Grassley Wins Passage of Bill to Protect Religious Freedom


Legislation Would Keep Bankruptcy Courts Out of Church Coffers and Protect Charitable Giving


Scott Stanzel

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? Sen. Chuck Grassley of Iowa today won Senate approval for his bill to protect tithing and charitable giving under the federal bankruptcy code.

"As Americans, we value religious freedom as an important constitutional liberty," said Grassley. "My proposal responds directly to recent decisions made by federal judges which leave churches open to bankruptcy lawsuits and force churches and charities to return money given through donations."

Grassley said his Religious Liberty and Charitable Donation Act will protect tithing and charitable giving by individuals who are recovering from bankruptcy and have demonstrated a pattern of giving by amending two aspects of the current bankruptcy law. The first would protect organizations receiving the donations and the second would protect tithing by individuals after Chapter 13 has been declared. Chapter 13 bankruptcy laws allow debtors to re-pay a discounted portion of their debts. Current law allows debtors to factor in a moderate amount of money for entertainment expenses, but some courts have declared debtors may not budget money to be tithed.

Grassley's legislation would make the following changes:

  • It would prevent federal bankruptcy judges from ordering churches and other charitable organizations with tax exempt status to return donations of up to 15 percent of debtors' gross annual income. In addition, if debtors have demonstrated past patterns of giving greater percentages of income, those donations would be protected by Grassley's legislation.
  • It would allow Chapter 13 debtors to include a charitable contribution of up to 15 percent of their gross annual incomes in budgets for repayment of debt.

"Under current law, a person can budget money for pizza and a movie but not for a charitable contribution to his or her church, even if that person believes his or her faith requires a tithe. Religious freedom should not be trampled upon by our federal courts," Grassley said.

Last September, Grassley held a hearing on this subject as chairman of the Judiciary Subcommittee on Administrative Oversight and the Courts, which maintains jurisdiction over bankruptcy issues. Witnesses at the hearing shared first-hand accounts of their religious freedoms being impacted by the federal bankruptcy code.