Out of 51 U.S. jurisdictions, Arizona ranks #17 overall for its friendliness towards faith-based nonprofit organizations. Arizona has several policies that facilitate the contributions of faith-based nonprofits, including an automatic exemption from state corporate income tax for religious organizations that have 501(c)(3) status and strong protections for directors to rely on guidance from religious authorities. Additionally, Arizona has no charitable solicitation registration or audit requirements. Arizona, however, has some policies that are burdensome to faith-based nonprofits operating in the state, such as a broad Blaine Amendment and laws regarding public accommodations that include no meaningful religious exemptions.
Religious Freedom:
State Constitutional Protection of Free Exercise:
0
/5
The Arizona Constitution follows in lockstep with the federal constitution’s protections, meeting but not exceeding the required minimum protections of the First Amendment.
State Religious Freedom Restoration Act:
3
/5
Arizona has enacted a RFRA that protects the religious free exercise of all individuals and entities by requiring government burdens on religious exercise to satisfy strict scrutiny. Since these protections originate in a statute rather than the state constitution, Arizona does not receive the highest score for this factor.
Religious Freedom for Nonprofits with Public Programming:
-5
/5
Arizona’s nondiscrimination laws generally restrict religious freedom for religious organizations that offer public programming and facilities and provide no meaningful religious accommodations or exemptions.
Religious Freedom for Faith-Based Employers:
-3
/5
Arizona’s nondiscrimination laws related to employment have only a narrow exemption allowing religious organizations to hire co-religionists.
Protections for Religious Exercise in State of Emergency:
3
/5
Arizona law provides that religious worship can only be prohibited or restricted by an emergency order that: (a) applies equally to all “essential” secular entities in the jurisdiction, (b) serves a compelling governmental interest, and (c) is narrowly tailored.
Blaine Amendment:
-5
/5
The Arizona Constitution contains a Blaine Amendment that broadly restricts faith-based organizations’ freedom to participate in public benefit programs on the same terms as similarly situated secular institutions. Current U.S. Supreme Court precedent has rendered this language ineffective, but it could become effective in the future if Court precedent changes.
Regulatory Freedom:
Nonprofit Religious Corporation Act:
3
/5
Arizona’s nonprofit corporation law expressly: (a) acknowledges an option for nonprofit corporations to incorporate for religious purposes and (b) includes specific provisions to protect the right of nonprofits incorporated for religious purposes to self-government in internal affairs. The law does not include an option to incorporate expressly as a nonprofit religious corporation.
Standards of Conduct for Directors of Religious Organizations:
5
/5
Arizona law permits a director to rely on guidance from religious figures within his or her faith tradition in the fulfillment of the director’s fiduciary duties.
Charitable Registration Law:
5
/5
Arizona has no charitable solicitation registration requirements.
Audit Requirements Pursuant to Charitable Registration:
5
/5
Arizona has no charitable registration requirement, and therefore no audit requirement.
Corporate Income Tax:
5
/5
Arizona imposes a corporate income tax but automatically exempts organizations with federal 501(c)(3) exempt status.
Sales and Use Tax, Sales:
3
/5
Arizona imposes a sales and use tax on religious organizations’ sales but a broad and comprehensive, entity-based tax exemption for 501(c)(3) religious organizations’ sales is generally available upon application.
Sales and Use Tax, Purchases:
-3
/5
Arizona imposes a sales and use tax on religious organizations’ purchases and only provides limited exemptions.
Property Tax:
1
/5
Arizona imposes property tax and provides only fragmented property tax exemptions that include only a narrow subset of religious organizations or that apply only to a narrow category of religious and/or charitable property uses, such as property used for religious worship.
