Out of 51 U.S. jurisdictions, Illinois ranks #47 overall for its friendliness towards faith-based nonprofit organizations, making it one of the worst places to operate a faith-based nonprofit in the United States. Illinois has some 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 a statutory RFRA. Illinois, however, has several laws that are burdensome to faith-based nonprofits operating in the state, such as a broad Blaine Amendment, burdensome audit requirement to maintain charitable solicitation registration, and a lack of protections for religious exercise during a state of emergency.
The Illinois 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).
Illinois 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, Illinois does not receive the highest score for this factor.
Illinois’ nondiscrimination laws generally restrict religious freedom for religious organizations that offer public programming and facilities and provide accommodations or exemptions but only for only a narrow spectrum of religious organizations, such as organizations classified as churches.
The Illinois Constitution contains Blaine Amendment-like language 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 in many cases, but it could become effective in the future if Court precedent changes.
Illinois nonprofit corporation law does not have any law deferring to religious beliefs and structures in governance matters and does not have any special provisions specific to the internal governance or operations of religious organizations.
Illinois law is silent as to whether a director, in the fulfillment of the director’s fiduciary duties, may rely on the opinion of individuals who can reasonably be assumed to have expertise on a certain matter, and the law does not expressly permit a director to rely on guidance from religious figures within his or her faith tradition.
As a condition of maintaining authorization to fundraise in the state, Illinois requires the submission of reviewed or audited financials even for organizations with annual contributions less than $500,000.
Illinois imposes a sales and use tax but a broad and comprehensive, entity-based tax exemption for 501(c)(3) religious organizations’ purchases is generally available upon application.
Illinois imposes property tax but, upon application, generally provides an exemption to religious organizations for property used for religious and/or charitable purposes.
