When it comes to financial transparency, churches that are recognized as 501(c)(3) organizations occupy a unique space in U.S. nonprofit law. While all public charities must generally comply with IRS filing and public disclosure requirements, churches and certain church-affiliated organizations are granted special exemptions. Here's what you need to know:
Are Churches Required to File Form 990?
Most 501(c)(3) nonprofits must file an annual return with the IRS—Form 990, 990-EZ, or 990-N—to maintain tax-exempt status and provide transparency about their operations. However:
Churches, their integrated auxiliaries, and conventions or associations of churches are exempt from this requirement.
This exemption applies even if the church has significant income or assets.
In other words, churches do not have to file Form 990, even though they are still recognized as tax-exempt organizations.
Do Churches Have to Share Financials with the Public?
Because churches aren’t required to file Form 990, they also aren’t required to publicly disclose their financial information in the same way other nonprofits are.
This means donors, members of the public, and watchdog organizations generally can’t access detailed financial records for churches unless the church voluntarily publishes them.
Some churches choose to publish financial reports to build trust with members and donors—but it’s not legally required.
Are There Any Exceptions?
There are a few scenarios where a church might lose its exemption or be required to disclose finances:
If a church operates a separate nonprofit (like a school or foundation) that is not a religious auxiliary, that entity may need to file Form 990.
If a church is under investigation for violating tax-exempt rules (e.g., excessive political activity or private benefit), the IRS can request financial documentation.
Churches that voluntarily file Form 1023 (to gain formal 501(c)(3) recognition) may have more reason to maintain financial records even if disclosure isn't required.
So What Should Churches Do?
Even though they aren’t required to file or disclose, churches are still responsible for:
Keeping accurate financial records
Using funds for charitable and religious purposes
Avoiding private benefit or excessive compensation
Complying with federal and state laws governing employment, taxes, and property use
And for the sake of donor trust and internal accountability, many churches choose to:
Conduct independent financial reviews or audits
Share financial summaries with church members
Maintain financial transparency as a core value
Bottom Line
501(c)(3) churches are not legally required to disclose their finances to the public or the IRS via Form 990—but that doesn’t mean they’re above financial oversight. Maintaining sound fiscal practices and voluntary transparency can help churches build trust, avoid legal issues, and remain focused on their mission.
Need help understanding the rules for your faith-based nonprofit? InstantNonprofit is here to guide you through the process.