Out of 51 U.S. jurisdictions, North Dakota ranks #37 overall for its friendliness towards faith-based nonprofit organizations. North Dakota 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 no audit requirement to solicit donations in the state. New Jersey, however, has some policies that are burdensome to faith-based nonprofits operating in the state, such as a Blaine Amendment and nondiscrimination laws regarding public accommodations that include no meaningful religious exemptions.
The North Dakota 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).
North Dakota 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, North Dakota does not receive the highest score for this factor.
North Dakota’s nondiscrimination laws generally restrict religious freedom for religious organizations that offer public programming and facilities and provide no meaningful religious accommodations or exemptions.
North Dakota law provides that religious conduct 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 North Dakota 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 in many cases, but is still detrimental to the work of faith-based institutions. Current U.S. Supreme Court precedent has rendered this language ineffective, but it could become effective in the future if Court precedent changes.
North Dakota 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.
North Dakota 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.
North Dakota 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, provided the sales are related to a nonprofit’s charitable, religious, or educational activities, all revenue from the sales is used for the nonprofit’s exempt purposes, and the sales are not in competition with retailers.
North Dakota imposes property tax but, upon application, generally provides an exemption to religious organizations for property used for religious and/or charitable purposes.
