Kentucky ranks #11 overall out of the 51 U.S. jurisdictions for its friendliness towards faith-based nonprofit organizations. Kentucky has several laws that facilitate the contributions of faith-based nonprofits, including a state RFRA statute and strong protections for religious exercise during a state of emergency. Additionally, Kentucky does not impose audit requirements as a condition of maintaining authorization to fundraise in the state. Kentucky, however, has some policies that are burdensome to faith-based nonprofits operating in the state, such as a Blaine Amendment and very limited exemptions from state sales tax on religious organizations’ sales.
The Kentucky 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).
Kentucky 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, Kentucky does not receive the highest score for this factor.
Kentucky’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.
Kentucky’s nondiscrimination laws related to employment have only a narrow exemption allowing religious organizations to hire employees on the basis of religion.
Kentucky provides absolute statutory protection for religious worship and provides that 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 Kentucky Constitution contains a Blaine Amendment that could prevent the participation of faith-based schools in generally available public benefit programs on the same terms as similarly situated secular schools. This is not as broad as a general Blaine Amendment, which prohibits all aid to faith-based institutions, but is still detrimental to the work of faith-based 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.
Kentucky 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.
Kentucky law permits a director, in the fulfillment of the director’s fiduciary duties, to rely on the opinion of individuals who can reasonably be assumed to have expertise on a certain matter but does not expressly allow a director to rely on guidance from religious figures within his or her faith tradition.
Kentucky 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.
Kentucky imposes property tax but, upon application, generally provides an exemption to religious organizations for property used for religious and/or charitable purposes.
