Texas ranks #4 overall out of the 51 U.S. jurisdictions for its friendliness towards faith-based nonprofit organizations, making it one of the best states in which to operate a faith-based nonprofit. Texas has several policies that facilitate the contributions of faith-based nonprofits, constitutional language protecting religious exercise during a state of emergency, strong protections for directors to rely on guidance from religious figures within his or her faith tradition, and a broad exemption from charitable registration laws. Additionally, Texas has no nondiscrimination laws related to public accommodations and does not impose audit requirements as a condition of maintaining authorization to fundraise in the state. Texas, however, has several policies that are burdensome to faith-based nonprofits operating in the state, such as a broad Blaine Amendment and very limited exemptions from state sales tax on religious organizations’ sales.
The Texas 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).
Texas 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, Texas does not receive the highest score for this factor.
The Texas 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.
Texas nonprofit corporation law includes certain provisions to protect religious nonprofits’ right to self-government in internal affairs in some situations but does not include comprehensive laws specific to nonprofit religious corporations.
Texas 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.
Texas 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.
Texas 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.
