization name search counts 1,134 organizations that disclose over $3.4 billion of government funding.

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Publicly-Funded Religion

Hundreds of millions of taxpayer dollars finance religious organizations in the United States. Religious activities are likely both directly funded and indirectly subsidized by the taxpayer.

Exact amounts cannot be calculated, given that IRS published data and its systems of categorization provide no explicit means by which researchers can identify organizations dedicated to spreading religious ideas.

Evidently, given the examples noted above, the NTEE system is deeply flawed. Schedule A forms, meanwhile, are unregulated and unpoliced enough to be worthless.

At the very least, however, these faulty systems do afford us a small bit of insight into the astonishing amount of government funding that ends up in the coffers of just a relatively small number of self-identified religious organizations, drawn from all faiths.

One can only imagine how much additional government support might be hidden away in the churches, mosques and synagogues that choose, completely lawfully, not to file returns.

The relationship between the state and religion in America operates under a contradiction. On the one hand, important statutes and court precedents dictate that patronage must be limited. However, filing exemptions, sub-standard data collection by the IRS, and a widespread lack of transparency from city and state governments about their grantees and contractors, means the public and media cannot possibly ensure the rules are being followed. Federal inadequacy is likely allowing local government across the country to fund religious ideas and institutions with near impunity.

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