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Churches Warned to Back Off of Payday Lenders

Several Missouri churches received a letter in January from a Texas law firm warning that the churches might be jeopardizing their nonprofit status.

The letter from Grapevine, Texas-based Anthony & Middlebrook said, “…a church or religious organization that engages in activities that attempt to influence legislation (i.e., lobbying) may lose their tax-exempt status.”

The letter was sent to churches and ministries involved in a petition effort to get legislation on this year’s ballot to restrict annual percentage rates (APR) for so-called payday lenders.

Advocates from a very broad-based religious coalition have been working with consumer advocates in the state to reduce the APR for borrowers to 36 percent.

Steve Engler, a pastoral associate and director of social concerns at Visitation Catholic Parish in Kansas City, said his church chose not to respond to the firm’s letter.

“We didn’t respond, and we don’t plan to,” he said. “The idea that we are jeopardizing our tax-exempt status by working with CCO (Communities Creating Opportunities) has no legal grounds.”

Communities Creating Opportunities is a faith-based community organization in Kansas City that focuses on issues of social and economic justice.

Jeanie McGowan, a staff pastor at the First Baptist Church of Jefferson City, said CCO has been instrumental in coordinating the broad-based religious support the initiative is receiving.

Engler said he wasn’t sure how the firm, which has so far refused to comment on the letter, chose the churches and ministries that were targeted.

“I assume it’s because of our involvement with CCO,” he said. Engler called the letter “full of threats,” but his church is going ahead with the petition initiative.

St. Terese Little Flower Parish in Kansas City will be staying in the fight as well. Rev. Ernie Davis said his church is not intimidated by the letter’s tone.

“It made me kind of proud,” said Davis in a Kansas City Star article. “People are being overcharged with these very high interest rates and this shows that the people who benefit from the high interest rates are getting scared… (This) just makes me more dedicated to getting the problem taken care of.”

The legal letter was written on behalf of a group called Missourians for Equal Credit Opportunity (MECO).

The group’s website gives no information about who the members are, but the Missouri Ethics Commission records show that MECO has received $800,000 from a 501(c)4 organization called Missourians for Responsible Government.

The Center for Responsible Lending (CRL), a consumer advocacy group in Washington, D.C., said MECO was originally started by payday lenders, but the original group disbanded and transferred remaining funds to a “campaign committee” of the same name, the 501(c)4 referenced in the letter.

Rachel Anderson, director of faith outreach for CRL, said this is the first time she’s seen a legal tactic directed against advocates.

“Typically, we see attempts to demonize those calling for reform,” she said.

Anderson said faith-based groups have been responding well for calls to help get the word out about payday lending.

“Across the country, we’ve seen a wide range of religious leaders speaking out about this,” she said. “In Mississippi, a UMC minister has led the charge. The ELCA’s Office of Advocacy has been involved, as have Episcopalian bishops, Baptists and interfaith organizations. The PCUSA and UCC have both developed national policies calling on reform. A coalition of Catholics helped get the 28 percent cap done in Ohio last year.”

Faith-based organizations are in no real danger when lobbying about a particular issue as long as they follow the law, according to CCO.

In an article related to the letter, CCO said: “Federal tax law does prohibit churches and tax-exempt charities from supporting or opposing candidates. It also says those groups must limit advocacy activities on behalf of a particular cause so that they don’t constitute ‘a substantial part’ of an organization’s total activities.”

In other words, as long as churches are feeding the poor, holding worship services, engaging in outreach, clothing the naked and otherwise being the church, they are in no danger of transgressing the law by advocating for a particular justice issue.

Greg Horton is a freelance writer and adjunct professor of philosophy and humanities. He lives in Oklahoma City.