Catholic Charities Bureau and its leadership were thrust into the national spotlight Thursday as the Supreme Court handed down a landmark decision. Justice Sonia Sotomayor’s name now headlines a case that could reshape the legal landscape for religious nonprofits, and Wisconsin officials face tough questions about state policy.
A unanimous Supreme Court ruled that Wisconsin violated First Amendment protections when it denied Catholic Charities Bureau a tax exemption for unemployment compensation, as reported by Breitbart News. The decision comes after years of litigation and a contentious debate about what it means to operate “primarily for religious purposes.”
Catholic Charities Bureau, along with four of its related entities, sought exemption from state unemployment taxes as an organization operating under the Roman Catholic Diocese of Superior, Wisconsin. Wisconsin’s highest court had ruled against them, arguing that because the group’s charitable services were not restricted to Catholics nor focused on proselytizing, it failed to meet the legal standard for a religious purpose. The Supreme Court, however, saw the matter differently.
The legal dispute centered on whether the Catholic Charities Bureau’s broad approach to charity was “religious” enough to warrant tax exemption. Wisconsin law, echoing federal statutes, exempts certain nonprofits “operated primarily for religious purposes” and “operated, supervised, controlled, or principally supported by a church or association of churches.” State officials argued that broad, non-proselytizing services did not qualify.
Catholic Charities Bureau countered that Catholic doctrine prohibits using charity for proselytism or limiting aid to church members. This theological nuance became a key point in the case, as the organization maintained its work was entirely consistent with the church’s teachings.
Justice Sotomayor, writing for the unanimous court, rejected Wisconsin’s distinction and cautioned about government interference in religious beliefs. The justices made clear that the state’s reasoning imposed an unconstitutional denominational preference.
The Supreme Court’s opinion emphasized the risk of government entanglement with religion when officials attempt to parse theological motivations behind charitable work. Sotomayor warned that such scrutiny gives rise to favoritism and discrimination among different faiths.
She wrote for the Court, “When the government distinguishes among religions based on theological differences in their provision of services, it imposes a denominational preference that must satisfy the highest level of judicial scrutiny. Because Wisconsin has transgressed that principle without the tailoring necessary to survive such scrutiny, the judgment of the Wisconsin Supreme Court is reversed, and the case is remanded for further proceedings not inconsistent with this opinion.”
The ruling underscored that faith-based service, not just worship or religious instruction, is protected religious exercise. Sotomayor’s opinion signals a broad interpretation of the First Amendment’s protection for religious organizations operating in the public sphere.
Eric Rassbach, attorney for Becket Law and lead counsel for Catholic Charities Bureau, celebrated the decision as a sweeping affirmation of religious freedom for all faiths. He argued that the ruling will safeguard the rights of various religious groups to serve their communities according to their beliefs.
Rassbach said, “This decision therefore protects the right of religious groups of all stripes—including Jews, Muslims, and Hindus—to care for the poor and needy consistent with their sincere religious beliefs about the nature of charity.” He also noted the significance of a unanimous court, adding, “the fact that the opinion was unanimous underscores that religious liberty is not a ‘left’ or ‘right’ issue, but a fundamental freedom that protects all Americans. That is something we should all take pride in.”
Critics of the decision argue that broadening religious exemptions from generally applicable laws could open the door to organizations avoiding regulations under the guise of faith. Some legal experts worry that this could make it harder to enforce workplace protections and tax policy consistently.
The Supreme Court did not grant an automatic exemption but sent the case back to lower courts for further proceedings consistent with its new interpretation. State officials must now re-examine how Wisconsin applies its religious exemption law, potentially affecting other faith-based nonprofits.
Catholic Charities Bureau and its sub-entities will continue their fight for exemption, with the Supreme Court’s opinion making it far more likely they will prevail. The case, Catholic Charities Bureau v. Wisconsin Labor and Industry Review Commission, No. 24-154, could reverberate across the country as states review similar statutes.
Broader implications for church-state relations loom large as nonprofits in every state watch to see how courts and legislatures respond. The ruling will likely become a touchstone for future religious liberty claims involving tax exemptions and social services.
