tag:theconversation.com,2011:/au/topics/johnson-amendment-35812/articlesJohnson amendment – The Conversation2018-07-30T10:31:48Ztag:theconversation.com,2011:article/1005752018-07-30T10:31:48Z2018-07-30T10:31:48ZCongress could declaw restrictions on politicking from the pulpit — over the objections of many churches<figure><img src="https://images.theconversation.com/files/229668/original/file-20180727-106505-sf3yg7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">President Trump signed an executive order related to the Johnson Amendment in 2017.</span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Trump-Religion/9d90c9b46eef4e799303bbf8688e7637/1/0">AP Photo/Evan Vucci</a></span></figcaption></figure><p>During his 2016 campaign, Donald Trump promised his Evangelical supporters that he would <a href="https://www.theatlantic.com/politics/archive/2016/08/how-trump-is-trying-to-put-more-money-in-politics/493823/">eliminate the Johnson Amendment</a>, a law that has barred tax-exempt charities from weighing in on political candidates since the 1950s.</p>
<p>Trump <a href="https://www.npr.org/2018/03/22/596158332/another-effort-to-get-rid-of-the-johnson-amendment-fails">reiterated his promise</a> at the first National Prayer Breakfast of his presidency, telling the audience he would “<a href="https://theconversation.com/trumps-vow-to-destroy-johnson-amendment-could-wreak-havoc-on-charitable-world-72561">get rid of and totally destroy</a>” it. In July 2017, he claimed success, signing an <a href="https://www.whitehouse.gov/the-press-office/2017/05/04/presidential-executive-order-promoting-free-speech-and-religious-liberty">executive order</a> designed to do just that.</p>
<p>Taking credit for eliminating the Johnson Amendment turned out to be <a href="https://www.politifact.com/truth-o-meter/statements/2017/jul/18/donald-trump/trump-claims-he-got-rid-johnson-amendment-true/">premature</a> because doing so requires an act of Congress. But some Republican lawmakers are stepping up.</p>
<p>As a <a href="https://scholar.google.com/citations?user=ef2n0uEAAAAJ&hl=en&oi=ao">law professor</a> who studies how the tax law impacts churches, I believe that repealing the Johnson Amendment could alter electoral politics by making it easier for people to anonymously funnel tax-deductible donations to political candidates. And even if that doesn’t happen, its repeal could prove tremendously damaging to the very churches that Trump was apparently trying to help.</p>
<h2>The Johnson Amendment</h2>
<p>Technically, the Johnson Amendment prohibits charities from supporting or opposing candidates for office. This ban covers a <a href="https://www.law.cornell.edu/uscode/text/26/501">spectrum of actions</a>, ranging from endorsements made out loud or in writing to giving candidates money. Charities that violate this prohibition <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1596863">lose their tax exemption and may get fined</a>. </p>
<p>But charities don’t have to stay out of politics altogether. Nonprofits lobby <a href="https://www.councilofnonprofits.org/proof-it-works">all the time</a>, both to protect their own interests and to further their missions.</p>
<p>And that lobbying is not subject to a blanket prohibition. Rather, it is subject to a second restriction: The activities cannot constitute a “<a href="https://www.irs.gov/charities-non-profits/measuring-lobbying-substantial-part-test">substantial</a>” amount of a charity’s work measured in time and money.</p>
<p>Trump appears to be only care about getting rid of the Johnson Amendment, however.</p>
<p>And on July 19, the <a href="https://www.congress.gov/bill/115th-congress/house-bill/172">House of Representatives</a> showed it was ready to help him fulfill his campaign promise when it <a href="https://www.lexology.com/library/detail.aspx?g=79b0e323-f4b1-4aaa-b529-e70956b6d3f3">passed</a> an appropriations bill with a provision that would effectively declaw the Johnson Amendment.</p>
<p>Rather than repeal the measure, this provision would bar the IRS from spending any money to enforce it. Without any threat of being subjected to Johnson Amendment enforcement, churches would become effectively exempt from it.</p>
<p>But first the <a href="https://www.politico.com/newsletters/morning-tax/2018/07/25/how-do-you-get-a-floor-vote-296963">Senate would have to approve the measure</a>.</p>
<h2>Religious freedom</h2>
<p>In case you’re wondering, for tax purposes a “church” is an organization that has several of the attributes on a <a href="https://www.irs.gov/charities-non-profits/churches-religious-organizations/churches-defined">list developed by courts and the IRS</a>, even if people wouldn’t commonly think of it as a church. </p>
<p>Most Christian, Muslim, Jewish, Sikh, Buddhist and Hindu houses of worship conform to this official definition. So does the <a href="https://www.facebook.com/Cannaterian/?hc_ref=ARSW5rhoZ-gQCNgffyNOjqP3VlcxTgEV9OHiIY7Z1yGzf4hXcLKZi07X5AwwqgCr6Eg">First Church of Cannabis</a>.</p>
<p>Johnson Amendment opponents argue that it infringes on the religious and speech rights of pastors. Clergy, they say, have a religious duty to oppose political candidates they find morally unacceptable and to back candidates who will further their churches’ missions. The Johnson Amendment prevents them from doing that.</p>
<p>But not all religious institutions would welcome this tax policy change. </p>
<p>The movement to revoke the Johnson Amendment has been spearheaded by the <a href="http://www.adflegal.org/free-speech-fairness-act">Alliance Defending Freedom</a>, an organization formed to protect and defend the legal rights of Christians and Christian churches. A vocal group of <a href="https://www.npr.org/2017/02/03/513187940/the-johnson-amendment-in-five-questions-and-answers">conservative white Evangelicals</a> also supports this effort. </p>
<p>Since 2008, in fact, the alliance has sponsored <a href="http://www.adfmedia.org/news/prdetail/4360">Pulpit Freedom Sunday</a>, during which participating pastors preach a sermon in which they endorse or oppose a candidate for office. They then send the IRS a copy of their sermon, challenging tax authorities to revoke their exempt status.</p>
<p>Interestingly enough, not a single participating church has been punished. In fact, in the nearly 65 years that the Johnson Amendment has been part of the tax law, <a href="https://ssrn.com/abstract=2546453">I’m aware of only one church</a> that has lost its exemption as a result of violating the Johnson Amendment. Even without repeal, the Johnson Amendment is almost entirely unenforced.</p>
<p>But the lack of IRS enforcement doesn’t mean that the Johnson Amendment is ineffective, or that it has no impact on church behavior. The law is on the books, even if it is unenforced, and it probably discourages at least some pulpit politicking.</p>
<h2>Deducting dark money</h2>
<p>Should this policy change, I see two big downsides to allowing churches to endorse endorse candidates.</p>
<p>First, donations to churches <a href="https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-contribution-deductions">are deductible</a> but not <a href="https://www.irs.gov/charities-non-profits/other-non-profits/nondeductible-lobbying-and-political-expenditures-1">political donations</a>. If churches could hand candidates money from donors, the government could be effectively subsidizing political gifts.</p>
<p>This would make those donations a bargain for political donors, at least those who are the <a href="https://theconversation.com/charity-and-taxes-4-questions-answered-89512">biggest earners</a>. And doing away with the Johnson Amendment for religious organizations could potentially invite widespread campaign finance laundering through churches. </p>
<p>Second, unlike other charities, churches <a href="https://www.irs.gov/charities-non-profits/annual-exempt-organization-return-who-must-file">aren’t required</a> to make financial disclosures. Thus, should political donors take advantage of the enforcement vacuum, on top of potentially getting a tax break, their donations would be anonymous.</p>
<p>Already, <a href="https://www.opensecrets.org/news/2016/11/1-4-billion-and-counting-in-spending-by-super-pacs-dark-money-groups/">hundreds of millions</a> of dollars of what’s known as “<a href="https://theconversation.com/missouris-dark-money-scandal-explained-90427">dark money</a>” is moving to campaign coffers during election years. Without the Johnson Amendment, donors who want anonymity could use churches to make dark money contributions.</p>
<p>Of course, churches would still face constraints on their ability to funnel money to political candidates even if Congress votes to repeal the Johnson Amendment. Their political activities – including donations for candidates – would still have to be an insubstantial part of their activities.</p>
<p>Any churches that become nothing more than conduits for political money would still be vulnerable to losing their tax-exempt status. As long they spend <a href="http://lawprofessors.typepad.com/nonprofit/2008/11/lds-church-prop.html">sufficient time and money on worship and other religious activities</a>, though, they would be free to use a new influx in donations to support or oppose political candidates.</p>
<h2>Religious opposition</h2>
<p>Which is why <a href="https://philanthropynewsdigest.org/news/religious-leaders-oppose-changes-to-johnson-amendment">thousands of religious leaders</a> oppose repeal.</p>
<p>Without the excuse to stay out of politics the measure gives churches, politicians could <a href="https://www.fcnl.org/updates/78-organizations-call-on-congress-to-oppose-the-repeal-of-the-johnson-amendment-1135">pressure religious groups</a> for endorsements. Large donors could demand that the church back specific candidates in exchange for monetary gifts. </p>
<p>Consider this hypothetical situation involving a pastor who does not want to endorse a particular candidate despite a donor’s demand. Perhaps she personally opposes the candidate. Perhaps she worries that injecting politics will sow discord among congregants. Perhaps she has another reason. </p>
<p>Sure, politics must be an insubstantial part of the church’s activities. But mentioning a candidate once during a 15-minute sermon, or even once during every sermon, would not be a substantial part of the church’s activities. </p>
<p>Currently, the Johnson Amendment would require her to decline a gift in exchange for her endorsement. Without it, that excuse vanishes.</p>
<p>By allowing churches to funnel deductible dark money into politics, I believe that repealing the Johnson Amendment would hurt America’s democracy. Even if that doesn’t happen, I fear that repeal could damage churches, their missions and their communities.</p><img src="https://counter.theconversation.com/content/100575/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Samuel Brunson does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Deactivating the tax provision known as the Johnson Amendment could increase the flow of dark money, reducing accountability in campaign finance.Samuel Brunson, Professor of Law, Loyola University ChicagoLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/885132017-12-06T11:20:12Z2017-12-06T11:20:12ZHow the tax package could sap the flow of charitable giving<figure><img src="https://images.theconversation.com/files/197856/original/file-20171205-23009-zkysmc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">House Speaker Paul Ryan, left, leads a round of applause after his colleagues took a step toward changing the tax code.</span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Congress-Taxes/2f6deeb69c144709a30fb0d188b8f55b/1/0">AP Photo/Jacquelyn Martin</a></span></figcaption></figure><p>The tax bills currently making their way through Congress could end up making Americans less charitable. </p>
<p>The bills that recently cleared the House and the Senate, which <a href="http://www.cnn.com/2017/12/04/politics/gop-tax-plan-conference-committee-house-vote/index.html">need to be reconciled</a>, would have different consequences for <a href="http://www.taxpolicycenter.org/model-estimates/charitable-contributions-and-tcja-nov-2017/t17-0265-effective-marginal-tax-benefit">charitable giving</a>. But both would raise the price of donating for millions of Americans, thereby reducing how much the nation gives to charity overall. </p>
<p>The precise impact of this tax code overhaul, however, would depend on which provisions wind up on the books. </p>
<p>As an economist and a scholar of philanthropy who researches how public policies shape charitable giving, I have been following the pending tax proposals closely and examining their potential impact. My research suggests that the proposed changes could lead Americans and U.S. companies to donate roughly US$20 billion less per year to charity.</p>
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<h2>Standard deduction and tax rates</h2>
<p>One of the primary ways giving could be reduced is through two of the tax plan’s key features – significantly boosting the standard deduction and cutting the top marginal tax rate. </p>
<p>Research I co-led showed that such changes, based on an earlier version of the tax plan, would reduce household charitable giving by <a href="https://theconversation.com/why-congress-should-let-everyone-deduct-charitable-gifts-from-their-taxes-78323">$13.1 billion</a> per year. That would mark a 4.6 percent decline from the <a href="https://theconversation.com/what-influences-american-giving-78800">$282 billion</a> American households gave in 2016. </p>
<p>We also determined that the share of households that itemize their tax returns would fall to approximately 5 percent from the current 30 percent. </p>
<p>While we based our estimates on a reduction in the top rate from 39.6 percent to 35 percent and a 75 percent increase in the standard deduction, the current House and Senate bills differ slightly from that baseline and each other, both in terms of top marginal tax rates and where they kick in for different income levels. For example, both bills would increase the standard deduction by 90.5 percent. </p>
<p>These ongoing differences make it hard to discern what the precise differences would be. But if the changes in the latest versions become codified, the share of filers who get a tax break – a built-in incentive – for their charitable gifts would fall even further than my team had estimated.</p>
<p>In short, I now anticipate the loss to charitable giving from the tax code changes to top our estimate of $13.1 billion.</p>
<h2>Estate tax</h2>
<p>Both bills would also reduce the incentive to give after a wealthy taxpayer dies.</p>
<p>The <a href="https://theconversation.com/how-closing-the-door-on-the-estate-tax-could-reduce-american-giving-85166">estate tax</a> encourages giving with a dollar-for-dollar deduction from estate and gift tax liabilities matching any amount of money bequeathed to charities after death. In other words, if you owe a tax of $5 million on your estate, you could give $100,000 to charity and lower your IRS bill to $4.9 million.</p>
<p>The number of families this actually applies to is tiny, after growing smaller in recent years. Only one in 500 estates belonging to the people who die in any given year owe anything, after Congress sharply increased the threshold under which estates are exempt from the tax. And rich families rely on loopholes to get out of it or <a href="https://www.bloomberg.com/view/articles/2014-01-30/only-idiots-pay-the-45-estate-tax">reduce the tax’s impact</a>.</p>
<p>Currently, <a href="https://www.cbpp.org/research/federal-tax/ten-facts-you-should-know-about-the-federal-estate-tax">estates under $5.5 million</a> are exempt for taxpayers filing as individuals and estates twice that size for couples.</p>
<p>The Senate bill calls for doubling current exemption levels to $11 million for an individual and $22 million for couples. The House plan would double exemption levels and then end the estate tax altogether in 2024. </p>
<p>Estimates regarding the effects of repeal range widely. However, there is complete consensus that doing away with this levy would reduce charitable bequests and donations wealthy Americans make during their lifetimes.</p>
<p>Based on my analysis, I anticipate that doing away with the estate tax altogether would cut giving by approximately $7 billion per year. </p>
<p>Levying it on the extremely small share of the very wealthiest households would surely reduce how much money is left to charities from current levels. But it is hard to extrapolate the approximate impact of this change because no researchers have modeled estimates with these levels of exemptions and tax rates.</p>
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<h2>Corporate giving</h2>
<p>Companies and corporate foundations donated $18.6 billion in both cash and in-kind goods and services to U.S. charities in 2016, according to the <a href="https://theconversation.com/what-influences-american-giving-78800">Giving USA report</a>, which the Indiana University Lilly Family School of Philanthropy researches and writes in partnership with the Giving USA Foundation. </p>
<p>My colleagues and I have not yet thoroughly studied how the pending reductions in corporate marginal tax rates might affect how much money businesses give to charity. But our models do show that the proposed reductions in the top corporate tax rate from 35 percent to 20 percent would reduce the incentives for corporations to give. </p>
<p>Businesses give for many reasons. However, it is reasonable to expect that dramatically cutting the top corporate tax rate would reduce corporate donations by an estimated $1.4 billion – a 7.6 decline from the amount business gave in 2016. </p>
<h2>Johnson Amendment</h2>
<p>The House bill includes a provision that would leave churches and other nonprofits, which by law must be nonpartisan, far more free to engage in political speech than they are today.</p>
<p><a href="http://thehill.com/opinion/finance/359330-theres-a-wolf-in-sheeps-clothing-hiding-in-the-gop-tax-bill">Nonprofit leaders</a> warn that this measure, left out of the Senate version, could have major consequences.</p>
<p>Watering down this restriction – known as the <a href="https://theconversation.com/how-the-tax-package-could-blur-the-separation-of-church-and-politics-87285">Johnson Amendment</a> – is <a href="http://www.publicconsultation.org/wp-content/uploads/2017/11/Johnson_Amendment_Quaire1117.pdf">wildly unpopular</a> with the vast majority of American voters, according to surveys. I suspect that it would be even less popular if more people understood the potential effects of this change on charities.</p>
<p>If churches and all other charities were to become largely able to endorse and support political candidates and retain their tax-exempt status, as the House’s tax bill would do, it would suddenly change the longstanding differences between giving to charities instead of explicitly political organizations and lobbying groups. </p>
<p>Currently, taxpayers may deduct their gifts to charities but not the money they donate to lobbying outfits and political parties.</p>
<p>If donations that are essentially political became tax-deductible, some donors would be likely to reallocate donations to charities, including new supposedly charitable entities created expressly to raise money to lobby for political causes. </p>
<p>Following such rejiggering, the consequences of this shift would reduce federal revenue by an estimated <a href="https://www.usatoday.com/story/news/politics/2017/11/10/tax-bills-repeal-johnson-amendment-could-cost-taxpayers-more-than-1-billion/852554001/">$2.1 billion</a> over 10 years, the nonpartisan Joint Committee on Taxation calculates. </p>
<p>While this change might create the appearance of an increase in charitable giving, it would be misleading to see the reallocation of giving from political parties and causes to politically charged charities as an authentic improvement for the charitable sector as a whole.</p>
<h2>Dynamic scoring</h2>
<p>Economic growth, of course, is good for philanthropy.</p>
<p>People tend to give less to charity during economic recessions and give more when times are better. After adjusting for differences in inflation, total giving fell an average of 0.5 percent annually during years when the U.S. economy was in recession since 1957. </p>
<p>On the flip side, the sum total of donations grew an average of 4.5 percent per year during boom times, <a href="http://www.givingusa.org">according to</a> <a href="https://store.givingusa.org/products/giving-usa-2017-report-highlights?variant=37727126089">Giving USA</a> data. </p>
<p>For multiple reasons, most research regarding the effects of tax policy on philanthropy does not use “dynamic scoring,” however. That is, it does not account for the potential economic growth effects tax policies are expected to have (or not) on growth.</p>
<h2>Universal charitable tax deduction</h2>
<p>So what could lawmakers do if they wanted to avert this outcome?</p>
<p>The most straightforward way to prevent the tax code overhaul from reducing charitable giving would be to let <a href="https://theconversation.com/why-congress-should-let-everyone-deduct-charitable-gifts-from-their-taxes-78323">all taxpayers deduct</a> donations from their taxable income. </p>
<p>My team and I have modeled the effects of this approach, which many <a href="https://www.councilofnonprofits.org/article/national-council-of-nonprofits-statement-the-universal-charitable-giving-act-hr-3988">nonprofit leaders</a> are urging Congress to adopt.</p>
<p>New bills that would do that are pending in both the <a href="https://www.congress.gov/bill/115th-congress/house-bill/3988">House</a> and the <a href="https://www.lankford.senate.gov/imo/media/doc/UniversalCharitableGiving_Lankford.pdf">Senate</a>. Both would create a universal deduction for non-itemizers, and both of them would cap this tax break at gifts equal to one-third of the standard deduction. </p>
<p>While the proposed caps would offer no incentive to give above the limit, and, therefore, it would be better without caps, those thresholds are high enough that they are unlikely to affect many otherwise ineligible taxpayers’ giving patterns.</p>
<p>So far, however, provisions along these lines are not on the table as part of the broader package.</p><img src="https://counter.theconversation.com/content/88513/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Patrick Rooney and the Indiana University Lilly Family School of Philanthropy have received millions of dollars of grants to fund research that benefits the philanthropic sector generally and many charities specifically. Rooney has consulted with and been affiliated with the advisory committees and legal boards for numerous charities and foundations over the years. None have funded this essay or have provided feedback on it in advance of its release. </span></em></p>More than US$20 billion per year in giving is potentially at stake.Patrick Rooney, Executive Associate Dean for Academic Programs, Professor of Economics and Philanthropic Studies, IUPUILicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/872852017-11-22T20:55:13Z2017-11-22T20:55:13ZHow the tax package could blur the separation of church and politics<figure><img src="https://images.theconversation.com/files/195871/original/file-20171122-6072-1ri5exo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">If a House provision gets enacted, churches will be able to endorse -- not just pray for -- political candidates.
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/sign-election-night-prayers-church-our-512271844?src=0HREH_t_zGV5g3kO65KoMg-1-0">Andrew Cline/Shutterstock.com</a></span></figcaption></figure><p><a href="http://money.cnn.com/2017/11/16/news/economy/house-tax-bill-vote/index.html">The tax package</a> pending in Congress includes a provision that would leave churches and other nonprofits, which by law must be nonpartisan, suddenly free to engage in political speech.</p>
<p>This measure, currently <a href="http://www.thenonprofittimes.com/news-articles/senate-tax-bill-keep-johnson-amendment-intact/">only in the House version</a> of the bill, could potentially change charitable life as we know it.</p>
<p>As an accounting professor who teaches nonprofit taxation, I believe that this significant change deserves vigorous public debate and is too big to bury in tax legislation.</p>
<h2>Johnson Amendment</h2>
<p>Tax law currently bars religious and secular charities alike from <a href="https://www.irs.gov/charities-non-profits/charitable-organizations/the-restriction-of-political-campaign-intervention-by-section-501c3-tax-exempt-organizations">engaging in political activity</a>, which the government defines as attempting to influence legislation or intervening in a campaign on behalf of (or in opposition to) specific candidates.</p>
<p>Nonprofits caught breaking this law may pay back taxes or lose their tax-exempt status. </p>
<p>Known as the <a href="https://www.npr.org/2017/02/03/513187940/the-johnson-amendment-in-five-questions-and-answers">Johnson Amendment</a>, this provision dates back to 1954, when then-Senator Lyndon B. Johnson led the effort to get this restriction on the books. <a href="https://www.fcnl.org/updates/78-organizations-call-on-congress-to-oppose-the-repeal-of-the-johnson-amendment-1135">More nonprofits say they welcome this</a> as a <a href="https://www.councilofnonprofits.org/article-tags/johnson-amendment">form of protection</a> from political pressure <a href="https://www.fredericksburg.com/falwell-expounds-on-support-for-repealing-johnson-amendment/article_98b73a4b-2c78-5340-9dad-b0ba9e0de233.html">than object to it</a> as a restriction on their rights. </p>
<p>President Donald Trump vowed as a candidate to repeal the Johnson Amendment to <a href="http://thehill.com/homenews/administration/317542-trump-vows-to-destroy-the-johnson-amendment">give church leaders the ability to speak about politics</a> without penalty. But repealing a law takes an act of Congress and power he lacks. </p>
<p>As a step in that direction, he issued an <a href="https://www.whitehouse.gov/the-press-office/2017/05/04/presidential-executive-order-promoting-free-speech-and-religious-liberty">executive order</a> directing the IRS <a href="http://www.politifact.com/truth-o-meter/statements/2017/jul/18/donald-trump/trump-claims-he-got-rid-johnson-amendment-true/">not to enforce</a> it for religious institutions.</p>
<p>The tax bill’s proposed change would actually repeal the Johnson Amendment, and it would apply to all <a href="https://www.forbes.com/sites/peterjreilly/2017/11/17/will-destruction-of-johnsnon-amendment-destroy-charity/#19330d8a47c2">charitable</a> organizations, including churches and other houses of worship like mosques and synagogues. It came as an unwelcome surprise to most charities, which have been openly rejecting it. </p>
<p>“Charitable nonprofits don’t want to be dragged into the toxic political wasteland,” said Tim Delaney, who leads the <a href="https://www.councilofnonprofits.org/article/last-minute-change-tax-reform-bill-hardens-nonprofit-opposition">National Council of Nonprofits</a>. </p>
<p>If the House language becomes law, political speech by these groups would technically need to meet <a href="https://waysandmeansforms.house.gov/uploadedfiles/summary_of_chairman_amendment_2.pdf">two requirements</a>. First, charities would be able to make political statements in the ordinary course of business – that is, doing whatever it is they do. For example, a prominent pastor could endorse political candidates during a sermon that’s broadcast or livestreamed.</p>
<p>Second, making such statements must cost no more than an “<a href="https://waysandmeansforms.house.gov/uploadedfiles/summary_of_chairman_amendment_2.pdf">incremental de minimis amount</a>” – regulatory language that basically translates into “not much.”</p>
<p>In other words, <a href="https://www.philanthropy.com/article/Opinion-The-House-Tax-Bill/241794">calls to vote for a particular candidate</a> could be printed in flyers as long as those missives were mainly about something else. And nonprofits could endorse candidates on their websites as long as the details do not dominate that digital space. Politicking would be allowed on the sidelines and if it does not consume a large share of a group’s budget.</p>
<p>Where exactly the government would draw a line isn’t clear yet. Most likely, churches wouldn’t be free to mail their congregants straightforward calls to “vote for Jennifer Doe on November 7.” But they might be able to include that language in their monthly newsletters or on a web page about a church supper.</p>
<h2>Why bother?</h2>
<p>Why lift current restrictions on political speech by charities? The <a href="https://www.adflegal.org/detailspages/blog-details/allianceedge/2016/10/31/the-legal-implications-of-the-johnson-amendment">Alliance Defending Freedom</a>, a conservative Christian legal group, argues that the Johnson Amendment unconstitutionally restricts free speech by not allowing nonprofits to speak on big issues that matter to the public.</p>
<p>However, there’s no clear evidence that this is a valid concern. Plenty of pastors already speak out often on policy issues, such as abortion, immigration and income inequality. Some even endorse <a href="http://www.pewforum.org/2016/08/08/many-americans-hear-politics-from-the-pulpit/">candidates running for office</a>, according to a 2016 Pew study.</p>
<p>In fact, religious leaders have been reportedly speaking out more because of increasingly lax <a href="https://www.nytimes.com/2015/07/06/us/politics/irs-expected-to-stand-aside-as-nonprofits-increase-role-in-2016-race.html">IRS enforcement</a> of nonprofit political activity starting years before Trump signed his executive order.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/195742/original/file-20171121-6055-a20dl5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/195742/original/file-20171121-6055-a20dl5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/195742/original/file-20171121-6055-a20dl5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/195742/original/file-20171121-6055-a20dl5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/195742/original/file-20171121-6055-a20dl5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/195742/original/file-20171121-6055-a20dl5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/195742/original/file-20171121-6055-a20dl5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/195742/original/file-20171121-6055-a20dl5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">President Donald Trump, shown here signing an executive order on May 4. The order instructed the IRS to use ‘maximum enforcement discretion’ in enforcing a tax code provision barring nonprofits from engaging in political activity.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Trump-Religion/9d90c9b46eef4e799303bbf8688e7637/2/0">AP Photo/Evan Vucci</a></span>
</figcaption>
</figure>
<h2>Arguments against this change</h2>
<p>The Johnson Amendment entangles church and state by requiring the IRS to determine whether speech by 501(c)(3) nonprofits – the kind to which Americans who itemize their returns can make tax-deductible donations – is political or merely issue advocacy.</p>
<p>For example, religious leaders currently can speak about abortion as long as they do not endorse candidates based on their views regarding the procedure. If the proposed tax code amendment becomes law, they would be free to do just that.</p>
<p>Delaney and other nonprofit leaders – including religious ones – say that they would prefer to see <a href="http://thehill.com/opinion/finance/359330-theres-a-wolf-in-sheeps-clothing-hiding-in-the-gop-tax-bill">partisan politics kept out of charities, churches and foundations</a>. This arrangement, they argue, currently <a href="http://thehill.com/opinion/finance/360915-nonprofits-must-sound-the-alarm-on-house-tax-bill?platform=hootsuitetheres-a-wolf-in-sheeps-clothing-hiding-in-the-gop-tax-bill">shields them from political pressure</a> from donors, board members or politicians. </p>
<p>There is also a risk that some charities would superficially serve an educational purpose while actually engaging in political activity, according to <a href="https://www.philanthropy.com/article/Opinion-The-House-Tax-Bill/241794">Roger Colinvaux</a>, a Catholic University law professor who previously served as a lawyer for the Joint Committee on Taxation, a congressional committee with members from both the House and Senate whose staff analyzes tax proposals.</p>
<p>Without restrictions on political speech by churches and secular charities, many experts predict that taxpayers seeking to make political contributions would <a href="http://www.councilofnonprofits.org/print/2028">shift such nondeductible donations</a> from politicians, parties and political organizations to nonpartisan charities. </p>
<p>This would mean potentially billions of dollars in political donations could be written off. And like the tax cuts themselves, this change would come with a price tag.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/8rUjwgqNyMY?wmode=transparent&start=3279" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Rep. John Lewis, a Georgia Democrat, raised questions about the proposed changes to charity tax laws during a congressional hearing.</span></figcaption>
</figure>
<p>The House bill would lift this restriction for five years beginning in the 2019 tax year, reducing revenue by approximately <a href="https://waysandmeans.house.gov/wp-content/uploads/2017/11/20171106-JCT-Estimated-Revenue-Effects-of-Amendment-in-the-Nature-of-a-Substitute-to-H.R.-1.pdf">US$1.5 billion</a>, according to the <a href="https://www.jct.gov/publications.html?func=startdown&id=5034">Joint Committee on Taxation</a>. </p>
<p>What’s more, contributions to nonprofits for political purposes could be anonymous. While the names of donors who contribute to political campaigns must be disclosed, charitable donations don’t have to revealed.</p>
<p>In other words, donors could make their contributions to nonprofits contingent upon endorsements for candidates without anyone knowing about it if this provision becomes part of the tax code.</p>
<h2>What nonprofits say</h2>
<p>More than 4,200 religious leaders signed an <a href="https://www.faith-voices.org/find-out-more">interfaith petition</a> to keep the Johnson Amendment intact.</p>
<p>At the same time, 5,500 charitable organizations <a href="https://www.givevoice.org/sites/default/files/community-letter-in-support-of-nonpartisanship-5-12-update.pdf">have objected</a> to the proposed revision by signing a letter to that effect.</p>
<p>And a <a href="http://independentsector.org/news-post/national-poll-johnson-amendment/">national poll by the Independent Sector</a>, an organization representing charities, foundations and corporations seeking to advance the common good, found that 72 percent of respondents wanted to keep the Johnson Amendment on the books.</p>
<p>The only people who have called for this change are <a href="https://www.vox.com/identities/2017/11/2/16598906/republican-tax-bill-religious-right-johnson-amendment-trump">evangelical Christian</a> pastors.</p>
<h2>Rushed timetable</h2>
<p>Given the pending tax package’s potential to make sweeping changes, the question of whether it makes sense to loosen restrictions on political speech by charitable organizations is getting less attention than it should.</p>
<p>Most Americans do not know what is in this legislation, which Trump wants to sign into law before Christmas on a <a href="http://www.businessinsider.com/trump-tax-reform-plan-bill-timeline-2017-10">rushed timetable</a>. If he gets his wish, chances are strong that the debate will follow passage rather than precede it. </p>
<p>A huge shift like this deserves a real and open debate, not the kind of behind-the-scenes deal-making that apparently went on before House Republicans folded this nonprofit provision into its tax bill.</p><img src="https://counter.theconversation.com/content/87285/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Susan Anderson is not affiliated with any organization other than Elon University and receives no funding from outside sources..</span></em></p>A provision in the House’s pending tax bill would let religious and secular nonprofits engage in political speech without facing a penalty.Susan Anderson, Professor of Accounting, Elon UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/776052017-05-26T01:32:35Z2017-05-26T01:32:35ZTrump says the IRS regulates churches too much. Here’s why he’s wrong<figure><img src="https://images.theconversation.com/files/170441/original/file-20170522-7327-1wg2m9c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Who enforces regulations that bar churches from engaging in politics?</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/politician-woman-holding-religious-bible-215878255">www.shutterstock.com</a></span></figcaption></figure><p>President Donald Trump recently signed an <a href="https://www.whitehouse.gov/the-press-office/2017/05/04/presidential-executive-order-promoting-free-speech-and-religious-liberty">executive order</a> that he said would keep his campaign promise to defend religious groups from the IRS when they engage in political speech.</p>
<p>Like other <a href="https://surlysubgroup.com/2017/05/04/trumps-johnson-amendment-executive-order-does-not-say-what-he-said-it-said/">experts</a>, I believe this move <a href="https://www.usatoday.com/story/news/politics/2017/05/04/president-trumps-religious-order-could-unleash-political-money/101289500/">does nothing</a> to change IRS policy. But as a law professor who used to litigate exempt-organization tax issues for the Internal Revenue Service, I’m concerned the news might suggest that charities are over-regulated. </p>
<p>In fact, the opposite is true. </p>
<h2>The Johnson Amendment</h2>
<p>During the campaign, Trump often trumpeted a false claim that churches were under attack by the IRS due to the Johnson Amendment, a 63-year-old law that bars all charities from engaging in political activities. </p>
<p>Soon after he took office, Trump swore he would <a href="https://theconversation.com/trumps-vow-to-destroy-johnson-amendment-could-wreak-havoc-on-charitable-world-72561">destroy it</a>. However, his recent order merely directed the IRS to keep up its already light regulation of religious groups. </p>
<p>Trump couldn’t defang the Johnson Amendment if he tried because the IRS rarely punishes any nonprofit organizations, including churches, for violating it. While the IRS has admonished churches that may have violated the amendment inadvertently, the IRS has <a href="https://berkleycenter.georgetown.edu/cases/branch-ministries-v-rossotti">revoked a church’s tax-exempt status</a> for violating the Johnson Amendment only once since it became law. In that instance, a Binghamton, New York church published newspaper ads urging Christians to vote against Bill Clinton in 1992.</p>
<p>In other words, the Johnson Amendment is mostly toothless.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/170431/original/file-20170522-7379-8moxrm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/170431/original/file-20170522-7379-8moxrm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/170431/original/file-20170522-7379-8moxrm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=840&fit=crop&dpr=1 600w, https://images.theconversation.com/files/170431/original/file-20170522-7379-8moxrm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=840&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/170431/original/file-20170522-7379-8moxrm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=840&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/170431/original/file-20170522-7379-8moxrm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1055&fit=crop&dpr=1 754w, https://images.theconversation.com/files/170431/original/file-20170522-7379-8moxrm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1055&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/170431/original/file-20170522-7379-8moxrm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1055&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The Johnson Amendment establishes boundaries due to the separation of church and state.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/download/success?src=-rzkjocFM4Ojnv9N6f2eiA-1-4">www.shutterstock.com</a></span>
</figcaption>
</figure>
<h2>Federal oversight</h2>
<p>One problem with the fuss Trump made over the law: It fostered the impression that churches are being oppressed by the IRS, when in reality the federal government does not employ enough regulators to properly oversee the nonprofit sector – including religious and secular groups.</p>
<p>In 2000, the IRS had about 800 employees dedicated to reviewing applications and auditing tax-exempt nonprofit organizations. In 2013 <a href="https://www.gao.gov/assets/670/667595.pdf">it had 842</a>. Staffing appears to have actually shrunk since the 1970s, when the Treasury Department undertook a thorough study of the charitable sector and its oversight environment, known as the Commission on Private Philanthropy and Public Needs. That commission <a href="https://archives.iupui.edu/handle/2450/812">counted 1,000</a> employees dedicated to this function. </p>
<p>While the agency’s staffing has declined, the number of charities registered with the IRS has soared to <a href="https://www.irs.gov/pub/irs-soi/16databk.pdf">more than 1.2 million in 2016</a>, from <a href="https://www.irs.gov/pub/irs-soi/80dbfullar.pdf">around 320,000 in 1980</a>. The real number is higher because churches <a href="https://www.irs.gov/charities-non-profits/churches-integrated-auxiliaries-and-conventions-or-associations-of-churches">automatically qualify</a> for tax-exempt status without doing any paperwork. That means the nation’s estimated <a href="http://hirr.hartsem.edu/research/fastfacts/fast_facts.html#numcong">350,000 religious congregations</a> don’t need to register with the IRS or file tax returns – a fact at odds with Trump’s over-regulation myth.</p>
<p>In addition, nonprofit assets have almost tripled to <a href="http://www.urban.org/research/publication/nonprofit-sector-brief-2015-public-charities-giving-and-volunteering">US$3.2 trillion in 2013</a> from <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2658325">$1.1 trillion in 1995</a>.</p>
<p>Yet Trump’s proposed 2018 budget may weaken enforcement capacity even more. It calls for <a href="http://www.politico.com/tipsheets/morning-tax/2017/05/23/still-skin-and-bones-220465">cutting current IRS funding</a> – following a <a href="http://www.cbpp.org/research/federal-tax/irs-funding-cuts-compromise-taxpayer-service-and-weaken-enforcement">17 percent decline</a> since 2010 – by another $239 million in 2018.</p>
<p>The National Taxpayer Advocate, an independent office within the IRS that <a href="https://taxpayeradvocate.irs.gov/about-tas">represents taxpayer voices</a>, <a href="http://www.taxpayeradvocate.irs.gov/2012-Annual-Report/downloads/Most-Serious-Problems-Tax-Exempt-Automatic-Revocation.pdf">since 2012</a> has regularly described the IRS as <a href="http://www.taxpayeradvocate.irs.gov/2013-Annual-Report/downloads/EXEMPT-ORGANIZATIONS-The-IRS-Continues-to-Struggle-with-Revocation-Processes-and-Erroneous-Revocations-of-Exempt-Status.pdf">severely lacking</a> the resources needed to oversee the charitable sector. </p>
<h2>State-level oversight</h2>
<p>Theoretically, the federal government does not need to heavily regulate charities because state attorneys general typically bear the responsibility for providing this oversight.</p>
<p>In reality, the states don’t employ the staff or spend the money required to oversee nonprofits either. According to a survey conducted by University of Minnesota Law School Dean <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1010985">Garry Jenkins</a> 10 years ago, most states employed no more than the equivalent of a single full-time staffer to do this work.</p>
<p>Even New York state’s team of more than 20 full-time employees, the largest Jenkins found, was still arguably unable to keep up with its workload. Given the <a href="http://origin-nyi.thehill.com/blogs/pundits-blog/state-local-politics/327199-your-state-may-be-facing-the-dawn-of-an-unforgiving">economic stress</a> the states are experiencing, there’s no reason to believe that this situation has improved over the past decade.</p>
<h2>Rogue charities</h2>
<p>While the IRS has rarely found significant noncompliance among charitable organizations, reports of rogue charities are common enough to suggest that the nation needs stronger nonprofit oversight. </p>
<p>The <a href="http://www.npr.org/2016/06/16/482020436/senators-report-finds-fundamental-concerns-about-red-cross-finances">Red Cross</a> is still struggling to quell concerns from Congress <a href="http://www.npr.org/sections/goatsandsoda/2015/07/21/424988126/documents-show-red-cross-may-not-know-how-it-spent-millions-in-haiti">about its accounting</a> practices in Haiti after the group raised $500 million to response to that country’s 2010 earthquake. In 2013, the <a href="http://cironline.org/reports/part-1-dirty-secrets-worst-charities-4603">Center for Investigative Reporting</a> and the Tampa Bay Times zeroed in on 50 charities that spent as little as three cents on the dollar they raised for charitable activity on work tied to their missions. </p>
<p>And in 2016, the Federal Trade Commission (FTC), all 50 states and the District of Columbia settled
with the <a href="https://www.ftc.gov/news-events/press-releases/2016/03/ftc-states-settle-claims-against-two-entities-claiming-be-cancer">Cancer Fund of America Inc.</a>, Cancer Support Services Inc. and the leader of both groups, James Reynolds Sr., barring them all from operating in the charitable world again. The FTC alleged that they spent most of their money on families, friends and operators rather than on charity.</p>
<p>Were the charitable sector small, the limited oversight resources might not matter much. However, nonprofits today account for <a href="https://nonprofitquarterly.org/2016/10/24/nonprofit-workforce-numbers/">almost 5 percent of GDP and employ roughly 1 in 10 American workers</a>. </p>
<h2>An independent agency</h2>
<p>Perhaps surprisingly, research by the IRS and reviewed by Notre Dame University law professor <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2658325">Lloyd Hitoshi Mayer</a> suggests that noncompliance isn’t widespread. But enough wrongdoing has surfaced that several legal scholars, including Mayer and Catholic University professor <a href="http://scholarship.law.edu/scholar/117/">Roger Colinvaux</a>, have called for significantly stronger nonprofit oversight.</p>
<p>Texas A&M law professor <a href="http://scholarship.law.tamu.edu/cgi/viewcontent.cgi?article=1048&context=facscholar">Terri Lynn Helge</a> has reviewed various ideas for boosting oversight, such as creating state boards to oversee charities or allowing a charity’s big donors and founders to sue over perceived malfeasance. However, no state has significantly tightened its oversight. </p>
<p>Helge supports the creation of an independent self-regulating entity technically backed by federal agency power to strengthen nonprofit regulation. It would be akin to the <a href="https://www.finra.org/about">Financial Industry Regulatory Authority</a>, which oversees stockbrokers and brokerage firms. <a href="http://web.law.columbia.edu/sites/default/files/microsites/attorneys-general/Marcus%20Owens%203.18.pdf">Marcus S. Owens</a>, the former head of the IRS Tax Exempt and Government Entities Division, has made similar recommendations.</p>
<p>While the states have made little headway, the IRS has made some adjustments. In 2014, it introduced Form 1023-EZ, which allows small charities to file a very abbreviated application for tax-exempt status with no formal review by the IRS, to eliminate its backlog of applications and to focus its human resources on audits. This change, though, has been <a href="http://www.forpurposelaw.com/critics-concerns-about-form-1023-ez-spot-on/">widely criticized</a> by the charitable sector as making oversight worse because small charities can now form with no IRS check on basic compliance. It has also tried to zero in on high-priority charities such as <a href="http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=1244&context=yjhple">hospitals</a> and <a href="https://www.irs.gov/pub/irs-tege/CUCP_FinalRpt_050213.pdf">universities</a>. </p>
<p>What does this mean in terms of the Johnson Amendment and Trump’s wish to destroy it? There are real problems with charity regulation, but they have nothing to do with regulatory overkill.</p><img src="https://counter.theconversation.com/content/77605/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Philip Hackney does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>President Trump claims that churches suffer from the over-regulation of their political speech. In reality, oversight is lax for religious groups and secular tax-exempt nonprofits alike.Philip Hackney, James E. & Betty M. Phillips Associate Professor of Law, Louisiana State University Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/731652017-02-20T02:16:41Z2017-02-20T02:16:41ZHow much does the Johnson Amendment curtail church freedom?<p>On National Prayer Breakfast day in early February, President Donald Trump <a href="https://11111011100.whitehouse.gov/the-press-office/2017/02/02/remarks-president-trump-national-prayer-breakfast">repeated a pledge</a> he had made several times on the <a href="http://www.christianitytoday.com/gleanings/2016/july/trump-pledges-repeal-johnson-amendment-pulpit-freedom.html">campaign trail</a> that echoed the <a href="https://www.gop.com/the-2016-republican-party-platform/">2016 Republican Party Platform</a>:</p>
<blockquote>
<p>“I will get rid of, and totally destroy, the Johnson Amendment and allow our representatives of faith to speak freely and without fear of retribution.” </p>
</blockquote>
<p>He was talking about a small part of the tax code that requires organizations that are both tax-exempt and able to receive tax-deductible contributions to stay away from <a href="https://www.stayexempt.irs.gov/Resource-Library/Glossary/Political-Campaign-Activity">political campaigns</a>. </p>
<p>Often called the Johnson Amendment, this law covers churches, mosques and synagogues, as well as other charitable, religious, educational and scientific organizations. </p>
<p>Almost <a href="http://www.lifeway.com/Article/research-majority-pastors-disapprove-pulpit-endorsements">90 percent of Protestant pastors</a> and <a href="http://blog.lifeway.com/newsroom/2016/09/08/skip-the-endorsements-in-church-say-most-americans/">80 percent of parishioners</a> agree that churches should stay out of politics. But the truth is many moral issues are deeply political.</p>
<p>I’m the author of <a href="http://www.aspenlawschool.com/books/schmidt_nonprofit2e/default.asp">“Nonprofit Law: the Life Cycle of a Nonprofit”</a> and a professor in the School of Public Policy at UMass Amherst. From my perspective, a bigger question is how far are pastors and other leaders of houses of worship muzzled under the current law? </p>
<p>Here’s a detailed look at what pastors and other leaders of houses of worship can and cannot say under the Johnson Amendment.</p>
<h2>Rules for tax exemption</h2>
<p>First, let’s look at what the Johnson Amendment prohibits.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/157360/original/image-20170217-10193-1f2mu83.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/157360/original/image-20170217-10193-1f2mu83.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=394&fit=crop&dpr=1 600w, https://images.theconversation.com/files/157360/original/image-20170217-10193-1f2mu83.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=394&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/157360/original/image-20170217-10193-1f2mu83.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=394&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/157360/original/image-20170217-10193-1f2mu83.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=495&fit=crop&dpr=1 754w, https://images.theconversation.com/files/157360/original/image-20170217-10193-1f2mu83.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=495&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/157360/original/image-20170217-10193-1f2mu83.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=495&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">President Lyndon B. Johnson in a White House corridor, Washington on July 17, 1965, with guests author John Steinbeck, left, and evangelist Billy Graham.</span>
<span class="attribution"><span class="source">AP Photo/Charles Gorry</span></span>
</figcaption>
</figure>
<p>Tax-exempt churches and their staff <a href="https://www.irs.gov/charities-non-profits/charitable-organizations/the-restriction-of-political-campaign-intervention-by-section-501-c-3-tax-exempt-organizations">cannot endorse or oppose political candidates, even indirectly</a>. So, if a church wishes to retain its tax-exempt status and be able to accept tax-deductible donations, pastors are required to refrain from supporting any candidate.</p>
<p>That means the church cannot make political donations, invite one candidate to speak or use its facilities without the others, or compare a candidate’s positions to the church’s.</p>
<p>In fact, anything that suggests the church prefers a candidate or party can, at least theoretically, endanger the church’s tax exemption. </p>
<h2>There is room for speaking out</h2>
<p>And yet, churches and their leaders can speak out in a variety of ways that could reflect their religious views.</p>
<p>For example, pastors can bring their religious knowledge to the moral issues of the day and discuss public policy issues, such as abortion, poverty and homosexuality from the pulpit. As the <a href="https://www.law.cornell.edu/supremecourt/text/397/664">Supreme Court</a> has said, </p>
<blockquote>
<p>“Adherents of particular faiths and individual churches frequently take strong positions on public issues… . Of course, churches as much as secular bodies and private citizens have that right.” </p>
</blockquote>
<p>So, houses of worship can also conduct educational meetings; they can <a href="https://www.au.org/blogs/wall-of-separation/critical-mass-dc-archdiocese-sponsors-special-religious-service-for-judges">inform candidates</a> of their positions on issues, and <a href="http://www.lawyersalliance.org/pdfs/news_legal/Nonprofit_Organizations_Can_Speak_Out_About_Controversial_Government_Actions_FINAL.pdf">criticize or praise</a> the actions of an elected official. </p>
<p>Thus, even though President Trump has already filed for reelection, churches can speak out on his policies as long as they do not indicate their preference for the 2020 election. </p>
<p>Pastors are also free to endorse candidates if they do so as private citizens: that is, not speak from the actual building of the church, making clear their independence from their church role. In 2016 <a href="http://www.dallasobserver.com/news/robert-jeffress-wants-a-mean-son-of-a-gun-for-president-says-trump-isnt-a-racist-8184721">Robert Jeffress</a>, the pastor of a Dallas megachurch, endorsed Donald Trump, and Pastor <a href="https://www.c-span.org/video/?c4613247/reverend-cynthia-hale">Cynthia Hale</a> prayed for Hillary Clinton to become president. </p>
<p>In fact, approximately 44 percent of Protestant pastors acknowledged endorsing candidates <a href="http://www.lifeway.com/Article/research-majority-pastors-disapprove-pulpit-endorsements">in their own capacity</a> in 2016.</p>
<h2>Many other choices</h2>
<p>Another way in which pastors can engage with citizens is through <a href="http://www.nonprofitvote.org/nonprofits-voting-elections-online/voter-education/">voter education</a>. What this means is that churches can encourage voter registration, drive people to the polls, and prepare nonpartisan voters’ guides and forums.</p>
<p>For example, the United Church of Christ has an <a href="http://www.ucc.org/ourfaithourvote/">Our Faith, Our Vote</a> campaign to encourage participation in the electoral process.</p>
<p>In addition, the law says that churches can <a href="http://www.bolderadvocacy.org/wp-content/uploads/2012/08/Lobbying_Rules_for_Houses_of_Worship.pdf">lobby their legislators</a>, provided that lobbying is not a “substantial part” of their activities. Neither Congress nor the IRS has explained exactly what “substantial” means in the context of a church. </p>
<p>The <a href="http://www.npr.org/2016/08/24/484995344/catholic-church-groups-fight-bills-to-revive-old-sex-abuse-cases">Catholic Church</a>, <a href="https://www.irs.gov/pub/irs-pdf/p1828.pdf">Mormon Church</a> and <a href="http://www.businessinsider.com/church-of-scientology-washington-lobbyist-2015-4">Church of Scientology</a> have all been in the news recently for lobbying. </p>
<p>Religious leaders can also speak for or against a <a href="https://www.irs.gov/charities-non-profits/attempts-by-exempt-organizations-to-influence-judicial-appointments">judicial nominee</a> and express an opinion on a <a href="http://www.pewforum.org/2012/10/02/answers/#_edn12">ballot measure</a>, referendum or constitutional amendment. </p>
<p>Neither judges nor measures are “candidates for public office,” and therefore they are not covered by the Johnson Amendment. </p>
<p>Religious houses comply with the law <a href="https://www.irs.gov/irb/2007-25_IRB/ar09.html">as long as they invite all</a> major candidates to speak, even if only one candidate appears, as long as the candidates are invited to events with approximately the same attendance. For example, Senator Ted Cruz announced his 2016 candidacy for president at Liberty University, a Christian university, which <a href="https://www.au.org/media/press-releases/as-2016-presidential-campaign-gets-under-way-irs-should-act-to-enforce-non">critics claimed</a> violated the Johnson Amendment. But Bernie Sanders also spoke there. </p>
<p>A church can also invite a candidate in a capacity other than being a candidate. Thus, the <a href="http://www.ucc.org/concluding-its-ucc-inquiry-irs-offers-complete-vindication">United Church of Christ</a> did not violate the Johnson Amendment when it invited Barack Obama to speak about his faith journey.</p>
<p>The Johnson Amendment does not prevent churches from speaking out politically if they are willing to forego their tax exemption. <a href="https://baptistnews.com/article/huckabee-questions-churches-tax-exemption/#.WKQu3BjMzwc">Mike Huckabee</a> is among the leaders who has suggested they take this route. </p>
<h2>Who has been penalized?</h2>
<p>Indeed, the law clearly states that if a church violates the Johnson Amendment, it can lose its tax exemption and it can be forced to pay an excise tax on <a href="https://www.law.cornell.edu/uscode/text/26/4955">its political expenditures</a>. But this almost never happens. The IRS <a href="https://www.law.cornell.edu/uscode/text/26/6103">does not disclose</a> its investigations or its settlements with taxpayers, so we do not know exactly what they are investigating unless the taxpayer makes a public announcement or there is a court case. </p>
<p>As far as we know, however, only one church has ever lost its exemption for violating the Johnson Amendment. In 2000 the <a href="https://www.ncronline.org/blogs/ncr-today/catholic-answers-cant-sue-irs">D.C. Circuit</a> affirmed an IRS decision to revoke the tax-exempt status of the Church of Pierce Creek after it published full-page ads in two major newspapers opposing presidential candidate Bill Clinton. </p>
<p>We know that the IRS attempted to impose a tax on a <a href="https://www.ncronline.org/blogs/ncr-today/catholic-answers-cant-sue-irs">Catholic organization</a> in 2004 that had criticized presidential candidate <a href="https://www.ncronline.org/blogs/ncr-today/catholic-answers-cant-sue-irs">John Kerry</a> and attempted to investigate a Christian organization that endorsed <a href="http://law.justia.com/cases/federal/district-courts/minnesota/mndce/0:2008mc00037/101893/26/">Michele Bachmann</a> for president in 2009, but it changed its mind in the first situation and a court prevented the second on procedural grounds. </p>
<p>Since then, no other investigation has become public, even though some churches are blatantly challenging the restriction. Every year since 2009, a Sunday in October is labeled <a href="http://www.adfmedia.org/News/PRDetail/4360">Pulpit Freedom Sunday</a>, and pastors around the country endorse candidates from the pulpit. According to its organizers, over 4,100 pastors have joined the movement since that date. </p>
<p>In 2016, a <a href="http://www.pewforum.org/2016/08/08/many-americans-hear-politics-from-the-pulpit/">Pew Research survey</a> found that 14 percent of those who attended religious services in the spring and early summer heard statements opposing or endorsing presidential candidates.</p>
<h2>So, what’s next?</h2>
<p>It is unclear what happens next, but here are some possibilities. </p>
<p>One, the situation could remain as it is, with the law on the books that most churches follow, but some blatantly disregard without losing their tax exemption because of lax enforcement. Two, the IRS could challenge a church that disregards the Johnson Amendment, and the courts could decide its fate. Three, President Trump could <a href="https://theconversation.com/trumps-vow-to-destroy-johnson-amendment-could-wreak-havoc-on-charitable-world-72561">direct the IRS </a>to refrain from enforcing the Johnson Amendment. Four, Congress could pass the <a href="https://www.congress.gov/bill/115th-congress/house-bill/781?q=%7B%22search%22%3A%5B%22781%22%5D%7D&r=1">Free Speech Fairness Act of 2017</a>, which was introduced in Congress on Feb. 1. </p>
<p>That act would allow churches and other nonprofits to endorse or oppose a candidate if the statement is made during the “ordinary course of business” and its cost is “insignificant.” It is unclear what it means, but I read it as allowing pastors to speak from the pulpit. </p>
<p>Lastly, Congress could enact legislation that would repeal the Johnson Amendment entirely, a change that is likely to have <a href="https://theconversation.com/trumps-vow-to-destroy-johnson-amendment-could-wreak-havoc-on-charitable-world-72561?utm_medium=email&utm_campaign=How%20to%20blow%20up%20LBJs%2063-year-old%20charity%20law&utm_content=How%20to%20blow%20up%20LBJs%2063-ye">far-reaching consequences</a> for churches and the entire nonprofit sector.</p>
<p>We will have to wait to see what happens, of course.</p><img src="https://counter.theconversation.com/content/73165/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Elizabeth Schmidt does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Johnson Amendment requires houses of worship to stay away from politics to receive tax exemptions. Yet, their leaders can speak out in a variety of ways that could reflect their religious views.Elizabeth Schmidt, Professor of Practice, Nonprofit Organizations; Social & Environmental Enterprises, UMass AmherstLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/725612017-02-13T01:50:52Z2017-02-13T01:50:52ZTrump’s vow to ‘destroy’ Johnson Amendment could wreak havoc on charitable world<p>President Donald Trump recently <a href="https://www.nytimes.com/2017/02/02/us/politics/trump-johnson-amendment-political-activity-churches.html?_r=0">pledged to “destroy” the Johnson Amendment</a>, a 63-year-old law that bans charities from engaging in political activities.</p>
<p>As Trump said this at the <a href="https://theconversation.com/national-prayer-breakfast-what-does-its-history-reveal-71978">National Prayer Breakfast</a>, his focus was on permitting religious groups to play a more vocal role in political campaigns. <a href="https://www.sparemin.com/myrecording/7637/?_branch_match_id=364807608631109320">Our experience in researching nonprofit organizations</a>, however, suggests there would be much wider and likely negative ramifications if he fully follows through on his pledge. </p>
<p>To understand the impact, we need to examine the Johnson Amendment and consider how the president might seek to alter it.</p>
<h2>A broad reach</h2>
<p>The Johnson Amendment is a provision of the tax code that <a href="https://www.irs.gov/charities-non-profits/charitable-organizations/the-restriction-of-political-campaign-intervention-by-section-501-c-3-tax-exempt-organizations">prohibits nonprofits registered as charities</a> – and thus eligible to receive tax-deductible donations – from intervening in “any political campaign.” </p>
<p>At its simplest, it means that a charity cannot encourage people to vote for or against a particular candidate for public office – though it can discuss political issues generally. So a nonprofit organization must choose between being designated a charity, which affords it the right to receive tax-deductible contributions, or another tax status that provides more leeway in politicking.</p>
<p>It arose from a long history of religious leaders engaging in political speech. While some of that history marks important and admirable roles, like those of the abolitionists, it is also marred by cases like the <a href="http://magazine.nd.edu/news/the-right-of-a-catholic-to-be-president/">anti-Catholic rhetoric from some Protestant pulpits attacking Al Smith in the 1928 election</a>.</p>
<p>The amendment takes its name from then-Senator Lyndon B. Johnson, who <a href="https://www.nytimes.com/2017/02/02/us/politics/johnson-amendment-trump.html">proposed it in 1954</a> to draw a clear line between politics and charity. Some suggest Johnson proposed the amendment because he was <a href="http://www.politifact.com/truth-o-meter/statements/2016/jul/22/donald-trump/donald-trump-correct-lyndon-johnson-passed-legisla/">angry with a charity that had opposed his candidacy in a primary race</a> for Senate. </p>
<p>Even before its passage, however, the <a href="http://scholarship.law.edu/cgi/viewcontent.cgi?article=1112&context=scholar">IRS took a dim view</a> of charities engaging in political activities. To the IRS, such activities didn’t further a “<a href="https://www.irs.gov/charities-non-profits/charitable-purposes">charitable purpose</a>,” such as helping the poor, maintenance of public monuments, advancement of religion or the defense of civil rights. </p>
<p>Opponents claim the statute violates their rights under the First Amendment to freedom of speech and religion, while proponents argue it ensures the charitable tax deduction is not inadvertently subsidizing political speech.</p>
<p>Many churches and other religious organizations <a href="http://aclj.org/free-speech/how-the-johnson-amendment-threatens-churches-freedoms">have led the way in objecting to the amendment’s chilling effect on speech</a>. One effort to fight back, “<a href="http://www.cnn.com/2016/10/01/politics/pulpit-freedom-sunday-johnson-amendment/">pulpit freedom Sunday</a>,” has been conducted annually to protest these restrictions. The day is marked by preachers flouting the rule and speaking openly about politics.</p>
<p>But since it applies to all charities, any attempt to “destroy” the amendment would affect the behavior of more than just pastors and priests. Schools, hospitals, addiction centers, food banks and other charities all could then advocate for or against candidates to some extent without losing their charitable status. </p>
<h2>Tweaking the Johnson Amendment</h2>
<p>Despite his rhetoric, Trump is unlikely to try to entirely eliminate the amendment, in part because his aim seems to be focused on religious speech. </p>
<p>So a bare minimum change could be an executive order that explicitly states that the administration will not enforce the law against religious groups as long as the political activities are conducted as an ancillary part of regular operations. </p>
<p>This would generally ensure that a preacher would not jeopardize a church’s tax-exempt status by supporting a candidate from the pulpit. A move like this would largely be symbolic since there is <a href="https://www.nytimes.com/2017/02/02/us/politics/trump-johnson-amendment-political-activity-churches.html?_r=0">little evidence</a> that the IRS has sought to revoke the charity status of a church whose preacher violated the ban, such as on pulpit freedom Sunday. The Treasury Department and the IRS may already believe that enforcement of the amendment in this context is impractical and may even violate laws protecting religious freedom.</p>
<p>Such a limited executive order would mean the IRS would still enforce the law when a church is engaged in more secular activity, <a href="https://berkleycenter.georgetown.edu/cases/branch-ministries-v-rossotti">such as acquiring a billboard</a> to favor or oppose a particular candidate.</p>
<p>A more aggressive posture would be if Trump issues an order telling the IRS not to enforce the ban on churches under any circumstances. Although the idea of a president choosing to not enforce a law dutifully passed by Congress may seem odd and problematic, presidents have wide prosecutorial discretion. </p>
<p>President Obama, for instance used this power to direct his Justice Department to curtail enforcement of some violations of <a href="https://www.justice.gov/opa/pr/justice-department-announces-update-marijuana-enforcement-policy">drug</a> and <a href="http://www.cnn.com/2016/06/23/politics/immigration-supreme-court/">immigration</a> offenses. Its use can also run into <a href="http://www.cnn.com/2016/06/23/politics/immigration-supreme-court/">legal challenges</a>, as was the case with Obama’s immigration efforts.</p>
<p>On the legislative side, Congress is already pursuing its own modest efforts, such as the <a href="https://www.congress.gov/bill/114th-congress/house-bill/6195">Free Speech Fairness Act</a>. That would allow charitable groups to engage in political speech when it’s a normal part of their activities and the costs of doing so are “de minimis” – so no national candidate ads, for example.</p>
<p>While the impact of this bill remains uncertain, it would likely eliminate none of the challenges of enforcing the current ban and might raise more problems.</p>
<h2>More ambitious approaches</h2>
<p>A more ambitious legislative approach short of killing the amendment would be to add a carve-out that exempts houses of worship altogether. Such an effort would seem consistent with Trump’s goal of permitting religious groups more leeway in supporting candidates. An unintended consequence would be to increase the need for the IRS to answer the question of what constitutes a church.</p>
<p>We have seen this play out already on a smaller scale with the carve-out that <a href="http://www.forbes.com/sites/peterjreilly/2017/01/14/pastor-calls-for-church-transparency-with-irs-form-990/#3a163e94abad">exempts churches from filing annual financial reports</a>. Atheist groups <a href="http://www.forbes.com/sites/peterjreilly/2013/09/07/freedom-from-religion-foundation-demands-financial-transparency-by-churches/#720795704e31">have filed lawsuits alleging unequal treatment</a>, and others have sought to push the boundaries when filing for church status. The <a href="http://www.usatoday.com/story/news/politics/2015/06/02/first-church-of-cannabis/28364521/">First Church of Cannabis</a> and <a href="https://www.washingtonpost.com/news/acts-of-faith/wp/2015/08/24/john-oliver-has-received-thousands-of-donations-for-budding-televangelism-ministry/?utm_term=.6b1441601b8a">John Oliver’s bitingly satirical</a> but short-lived <a href="http://www.ourladyofperpetualexemption.com">Our Lady of Perpetual Exemption</a> are two examples of unconventional “churches.”</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/7y1xJAVZxXg?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">John Oliver establishes a church.</span></figcaption>
</figure>
<p>In other words, this would almost certainly increase the flow of groups seeking church status. Besides forcing the IRS to answer that difficult question – what’s a church – it may also undermine public perceptions of churches more broadly. </p>
<p>If one takes the most literal interpretation of the president’s pledge, his aim would be to permit politicking by all charitable organizations. He might pursue this goal through an executive order, but a permanent change would require a legislative solution. </p>
<p>A full repeal of the amendment would have the potential to upend the entire nonprofit sector. After all, limitations on politicking provide a key line between organizations that can receive tax-deductible charitable contributions and those that cannot (e.g., social welfare organizations and political action committees).</p>
<p>A repeal would also open a new pathway for avoiding laws on the disclosure of campaign contributions, creating another so-called <a href="https://www.opensecrets.org/outsidespending/nonprof_summ.php">dark money</a> channel.</p>
<p>If this line were removed, we should expect to see many organizations that are ostensibly political in nature seeking charity status so they can raise funds through tax-deductible gifts from undisclosed donors. And many nonprofits that weren’t previously political would likely expand to add such spending to their portfolio of activities. </p>
<p>Many fear that blurring the lines between goals intended to serve the general public and those aimed at special interests would undermine public trust in charities and ultimately even put the charitable deduction at risk. With this in mind, <a href="https://www.philanthropy.com/article/Charity-Coalitions-Vow-to/239097?cid=cpfd_home">prominent nonprofit groups have objected</a> to efforts to repeal the Johnson Amendment. </p>
<p>The push against repeal by charities should be a good indication of its potentially damaging effects. It’s not often that organizations push to retain limits on themselves.</p>
<h2>A tricky business</h2>
<p>Even if the prohibition goes away, unlimited political activity and its enforcement would remain a problem. That’s because political activity itself does not further a charitable purpose. And the IRS would still have to police whether charities were engaged in too much of it to justify charitable status. </p>
<p>Additionally, determining whether a particular comment or speech is even political can be quite difficult. For instance, if a <a href="http://articles.latimes.com/2007/sep/24/local/me-allsaints24">minister gives a sermon</a> asking his congregation to compare two candidates for office and determine whom Jesus would pick, has the minister engaged in political speech in his capacity as a representative of the church? The IRS has <a href="https://www.irs.gov/pub/irs-drop/rr-07-41.pdf">issued guidance with 21 different situations</a> to explain how it makes such determinations.</p>
<p>At the moment, <a href="http://www.mcclatchydc.com/news/politics-government/white-house/article130401949.html">Congress appears reluctant</a> to completely dismantle the Johnson amendment, perhaps because of the concerns we’ve listed above or others. So the likely change, if any, would be a minor shift that gives some nonprofits additional leeway to engage in political speech. </p>
<p>But as we’ve shown, even modest changes to the amendment in this direction are risky and could lead to unintended consequences tantamount to “throwing the baby out with the bathwater.” Given this unclear and treacherous territory on which he has embarked, the president would be wise to tread carefully.</p><img src="https://counter.theconversation.com/content/72561/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>President Trump recently repeated his pledge to eliminate the 63-year-old law, which bans charities from engaging in political activities, at the National Prayer Breakfast.Philip Hackney, James E. & Betty M. Phillips Associate Professor of Law, Louisiana State University Brian Mittendorf, Fisher College of Business Distinguished Professor of Accounting, The Ohio State UniversityLicensed as Creative Commons – attribution, no derivatives.