By Vicki Brown
Congress established the 501(c)3 tax-exempt status applicable to churches, religious organizations and ministers “in recognition of their unique status in American society,” the IRS claims in its Tax Guide for Churches and Religious Organizations.
The designation benefits those that qualify in a number of ways. Public charities are exempt from paying federal corporate income tax and often from state and local corporate income taxes as well. That means houses of worship and church-related organizations save money.
For churches, perhaps the most important benefit is the ability to solicit charitable donations — including offerings from members — that are tax deductible for the donor.
The IRS provision sets five primary requirements in place that entities must meet to qualify for the designation. Two of the five govern political activity: No “substantial” part of the organization’s activities may “involve attempts to influence legislation,” and the group cannot “intervene” in political campaigns.
The code says organizations that qualify as not-for-profits under 501(c)3 “are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office.” The code further prohibits any “public statements of position” — verbal or written.
The IRS interprets that portion of the code to mean speech could be restricted, even if a candidate isn’t “expressly” named, if the information in the communication is sufficient for readers or listeners to be able to identify the candidate. A communication can be construed as a violation if it “expresses approval or disapproval of one or more candidates’ positions or actions.”
That point caught the Billy Graham Evangelistic Association in the 2012 presidential election cycle. Although Graham did not endorse anyone for president, he met with then-Republican candidate Mitt Romney. Media reports declared the famous evangelist “sort of” endorsed Romney through that meeting.
Later Graham authorized newspaper ads in which he urged people to vote for candidates who supported marriage as biblically defined, who were pro-life and who would defend religious freedom.
While he did not explicitly endorse Romney or any Republican candidates nor openly oppose Democratic ones, the Freedom from Religion Foundation sued the IRS for failure to investigate the political activities of churches and religious organizations, singling out Graham’s association.
While the tax code appears restrictive, congregations, other religious organizations and church leaders do have options.
Churches and religious organizations are allowed to set up a separate 501(c)4 tax-exempt political arm through which to endorse candidates and lobby for or against issues. The primary restriction is that contributions to a 501(c)4 are not tax-deductible for donors, and monies given to the 501(c)3 cannot be transferred to or used by the political arm.
Even as a 501(c)3, a church can allow candidates to appear and speak in a worship service, as long as all candidates are given equal time and the speaker introductions are made in neutral language.
Baptist Joint Committee for Religious Liberty Executive Director Brent Walker emphasized pastors and other ministers, while specifically forbidden to participate in politics in their official capacity, still retain their First Amendment constitutional rights as individuals “as long as it’s clear they are doing it on their own.”
The prohibition against political campaign intervention by tax-exempt nonprofits became part of the Internal Revenue Service tax code in 1954 when then-Texas Sen. Lyndon B. Johnson introduced it during a floor debate.
Although some groups believe Johnson posited the tax code addition as a means to stop political challengers, no historical record of the senator’s reasoning exists.
Organizations that support the IRS restrictions on churches and religious organizations cite separation of church and state as the primary reason.
Americans United for the Separation of Church and State and the Baptist Joint Committee for Religious Liberty both stress the need to keep the “wall of separation” in place between religion and the state. They concentrate primarily on houses of worship and ministers, rather than on religious not-for-profit organizations. Maintaining that wall will guarantee freedom for everyone, they insist.
“Pulpit politicking threatens to divide congregations and communities and replace the theological mission of the church with one focused on partisanship and division,” AU notes on its website. Americans United also actively turns in houses of worship for IRS scrutiny whenever it believes any have broken the tax rules.
The Baptist Joint Committee emphasizes church-state separation as the political/constitutional means to protect religious liberty. Houses of worship should not try to influence government, and government should keep a neutral stance toward religion.
“The institutional and functional separation of church and state has resulted in a vibrant religion, a plush pluralism and a vital democracy,” the BJC says on its website.
However, some conservative Christian legal activists, notably the Alliance Defending Freedom and the Liberty Council, have declared Johnson’s IRS amendment unconstitutional for four reasons.
First, they believe the amendment violates the First Amendment’s Establishment Clause because it requires the government to “excessively and pervasively monitor” speech that takes place in religious contexts. “The amendment allows the government to determine when truly religious speech becomes impermissibly ‘political,’” the Alliance Defending Freedom declared.
Second, it violates the Free Speech Clause “because it requires the government to discriminate against speech based solely on the content of the speech.”
Third, it further violates freedom of speech because a condition of receiving a tax exemption requires an organization to refrain from addressing certain topics.
Fourth, the Johnson amendment violates the Free Exercise Clause because “it substantially burdens a church’s exercise of religion” but without a “compelling reason” to do so, the Alliance notes on its website.
Each year, usually in October, the Alliance Defending Freedom has been seeking to push the law’s boundaries by sponsoring Pulpit Freedom Sunday, which encourages pastors to openly defy the law in a worship service.