Out of 51 U.S. jurisdictions, Tennessee ranks #23 overall for its friendliness towards faith-based nonprofit organizations. Tennessee has several policies 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. Tennessee, however, has some policies that are burdensome to faith-based nonprofits operating in the state, such as laws regarding public accommodations that include no meaningful exemptions for religious organizations and sales tax with very limited exemptions on religious organizations’ sales.
Religious Freedom:
State Constitutional Protection of Free Exercise:
0
/5
The Tennessee Constitution follows in lockstep with the federal constitution’s protections, meeting but not exceeding the required minimum protections of the First Amendment.
State Religious Freedom Restoration Act:
3
/5
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 these protections originate in a statute rather than the state constitution, Tennessee does not receive the highest score for this factor.
Religious Freedom for Nonprofits with Public Programming:
-5
/5
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.
Religious Freedom for Faith-Based Employers:
-3
/5
Tennessee’s nondiscrimination laws related to employment have only a narrow exemption allowing religious organizations to hire co-religionists.
Protections for Religious Exercise in State of Emergency:
3
/5
Tennessee law provides absolute statutory protection for religious worship.
Blaine Amendment:
3
/5
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.
Regulatory Freedom:
Nonprofit Religious Corporation Act:
3
/5
Tennessee’s nonprofit corporation law expressly: (a) acknowledges an option for nonprofit corporations to incorporate for religious purposes and (b) includes specific provisions to protect the right of nonprofits incorporated for religious purposes to self-government in internal affairs. The law does not include an option to incorporate expressly as a nonprofit religious corporation.
Standards of Conduct for Directors of Religious Organizations:
5
/5
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.
Charitable Registration Law:
0
/5
Tennessee generally requires charitable solicitation registration and only exempts entities that are not required to file Form 990, such as organizations classified as churches, religious orders, etc.
Audit Requirements Pursuant to Charitable Registration:
-3
/5
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.
Corporate Income Tax:
5
/5
Tennessee imposes a corporate income tax but automatically exempts organizations with federal 501(c)(3) exempt status.
Sales and Use Tax, Sales:
-3
/5
Tennessee imposes a sales and use tax on religious organizations’ sales and only provides limited exemptions for certain items.
Sales and Use Tax, Purchases:
3
/5
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.
Property Tax:
3
/5
Tennessee imposes property tax but, upon application, generally provides an exemption to religious organizations for property used for religious and/or charitable purposes.
