Nonprofit and religious leaders say conditions for loosening federal rules on politicking by nonprofits are as ripe as they have been in years, with President Trump promising to “totally destroy” a law that stops charities and houses of worship from endorsing or opposing political candidates.
Still, getting Congress to alter the law will be hard to do, say those who’ve followed the yearslong debate on the issue. Among the reasons: Major nonprofit associations oppose weakening the law and are moving to block efforts to do so, and there is scant support from the general public.
One proposal introduced in the new Congress would do what President Trump called for: kill what is often called the Johnson Amendment after its author, then-Sen. Lyndon Johnson. Another bill, the Free Speech Fairness Act, introduced in February by three Republican lawmakers, would allow charitable and religious organizations to endorse or oppose candidates without fear of losing tax-exempt status so long as their political actions stayed within the “ordinary course of the organization’s regular and customary activities.” Any additional spending on such activities would have to be negligible, or a “de minimis” amount.
A nonprofit that sends out a regular newsletter could include an endorsement of a political candidate, for example. A pastor could invite a candidate to speak during a regularly scheduled meeting or service, and could publicly encourage members of the congregation to vote for him or her.
“This is not about financing a political campaign,” Sen. James Lankford, a co-sponsor of the bill, said in an interview with The Chronicle. “It is already inappropriate and illegal to be able to use a nonprofit organization as a shadow campaign organization. If they want to do that they can be a (c)(4) organization rather than a (c)(3) organization.”
Mr. Lankford and other backers of the measure say it will not politicize nonprofits and congregations but will ensure their First Amendment rights are protected. Nobody would be able to make a political donation through a nonprofit and receive a charitable tax deduction, they say.
“The Free Speech Fairness Act really serves as what I call a relief valve for speech,” said Erik Stanley, senior counsel at the Alliance Defending Freedom, a conservative Christian legal nonprofit that has sought for years to undo limits on nonprofit political activity. “It allows for nonprofit entities to speak out on issues that they feel [are] important to them in the ordinary course of the business.”
More ‘Dark Money’?
Opponents of abandoning or weakening the Johnson Amendment counter that the key issue is not speech, but money.
They argue that allowing even modest amounts of nonprofit resources to be directed to political campaigns would open a giant hole through which donors and candidates could secretly shovel dollars. Nonprofits and religious organizations don’t have to disclose the names of their donors to the public, and congregations aren’t required to file spending disclosures because of rules protecting separation of church and state.
“The idea that it is speech — no, it is really about who is paying for the speech,” said Lawrence Ottinger, a lawyer and longtime nonprofit leader.
The country has seen such a slippery slope before, say those who want the nonprofit-politicking ban to remain intact. They point to the so-called “dark money” flowing through advocacy groups that are tax-exempt under Section 501(c)(4) of the tax code.
Federal rules state only that such groups must “primarily engage in promoting in some way the common good and general welfare of the people of the community,” language seized upon by lawyers to defend spending of up to 49 percent of 501(c)(4) entities’ money on political activity. As a result, in recent years such organizations have become conduits for hundreds of millions of dollars in political donations, although supporters aren’t eligible to take a tax deduction, as they are when they give to charities.
“It is the camel’s nose under the tent,” Mr. Ottinger said.
Law Too Vague
Nonprofits are free to lobby on issues tied to their missions, so long as it does not constitute a “substantial part” of overall activities, under a law that dates to 1934. (Congress updated this law in 1976 to allow some nonprofits to spend on lobbying based on fixed percentages and the sizes of the nonprofits.) The executive director of a food bank, for example, may call on elected officials and others to support anti-hunger policies.
The Johnson Amendment, enacted in 1954 and tweaked in 1987, prohibits nonprofits and congregations from getting involved in political campaigns on behalf of candidates, especially by making endorsements. (Employees of charitable and religious organizations can participate in political activities as private citizens outside the boundaries of their groups.)
The problem, according to many charity, religious, and political leaders of disparate political persuasions, is that the law as written is too vague. A lack of enforcement by the Internal Revenue Service and a dearth of court cases and rulings have left nonprofits with little guidance on how to interpret it.
For example: Is a nonprofit in violation if it issues a statement on an issue that has been raised as a distinguishing characteristic between two candidates but does not specifically name the candidates or their parties? Would a pastor be within the law if he endorsed a candidate using only a visual cue, like a political party’s logo?
Some of these same lawmakers, nonprofit lawyers, and religious leaders have sought for years to either change the law or to get the IRS to clarify its rules. They have attempted to do so with legislation, and with efforts such as the Commission on Accountability and Policy for Religious Organizations and the Bright Lines Project.
Seeking ‘Pulpit Freedom’
The current law is most vehemently opposed by a small number of conservative Christian groups and individuals who want pastors to be free to make political endorsements from the pulpit. Since 2008, the Alliance Defending Freedom and some religious leaders have sought to bait the IRS into enforcing the law with an annual event called Pulpit Freedom Sunday. Pastors intentionally and loudly violate the law in hopes of generating a legal challenge on the constitutionality of it. The IRS has ignored that effort.
“I would say this respectfully, but I don’t believe anybody who is intellectually honest can say that it is OK to leave it alone,” said Michael Batts, an accountant in Florida who works with nonprofits, including many churches. “There is a major problem with the way the law exists and is administered today.”
Mr. Batts, who supports efforts to amend the law, chaired the Commission on Accountability, which was launched by Republican Sen. Charles Grassley and sought to clarify rules governing the political activity of religious and charitable organizations. Parts of its concluding report, released in 2013, are reflected in the Free Speech Fairness Act.
“The real intent of the recommendation of the commission was to allow speech that does not involve incremental spending, as long as that speech or that communication is made in the ordinary course of an organization’s regular and customary exempt activities,” Mr. Batts said.
Mr. Batts said that there is one piece of the commission’s report that he wished were included in the current proposal before Congress. That would clarify that if there is an unintentional violation of the law, or if the violation is minor in comparison with the size of the organization, that the penalty be a fine, not the revoking of tax-exempt status.
He rebuffs criticism that the Free Speech Fairness Act would be hard to enforce. As it stands now, Mr. Batts said, “The law isn’t being enforced at all.”
Fresh Momentum
That bill is not the only pending legislative bid to change the landscape for nonprofit politicking. Walter Jones, a Republican House member from North Carolina, introduced a measure in January that would scrap restrictions on nonprofits’ political activity entirely. Mr. Jones has brought forward the bill nearly every year since 2001; his 2002 effort produced an actual vote, a fast-track, late-night attempt in the House that needed a two-thirds majority to pass. It failed to garner a simple majority.
Now, the momentum is as strong as it has been in recent memory for those groups and leaders who would like to see the limits at least eased, according to those who have followed the issue for years.
For starters, President Trump has made ending the Johnson Amendment a centerpiece of his outreach to Christian voters, most recently reiterating at the National Prayer Breakfast in Washington that he would like to see it done away with. One of the co-signers of the Free Speech Fairness Act, Louisiana Republican Rep. Steve Scalise, is the House majority whip. Rep. Kevin Brady, a Republican from Texas and chairman of the influential House Ways and Means Committee, issued a statement in late February stating he too wants to get rid of the politicking ban.
And with a GOP-controlled Congress pledging to pass a major tax overhaul by August, there could be an opportunity for members to get a change in or repeal of the law passed as part of that larger bill.
David Keating, president of the Center for Competitive Politics, a legal and advocacy nonprofit that works to peel back campaign-finance restrictions, said he wouldn’t be surprised to see something like the Free Speech Fairness Act pass as part of a tax overhaul or as its own bill.
“If look at the Johnson Amendment today, no one would write it the way it’s written; it’s terrible,” he said. “You look at it and you’re not sure how far it goes, what it covers, and that’s not the way to write legislation.”
Mr. Keating contended that most of the concerns about allowing nonprofits to engage directly in politics are overblown. He said it’s possible to restrict nonprofit political speech to gatherings like sermons, meetings, and conferences, adding, “Congress is not going to approve tax-deductible donations for political activity.”
Still, he said, it would make sense for any legislation to be as specific as possible in restricting political ads and other forms of campaigning by charities and churches.
Allison Hayward, a California lawyer who specializes in elections and ethics, said she believes the 1954 law wasn’t intended as a strict ban on all political activity but likely was meant to restrict large amounts of political spending and campaigning by nonprofits by creating a test to measure how much is too much.
Ms. Hayward, who examined the history of the Johnson Amendment as part of a research paper for the Center for Competitive Politics, said reform is needed because the current law and guidelines are confusing and contradictory. Nonprofits, for instance, can endorse candidates and engage in political campaigning but only if they establish separate 501(c)(4) “social welfare” entities. “Now we’ve got this silly shell game,” she said.
She also thinks it’s inconsistent for charities and churches to have the ability to do a limited amount of political lobbying but be barred from endorsing political candidates. “If you’re worried about corrupting charities and, it’s OK for them to do some amount of lobbying, just not too much, it should be OK for them to do some amount of political intervention, just not too much.”
Ms. Hayward characterized the Free Speech Fairness Act as a way to allow 501(c)(3)s to engage in political speech but also ensure that they don’t go too far. But even if that measure is passed, she said, battles would still be waged over how far churches and charities could go and how much they could spend on political activity. There almost certainly would be nonprofits that would push the boundaries of the law, she said.
Support From Trump
Mr. Trump’s calls for change and the current proposals in Congress may very well go nowhere. One reason is that religious congregations are not uniformly in support of the idea. Nor is the American public clamoring for a change.
The “biggest obstacle to success that these proposals have is that they are deeply unpopular, particularly among religious people,” said Amanda Tyler, executive director of the Baptist Joint Committee for Religious Liberty, which has fought against loosening nonprofit-politicking rules for years. In a highly charged political environment, nonprofits are one of the last safe refuges from the noise, and people would like to see it stay that way, she said.
In a survey conducted by the Pew Research Center last year, 66 percent of Americans said they do not want churches or other houses of worship to endorse political candidates.
Another poll, done by the research arm of the nonprofit Christian information and resource group LifeWay, found that 79 percent of Americans consider it inappropriate for pastors to endorse candidates in church, and three out of four said churches should not make political endorsements. Less than half said that churches should be punished if the violate the law.
Major nonprofit membership organizations including Independent Sector, the Council on Foundations, the National Council of Nonprofits, and the Association of Fundraising Professionals have come out against proposed changes to the law. Their list of reasons is long, but prominent among them is that those calling for change have focused heavily on religious congregations without sufficiently considering what new rules would mean for charities at large.
Steve Taylor, senior vice president and counsel for public policy at United Way Worldwide, one of the country’s biggest charities, said nonprofits already have plenty of freedom to advocate on policy issues relevant to their communities and their missions.
“I understand the argument that a small number of charities are making about feeling like their speech rights are being inhibited,” he said. “But repealing the Johnson Amendment is like trying to use a sledgehammer to squash a fly.”
Mr. Taylor said charities that start endorsing candidates would put their credibility at risk. He recalled a telephone call he received from a local United Way.
“They had been asked by two candidates to endorse them for county sheriff,” he said. “One candidate was a current board member, and the other candidate was a former board member. You cannot imagine how relieved that United Way was when they found out the law prohibited them from endorsing any candidate.”
Tim Delaney, president of the National Council of Nonprofits, said the membership organization is gathering signatures for a letter from nonprofit leaders to Congress, opposing repealing or amending the law.
Both of the current bills targeting the law would be “extremely harmful,” Mr. Delaney said. “These would be tax-deductible contributions that would then throw dark money into the system” and cause divisiveness within nonprofits that have typically been politically neutral, he said.
The Association of Fundraising Professionals said in a statement that donors expect their gifts to support organizations’ stated charitable causes through programs and services.
“If a donor knows the charity is supporting political candidates that he or she opposes, why would they give?” the membership group said. The statement also raises the issues of tax deductibility and donor disclosure, asking, “Since charities are not required to disclose donors, while political parties and candidates are, will charities now become the refuge of political donors who want to remain anonymous?”
Greg Colvin, an expert on nonprofit tax law, worked closely with the Bright Lines Project, an effort led by the progressive public-policy organization Public Citizen to get the IRS to better define what constitutes “political intervention” by charities and other tax-exempt groups. He said that one problem with the Lankford bill is that it would require houses of worship to prove to the IRS that there were no substantive increases in expenditures related to political activity. That would require financial reporting that churches and others do not currently do, making them more easily subject to audit. Currently, the IRS can audit churches, but such actions require high-level approval.
“I think the financial investigation of churches is unwise,” Mr. Colvin said.
‘No Real Test’
Proponents of changing the nonprofit-politicking law are frank about failed past attempts to do so. Mr. Lankford notes that President Trump’s attention to the issue could be both a curse and a blessing.
“If you’re a supporter of Trump, you suddenly think, ‘Gosh, this is the thing that has to be done immediately on tax policy,’ ” the Oklahoma Republican said. If you oppose the new president, “You immediately run to your corner and say it is a terrible idea.”
But at the end of the day, he said, nonprofits and religious organizations are still left with unclear and unevenly enforced rules.
“Because the IRS hasn’t done prosecutions on it, there has been no real test of standing to test the constitutionality of it, so it has just remained out there as kind of this idle threat without real teeth or enforcement,” Mr. Lankford said.
He noted that his proposal would merely allow some politicking by nonprofits, not compel it. Most nonprofits have donors with varied views so will likely choose not to be involved in politics at all, he said.
“But those that do choose to do that, why should they be prohibited because somebody else doesn’t like it?” the senator said. “The nature of free speech in our Constitution is, I have free speech and so does my neighbor. And I can’t limit my neighbor’s speech because I don’t like it. They can’t limit my speech because they don’t like it.”
