Tax Bill Likely to Soften Rule Barring Politicking by Nonprofits

A tax bill to be put forth by Republican Congressional leaders as early as this week will likely include language that would loosen or do away with a federal ban on political endorsements and spending by nonprofits, according to nonprofit leaders following the issue closely.

It would represent the most serious legislative action to change the rule, sometimes referred to as the Johnson Amendment, since a vote in the House in 2002. In that vote, the proposal to eliminate the rule failed to garner a simple majority.

Most charities and religious leaders oppose scrapping the Johnson Amendment, according to multiple polls, saying it would plunge such organizations into partisan politics. Critics say it also would allow partisan operatives to create nonprofits as vehicles for opaque political fundraising and spending.

“This is a huge threat because many in the GOP are serious about repealing or weakening the Johnson Amendment, they control both houses of Congress, and the President campaigned on this issue,” said Rick Cohen, director of communications and operations at the National Council of Nonprofits, one group that has been lobbying to keep the law intact.

Seeking Clarity

The Johnson Amendment was enacted in 1954 and tweaked in 1987. It prohibits nonprofits, including churches and other religious congregations, from endorsing or making campaign contributions in support of political candidates.

Nonprofit employees can participate in political activities as private citizens, and nonprofits can legally lobby on issues pertinent to their missions, so long as that lobbying work does not constitute a “substantial part” of all operations and activities.

Still, the IRS limits on nonprofits’ and churches’ political activities have long been criticized as too vague by nonprofit, religious, and political leaders of all political persuasions. And many have spent years working to build consensus around how to sharpen and clarify the Johnson Amendment. Such efforts have included the Commission on Accountability and Policy for Religious Organizations and the ongoing Bright Lines Project. Those projects failed to produce change.

Endorsing Candidates

The Johnson Amendment has long been a target of a small number of conservative Christian leaders, who argue it impinges on their ability to give guidance to their community members on how to vote.

Some Republican leaders have been listening.

Rep. Kevin Brady, chair of the House Ways and Means Committee, said earlier this year he would include language in a tax bill to amend the law. And Rep. Steve Scalise, the No. 3 ranking Republican in the House, co-sponsored legislation earlier this year that would allow charitable and religious organizations to endorse or oppose candidates without fear of losing tax-exempt status so long as their political actions stayed within the “ordinary course of the organization’s regular and customary activities.” Any additional spending on such activities would have to be negligible, or a “de minimis” amount.

As the Republican nominee for president, candidate Donald Trump promised religious leaders he would get rid of the Johnson Amendment. In May, President Trump signed an executive order directing the IRS not to unfairly target churches and religious organizations for political speech, although the move meant little in the way of real-world action, according to nonprofit legal experts.

Quiet Opposition

Nonprofit leaders who oppose any change to the law that would reduce existing limits on nonprofits’ political activities say they have talked to many Republican lawmakers in Congress who oppose changing the Johnson Amendment, but who have expressed reluctance to oppose the leadership in their own party on the issue.

Nonprofit leaders have organized what they are describing as a “call-in day” on Monday to get lawmakers’ constituents to call and express opposition to any change.

“When we go into these offices, what we hear is, ‘Boy, that is a bad idea,’” Emily Peterson-Cassin, project coordinator at the Bright Lines Project, said Friday, speaking at the Independent Sector conference in Detroit. “But the hurdle we need you to overcome is ‘Boy, that is a bad idea, and I’m going to go against the leadership to say that it is a bad idea.’”

If the language is indeed in the bill released this week, the next step is to try to convince enough members of the Ways and Means Committee to remove it, said Mr. Cohen of the National Council of Nonprofits.

“If the provision to politicize charitable nonprofits and foundations remains in a bill that the House passes, it will be incumbent upon the nonprofit community to make clear to the Senate that current law must be retained,” Mr. Cohen said.