Protecting Nonprofit Nonpartisanship

For more than 60 years, an important provision in the federal tax code has successfully protected charitable nonprofits, religious congregations, and foundations from being hounded by politicians, political operatives, and paid political consultants seeking political endorsements, financial contributions, and more. That provision is being threatened by the President, who recently vowed to “get rid of and totally destroy” the protection, and legislation in Congress seeking to completely repeal or substantially weaken it. Although couched as attempts to promote religious freedom and free speech, the legislative proposals would have the effect of politicizing and thereby erasing the public’s high trust in charities, houses of worship, and foundations to benefit politicians and paid political consultants.

Status

President Trump vowed at the National Prayer Breakfast in February that he intends to “get rid of and totally destroy” the protection in federal law that keeps charitable nonprofits, including religious institutions and foundations, away from engaging in partisan, election-related activities, such as using charitable assets for political contributions and endorsing candidates for elective office. One bill in Congress, H.R. 172, would completely repeal the “no partisan politicking” provision, subjecting nonprofits to demands/requests to get involved in partisan political electioneering, including using charitable, religious, and foundation assets to make political donations. Such a move would not only allow people to get tax deductions for making political donations, but also force the public to effectively be subsidizing that speech by others. Two other bills, S.264 and H.R. 781, would substantially weaken the law by allowing leaders of individual 501(c)(3) entities to endorse candidates for public office and engage in some partisan electioneering activities. 

Why It Matters

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The tax-law provision now being challenged by politicians is the final clause of Section 501(c)(3), which provides that in exchange for tax-exempt status, a charitable nonprofit, foundation, or religious organization may “not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.” Since 1954, that language has served to protect charitable nonprofits and foundations – and the donating public. It helps to ensure that organizations dedicated to the public good in communities remain above the political fray.

Our society is better today, because 501(c)(3) organizations operate as safe havens from the caustic partisanship that currently is bedeviling our country, as places where people can come together to actually solve community problems rather than just posture and remain torn apart. Repeal or revision of the law would damage the integrity and effectiveness of all charitable nonprofits and foundations.

Background

Congress first exempted from taxation organizations operating “solely for charitable, religious, or educational purposes” in 1894. Since then, Congress has added amendments expanding the list to include several other entities that can qualify for tax exemption. Congress also has added three major conditions: to receive the benefits of tax exemptions, those organizations cannot pay out profits (no private inurement), spend a substantial part of their activities lobbying, or engage in partisan politics (the provision at issue now). Organizations can do any of those, of course, but then they lose their tax exempt status.

Congress adopted the main part of the provision being challenged now in 1954 when Senate Minority Leader Johnson offered it as an amendment – which is why it is sometimes called “the Johnson Amendment.” Additional language was added to that provision in 1978 (the “or in opposition to” parenthetical): “does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.”

Public Statements of Support for Nonprofit Nonpartisanship

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Additional Resources