The organization takes advantage of a little-known provision in the tax code to exempt over half of its executive director's salary from Federal income taxes.
The LA Times (Rebecca Trounson) reported on an apology by former members of the ex-gay organization Exodus International (EIN 52-1413470 Form 990) for their former claims that sexual orientation could be changed by prayer. The press conference by the ex-ex-gays (should we say 2X gays?) coincided with the opening of the Exodus International annual conference, which accounts for about a third of the group's program activities according to the Form 990 (the rest goes to publications, smaller outreach meetings, and a referral program).
What caught my eye in the Form 990 is a footnote reporting that $40,000 of executive director Alan Chambers' salary of $70,000 is a "minister housing allowance under section 107 of the Internal Revenue Code." This section in question is available only to ministers of the gospel (the term used in the code) and excludes from gross income a housing allowance equivalent to the fair rental value of their home, furnishings, garage, and the cost of utilities. (And it's a double benefit, because the beneficiary can still deduct mortgage interest, if they have any.) In this case, Exodus Ministries is saying that Rev. Mr. Chambers has housing worth $3,333.33 a month. (In addition, Executive VP Michael Goeke is shown with compensation of $31,900 and $24,100 as a housing allowance.)
Section 170 came out of a desire to shield pastors from having to pay taxes out of pocket for the use of a parsonage, but the exemption broadened. Congress reaffirmed the exemption back in 2002, when it looked as though the Ninth Circuit Federal Court was considering a case that might have called into question the Constitutionality of the provision. That case, which involved the $80,000 per year housing allowance of best selling author Rick Warren, then pastor of Saddleback Church (church, no Form 990), was brought to a halt when Congress hastily removed the basis for the dispute so the Constitutional question could not be raised. The rest of the story is explained in a law review article by Erwin Chemerinsky, The Parsonage Exemption Violates the Establishment Clause and Should Be Declared Unconstitutional. (Don't be shy, Erwin, tell us how you really feel.)
What's at issue here is whether Exodus International actually qualifies for the exemption. Under IRS regulations, the exemption is only available for remuneration for services which are ordinarily the duties of a minister of the gospel (again, this is how the code puts it). These include
sacerdotal functions, the conduct of religious worship, the administration and maintenance of religious organizations and their integral agencies, and the performance of teaching and administrative duties at theological seminaries.
To me, conferences, publications, outreach, and referrals to help people change their sexual orientation seems a little afield from the ordinary duties of a minister of the gospel. Not to mention the size of the allowance. Spending well over half one's income on housing seems excessive, even these days. Stretching the definitions on clergy housing and exaggerating the size of the benefit—when there are prominent voices calling for its abolition—are not in the best interests of vast majority of churches who use the deduction for its original intended purpose.
Exodus International is a member of the Evangelical Council for Financial Accountabilty (EIN 93-0744698 Form 990). ECFA suggests (but does not mandate) certain guidelines for ministries on the application of various tax provisions relating to ministers (including the housing allowance). Just looking at the guidelines, it appears that Exodus International might have skimped on the suggestion that care should be exercised in determining the amount of housing allowance to request.
And it looks that Rev./Mr. Chambers has latched on to another issue that has enough traction with a donor base to make a living for himself, joining Ken Ham (Creation Museum), Brent Bozelle (Parents Television Council), and Grover Norquist (Americans for Tax Reform) among the ranks of what I call issuepreneurs. It's just that in this case, Uncle Sam is chipping in with tax-free income.