Politicizing churches is a bad idea for lots of reasons. Not only it is illegal for non-profit organizations to endorse or oppose candidates, it also can divide congregations and lead to other types of problems.
Exhibit A is Cornerstone World Outreach, a church in Sioux City, Iowa. Last year, Cornerstone Pastor Cary K. Gordon decided to use his house of worship to launch an effort to recall three Iowa Supreme Court justices. Gordon was angry that the three, who faced retention elections, had voted to legalize same-sex marriage in the state.
The campaign, dubbed “Project Jeremiah,” was successful, and all three judges lost their seats. But there has been a bit of a blowback since then, and Gordon’s congregation may soon find themselves without a building.
It seems Gordon got so caught up in politics that he couldn’t be bothered to pay his bills. In fact, the congregation owes a contractor more than $3 million for work done on the facility. A mechanic’s lien has been placed on the church, and if the sum isn’t paid, Cornerstone goes up on the auction block May 3.
You might recall that when Americans United learned about what Gordon was doing, we asked the Internal Revenue Service to investigate. Houses of worship and other 501(c)(3) non-profits are not permitted to endorse or oppose candidates. Telling people to vote against judges was a clear violation of federal law.
Making matters worse, Gordon and other church officials knew what they were doing was legally problematic. In a letter describing Project Jeremiah that was sent to clergy across the state, Gordon said a group called Liberty Institute would defend any church sanctioned by the IRS.
We don’t know if the IRS is taking any action against the church because agency investigations are confidential, but it appears that concerns about a potential IRS penalty might have led to some of the church’s troubles.
The Sioux City Journal reported that church officials had hoped to secure a loan to pay the contractor’s bill but were warned that Project Jeremiah made it difficult for the church to get credit.
Doug Daniels, an associate pastor at the church, at one point drafted an affidavit about the matter. As the Journal reported, “Daniels’ draft affidavit also includes text of an e-mail urging church officials to issue a retraction and warned that an unnamed state agency had asked the Federal Deposit Insurance Corp. to investigate the church as a result of Project Jeremiah.”
I think there’s some confusion here. The Federal Deposit Insurance Corporation ensures that Americans won’t lose money deposited in banks that fail. It’s not likely that the FDIC would intervene in this matter. The e-mail cited was written by a loan broker.
Most likely, he got confused and said FDIC when he meant to say IRS. But the bottom line remains the same: The brazen political intervention apparently caused a loan broker to conclude that the church is a poor candidate for a loan, and this has compounded Cornerstone’s problems.
The loan officer is right to be worried. The IRS has the power to revoke a church’s tax-exempt status and assess fines and back taxes. In a case from 1993, the Rev. Jerry Falwell had to pay the IRS $50,000 in back taxes after the IRS determined that his tax-exempt “Old Time Gospel Hour” broadcast ministry had illegally intervened in several congressional elections. The ministry’s tax exemption for the years 1986 and 1987 was retroactively revoked.
Church officials continue to try to work out a deal with the contractor, but they haven’t ruled out declaring bankruptcy as a last resort.
It’s quite a mess, and I can’t help but think that the church might have avoided it all if its leaders hadn’t been so determined to forge a partisan political machine.