Do Religious Non-Profit Organizations Have the “Right” to Political Speech Under Federal Tax Laws?

August 26, 2013 - 4 minute read

The question of whether religious non-profit organizations that receive 501(c)(3) tax exemptions should be able to communicate about politics is a long-standing and controversial one. In January of 2011, Iowa Republican Senator Charles Grassley requested that The Evangelical Council for Financial Accountability (“ECFA”) coordinate a national effort to provide input on this question, along with other questions on accountability, tax policy and political expression of nonprofits in general and religious organizations in particular.  The ECFA created the Commission on Accountability and Policy for Religious Organizations to respond to Senator Grassley’s inquiries.  The Commission released its first report, entitled Enhanced Accountability for the Religious and Broader Nonprofit Sector, in December 2012.

The Commission recently published its second report entitled Government Regulation of Political Speech by Religious and Other 501(c)(3) Organizations.  As the law is currently applied, in order to receive Section 501(c)(3) tax exemption, non-profit organizations are prohibited from communications that involve support of or opposition to candidates for political office.  Michael Batts, Commission Chairman, explains that Section 501(c)(3) “is the only law of its type on the books . . . the only law that allows the Internal Revenue Service to evaluate the content of a sermon delivered by a member of the clergy . . . the only law that could cause a church to lose its federal tax exemption based on the words spoken by its leaders in a worship service.”  The Commission report concludes that the status quo application of Section 501(c)(3) is untenable.  Because religious and nonprofit leaders are not provided clarity on where the lines of demarcation lie, they simply avoid political communications altogether – effectively chilling free speech.  As we all know, the IRS has also faced recent scrutiny due to allegations of selective and inconsistent enforcement of other sections of the Internal Revenue Code.

One major recommendation that the Commission proposes is that a clergy member “should be permitted to say whatever he or she believes is appropriate in the context of a religious worship service without fear of government reprisal, even when such communications include content related to political candidates.”  The Commission proposes that other nonprofits should be afforded similar latitude in their communications.

Independent Sector (“IS”), a nonpartisan network of approximately 600 nonprofits, foundations and corporate giving programs, issued a statement in response to the Commission’s recommendations.  IS urges public officials to reject the Commission’s recommendations, writing, “Allowing the endorsement of political candidates, as this report calls for, is tantamount to allowing political agents to the use the public’s goodwill towards the charitable sector as a vehicle to advance, through financial contributions, their own partisan political will.  Such action would drag the charitable sector into the morass of political activity, driving a nail into the coffin of its integrity and credibility.”  IS concluded that, “501(c)(3) organizations, as the public trust demands, should remain above the political fray, advocating and informing leaders, but never engaging in political activity.”

Commission Chairman Michael Batts offered the following words, “Opinions will vary significantly from one organization to another as to whether it is appropriate to engage in certain political communications. . . Having the freedom to do something does not, of course, create an obligation to do it.”

Rodney and Etter, LLC has provided legal services to the non-profit legal community for years. We have represented some of the largest churches in Louisiana and Texas. Roy J. Rodney, Jr. is a member of the American Bar Association’s Business Section Committee on Non-profits. He was recently appointed national chair of the ad hoc Committee on Non-profits by Pat Rosier, President of the National Bar Association.

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