11 May 2017

Uncertainty remains for religious nonprofits embracing Trump Executive Order

by Alexander L. Reid, Partner, Morgan Lewis

President Trump vowed to “get rid of and totally destroy the Johnson Amendment” while speaking at the National Prayer Breakfast on February 2, 2017, referring to the prohibition all 501(c)(3)  organizations from participating or intervening in any political campaign on behalf of (or in opposition to) any candidate for public office. Senator Lyndon Johnson (D-TX) sponsored the original 1954 legislation citing unwelcome political intervention by charitable organizations in the Texas Democratic primary as his policy rationale.

Many organizations, particularly churches, have criticized the restriction on political campaign intervention for chilling their freedom of speech and free exercise of religion. Other nonprofits are concerned that lifting the prohibition on political activity will force them to take political positions that will harm their ability to carry out their missions. Campaign finance watchdogs are concerned that charities will become “super-super PACs” if they can participate in politics because they would be able to offer donors not only anonymity but also deductible charitable contributions.

On May 4th, the President backed up his earlier vow with an Executive Order entitled “Promoting Free Speech and Religious Liberty” which requires the Secretary of the Treasury (and the Internal Revenue Service) to refrain from taking

any adverse action against any individual, house of worship, or other religious organization on the basis that such individual or organization speaks or has spoken about moral or political issues from a religious perspective, where speech of similar character has, consistent with law, not ordinarily been treated as participation or intervention in a political campaign on behalf of (or in opposition to) a candidate for public office by the Department of the Treasury.

It is unclear what the legal effect of this Executive Order will be because existing law (i.e. the Johnson Amendment) and the IRS’s interpretation of existing law, are clear about what ministers can and cannot say from the pulpit.

For example, Revenue Ruling 2007-41 states that “[t]he political campaign intervention prohibition is not intended to restrict free expression on political matters by leaders of organizations speaking for themselves, as individuals…. However, for their organizations to remain tax exempt under section 501(c)(3), leaders cannot make partisan comments in official organization publications or at official functions of the organization.”

Example 5 from that same ruling provides that a minister will not be treated as speaking on behalf of the church if the minister’s political activity does not occur at an official church function or in an official church publication, does not use the church’s assets, and the individual does not state that he was speaking as a representative of church.

Perhaps most importantly, it is unclear whether churches will take advantage of any administrative forbearance in enforcing the Johnson Amendment because future administrations can, and frequently do, rescind the Executive Orders of previous administrations. A church that engages in political activity during the Trump Administration would risk losing its exempt status if the next President directs the IRS to enforce the Johnson Amendment. The IRS under a future president would have the authority to consider the activity undertaken by the church during President Trump’s time in office, and mete out any punishment allowed by current law for past transgressions. So religious congregations remain at risk of losing their tax-exempt status if they support or oppose a candidate for office, regardless of the Executive Order.

Whatever one’s view on the Johnson Amendment, whether favoring its full or partial repeal or urging it’s continuance and even stepped-up enforcement, it seems unlikely that the President’s Executive Order will have much of an impact one way or the other, except perhaps to lull a few unwary congregations into peril if they rely solely on the President’s rhetoric to determine what is or is not now permissible. The question of political involvement by churches and charities remains one for Congress to decide, through new legislation or inaction.