Iowa ranks #6 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. Iowa has several laws 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, Iowa has no charitable solicitation registration requirements. Iowa, however, has some policies that are burdensome to faith-based nonprofits operating in the state, including no protections for religious exercise during a state of emergency and a lack of a RFRA.
The Iowa 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).
Iowa 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, Iowa does not receive the highest score for this factor.
Iowa’s nondiscrimination laws generally restrict religious freedom for religious organizations that offer public programming and facilities but provide accommodations or exemptions for the vast majority of religious organizations.
Iowa’s nondiscrimination laws related to employment are broad and the exemptions are limited to situations where the qualifications for employment based on religion, sexual orientation, or gender identity are related to a “bona fide religious purpose.”
The Iowa 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.
Iowa nonprofit corporation law includes certain provisions to protect religious nonprofits’ right to self-government in internal affairs in some situations but does not include comprehensive laws specific to nonprofit religious corporations.
Iowa 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.
Iowa imposes a sales and use tax on religious organizations’ sales but generally provides a broad and comprehensive, automatic tax exemption for 501(c)(3) religious organizations’ sales.
Iowa imposes property tax but, upon application, generally provides an exemption to religious organizations for property used for religious and/or charitable purposes.
