Out of 51 U.S. jurisdictions, Pennsylvania ranks #27 overall for its friendliness towards faith-based nonprofit organizations. Pennsylvania 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 as well as accommodations or exemptions from employment nondiscrimination laws that protect the autonomy of most religious organizations. Pennsylvania, however, has some policies that are burdensome to faith-based nonprofits operating in the state, such as nondiscrimination laws regarding public accommodations that include minimal exemptions for religious organizations, state sales tax with limited exemptions for religious organizations’ sales, and a burdensome audit requirement to maintain charitable solicitation registration., and a burdensome audit requirement to maintain charitable solicitation registration.
The Pennsylvania 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).
Pennsylvania’s nondiscrimination laws generally restrict religious freedom for religious organizations that offer public programming and facilities and provide only narrow accommodations or exemptions.
Pennsylvania’s nondiscrimination laws related to employment provide strong accommodations or exemptions to generally protect the autonomy of most organizations.
The Pennsylvania 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 US Supreme Court precedent has rendered this language ineffective in many cases, but it could become effective in the future if Court precedent changes.
Pennsylvania nonprofit corporation law includes a provision that defers to ecclesiastical law in the event that the religious law or doctrine conflicts with the nonprofit corporation law to the extent required by the Constitution of the United States or the Pennsylvania constitution.
Pennsylvania 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.
As a condition of maintaining authorization to fundraise in the state, Pennsylvania requires the submission of reviewed or audited financials from organizations with annual contributions of $250,000 or more.
Pennsylvania 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.
Pennsylvania imposes property tax and provides only fragmented property tax exemptions that include only a narrow subset of religious organizations or that apply only to a narrow category of religious and/or charitable property uses.
