Devoted to the Propagation and Defense of New Testament Christianity
April 5, 1962
NUMBER 47, PAGE 3,10-11a

Church Owns Supermarket --- Why Not?

Jules Loh, (Ap Newsfeature Writer)

Just inside the gate of a large amusement park in New Jersey a black-robed nun sits on a folding chair, accepting with a warm "God bless you" each coin that drops into the lidless cigar box on her lap.

To beg she's not ashamed.

But if it's money she's after, real money, her humble method is as out of tune with the 1962 church scene as her whispered ayes with the calliope's strident oom-pahpah.

She could, for example, turn a neat profit by owning a parking lot, or a restaurant, or an apartment house, or a coal mine, or all the stock of the Los Angeles Philharmonic Auditorium Co., or the site of a J. C. Penny store in Columbus, Ohio, or of the Greyhound bus station in Louisville, or of the Robert Morris Hotel in Philadelphia, or of a supermarket in Schenectady, or even a little spread in Texas — a city block in downtown Dallas, say. Or she could make exquisite candies, or bake fine bread, or brew brandy or raise cattle or grow vegetables or cultivate herbs.

These are but a handful of the profitable ventures pursued today by churches across the land.

Some denominations drink more deeply of these so-called unrelated business profits than others, but there are few total abstainers. The businesses and properties just listed, for example, are in the hands of Congregationalists, Methodists, Catholics, Baptists, Presbyterians, Mormons, Lutherans, Episcopalians and Seventh Day Adventists, and it's far from a complete lineup.

The fact is, churches nowadays are obligated to support widely expanded services on a scale unknown to churchgoers of a generation ago — missionary activities, vacation Bible schools, youth programs and the like.

The Central Christian Church of Lexington, Ky., a typical example, had an annual budget of less than $30,000 at the end of World War II. It's now $168,000 a year.

Most churches — Central Christian is one of them — are able to raise the added money solely through increased member contributions. But many hire professional fund raisers, a service some denominations, notably the Lutherans, provide for their churches.

But an increasing number of pastors are finding pew rents and collection plates simply won't get the job done, even with an occasional bake sale, bazaar or Saturday night bingo.

So the harried pastor looks around for a chance to do a little moonlighting, as they say.

"Why not," he asks himself, "rent out the church parking lot during the week?" That's what the Beneficent Congregational Church of Providence, R. I., does, to name only one. In 1960 the lot grossed $11,000.

Or if a member of the congregation should up and give you a piece of property — which is how the Seventh-Day Adventists came to own Harris Pine Mills, and Oregon lumber and furniture-making business — why not continue to operate it?

A commonplace practice for churches, in fact, is to buy neighboring property for future expansion, renting it out meanwhile until it's needed.

The First Baptist Church of Birmingham, Ala., and the Central Presbyterian Church of Louisville both are holding downtown parking lots for just such a purpose. The Catholic diocese of Portland, Maine, owns a couple of filling stations for ultimate expansion sites.

Sometimes churches wind up with income-producing property by sheer accident. The Catholic diocese of Memphis bought an apartment house to use as a home for un-wed mothers, and got stuck with it when neighbors objected. So now the church collects rent.

Why Not?

One answer comes from a number of churchmen alarmed by what they frequently refer to as "the burgeoning wealth of the churches."

They feel unrelated church activities have gotten out of hand, especially if the activities pay no taxes and thus have an advantage over commercial competitors.

"How many decades will it be," asked Presbyterian Dr. Eugene Carson Blake in a speech not long ago, "before the United States may find itself dominated by the wealth of a church or churches....?"

(Asked for his own estimate, Dr. Blake said he was "speaking in terms of 50 or 100 years." He also said, "Perhaps part of my concern is because too large a share seems to be falling into the hands of one church — the Catholic church.")

Dr. Blake and others feel the states and federal government, ever in need of money, are giving it away unnecessarily by property and income tax exemptions for activities unrelated to the church's primary function.

The opposing camp argues that church institutions such as orphanages, hospitals, schools, besides being nonprofit also serve a public function which otherwise would have to be done by the state.

Therefore, even though they pay no taxes on their unrelated income, they actually save the taxpayers money in the long run.

On the other hand, the Baptist Joint Committee on Public Affairs, after a study by the churches and American tax policies, concluded that the tax-exemption criterion for churches should be "the source from which the income is derived rather than the use to which it is put."

When the Seventh-Day Adventists inherited Harris Pine Mills, for example, they continued paying the same taxes as always.

The Mormon Church long has prided itself in that it pays all federal, state and local taxes on any profits from wholly or partially owned businesses — and they are considerable.

A partial list includes the Utah-Idaho Sugar Co., the Deseret News Publishing Co., the Beneficial Life Insurance Co., the Orlando Livestock Corp. (a 300,000 acre cattle enterprise in Georgia and Florida), a couple of hotels, a book store and a real estate holding company. The church also owns a coal mine, 66,000 acres of farmland, citrus orchards, 30 canneries, poultry farms, dairies and feed lots — more than $17 million in assets — simply to keep up its stockpiles of food for the needy at 140 storehouses across the nation.

The Massachusetts Baptist Convention makes a token payment of $300 a year to the town of Groton in lieu of lawfully exempt taxes on a campsite. "We consider it good public relations," said the secretary of the convention.

It is virtually impossible to learn exactly how much income-producing property is in the hands of the nation's churches.

There are no central sources for the information. Virtually every Protestant church and Jewish synagogue is financially autonomous, as is every Catholic diocese. Each administers its own property, has its own debts and sources of income.

Moreover, pastors and bishops frequently aren't inclined to part with the information.

But an Associated Press survey turned up some interesting examples.

The Loma Linda Food Co. of Arlington, Calif., owned by the Pacific Union Conference of the Seventh-Day Adventists Church, has a net worth of $1.6 million.

The company specializes in meatless foods (more than 50 varieties), and because it thus serves the vegetarian needs of church members it is tax exempt.

Adventists also operate a number of other commercial businesses — bakery, furniture store, filling station — whose income helps support their schools. Net gain from all such enterprises in 1960 was $184,000, all except $71,000 from Loma Linda.

In Milbanks, S. D., the United Brethren Church operates a cheese and dairy business with capital stock listed at $100,000. St. Joseph's Catholic Church in Newport, R. I., owns the $48,000 Strand Theater. The International Church of the Foursquare Gospel, founded in Los Angeles by the late Aimee Semple McPherson, operates two radio stations valued conservatively at $3 million. The First Congregational Church of Claremont, N. H., nets $1,000 a year from a building it leases to an automatic laundry.

In Columbus, Ohio, the Catholic College of Josephinum owns the Montgomery Ward Building, and the American Lutheran Church in the same city owns the $173,110 Wort-berg Press Building. In Massachusetts, the Congregational Christian Conference owns an inn on Cape Cod.

In city after city you can buy from churches and church organizations greetings cards, religious articles, sandwiches, pastries, candy, and, from the Episcopal cathedral in Washington, herbs grown in its own gardens.

Catholic orders of monks produce top quality products from bread to wine in monasteries scattered across the country.

The beef produced by the monks of St. Benedict's Abbey near Aspen, Co., is of such consistently high grade Denver stockyards buy it sight unseen.

Most publicized Catholic enterprise probably is the Christian Brothers' wine operation, in California's Napa Valley, with a bottling capacity of 6,000 cases a day.

Figures published during a tax dispute — a landmark case in the tax exemption field, incidentally — showed the religious order netted $3.6 million over three years. The income operates 10 schools in northern California.

The order always has paid property taxes, but its federal income tax status was in dispute for a decade before it finally was settled last December with the order required to pay some back income taxes.

The federal government exempts from income tax churches and religious orders or organizations that are an integral part of a church. Members of an order must perform sacerdotal functions or conduct religious worship.

The Christian Brothers are a teaching order of men who wear clerical garb. But they aren't priests, and do not perform "sacerdotal functions." The government, therefore, contended successfully that the order is not an integral part of a church.

The federal exemption applies to church income from such sources as dividends, interest, annuities, royalties, rents, sales or real property, and also to church-owned corporations not operated primarily for business profit.

Even if such a feeder corporation is held to be primarily engaged in business for profit, and thus subject to tax, the church itself doesn't have to pay tax on its income from the corporation.

Some churchmen not only are opposed to such exemptions but even would favor tax levies on the church house itself.

Morton J. Bjorkquist of St. Paul, Minn., a member of the Augustana Lutheran Church's Social Missions Board, told his denomination's 100th annual synod recently:

"There's no reason why the church and its institutions shouldn't be paying their fair share of the taxes needed to support our government."

The American practice of tax exemption for churches and church institutions — based on the theory they benefit society as a whole — is older than the Constitution, and only a few churchmen agree with Bjorkquist's point of view.

The debate goes on, however. The First Amendment is appealed to (though no tax cases to date have been decided on grounds of separation of church and state), and volumes continue to be written on the subject.

Meanwhile, it's business as usual...