Debating the Johnson Amendment

The Project

During his campaign for president, Donald Trump declared he would push to repeal the Johnson Amendment, which is legislation that prohibits 501(c)(3) organizations from intervening on behalf of, or in opposition to, political candidates or campaigns. The topic has proven to be a hot-button issue, even dividing many within the nonprofit sector. Some argue that the so-called Johnson Amendment stifles free speech while others argue it appropriately keeps partisan politics and spending out of the charitable sector. The Philanthropy Roundtable has chosen not to take a position on whether or not to repeal the Johnson Amendment at this time and as such, can serve as a platform for a broad discussion surrounding the issue. The Roundtable presented a series of questions to four leaders in the nonprofit sector – two favoring repeal of the Johnson Amendment and two opposing repeal – for a deep dive into the practical, theoretical and constitutional issues surrounding this debate.  The participants in this discussion are as follows.

The Johnson Amendment Background

Section 501(c)(3) of the Internal Revenue Code allows nonprofit organizations engaged in charitable, educational, religious, scientific, and a handful of other purposes supporting civil society to be exempt from federal income taxes and eligible to receive tax-deductible contributions. In order to qualify for this status, nonprofits must meet three conditions. First, profits cannot be paid out to benefit shareholders or individuals. Second, limits are imposed on the amount of lobbying that 501(c)(3) organizations can engage in. Finally, they must “not participate in, or intervene in (the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.”    [expand title=”Read More” id=”back”]

This last requirement is commonly called the Johnson Amendment after then-Senate Minority Leader Lyndon Johnson, who proposed the measure in 1954 as part of a larger tax bill that passed and was signed into law by President Eisenhower. Some also refer to it as “nonprofit nonpartisanship.”

As a result of the law, 501(c)(3) organizations may not endorse or oppose candidates for public office or contribute money, time, or resources to help elect or defeat candidates. This applies not just to houses of worship but all other 501(c)(3) organizations as well. Other speech, such as commentary on legislation and issues of the day, are not affected by the Johnson Amendment. If Section 501(c)(3) organizations engage in partisan electioneering, they can lose their tax status.

Congress is currently considering legislation that would scale back the Johnson Amendment (H.R. 781 and S.264, called the Free Speech Fairness Act and introduced by Sen. Jim Lankford (R-OK), Rep. Steve Scalise (R-LA), and Rep. Jody Hice (R-GA)), so that the ban on partisanship would not apply to “any statement which is made in the ordinary course of the organization’s regular and customary activities … and results in the organization incurring not more than de minimis incremental expenses.”

In addition, in early May of 2017 President Trump signed an Executive Order, part of which purports to lift the Johnson Amendment’s restrictions on houses of worship, but not other 501(c)3 nonprofit organizations. It is not clear that the order does anything other than ratify the current status quo however, which is that the law remains on the books but the IRS generally does not enforce it in the case of houses of worship.    Click here to close[/expand]


  1. Are there any changes you would like to see made to current law as it regards 501(c)(3) groups’ ability to endorse candidates (including changes strengthening, weakening, adjusting, or clarifying current law and its enforcement)?
  2. It has been proposed that houses of worship be “carved out” from the Johnson Amendment’s prohibition on partisanship by 501(c)(3) charities, allowing them to endorse or oppose political candidates while other 501(c)(3) entities continue to be prohibited from doing so. Is this a good idea, and why or why not?
  3. The “Free Speech Fairness Act,” sponsored by Senator Lankford and Representatives Scalise and Hice, would permit 501(c)(3) organizations to endorse or oppose candidates “in the ordinary course” of business so long as only “de minimis” incremental costs were incurred. What does “de minimis” mean? Would this open up the floodgates for political spending by 501(c)(3)s, and also subject 501(c)(3)s to new forms of regulation?
  4. Under the status quo, there is a complete legal prohibition on 501(c)(3) organizations supporting or opposing candidates for office but it is largely unenforced as it relates to houses of worship. Are you concerned that a law is unenforced, or enforced rarely but in an arbitrary manner, and how should this be corrected
  5. Anything you would like to add?

1. Are there any changes you would like to see made to current law as regards 501(c)(3) groups’ ability to endorse candidates (including changes strengthening, weakening, adjusting, or clarifying current law and its enforcement)?

Tim Delaney
Not in the portion of Section 501(c)(3) known as the Johnson Amendment. It has served America well over the last six decades by protecting charitable, philanthropic, and religious organizations from the derision and division of partisan politicking. Nonpartisanship is vital to the work 501(c)(3) organizations. It creates a safe space inviting the problem-solving skills of all community members, without the distractions of party labels and the polarizing partisanship that currently bedevils our country.    [expand title=”Read More” id=”TDQ1″]

Moreover, the vast majority of Americans, voters, religious leaders, and 501(c)(3) charitable, philanthropic, and religious organizations oppose any change to 501(c)(3). Consider these facts:

  • 79 percent of Americans oppose pastors publicly endorsing political candidates during a church service (Sept. 2015 national survey);
  • 72 percent of voters want to keep current rules prohibiting 501(c)(3) organizations from engaging in partisan political activities (Mar. 2017 national poll);
  • 89 percent of evangelical clergy oppose endorsing political candidates from the pulpit (Feb. 2017 survey, National Association of Evangelicals);
  • 99 religious and denominational organizationsdelivered a letter to Congress in April expressing strong opposition to “any effort to weaken or eliminate protections that prohibit 501(c)(3) organizations, including houses of worship, from endorsing or opposing political candidates”; and
  • 4,500+ (so far) charitable, philanthropic, and religious organizations from every state have signed the Community Letter in Support of Nonpartisanship saying they “strongly oppose” proposals to repeal or weaken the Johnson Amendment.

Nonetheless, Congress does need to make two other changes. First, it needs to fund the IRS at levels that ensure its employees are well trained, that training programs are up to date, and that the IRS is able to promote compliance with Section 501(c)(3). Much of the misinformation, and, indeed, the scaremongering about current law is the result of partisans taking the stage while the IRS is operating with limited capacity to keep up with caseloads.  It is unfortunate and harmful that the IRS is not engaging proactively in the community to provide clarity and training about what is and is not permissible under law.

Second, Congress needs to direct the IRS to do its job and stop using IRS Form 1023-EZ, the short form the IRS adopted in 2014. The IRS approved the abbreviated application process for 501(c)(3) status to ease its own internal management, despite warnings by the National Association of State Charity Officials, National Council of Nonprofits, and the IRS’s own external Advisory Committee on Taxation that doing so would be abdicating its responsibility to police the entry of bad actors into the charitable nonprofit community, creating new opportunities for fraud. Recent research shows that the IRS has improperly handed out 501(c)(3) status to several hundreds of organizations not entitled to this most valuable form of tax-exempt status. The Taxpayer Advocate’s report documents the flawed application system that has allowed a “significant number” of unqualified applicants to receive 501(c)(3) status. This fundamental breach in the process will be blown wide open if the proposed legislation passes, because it will create myriad ways for the unscrupulous to create new entities to avoid any reasonable restraints, thereby tainting all other charitable, philanthropic, and religious organizations.    Click here to close[/expand]

David Keating
The current law is poorly written. Given that it was added on the Senate floor in 1954 with no hearings or substantial debate, that’s not surprising. Lyndon Johnson wasn’t looking out for the integrity of the political system or charitable groups when he proposed the amendment. He was concerned about his own reelection prospects after winning by just 87 votes in his 1948 reelection campaign.    [expand title=”Read More” id=”DKQ1″]

The Johnson amendment was a quick and flawed method of quieting critics, not a well-considered reform. Even immediately after it passed, no one knew what it meant. Johnson himself appeared to mislead the Senate about the impact of the amendment. When he introduced it on the Senate floor, he said it would “deny tax-exempt status to not only those people who influence legislation but also to those who intervene in any political campaign on behalf of any candidate for any public office.” But the bill did not ban lobbying (which years earlier had been limited to an insubstantial amount, which remains law today), it exclusively addressed campaign intervention.

The Johnson amendment says that a group may have 501(c)(3) status only if it also “does 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.”

Some of the activities banned by the Johnson amendment are clear. Charities may not spend money on ads endorsing a candidate. Charities may not donate to candidate committees, political parties or political committees (PACs). Beyond that, no one knows for sure. That’s a problem, and a big one, because vague laws chill our First Amendment speech rights.

In the landmark campaign finance case Buckley v. Valeo, the Supreme Court quoted an earlier decision to explain the importance of having clear rules for speech.

In short, the supposedly clear-cut distinction between discussion, laudation, general advocacy, and solicitation puts the speaker in these circumstances wholly at the mercy of the varied understanding of his hearers and consequently of whatever inference may be drawn as to his intent and meaning. … Such a distinction offers no security for free discussion. In these conditions it blankets with uncertainty whatever may be said. It compels the speaker to hedge and trim.

The problems created by the Johnson amendment are getting worse, not better. As everyone knows, the news business has fallen on hard times since the internet cut classified and display advertising and created many new competitors. As a result many news organizations have become 501(c)(3) charities. Does “publishing statements” on candidates or a political campaign endanger such a news organization’s tax status?

Even when it passed, no one knew the reach of the law. As explained in a paper for the Center for Competitive Politics, Allison Hayward noted that “One article written soon after the Code’s enactment observed:

[S]ince participation in a political campaign may be, in effect, an indirect method of attempting to influence legislation, discrimination between these two activities would seem inconsistent. In view of the fact that the substantiality concept has been applied in the legislative area, it would appear that the present Code should be construed to apply equally to the political campaign situation.”

Hayward further noted that “At enactment, then, some reasonable minds believed the Johnson Amendment would only bar ‘substantial’ political intervention for 501(c)(3)s.”

The IRS is the last agency we want to serve as the speech police. Its main function is to help taxpayers comply with their responsibilities to file their tax returns and pay their taxes. If they don’t, the IRS enforces the law to collect the taxes due.

The agency knows little about the First Amendment, and the Tea Party scandal under Lois Lerner gave the agency a black eye and greatly harmed people trying to exercise their First Amendment rights.

I don’t have all the answers as to how to fix the law. It would not be hard to make it clearer. Still, it would be best to take discretion out of the hands of the IRS to the extent possible. The agency does not have the expertise to police political speech.

Regarding federal campaign intervention, I can think of one remedy that merits consideration. As long as a charity does not make a reportable contribution or expenditure under the Federal Election Campaign Act (FECA), then the charity has not violated the amendment with respect to federal candidates. If it does make a reportable contribution, donation or expenditure, then the charity should be required to pay a tax at the highest marginal tax rate imposed on either individuals or corporations. If it failed to report the amounts and pay tax to the IRS, then late filing or payment penalties could be also imposed. If the expenditures exceed 5 percent of the total funds spent by the charity, then other sanctions might be imposed.

FECA and associated Federal Election Commission regulations provide good guidance on what constitutes campaign intervention and what does not. There would be no need for the IRS to reinvent the wheel. Additionally the FEC has expertise in the field sorely lacking at the IRS.

However, one problem is that FECA and FEC rules allow corporations to set up separate segregated funds, or PACs, and pay the administrative and fundraising expenses for the funds. It would be a simple matter to amend FECA to bar 501(c)(3)s from setting up such PAC accounts or to allow such groups to have PACs as long as the PACs pay their own fundraising and administrative expenses.  Additional tweaks to FECA may also be needed to allow non-membership organizations to make internal communications, which, I should note, are reportable activities.

The problem is harder to address for state and local campaign intervention because many state laws are terribly written. That said, few of such laws are worse than the Johnson amendment.

The advantage of this approach is that it takes the IRS out of the business of monitoring political activity. It also provides rules that are clearer than the IRS guidance. There is a free procedure for asking for, and receiving, binding advisory opinions. The FEC enforcement mechanism is bipartisan, which greatly reduces the risk of arbitrary enforcement.     Click here to close[/expand]

Amanda Tyler
The status quo works well to separate the charitable sector, including houses of worship, from partisan candidate elections. This long-standing arrangement has been codified in the tax law for 63 years, allowing institutions to flourish and focus on their exempt purposes, without being distracted or co-opted by partisan campaigns, while prohibiting the use of taxpayer-subsidized dollars from being spent on candidate elections. The law has, at times, also provided needed protection from candidates and their donors who seek to use the good reputation of these institutions, as well as their most-preferred tax status, for their campaigns.    [expand title=”Read More” id=”ATQ1″]

The statutory language prohibiting 501(c)(3) organizations from “participating or intervening in a political campaign on behalf of or in opposition to any candidate for public office” has been reasonably interpreted by the IRS in revenue rulings and guidance. There is a bright-line prohibition on candidate endorsements, and whether activity by the 501(c)(3) organization constitutes an endorsement is to be determined considering the “facts and circumstances” of such activity.

It is unfortunate that the tax law has been misconstrued and mischaracterized as a bar on the ability of organizations to address the issues of the day or to engage in political speech. Some advocates looking to change the law have blurred the line in their rhetoric between permissible political speech and impermissible partisan campaign intervention. The tax law prohibition is not a divorcement of politics from exempt organizations, including houses of worship. Many churches feel that they are called to speak politically on a variety of social issues. Nothing in the tax law prevents pastors from speaking out from the pulpit on issues, no matter how controversial. While no statutory change is necessary, there may be room for clarification of the standard to correct misinformation that has been spread about the law.    Click here to close[/expand]

Michael Farris
The Johnson Amendment is unconstitutional and needs to be changed.  It violates the Establishment Clause because it requires ongoing and pervasive monitoring of speech by churches, such as a pastor’s sermon from the pulpit.  The United States Supreme Court has found programs unconstitutional that entail “comprehensive, discriminating, and continuing state surveillance.” Lemon v. Kurtzman, 403 U.S. 602, 619 (1971).    [expand title=”Read More” id=”MFQ1″]

It also violates the Free Speech Clause because it is an unconstitutional condition on free speech—it requires churches to surrender their constitutional right to obtain a tax exemption.  The Supreme Court has condemned such schemes, stating that the “exaction of a tax as a condition to the exercise of the great liberties guaranteed by the First Amendment is . . . obnoxious . . .” Follett v. Town of McCormick, 321 U.S. 573, 577 (1943).  It has also held that “To deny [a tax] exemption to claimants who engage in certain forms of speech is in effect to penalize them for such speech.” Speiser v. Randall, 357 U.S. 513, 518 (1958).

In addition, it violates the Free Speech Clause because it is a content-based distinction.  The IRS obviously must examine a pastor’s sermon to determine whether or not it violates the amendment.  Government agents must review sermons to determine when they become too “political” or, one may say, not religious enough.  The Supreme Court has called such content-based discrimination “odious” and “disfavored” because it allows the government to silence speech it does not like. [City of Renton v. Playtime Theatres, Inc., 475 U.S. 41, 56 n.1 (1986).]

The history of the Johnson Amendment’s passage highlights that it was a shoddy attempt by an incumbent to silence political opponents—with no forethought given to its constitutionality.  In 1954, Lyndon Johnson was running for reelection to the United States Senate.  Two secular nonprofit organizations dedicated to opposing communism distributed thousands of pieces of literature opposing Johnson’s reelection bid because they believed Johnson’s stance against communism was too lenient.  Johnson tried to find ways to silence these organizations, even inquiring of the IRS whether the organizations were violating tax law by opposing his candidacy (the IRS responded that the organizations were not violating tax law).  With his reelection chances in jeopardy, Johnson came up with a cunning idea to change the law to prohibit nonprofits from supporting or opposing candidates for office.

On July 2, 1954, Johnson appeared on the floor of the U.S. Senate and offered an amendment to a bill that modernized and overhauled the tax code.  The legislative history shows that no debate occurred on the amendment, and it passed with a voice vote.  It went on to become part of the bill that President Eisenhower later signed into law on August 16, 1954.

One scholar who studied the history of the Johnson Amendment concluded:

The ban on electioneering is not rooted in constitutional provisions for separation of church and state.  It actually goes back to 1954 when Congress was revising the tax code, anti-communism was in full bloom, and elections were taking place in Texas.  In this highly-charged political environment, Lyndon Johnson introduced an amendment banning section 501(c)(3) tax-exempt organizations from participating in any political campaign on behalf of any candidate for public office.  His amendment was directed at anti-communist groups such as Facts Forum and the Committee for Constitutional Government which stood between him and his goals of crippling McCarthyism, thwarting Allan Shivers’ efforts to control the Democratic party in Texas, and defeating Dudley Dougherty.  Johnson was not trying to address any constitutional issue related to separation of church and state; and he did not offer the amendment because of anything that churches had done.  Churches were not banned from endorsing candidates because they are religious organizations; they were banned because they have the same tax-exempt status as Facts Forum and the Committee for Constitutional Government, the right-wing organizations that Johnson was really after. … The ban on electioneering has nothing to do with the First Amendment or Jeffersonian principles of separation of church and state.”  James D. Davidson, Why Churches Cannot Endorse or Oppose Political Candidates, 40 Rev. Religious Res. 16, 18 (1998).

This history discloses that the Johnson Amendment did not arise from any enlightened or noble constitutional principle and that churches became an unintended casualty of a partisan end run that was wholly unconcerned with religious expression.  The current ban and censorship on pastors supporting or opposing candidates flows from a rank incumbent-protection measure passed by a powerful senator bent on keeping his seat in the halls of power.

Since its passage, the IRS has issued increasingly vague guidance interpreting and enforcing the Johnson Amendment.  Let’s not forget that the Johnson Amendment is a speech restriction that, by its very terms, applies to the “publishing or distributing of statements.”  Yet, the IRS does not define with certainty or precision what speech is prohibited.  Instead, the IRS uses a “facts and circumstances” approach to determining when a church or pastor has violated the Johnson Amendment.  In this approach, the IRS considers all the facts and circumstances of what occurred before rendering a decision on whether the church or pastor violated the law.  It issues guidance that prohibits churches (and all nonprofits) from “directly or indirectly” supporting or opposing candidates, yet it does not define what an “indirect” participation looks like.  The predictable result of this unclear guidance has been that America’s pastors chill their speech and a massive self-censorship pervades the pulpits.  If lawyers argue over where the line is in the Johnson Amendment (and they do), how can we expect pastors to understand and apply its restrictions?  Instead, most pastors just avoid the topic of politics altogether.

The Johnson Amendment also empowers IRS agents to monitor what a pastor says from the pulpit and punish a pastor the IRS believes has crossed the line.  This is not “separation of church and state” as that phrase was intended by our Founders—to keep the government from becoming involved in the internal affairs of the church.  Instead, the Johnson Amendment sets up an excessive entanglement of the government with churches.  After all, a sermon from the pulpit is core religious expression, yet it is subject to monitoring by government agents.

The Johnson Amendment should be changed to allow pastors to speak freely from the pulpit on all matters of life.  This does not mean that pastors will be forced to endorse or oppose candidates from the pulpit.  That is a decision for each pastor to make—understanding his unique congregation and ministry context.  Nor does this mean that churches will be turned into political action committees where party bosses run the church from cigar-filled Sunday school rooms.  The Johnson Amendment did not exist until 1954 and pastors exercised their rights responsibly for the first 200 years of American history.  In fact, we owe our Bill of Rights in large part to the influence of Baptist pastors in Virginia like George Eve and John Leland who pressured James Madison to publicly support a Bill of Rights during his candidacy for the First Congress.  Madison defeated James Monroe and, as a modern historian put it, there was no doubt that his victory was a result of the Baptist clergy who supported his candidacy.  Madison became the drafter and the primary proponent of the Bill of Rights because pastors were not afraid to interact with the political process.  And pastors have done so at critical moments in our history—promoting women’s suffrage, condemning child labor, speaking against slavery and promoting civil rights just to name a few.

The fact is that it is a pastor’s job to decide what to say from the pulpit, not the government’s.  Fixing the Johnson Amendment to allow pastors to speak freely from the pulpit remedies the constitutional problems created by its passage and enforcement.    Click here to close[/expand]

2. It has been proposed that houses of worship be “carved out” from the Johnson Amendment’s prohibition on partisanship by 501(c)(3) charities, allowing them to endorse or oppose political candidates while other 501(c)(3) entities continue to be prohibited from doing so. Is this a good idea, and why or why not?

David Keating
Personally, I think this is a bad idea. When people associate into groups, the groups should all be treated the same way under the law.    [expand title=”Read More” id=”DKQ2″]

As noted already in my suggestions for reform, I believe all groups should be allowed to endorse candidates. However, I can understand the desire not to allow tax deductible donations to be used to publish or broadcast the endorsement.

Under the First Amendment, I don’t see how or why a house of worship should get a special carve out to endorse candidates while a charitable group of atheists would not get the same right. Groups have First Amendment rights because the people in them have First Amendment rights, regardless of their beliefs.    Click here to close[/expand]

Amanda Tyler
No, it is neither prudent nor constitutional to treat 501(c)(3) houses of worship differently than other organizations benefiting from that most-preferred tax status when it comes to the campaign intervention ban.    [expand title=”Read More” id=”ATQ2″]

In April, 99 religious and denominational organizations wrote Congress to express their concerns about how any change in the law would impact their houses of worship. These concerns included the divisive impact candidate endorsements would have on their houses of worship, the threat to their “prophetic voice, their ability to speak truth to power as political outsiders,” the demeaning of their institutions, and the pressure that would come from “individuals and corporations who could offer large donations or a politician promising social service contracts in exchange for taking a position on a candidate.” Thousands of faith leaders from across the country and from many different religious traditions have raised similar concerns in an ongoing online petition found at

Any effort to exempt only houses of worship from the 501(c)(3) campaign intervention ban would likely fail to survive an Establishment Clause challenge, following the Supreme Court’s reasoning in Texas Monthly v. Bullock, or raise serious issues under the Free Speech Clause.    Click here to close[/expand]

Michael Farris
Any fix to the Johnson Amendment should apply across the nonprofit spectrum.  While Alliance Defending Freedom is primarily concerned with protecting pastors and churches, we recognize that the Johnson Amendment’s speech restrictions apply to all nonprofits alike and create the same constitutional problems.  Very little, if any, thought went into the adoption of the Johnson Amendment, and it unconstitutionally censors the free-speech rights of nonprofits.  Congress should fix the constitutional problems it created for all exempt organizations when it passed the Johnson Amendment.

Tim Delaney
As a member of the U.S. Supreme Court Bar and former state Solicitor General and Chief Deputy Attorney General, I must emphasize the obvious: violating the U.S. Constitution is never a “good idea.” Singling out houses of worship and religious organizations for preferential treatment – as Section 2 of the recent Executive Order purports to do – would violate the U.S. Constitution.    [expand title=”Read More” id=”TDQ2″]

If Section 2 of the May 3 Executive Order changes enforcement of federal law (some contend that it is empty window-dressing that changes nothing), then it violates: (1) the First Amendment’s Establishment Clause by giving superior treatment to religious groups; (2) the Fifth Amendment’s Due Process Clause because it uses vague and ambiguous language by failing to define what constitutes a “religious organization” worthy of superior treatment (e.g., do an Islamic Society chapter, a Jewish community center, Notre Dame University, or YWCA affiliate qualify?); (3) the separation of powers principle in the U.S. Constitution because a president cannot unilaterally change a statute previously passed by Congress; and (4) the Take Care Clause in Article II of the Constitution directing the President to “take care that the laws be faithfully executed” because a president cannot essentially line-item veto selected words from a longstanding statute by instructing law enforcement to ignore certain words as to some but enforce those words against others.

Those agitating for legislation to inject partisan politicking into the nonprofit community levy complaints against the IRS and the Internal Revenue Code that typically open and close with expressions of outrage that preachers and others may not talk about “the issues of the day,” such as abortion, immigration, marriage, and the environment, without running afoul of the restrictions of the Johnson Amendment. But that’s simply not true. Each of those, and all other issues of the day, concern the line between permissible versus excessive lobbying – admittedly an imprecise line – that is governed by the second condition in Section 501(c)(3), the one enacted in 1934. Issues of the day have nothing to do with the clear line prohibiting partisan politicking in the Johnson Amendment first enacted in 1954, renewed without controversy in 1969, 1976, and 1986, and expanded in 1987.

The bottom line is that churches, charities, and foundations can talk about such issues of the day and other public policy matters, from a moral, biblical, or other perspective, without triggering the Johnson Amendment. It is disingenuous for partisans in this debate to blithely assert that the IRS is monitoring “political speech” and then cite complaints about the second condition that do not relate to the Johnson Amendment that they denounce. If speech about the issues truly is THE issue, then they should be challenging the fuzzy lobbying restrictions in the second condition of Section 501(c)(3) enacted in 1934. Many charitable nonprofits take the 501(h) election to secure some clarity about what is and is not considered lobbying under the law and about how to account for their lobbying expenses. Some religious groups lobbied to not be granted the right to take the 501(h) election when that Section was added to the Internal Revenue Code in 1976, so it is perhaps understandable that they now complain that the statutory language from 1934 is confusing.    Click here to close[/expand]

3. The “Free Speech Fairness Act,” sponsored by Senator Lankford and Representatives Scalise and Hice, would permit 501(c)(3) organizations to endorse or oppose candidates “in the ordinary course” of business so long as only “de minimis” incremental costs were incurred. What does “de minimis” mean? Would this open up the floodgates for political spending by 501(c)(3)s, and also subject 501(c)(3)s to new forms of regulation?

Amanda Tyler
Proposed legislation would substitute several new subjective standards for the current bright-line prohibition in the law. What does “ordinary course” mean? What is the organization’s “regular and customary activities in carrying out its exempt purpose”? What is “de minimis” compared to the organization’s total budget? What is “incremental?” These are all line-drawing questions that would fall on the IRS and the Treasury Department, which would have a mandate to enforce this new standard with limited resources and with likely much more activity in this area. We would either see lack of enforcement, rendering the statutory limitations meaningless, or we would see troubling entanglement of the IRS in a church’s affairs. Neither outcome would be an improvement on our current system.    [expand title=”Read More” id=”ATQ3″]

In practice, these statutory limitations are not likely to provide meaningful limits on campaign activity made with tax-exempt and tax-deductible dollars. For instance, if it is in the “ordinary course” of a church’s business to take out an ad in the local paper to advertise its worship services, it is likely to be only an “incremental cost” (if any cost at all) to include candidate endorsements in that ad. Many churches tape and broadcast their church services on their websites and social media platforms, and it would not be an additional cost to include candidate endorsements as part of that broadcast.

Houses of worship receive permissive accommodations that help them comply with the tax law and receive the government benefit of 501(c)(3) organizations. These include receiving automatic 501(c)(3) status, rather than having to file to receive that status as other exempt organizations do, and not being required to file the Form 990. If this new imprecise standard were incorporated in the law, houses of worship would be particularly attractive to campaigns as vehicles for campaign activity, given the lack of disclosure and other administrative burdens compared to the rest of the 501(c)(3) sector.

The recent experience of the IRS trying to enforce regulations interpreting the subjective limitation for 501(c)(4) organizations on political activity provides a cautionary tale. In that case, the statute provided tax-exempt status for organizations “operated exclusively for the promotion of the social welfare.” Treasury regulations interpreted that language to allow social welfare organizations to intervene in campaigns as long as their “primary” activity remained social welfare, but neither Treasury nor IRS clarified what “primary” meant. Some groups have argued that political activity for an organization could be up to 49 percent of the group’s work and not run afoul of the standard.

As was revealed in 2013 and became the subject of congressional oversight and criticism that continues to this day, the IRS engaged in improper scrutiny of certain organizations in attempting to enforce that imprecise standard. Unless Congress lifts the prohibition on Treasury and the IRS clarifying the new rules, any guidance offered for 501(c)(3)s under Sen. Lankford and Rep. Scalise’s proposal could make the regulatory landscape even more difficult to navigate for the significant number of  nonprofits that operate associated (c)(3)s and (c)(4)s.

Inserting an imprecise standard that requires the IRS to make judgment calls in the area of 501(c)(3) standards is ill-advised and likely to lead to the same results we have seen in the area of 501(c)(4) organizations. It will either lead to improper activities of the IRS, but this time in the context of church-state entanglement, raising constitutional concerns, or a lack of enforcement of an imprecise standard, rendering limitations meaningless.    Click here to close[/expand]

Michael Farris
The Free Speech Fairness Act is a constitutionally sound solution to the Johnson Amendment.  The bill creates a “relief valve” for speech that is at no cost or a de minimis cost to the organization.  A “de minimis incremental cost” means that the organization’s costs would not have been different by any significant amount had the communication not occurred.  For example, a pastor would ordinarily preach a sermon on the weekend regardless of whether he supports or opposes a candidate in the sermon.  An organization that regularly publishes a blog post every Tuesday will publish that post even if the content does not have anything to do with candidates for office.    [expand title=”Read More” id=”MFQ3″]

The Free Speech Fairness Act does not open the floodgates for political spending because it does not allow for political contributions or expenditures—except for those de minimis incremental expenses associated with speech in the ordinary course of business.  The Johnson Amendment still would prohibit any political contributions or expenditures beyond the small amount allowed by the Free Speech Fairness Act.

The Free Speech Fairness Act creates a much brighter line than currently exists under the Johnson Amendment.  All the IRS would be required to do is to look at whether the communication occurred in the ordinary course of an exempt organization’s business, and whether there was more than a de minimis incremental expenditure associated with the speech.  This removes the IRS from the “speech police” business and allows exempt organizations to speak freely.    Click here to close[/expand]

Tim Delaney
The Lankford/Scalise/Hice bill is no compromise, and indeed, ironically, it would magnify many of the problems it claims to attack by using blurry lines instead of clear lines and by inviting the IRS to come in and regulate houses of worship under the Johnson Amendment in ways it can’t today.    [expand title=”Read More” id=”TDQ3″]

The pending legislation to politicize the nonprofit and foundation communities suffers many flaws, beginning with the rationale behind it. For instance, a congressional hearing in early May to make the case in support of the Lankford/Scalise/Hice legislation actually did the opposite by proving that the Johnson Amendment is working and allegations of abuse by the IRS are unfounded. Three witnesses called to support the legislation presented the following evidence: two cases brought by the IRS against nonprofits that the nonprofits won, letters sent to preachers by outside groups (not the IRS) without any legal authority to enforce the law asserting that endorsing candidates from the pulpit is a violation of federal tax law, and the demand from the Mayor of Houston (not the IRS), who also had no enforcement authority, calling for transcripts of a preacher’s sermons. Thus, proponents calling for a change in the law failed to demonstrate their own allegations that the text of the 63-year-old statute and the IRS are the problem.

As for the text of the pending legislation, the bill would require the IRS to determine – first by defining and then applying – many new terms that will demand as much subjective interpretation as the IRS’s current and often reviled “facts and circumstances” test. For instance, what constitutes “statements” “made in the ordinary course” of an organization’s “regular and customary activities?” Do “statements” include “speech,” in a way that triggers case law that treats speech to include campaign finances – and thereby allowing 501(c)(3) organizations to spend their charitable and tax-deductible assets on partisan campaigns to support or oppose candidates for public office? How are “ordinary course” and “regular and customary activities” to be determined? Will baselines for them be set in time – such as when the law goes into effect, or when the organization was formed, or before it takes its first triggering act? Or will they evolve over time, and if so what time frame – once a quarter, once a year, once a decade? That, in turn, introduces speculation as to what is “ordinary course” this time versus another time (e.g., ordinary to have one radio ad per quarter this year versus ten ads per week around elections)? Does one apply to the IRS for determination of the baseline, or is it determined on a case-by-case basis? Does “regular” mean weekly, monthly, or just what an organization may do once or twice every year or two? Are the two terms in “regular and customary” meant to be read together or separately: it’s “customary” to endorse a candidate when asked, but it’s done only once every two or four years so it’s not “regular?”  These new terms would complicate rather than simplify any legal analysis in the field, putting far more groups at risk than the existing straightforward language.

Next, the “de minimis” test offered in the legislation has no meaning in current law, and would lead to much speculation, probable regulations, and certain litigation. For example, the law on 501(c)(4) organizations mandates that funds be “devoted exclusively to charitable, educational, or recreational purposes,” yet the IRS has interpreted “exclusively” to mean no more than 50 percent, making nearly half of a social welfare organization’s assets available for the types of partisan, election-related activities that proponents of the legislation are seeking. Further, including a “de minimis” test in the law would invite greater scrutiny by the IRS and others into the financial affairs of churches than current law. That is because most religious institutions are exempted from filing the IRS Form 990, which requires all other 501(c)(3) organizations to disclose how much they receive and how they spend those dollars.

Finally, the combination of “de minimis” and “incremental” is an oxymoron. What does “de minimis-plus” look like? How is it measured? Against an objective standard of zero, or de minimis as determined for each organization? Given that de minimis for the Ford Foundation compared to a local food bank will vary widely, as will the amounts by a mega-church with its televised messages versus those of that same local food bank, does the legislation unfairly award a greater partisan voice to larger and richer entities?

“Incremental” suggests that the amount of expenses could increase over time. But where is the tipping point from de minimis to real? And again, measured across what time frame? The bill fails to provide any guidance, leaving it up to the IRS agent using, perhaps, an uncertain “facts and circumstances” test.

Will the Lankford/Scalise/Hice bill open the floodgates for political spending by 501(c)(3) entities? Presumably all reading this article and all engaging in honest debate on the issue believe it would be a bad result if the floodgates were opened to using charities, churches, and foundations as shell organizations for laundering undisclosed and unregulated dark money into partisan election campaigns. (Considering the IRS’ use of the Form 1023-EZ and its proven inability to properly screen out applicants that fail to meet the legal test for 501(c)(3) status, I’d say that the floodgates have already been breached, and actors are now waiting for a formal invitation – in the form of legislation to repeal or weaken the Johnson Amendment – to violate the principles and integrity of the501(c)(3) community.)

The Philanthropy Roundtable readers can decide for yourselves whether the legislation would permit untoward and unsavory behavior or disrupt how you do your work, as you are hounded by countless politicians and their political operatives demanding that you endorse them, seeking your charitable assets, and more.

  • Today, 501(c)(3) organizations can say “no” to demands for political endorsements and campaign contributions because the requests by politicians and their operatives for endorsements and contributions amount to asking the charities, houses of worship, and foundations to break the law. Today, “no” means no. But were Congress to weaken the Johnson Amendment, charitable organizations and religious institutions would have to stand firm in the face of financial inducements or threats by politicians, operatives, board members, and donors who demand political endorsements.
  • Churches today do not disclose their finances on the Form 990 and, thanks to Section 7611 of the Internal Revenue Code, IRS agents must jump through very high hoops to examine the books of houses of worship. Can anyone honestly argue that faith-based institutions will be able to withstand the same forces that have diluted and polluted social welfare 501(c)(4) organizations in the aftermath of the Citizens United decision?
  • What will it do to the dynamics in your boardroom when one board member says, “We should endorse Sally because she’s a good friend from college,” and the board chair declares, “No, we should endorse John because he’s a business partner of mine.” What happens to the human service provider told it will be awarded the government contract – if it endorses the incumbent? Or the foundation told that candidates running for local office might want to tax certain foundation assets unless endorsements are made? Or the university president told by candidates for Governor, Congress, and/or the Presidency that the stadium needs to be provided free of charge for a candidate rally – meaning that private philanthropy will be forced to underwrite security, planning, clean-up, and more?
  • It is no stretch to anticipate that candidates, their operatives, and their donors to exert immense pressure (whether lawful and moral, or not) on college presidents, hospital executives, and preachers to send out emails endorsing political candidates to alumni, former patients, or parishioners, thereby distributing a no-cost message (presumably satisfying the de minimis language in the legislation) but alienating many recipients who had depended on those charitable, philanthropic, and religious organizations to be nonpartisan.
  • Those pushing the legislation offer the weak excuse, “well, you don’t have to endorse or participate if you don’t want to.” Yet anyone even remotely familiar with either the power-dynamics exerted on charitable and religious groups, or the raw drive to win at all costs in the political world, know that the side-stepping excuse is farcical. Again, today, “no” means no. Let’s keep it that way.    Click here to close[/expand]

David Keating
Passing the bill would be better than nothing, but as the question indicates there are unanswered questions about its meaning.  We don’t know how much cost would go over the “de minimis” line.  However, there are other areas of the tax law that use the term, and it does mean the expense must not be significant. Equally important is the bill’s requirement that the costs be “incremental,” which provides additional guidance and protection.    [expand title=”Read More” id=”DKQ3″]

There are other areas of the tax code where incremental costs are considered. For example, airlines may give employees free vacation travel if there are empty seats on a flight. Since the plane is going to make the scheduled flight, there is no extra cost to the airline to fill the empty seat (other than the de minimis cost of soft drinks, etc.) and thus no taxable income is created for the employee.

For example, if an organization regularly publishes a 24-page newsletter or magazine and then publishes a 28-page issue with election endorsements, the incremental cost might be small as most of the cost of publishing is postage and putting the issue on the press.  If the bill becomes law, the IRS may provide additional guidance whether such insignificant extra costs exceed a de minimis amount. My hope is that the agency would provide a safe harbor definition of a de minimis amount. For example, it might say that if total spending on campaign intervention is under 1 percent of the expenses that year, that would be considered de minimis.

If an organization published its regular 24-page newsletter, but it contained endorsements along with its customary articles, then the incremental cost would likely clearly be de minimis (assuming not much staff time was taken to decide the endorsements).

Likewise, in a house of worship, if the leader endorses a candidate as part of his regular services, there would be very little or no incremental costs.

Such a change won’t open up floodgates as only a trickle of information would flow, and only to regular consumers of the information.

A more fundamental problem is that the bill does not go far enough. In the past the IRS has launched investigations of charitable groups simply for criticizing government policies carried out by incumbents. This bill fails to address that problem.

It’s vitally important to clearly define election campaign intervention.  A clear definition would ban contributions to parties, candidates, and any political organization described in Section 527 of the Internal Revenue Code.  It would also clarify that banned communications must involve spending money, clearly identify a candidate, and contain express advocacy, a term that is well known in campaign finance law, urging the election or defeat of a candidate or candidates or candidates of a political party.    Click here to close[/expand]

4. Under the status quo, there is a complete legal prohibition on 501(c)(3) organizations supporting or opposing candidates for office but it is largely unenforced as it relates to houses of worship. Are you concerned that a law is unenforced, or enforced rarely but in an arbitrary manner, and how should this be corrected?

Michael Farris
The IRS’ track record of enforcement of the Johnson Amendment is abysmal.  Sometimes it enforces it vigorously through creation of special committees to give expedited review of alleged violations.  Sometimes it chooses not to enforce it at all.  It usually gives certain groups, like the African-American churches, a pass from enforcement.  And the IRS often does not have to enforce the law at all—as most organizations police themselves out of fear of drawing an IRS audit that could result in revocation of exempt status.  The status quo is untenable, though, regardless of the IRS’ enforcement posture.  The pervasive chill on speech created by the Johnson Amendment’s very existence is enough to mandate change.  And the constitutional rights of America’s churches (and other nonprofits) should not hinge on whether the IRS decides to vigorously enforce the law.

Tim Delaney
First, I challenge the misleading assertion that the law “is largely unenforced as it relates to houses of worship,” because it suggests other 501(c)(3) organizations are treated differently. The evidence does not support the proposition that churches are getting off scot free and therefore are somehow entitled to have the restriction removed as to them. The law is rarely enforced against other charitable nonprofits and foundations, but they are not clamoring for special treatment. In fact, nearly all organizations – charitable, philanthropic, AND religious – support retaining the protection in current law.    [expand title=”Read More” id=”TDQ4″]

Next, while there have been allegations of arbitrary enforcement, the record shows that the IRS has gone after organizations only after the groups have seriously and flagrantly violated the letter and spirit of the law. Pulpit Freedom Sunday, a gimmick devised to test the law, has not led to arbitrary, capricious, or even intentional enforcement by the IRS. One very good reason why little enforcement action is being taken is the uncertainty within the IRS as to who has the authority to sign off on church inquiries under Internal Revenue Code Section 7611.

Finally, the suggestion by some that because the law is unenforced or rarely enforced it should be removed from the books is absurd. Laws exist in large part to help guide behavior, not to play “gotcha.” Laws against treason, the Hatch Act (barring government employees from using government time or resources to engage in partisan politicking), judicial codes of conduct prohibiting judges from endorsing candidates for public office, and countless others are rarely enforced – but still retain value by providing useful guidance. Likewise, just because law enforcement is severely understaffed (whether a rural policy department or the IRS) and does not stop everyone who drives recklessly because they don’t see them is no reason to strip traffic laws off the books.    Click here to close[/expand]

David Keating
I’m more concerned that such a bad law exists in the first instance. It is impossible to strictly enforce unless we put tax agents at every religious service and charitable group meetings. Obviously, we don’t want to do that.    [expand title=”Read More” id=”DKQ4″]

Yet if we don’t do that, then how can we ever have assurance that the IRS would not enforce it against only unpopular religions or charities? The law is rarely enforced, as far as imposing penalties. However, even an investigation can impose substantial costs and reputational damage, and such investigations appear to be done in an arbitrary manner.

The only way to correct this problem is to fix the law.    Click here to close[/expand]

Amanda Tyler

The IRS’s lack of enforcement of the campaign intervention ban for the past several years is plain and, given the political fallout over its attempted enforcement of 501(c)(4) organizations, unlikely to change. The lack of enforcement also negates arguments made by some as to the law’s alleged “chilling” effect. If there are no consequences for organizations that boldly break the law to endorse and oppose candidates, then how can it plausibly be argued that organizations are deterred from engaging in permissible speech on political issues because of some specter of enforcement?    [expand title=”Read More” id=”ATQ4″]

The current law should be enforced. But a law’s lack of enforcement does not necessarily argue for its elimination or amendment, particularly when the proposed amendments make the law even more difficult to enforce. Voluntary tax compliance is critical to our tax system, particularly with the limited resources of the IRS. Churches and those advising them should be aiding in this compliance, helping educate about what the law requires, instead of sowing confusion which damages the integrity of religious institutions.    Click here to close[/expand]

5. Anything you would like to add?

Tim Delaney
For private and family foundations, repealing or weakening the Johnson Amendment is no mere intellectual exercise; it is a matter of “self-defense,” both figuratively and literally under the tax code. One longtime leader of a major foundation said that repealing this law would “end private philanthropy as we know it.” That’s not hyperbole, considering the demands that politicians and their operatives are likely to make on foundations to endorse their candidacies or channel funding toward their campaign coffers or to groups that agree to help the candidate get elected. The charitable nonprofits that you support – your partners in advancing your mission – would likely be torn asunder or rendered ineffective based on how elections turn out.    [expand title=”Read More” id=”TDQ5″]

A letter of candidate endorsement from Bill or Melinda Gates on their foundation’s letterhead to all grantees would get the attention of every charitable nonprofit that has or hopes to receive grants from the largest private funder in the world. Seem farfetched? Had the Johnson Amendment been repealed or weakened in time for the 2016 elections, what would or should have stopped the Trump Foundation or Clinton Foundation from exhorting the political virtues of their favored candidates using organizational resources that were to be dedicated to the public good?

Because challenges to the Johnson Amendment go to the core of what foundations do, taking a lobbying position against pending legislation is proper and legal under the Internal Revenue Code. See Council on Foundations legal analysis. I urge all private foundations, charitable nonprofits, houses of worship, and for-profit businesses committed to the advancement of our missions to sign onto the Community Letter in Support of Nonpartisanship and join us in making a strong statement in support of nonpartisanship. Thank you.

Go to for more information about the growing support for protecting nonprofit nonpartisanship, including research, editorials, op-eds, and other analyses.    Click here to close[/expand]

David Keating
Congress should also repeal Section 7409 of the Internal Revenue Code, which allows the IRS to go to court to get an injunction against a 501(c)(3) group from continuing to intervene in a political campaign. The IRS can revoke a group’s exemption, so it does not appear to need this power.    [expand title=”Read More” id=”DKQ5″]

For those who would like to learn more about this topic, I highly recommend reading the report of the Commission on Accountability and Policy for Religious Organizations titled “Government Regulation of Political Speech by Religious and Other 501 (c)(3) Organizations,” available online here.    Click here to close[/expand]

Amanda Tyler
Under current law, pastors have the free speech to preach on any partisan or political issue they want from their pulpit or other venue. They can endorse candidates in their personal capacities as much as they want. And, if their consciences tell them that they must tell their congregants how to vote, whether in sermons from the pulpit or, with other church resources funded by tax-deductible offerings, they can do that now – by being a “conscientious objector” and giving up their 501(c)(3) status. Tax exemption, after all, is a permissible legislative accommodation (Walz v. Tax Comm’n of the City of New York), but not an entitlement mandated by the Free Exercise Clause (Jimmy Swaggart Ministries v. Bd. of Equalization of California) or the Free Speech Clause (Heffron v. Int’l Society for Krishna Consciousness).

Michael Farris
In 2013, the Commission on Accountability and Policy for Religious Organizations released a report entitled “Government Regulation of Political Speech by Religious and Other 501(c)(3) Organizations: Why the Status Quo is Untenable and Proposed Solutions.” The Evangelical Council for Financial Accountability (ECFA) headed up the Commission which was composed of a broad array of religious non-profit leaders.  The Commission’s report gives the basis for why the status quo of the Johnson Amendment is untenable and proposes the solution that forms the basis for the Free Speech Fairness Act currently pending in Congress.  The report is notable because of the amount of non-profit leaders involved in creating it.  The Free Speech Fairness Act is not a solution in search of a problem but is a workable solution to a very real problem.