Out of 51 U.S. jurisdictions, Tennessee ranks #21 overall for its friendliness towards faith-based nonprofit organizations. Tennessee 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 strong protections for directors to rely on guidance from religious figures within his or her faith. Tennessee, 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 only very limited exemptions on state sales tax for religious organizations’ sales.
The Tennessee 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).
Tennessee 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, Tennessee does not receive the highest score for this factor.
Tennessee’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 Tennessee 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.
Tennessee nonprofit corporation law includes certain provisions to protect religious nonprofits’ right to self-government in internal affairs in some situations, including a provision that defers to ecclesiastical law or religious doctrine 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 Tennessee constitution.
Tennessee law permits a director to rely on guidance from religious figures within his or her faith tradition in the fulfillment of the director’s fiduciary duties.
As a condition of maintaining authorization to fundraise in the state, Tennessee generally requires the submission of reviewed or audited financials for organizations with annual contributions greater than $500,000.
Tennessee 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.
Tennessee imposes property tax but, upon application, generally provides an exemption to religious organizations for property used for religious and/or charitable purposes.
