Back in February, we blogged about the President’s vow to destroy the Johnson Amendment—which makes it illegal for tax-exempt organizations to engage in partisan political campaign activity—and the arguments both for and against the Amendment’s repeal. This month, with great fanfare, the President signed his executive order that was drafted to fulfill that promise. However, as recently reported in the Washington Post, the opinion of many experts is that the order falls decidedly short of the promised destruction.
As detailed in our previous post, there are many ways a 501(c)(3) organization can violate the prohibition on political campaign activity, but the clearest way is to contribute financially to a political campaign. This includes not only direct monetary contributions to a campaign, but also less direct contributions, such as allowing a candidate to use facilities or resources of the organization. It also prohibits organizations from making communications in support of, or in opposition to, candidates for office. This is what the Johnson Amendment is best known for—ostensibly limiting religious leaders from advocating from the pulpit for candidates for public office who share their values.
The relevant part of the Presidential Executive Order Promoting Free Speech and Religious Liberty signed on May 4, 2017, states that:
All executive departments and agencies (agencies) shall, to the greatest extent practicable and to the extent permitted by law, respect and protect the freedom of persons and organizations to engage in religious and political speech. In particular, the Secretary of the Treasury shall ensure, to the extent permitted by law, that the Department of the Treasury does not take 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. As used in this section, the term “adverse action” means the imposition of any tax or tax penalty; the delay or denial of tax-exempt status; the disallowance of tax deductions for contributions made to entities exempted from taxation under section 501(c)(3) of title 26, United States Code; or any other action that makes unavailable or denies any tax deduction, exemption, credit, or benefit.
Those familiar with the rules against tax-exempt organizations engaging in political activity have a hard time seeing how the President’s executive order has changed the status quo. Indeed, the text of the order, rather than making substantive changes, essentially restates the law as it currently exists. Specifically, the prohibition on advocating or campaigning for or against specific candidates or donating to candidates still stands, and organizations are protected only when discussing moral or political issues. Given that the Johnson Amendment was so rarely enforced anyway, it is difficult to argue that the executive order gives religious organizations any additional protection.
Liberal groups preparing to sue over the order decided that there was no need. Public Citizen said it was “a sham because what it actually does is instruct the IRS to enforce the law as written.” The American Civil Liberties Union called the order “an elaborate photo-op with no discernible policy outcome.” Disappointed advocates for repeal of the Johnson Amendment have described the executive order as a purely symbolic gesture as well, and not fulfilling Trump’s campaign promise.
All hope is not lost for Johnson Amendment repeal advocates, however, as the Free Speech Fairness Act is still ostensibly alive in the Ways and Means Committee. As discussed in our previous post, The Free Speech Fairness Act would allow for political campaign activity, such as candidate advocacy speech, that is made “in the ordinary course of the organization’s regular and customary activities,” so long as the organization does not incur “more than de minimis incremental expenses” for the speech. This means that speech about candidates and elections can be added to whatever a tax-exempt organization is currently proselytizing about as long as the organization does not incur more than an insignificant additional cost.
Schauble Law Group will continue to monitor developments as the Free Speech Fairness Act makes its way through the Ways and Means Committee.
