Can a religious charity charge interest on $ it lends or would this disqulify their status?
Can a religious charity lend money to its congregations and charge interest on this loan? If so would this disqualify their status or require taxes paid on the profit?
Tagged with: charge interest • charity • congregations • money
Filed under: US charities
Yes they can.
In general, interest income earned by a non-profit is not taxable. It also could be argued that lending money to its parishioners is substantially related to the purpose of the religious charity. (Providing for their congregation.) Particularly if it wasn’t something done frequently, but only to help someone through a tough time.
If the interest earned was used for non-charitable purposes then there would be an issue.