Fixing the 501(c)(3) Political Campaign Prohibition Mess
Freedom of speech and religion are central to the American experience. Yet, the federal government regulates the speech of religious organizations and other organizations dedicated to improving the lives of people. As Americans, we know instinctively that this is a problem.
Since 1954, federal tax law has included a provision that, as currently interpreted and applied, bans communications that involve support of or opposition to candidates for political office by religious and other 501(c)(3) organizations. It is the only law of its type on the books – 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. Federal officials know this law is problematic so it is largely unenforced in some respects and inconsistently enforced in others.
For the past year, the Commission on Accountability and Policy for Religious Organizations (Commission) has been studying this issue at the request of Sen. Charles Grassley (R-Iowa), as the chorus of those calling for a repeal of the 1954 law has been growing. The Commission, made up of 14 members and 66 panel members, including leaders from nearly every major faith group in America and other prominent nonprofit groups, does not recommend repeal in its 60-page report to Sen. Grassley. Instead, it offers new ideas for fixing the current mess.
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Current federal guidelines are fraught with problems, not the least of which is the vagueness that makes uniform enforcement virtually impossible. Leaders can never be sure where the line of demarcation is for permissible speech. They have good reason to be afraid of that line, since crossing it can carry the penalty of revocation of their organization's tax-exempt status. Ultimately, the vagueness effectively chills permissible speech and makes the law difficult for the IRS to administer-a fact that IRS officials have openly admitted.
Some churches deliberately engage in activities that violate the prohibition, but rarely face consequences. Since 2008, pastors across the United States (approximately 1,600 last year) have participated annually in "Pulpit Freedom Sunday," an initiative orchestrated by Alliance Defending Freedom in which pastors deliver sermons evaluating candidates for public office in light of Scripture. Some support or oppose candidates by name and send transcripts of their sermons to the IRS with a request to be audited. They hope to spark litigation on the constitutionality of the law, but the IRS has not taken up the challenge.
There are also cultural challenges. Engagement in political communication is inextricably steeped in the history of some faith communities. There are understandable, historic reasons for political engagement by African-American congregations (e.g., the Civil Rights Movement) so it is not surprising that a Pew Research Center study in late 2012 found that black Protestant churchgoers are eight times as likely to hear about political candidates at church as their white mainline counterparts, and that 45 percent of black churchgoers indicated hearing messages favoring a particular presidential candidate. The IRS has never shown an interest in wholesale enforcement of the law in the African-American church community – for good reason. The IRS should not be monitoring the content of worship services in African-American churches or any other churches.
Despite the fact that the IRS has not reacted to many well-documented and high-profile violations of the political campaign prohibition, it has, on other occasions, initiated enforcement actions, fueling popular perceptions of selective enforcement. For example, in 1995, the IRS revoked the tax-exempt status of Branch Ministries (a church) over its placement of newspaper ads identifying then-candidate Bill Clinton's positions on certain moral issues.
In 2004, the IRS pursued public charity Catholic Answers over the online posting of two letters questioning whether presidential candidate John Kerry should present himself for Holy Communion. The IRS later dropped its examination without penalty. Similarly, the IRS investigated the NAACP in connection with negative remarks made by its leaders about then-President George W. Bush at its convention before the 2004 election, and later dropped the issue. Cases like these create a serious credibility gap and raise real concerns about free speech implications.
Despite the diverse group gathered during the Commission's deliberations there was agreement with one principle –members of the clergy should be able to say whatever they believe is appropriate in the context of their religious services or activities without fear of reprisal from the IRS-even when such communication includes content related to political candidates. Secular tax-exempt organizations should have comparable latitude when engaging in their regular activities and communications. At the same time, we recognize that contributions to churches and other nonprofits are tax-deductible, and there are valid policy reasons for prohibiting disbursement of such funds for campaign purposes. We recommend Congress clarify that churches and other nonprofits may engage in "no-cost political communications" in a manner that does not result in the disbursement of tax-deductible contributions for political campaign purposes. We believe this new approach strikes an appropriate balance that will solve most of the current problems with the law.
Opinions regarding the appropriateness of engaging in political communications will vary significantly from one organization to another. Such determinations should be made by each organization, taking into consideration the unique factors that apply to the organization and its constituencies. The freedom to do something does not, of course, create an obligation to do it.
The IRS has enough challenges associated with administering the law for tax-exempt organizations without monitoring the content of religious worship services or other regular communications by 501(c)(3) organizations.
