Out of 51 U.S. jurisdictions, South Dakota ranks #43 overall for its friendliness towards faith-based nonprofit organizations, making it one of the worst places to operate a faith-based nonprofit in the United States. South Dakota has some policies that facilitate the contributions of faith-based nonprofits, such as no charitable registration or audit requirements for religious organizations to solicit donations in the state. South Dakota, however, has several laws that are burdensome to faith-based nonprofits operating in the state, such as a broad Blaine Amendment, nondiscrimination laws regarding public accommodations with only narrow exemptions for religious organizations, and only limited exemptions from state sales tax on religious’ organizations sales and purchases.
The South 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).
South 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, South Dakota does not receive the highest score for this factor. Since these protections originate in a statute rather than the state constitution, South Dakota does not receive the highest score for this factor.
South Dakota’s nondiscrimination laws generally restrict religious freedom for religious organizations that offer public programming and facilities and provide accommodations or exemptions but only for a narrow spectrum of religious organizations, such as certain educational institutions operated by a bona fide religious institution.
South Dakota’s nondiscrimination laws related to employment have only an extremely narrow exemption allowing religious organizations to hire co-religionists when religion is related to a bona fide occupational purpose.
South 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 South Dakota Constitution contains a Blaine Amendment that broadly restricts faith-based organizations’ freedom to participate in public benefit programs on the same terms as similarly situated secular 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.
South 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.
South Dakota law is silent as to whether a director, in the fulfillment of the director’s fiduciary duties, may rely on the opinion of individuals who can reasonably be assumed to have expertise on a certain matter, and the law does not expressly permit a director to rely on guidance from religious figures within his or her faith tradition.
South Dakota imposes a sales and use tax on religious organizations’ purchases and only provides limited exemptions for certain subsets of religious organizations, such as those that exclusively work for the relief of the poor, distressed or underprivileged.
South Dakota 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.
