ARTICLE
31 August 2022

Are Religious Corporations Constitutional?

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Allen Matkins Leck Gamble Mallory & Natsis LLP

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Allen Matkins, founded in 1977, is a California-based law firm with more than 200 attorneys in four major metropolitan areas of California: Los Angeles, Orange County, San Diego, and San Francisco. The firm's areas of focus include real estate, construction, land use, environmental and natural resources, corporate and securities, real estate and commercial finance, bankruptcy, restructurings and creditors' rights, joint ventures, and tax; labor and employment, and trials, litigation, risk management, and alternative dispute resolution in all of these areas. For more information about Allen Matkins please visit www.allenmatkins.com.
Like Gaul, the California Nonprofit Corporation Law has three major parts ("Gallia est omnis divisa in partes tres'). These three parts govern the formation and operation of three different types...
United States California Corporate/Commercial Law

Like Gaul, the California Nonprofit Corporation Law has three major parts ("Gallia est omnis divisa in partes tres'). These three parts govern the formation and operation of three different types of nonprofit corporations: public benefit (Part 2), mutual benefit (Part 3) and religious (Part 4). Many, but not all, of these three parts include similar provisions. However, there are significant differences.

The Nonprofit Religious Corporation Law authorizes the formation of a corporation primarily or exclusively for "religious purposes". Cal. Corp. Code § 9111. Among other things, the Attorney General has far less supervisory powers with respect to a religious corporation than a nonprofit public benefit corporation.

Recently, the I began to consider the constitutionality of California's Nonprofit Religious Corporation Law in light of Article I, Section 4 of the California Constitution, which provides in relevant part: "The Legislature shall make no law respecting an establishment of religion" (emphasis added). Read broadly, a law, such as the Nonprofit Religious Corporation Law, that provides for the chartering and operation of religious corporations would seem to be a law "respecting an establishment of religion". However, I doubt that the drafters of the California Constitution intended to prohibit such legislation. Rather, "establishment" should be understood in the historical context of "established churches" with respect to which the government oversaw the clergy and doctrine, provided financing, compelled attendance, and prohibited other religious organizations. This is not a question that I have researched and I would welcome hearing from any readers who may have considered the issue. A similar question also exists under the First Amendment of the United States Constitution which includes that same prohibition.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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