Arkansas ranks #9 overall out of the 51 U.S. jurisdictions for its friendliness towards faith-based nonprofit organizations, making it one of the best places to operate a faith-based nonprofit in the United States. Arkansas has several laws that facilitate the contributions of faith-based nonprofits, including a statutory RFRA, strong nonprofit religious corporation laws, and strong protections for directors to rely on guidance from religious figures. Arkansas, however, has some policies that are burdensome to faith-based nonprofits operating in the state, such as restrictive nondiscrimination laws related to public accommodations that provide no meaningful exemptions for religious organizations and no meaningful exemptions from state sales taxes on religious organizations’ sales and purchases.
The Arkansas Constitution follows in lockstep with the federal constitution’s protections, meeting but not exceeding the required minimum protections of the First Amendment (as currently interpreted by the US Supreme Court).
Arkansas 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 the RFRA is a statute rather than a state constitutional provision, Arkansas does not receive the highest score for this factor.
Arkansas’ nondiscrimination laws generally restrict religious freedom for religious organizations that offer public programming and facilities and provide no meaningful religious accommodations or exemptions.
Arkansas’ nondiscrimination laws related to employment protect religious freedom by excluding religious organizations from the definition of “employer.”
Arkansas law provides that religious worship and the operation of religious organizations 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.
The Arkansas Constitution does not contain a Blaine Amendment but also does not expressly protect faith-based organizations’ freedom to participate in public benefit programs on the same terms as similarly situated secular institutions.
Arkansas nonprofit corporation law includes certain provisions to protect religious nonprofits’ right to self-government in internal affairs in some situations, including a provision that defers to ecclesiastical law or religious doctrine in the event that the religious law or doctrine conflicts with the nonprofit corporation law to the extent required by the Constitution of the United States or the Arkansas constitution.
Arkansas 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.
As a condition of maintaining authorization to fundraise in the state, Arkansas generally requires the submission of reviewed or audited financials for organizations with annual contributions of $500,000 or more.
Arkansas imposes a corporate income tax but offers an exemption to organizations organized and operated exclusively for exempt purposes only upon application.
Arkansas imposes property tax but, upon application, generally provides an exemption to religious organizations for property used for religious and/or charitable purposes.
