CalNonprofits Articles

What does the latest Executive Order by President Trump mean for California nonprofits? For several months CalNonprofits has been closely watching an emerging issue that has the potential to destabilize nonprofits — including churches and religious institutions — by removing important federal tax laws that protect both nonprofits and the public, known as the Johnson Amendment. (See our letter of opposition and detailed background below.) President Trump has vowed to “destroy” the Johnson Amendment, which draws a clear line between nonprofits and electioneering. Yesterday, May 4th, he took the first step in that direction by issuing this executive order. But the clearest thing about yesterday's action is its lack of clarity: the executive order does not repeal the Johnson Amendment, and the legal ramifications for charities and churches is unclear with regard to other applicable legal requirements.

Our position remains the same: we nonprofits are trusted in part because we are resolutely nonpartisan. Those who support our work rely on us to use their donations to help our communities, not engage in electioneering. These proposals would benefit politicians and paid political operatives, not the people and communities we exist as nonprofits to serve.

We will continue to monitor this issue and will join other nonprofit organizations across the country to encourage Congress to maintain these important distinctions between partisanship and faith and charitable organizations.

NOTE: On March 30, 2017, a joint letter from CalNonprofits and the California Council of Churches IMPACT was being sent to members of Congress representing Californians, voicing strong opposition to proposals that would politicize the charitable nonprofit and philanthropic community by repealing or weakening current federal tax law protections that draw clear lines between nonprofits and electioneering, sometimes called the Johnson Amendment. Read our letter here.

National Coalition of Nonprofits Launches Campaign to Oppose Repeal of Johnson Amendment - By Ruth McCambridge

Yesterday, the National Council of Nonprofits launched a campaign to get nonprofits to sign a Community Letter in Support of Nonpartisanship to be sent to senators and Congressional representatives. 

The statement from NCN statement reads, “Charitable nonprofits, private foundations, religious groups, and their vast numbers of supporters can send a clear signal to Congress and the Administration that partisan politics has no place in the 501(c)(3) community. […] Join others from across the country to show that we intend to resist any and all efforts to weaken or repeal this longstanding protection in federal tax law that keeps 501(c)(3) organizations awayfrom endorsing, opposing, or contributing to political candidates.”

As readers will recall, NPQ took an editorial position against the repeal on February 6th. That article can be read in full here. What follows is an excerpt from NCN’s appeal for your signature. 

Why Nonpartisanship Matters

Nonpartisanship is a cornerstone principle that has strengthened the public’s trust of the charitable community. In exchange for enjoying tax-exempt status and the ability to receive tax-deductible contributions, 501(c)(3) organizations—charitable nonprofits, including religious congregations, and foundations—agree to not engage in “any political campaign on behalf of (or in opposition to) any candidate for public office.” The quoted and highlighted text is often referred to as the “Johnson Amendment” because it was proposed by then-Senate Minority Leader Johnson to legislation signed by President Eisenhower in 1954.

That provision of law protects the integrity and independence of charitable nonprofits and foundations. It shields the entire 501(c)(3) community against the rancor of partisan politics so the charitable community can be a safe haven where individuals of all beliefs come together to solve community problems free from partisan divisions. It screens out doubts and suspicions regarding ulterior partisan motives of charitable organizations, as undoubtedly would occur if even just a few charitable organizations engaged in partisan politics. Nonpartisan credibility is critical to the ability of 501(c)(3) organizations to work with elected officials of all parties at the local, state, and federal levels to address community needs.

Weakening the law by allowing leaders of individual 501(c)(3) entities to endorse candidates for public office and engage in limited partisan electioneering activities would damage the integrity and effectiveness of all charitable organizations and spawn litigation as innovative partisans seek to expand gray areas in the proposed legislation. Repealing the Johnson Amendment would damage the federal Treasury as people take tax deductions for political contributions they could then funnel through charitable nonprofits, undercut fair elections by providing a loophole to avoid campaign contribution disclosure laws, and empower politicians to exert pressure for access to foundation assets and charitable funds for their own partisan campaigns rather than for the public good.

The Issue: Whether the Johnson Amendment Needs Fixing

In recent weeks, the President vowed to “get rid of and totally destroy the Johnson Amendment,” the Chairman of the House Ways & Means Committee said he intends to repeal the law as part of comprehensive tax reform, and the House Majority Whip became a lead sponsor of one of the bills to weaken the protection. That legislation (H.R.781; S.264) would blur the current clear language (quoted above) that conditions tax-exempt status and the ability to receive tax-deductible contributions in part on not engaging in partisan, election-related activities for or against candidates for public office.

Proponents of the legislation, primarily a subsection of the broad religious community, generally focus on perceived restrictions on preachers who say they want to speak out about issues of the day, plus endorse candidates from the pulpit. Most commentators, however, emphasize the legal reality that charitable nonprofits, including religious congregations, already are free to speak on important matters of the day and advocate on public policy issues and legislation. Private foundations, while barred from most lobbying activities, are free to engage in public debates, promote public education efforts, and fund a wide range of issue-focused activities. Section 501(c)(3) of the federal tax code merely prohibits campaign intervention, defined to include endorsing or opposing candidates for public office, publishing or distributing statements for or against candidates, or using tax-deductible and other resources to support partisan campaign activities.

Is it Legal for My Organization to Sign Onto the Community Letter in Support of Nonpartisanship?

As noted above, charitable nonprofits have the right to lobby on many legislative issues. Signing the Community Letter in Support of Nonpartisanship is consistent with that legal right. The lobbying rules for private foundations are more restrictive, but in this case organizations, such as the Council on Foundations, have determined that signing onto the letter is legal. The Council on Foundations published a statement clarifying that foundation lobbying on this issue is legal under the “self-defense” exception.

What Good Will It Do to Sign the Community Letter in Support of Nonpartisanship?

Nonprofit and foundation voices matter. A small minority of individuals in the religious community have made the case to some political leaders that allowing churches and charities to endorse political candidates would be good for those preachers and politicians. The truth is that the vast majority of nonprofit and foundation leaders not only oppose changing the law, but see repeal or revision of the Johnson Amendment as being very harmful to the identity, independence, and integrity of our community. As with many issues, numbers matter. The more charitable nonprofits, foundations, religious congregations, and their many supporters—accounting firms, law firms, corporations that care—that stand up for the community and their missions by supporting nonpartisanship, the stronger is the message that changing the Johnson Amendment is unpopular and viewed as destructive by real people back home. Your voice matters!

Ruth is Editor in Chief of the Nonprofit Quarterly. Her background includes forty-five years of experience in nonprofits, primarily in organizations that mix grassroots community work with policy change. Beginning in the mid-1980s, Ruth spent a decade at the Boston Foundation, developing and implementing capacity building programs and advocating for grantmaking attention to constituent involvement.

PHOTO: “The intersection of Church and State” by Chris Phan, reprinted from The Nonprofit Quarterly

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