President Trump, who promised in February to “totally destroy” the law prohibiting churches from engaging in campaign activities, signed an executive order May 5 instructing the IRS to not penalize any house of worship or religious organization for speaking about political issues from a religious perspective, where similar speech has not previously been considered campaign intervention by the Treasury. While many news outlets announced a rollback of the law or an end to IRS enforcement of it (some even stated that churches are now allowed to endorse candidates), the order does not go so far. In fact, it generally restates existing policy.
The Johnson Amendment (Amendment), as the targeted law is called, already allows any organization exempt from tax under Section 501(c)(3) — not just churches — to speak on political issues. It only prohibits participation or intervention in a political campaign, i.e. contributing to or endorsing/opposing a candidate for public office. IRS policy is more general, prohibiting activities “with evidence of bias that … have the effect of favoring a candidate.” It is worth noting that only one church has ever lost its tax-exempt status for breaking the rule, and it did so by publishing two full-page newspaper advertisements opposing presidential candidate Bill Clinton. Exempt organizations may advocate in furtherance of their missions, so long as such lobbying does not form a “substantial part” of their overall activities. The IRS considers facts and circumstances or, if an organization elects, the ratio of lobbying expenditures to exempt-purpose expenditures. Individuals affiliated with exempt organizations are also free to both lobby and endorse candidates without limit, so long as they do it in their individual capacity and not as an organization representative.
Opponents of the Amendment cite a curtailing of free speech protections and religious freedom, while opponents of repeal fear an erosion of church-state separation and loss of public confidence in charities. The Alliance Defending Freedom asserts that because the rule is a content-based restriction on speech, it is therefore presumptively unconstitutional. The group has organized political endorsements from pastors in an unsuccessful eight-year effort to get a church penalized. However, the National Council of Nonprofits warns that repeal “would not only allow people to get tax deductions for making political donations, but also force the public to effectively [subsidize] speech by others.” In April, a group of 99 nonprofits including the Baptist Joint Committee, the National Council of Churches and the American Jewish Committee delivered a letter to Congress urging leaders to maintain the current law, asserting that it protects the independence and integrity of houses of worship.
Conservative commentators are unsatisfied with the May 5 executive order, contending that it does not go far enough. The National Review notes that, because executive orders can be disregarded by subsequent administrations, “legislative problems demand legislative or judicial solutions.” To that end, three bills currently percolating in Congress take aim at the law. H.R. 172 would repeal it entirely, while S.264 and H.R. 781 would weaken it by allowing leaders of individual charities to endorse candidates in their representative capacities.
With the effect of the order unclear and bills yet to be passed or tabled, 501(c)(3) organizations are advised to stay the course. For more information or questions about how these rules may affect your organization, please contact Megan Lasswell
at firstname.lastname@example.org or by phone at 844.4WINDES (844.494.6337).