As NPQ reported in “More Attempts to Repeal Johnson Amendment Irk Nonprofits,” last week, the House Appropriations Committee slipped a radical change in federal policy into a 253-page spending bill. The change, if enacted into law, would hurt charitable nonprofits, houses of worship, and the people we all serve.
Why This Matters to All of Us
The fate of the rider to the spending bill could be decided in the next few days, but to understand why it matters, first we must consider the current law that benefits us all. For 63 years, an important provision in the federal tax code has successfully protected charitable nonprofits, religious congregations, and foundations from being polarized by raw politics and hounded by politicians and paid political consultants seeking endorsements, financial contributions, and more.
The provision is Section 501(c)(3)’s third condition for eligibility to receive tax-deductible donations and tax-exempt status: a charitable nonprofit, religious organization, or foundation 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.” The provision is sometimes called the Johnson Amendment, after then-Minority Leader Lyndon Johnson, who proposed the amendment in 1954. The Republican-controlled Senate adopted it without controversy and President Ronald Reagan signed an expansion of the protection in 1987. While much of the focus of this debate has been on religious institutions, this issue affects every 501(c)(3) organization.
Despite longstanding bipartisan support and important proven benefits (see What’s at Stake, below), politically motivated forces are agitating to repeal or weaken the Johnson Amendment. They seek to politicize charitable nonprofits, houses of worship, and foundations. In February, President Trump vowed to “totally destroy” the law. One bill in Congress, H.R. 172, would repeal the protection and thereby open the floodgates for undisclosed and unregulated dark money to flow into partisan election campaigns—all with the bonus of a charitable deduction for the donor. Two identical House/Senate bills, H.R. 781/ S.264, would substantially weaken the law and spawn litigation; those measures are promoted by 47 very conservative groups, including religious broadcasters that could profit from an influx of taxpayer-supported “charitable” donations explicitly or implicitly earmarked for political endorsements. (Compare that 47 against the more than 4,800 nonprofits and foundations [so far], more than 3,000 religious leaders so far, and 99 religious and denominational organizations urging Congress to maintain the current law.)
Last week, yet another measure appeared when the House Appropriations Subcommittee on Financial Services “tucked a provision into its draft spending bill that would make it exponentially more difficult for the Internal Revenue Service to enforce” (according to Newsweek) even the most blatant violations of the Johnson Amendment. The rider (Section 116) would prevent the IRS from spending any funds to make a final determination that a house of worship or its affiliate has violated the Johnson Amendment unless the IRS meets three conditions:
- The IRS Commissioner personally approves the determination. (But how can the initial investigation even begin in order to reach a final determination if no funds can be used?
- The Commissioner notifies politicians at the House and Senate tax committees within 30 days of the law-enforcement determination. (That’s sheer in