Supreme Court Affirms Protections for Church-Sponsored Nonprofits
On June 5, 2025, the U.S. Supreme Court issued a unanimous 9–0 decision in Catholic Charities Bureau v. Wisconsin Labor & Industry Review Commission, marking a significant victory for churches and affiliated nonprofit ministries across the nation.
At the center of the dispute was Catholic Charities Bureau (CCB), a nonprofit organization under the Diocese of Superior. CCB provides essential services—such as elder care and support for individuals with disabilities—that, while rooted in faith, do not involve overtly religious activity like preaching or proselytizing.
The state of Wisconsin argued that because CCB’s services were not explicitly religious and were open to people of all faiths (or none), the organization failed to qualify as “operated primarily for religious purposes” and was therefore not eligible for a state unemployment tax exemption.
The Supreme Court's Ruling: A First Amendment Victory
In a powerful affirmation of religious liberty, the Supreme Court unanimously disagreed. Writing for the Court, Justice Sonia Sotomayor held that denying a tax exemption based on how a ministry expresses its faith violates the First Amendment.
“The government cannot favor one form of religious expression over another—whether it’s preaching from a pulpit or serving the vulnerable in quiet obedience.”
Justice Clarence Thomas, in a concurring opinion, emphasized that the government lacks the authority to determine whether a religious organization is “religious enough.” Doing so, he said, would intrude upon church autonomy and internal governance—both of which are protected by the Constitution.
Why This Decision Matters to Your Church or Ministry
This decision sets a critical precedent for faith-based organizations and church-run nonprofits that engage in activities like social services, education, healthcare, and community outreach—even when those services appear “secular” on the surface.
Key Takeaways for Churches and Ministries
Expanded Tax Exemption Protections
Ministries controlled, supervised, or principally supported by churches remain eligible for unemployment tax exemptions—even when their services aren’t overtly religious.Religious Motivation Counts
Ministries inspired by religious belief—whether expressed through worship or acts of service—are protected under the First Amendment.Protection from Government Overreach
States cannot impose restrictive definitions of religion or deny exemptions based on a nonprofit’s mode of ministry. Quiet, service-based expressions of faith are just as constitutionally protected as traditional religious rituals.
Is Your Church-Run Nonprofit Structured for Protection?
At Reynolds Law Group, we celebrate this decision as a landmark protection for your mission. If your church or affiliated ministry operates a nonprofit and has experienced regulatory pushback—or simply wants to ensure proper exemption status—now is the time to review your legal structure.
We’re here to help. Contact our team to schedule a review of your nonprofit’s formation, exemption status, or church affiliation.
