## Facts

- The Foundation of Human Understanding (FHU) was a nonprofit religious organization founded in 1963 and led by Roy Masters.
- The IRS had recognized FHU as tax-exempt under I.R.C. § 501(c)(3) but declined to classify it as a “church.”
- FHU sought recognition as a church for purposes of I.R.C. § 170(b)(1)(A)(i); the IRS issued a final adverse determination in 1983.
- FHU owned a building in Los Angeles where it held religious services three or four times a week.
- FHU later purchased a church building in Grants Pass, Oregon, where it also held regular services.
- FHU’s services were attended by established congregations reported to range from about 50 to 350 persons and were conducted by an organized ministry.
- FHU operated Brighton Academy, a school that instructed children in FHU’s teachings.
- FHU owned Tall Timber Ranch in Selma, Oregon, where it conducted seminars, meetings, and related activities.
- FHU conducted substantial broadcasting and publishing efforts, including a radio program and a magazine, used to disseminate Masters’s religious teachings and encourage participation.
- FHU’s worship format was nontraditional and lacked rigid liturgy; Masters emphasized meditation and emotional self-regulation, typically practiced privately rather than as a collective ritual during services.

## Issues

1. Whether FHU qualified as a “church” within the meaning of I.R.C. § 170(b)(1)(A)(i) for the years at issue, entitling it to church treatment for contribution-related tax purposes.

## Decision

- The Tax Court entered a declaratory judgment for FHU under I.R.C. § 7428.
- The court held that FHU qualified as a “church” within the meaning of I.R.C. § 170(b)(1)(A)(i).
- The court rejected the Commissioner’s adverse determination that FHU was not a church.

## Legal Principles

- Because the Code does not define “church,” classification turns on a functional, fact-intensive inquiry; no single criterion is controlling.
- A core indicator of church status is an identifiable body of believers that regularly assembles for communal religious services.
- Regular, organized worship services for established congregations, conducted by an organized ministry, strongly support church classification.
- Significant broadcasting and publishing activities do not negate church status where they function as outreach supporting congregational religious life rather than replacing it.
- Nontraditional doctrine, a flexible service format, and the absence of rigid liturgy do not preclude church status; the government must apply neutral criteria without favoring particular worship forms, consistent with First Amendment constraints.
- The distinction between a religious organization and a church generally turns on whether the organization maintains organized congregational worship and related structures sustaining a religious community.

## Conclusion

The Tax Court concluded that FHU met the functional and associational indicators of a church—organized ministry, regular services, and established congregations—and therefore qualified as a “church” under I.R.C. § 170(b)(1)(A)(i) despite its nontraditional worship format and substantial media outreach.


Found. of Hum. Understanding v. Comm’r, 88 T.C. 1341 (1987)