Out of 51 U.S. jurisdictions, Rhode Island ranks #38 overall for its friendliness towards faith-based nonprofit organizations. Rhode Island 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 (out-of-state nonprofits may need to register with Rhode Island for this exemption) as well as broad exemptions from charitable registration requirements. Rhode Island, however, has some policies that are burdensome to faith-based nonprofits operating in the state, such as nondiscrimination laws regarding public accommodations that include no meaningful exemptions for religious organizations and limited exemptions to state sales tax on religious organizations’ sales.
The Rhode Island 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).
Rhode Island 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, Rhode Island does not receive the highest score for this factor.
Rhode Island’s nondiscrimination laws generally restrict religious freedom for religious organizations that offer public programming and facilities and provide no meaningful religious accommodations or exemptions.
The Rhode Island 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.
Rhode Island 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.
Rhode Island 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, Rhode Island requires the submission of audited financials from organizations with annual gross income of more than $500,000.
Rhode Island imposes a corporate income tax but automatically exempts nonprofit organizations. Note that foreign nonprofits may need to register with the state to be entitled to the automatic exemption.
Rhode Island generally imposes a sales and use tax on religious organizations’ purchases but provides a broad and comprehensive, entity-based tax exemption for 501(c)(3) religious organizations’ purchases upon application.
Rhode Island imposes property tax and provides only fragmented property tax exemptions that include only a narrow subset of religious organizations, such as churches, or that apply only to a narrow category of religious and/or charitable property uses.
