Indiana ranks #3 overall out of the 51 U.S. jurisdictions for its friendliness towards faith-based nonprofit organizations, making it one of the best states in which to operate a faith-based nonprofit. Indiana 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 nonprofit religious corporation laws. Additionally, Indiana has no charitable solicitation registration requirements. Indiana, however, has some policies that are burdensome to faith-based nonprofits operating in the state, such as a broad Blaine Amendment and restrictive laws related to public programming and facilities that provide no meaningful protections for religious organizations.
Religious Freedom:
State Constitutional Protection of Free Exercise:
3
/5
The Indiana Constitution has been interpreted by the Indiana Supreme Court to provide stronger protections for religious free exercise or worship than the federal First Amendment.
State Religious Freedom Restoration Act:
1
/5
Indiana has enacted a RFRA that is limited in application and does not provide adequate protection for faith-based nonprofits with public programming.
Religious Freedom for Nonprofits with Public Programming:
-5
/5
Indiana’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
Indiana’s nondiscrimination laws related to employment are broad but provide strong accommodations or exemptions to generally protect the autonomy of the vast majority of religious organizations.
Protections for Religious Exercise in State of Emergency:
3
/5
Indiana 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 Indiana 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, but it could become effective in the future if Court precedent changes.
Regulatory Freedom:
Nonprofit Religious Corporation Act:
5
/5
Indiana’s nonprofit corporation law includes a designated law governing the formation and operations of nonprofit religious corporations and specific provisions to protect their right to self-government in internal affairs.
Standards of Conduct for Directors of Religious Organizations:
5
/5
Indiana 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
Indiana has no charitable solicitation registration requirements.
Audit Requirements Pursuant to Charitable Registration:
5
/5
Indiana has no charitable registration requirement, and therefore no audit requirement.
Corporate Income Tax:
5
/5
Indiana imposes a corporate income tax but automatically exempts organizations with federal 501(c)(3) exempt status.
Sales and Use Tax, Sales:
3
/5
Indiana imposes a sales and use tax on religious organizations’ sales but generally provides a broad and comprehensive, entity-based tax exemption for 501(c)(3) religious organizations’ sales upon application.
Sales and Use Tax, Purchases:
3
/5
Indiana imposes a sales and use tax on religious organizations’ purchases but generally provides a broad and comprehensive, entity-based tax exemption for 501(c)(3) religious organizations’ purchases upon application.
Property Tax:
3
/5
Indiana imposes property tax but, upon application, generally provides an exemption to religious organizations for property used for religious and/or charitable purposes.
