Don’t Let Congress Convert Charities (including Churches) into Dark Money Political Organizations

Would you like charities, including mosques, temples, synagogues, churches and other houses of worship, to be able to give your donations to politicians running for office?

Would you like mosques, temples, synagogues, churches and other houses of worship (that are automatically tax-exempt and not required to disclose their financials or their donors) to solicit and use funds to support politicians running for office?

President Trump and all those who support repeal of the Johnson Amendment want both of these things.

What is the Johnson Amendment?

The Johnson Amendment added to Section 501(c)(3) of the Internal Revenue Code the prohibition on political campaign intervention, requiring that organizations described by 501(c)(3) do 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.

Why do people want to repeal the Johnson Amendment?

Some say it’s to give back the freedom of speech to leaders of religious institutions so they are no longer inhibited from expressing their political views from the pulpit.

But it’s not surprising to find out, for politicians, it’s more about the money. Repeal of the Johnson Amendment would free up churches to give great amounts of money to influence elections. And the donors providing the funding and using the churches as conduits could remain anonymous because churches, unlike other charities, are not required to file annual information returns disclosing their donors to the IRS. It is widely believed that new funding of political campaigns from churches will disproportionately aid Republican and conservative candidates.

What are the problems that may arise from a repeal of the Johnson Amendment?

Dark money. This is money from wealthy political campaign supporters who want to remain anonymous. Presently, donations to tax-exempt 501(c)(4) social welfare organizations and 501(c)(6) business leagues (including trade associations, professional associations, and chambers of commerce) can be made without public disclosure of the donors’ identities. And such organizations may spend a substantial part of their monies on influencing public elections so long as that doesn’t represent their primary activity. Some believe this allows them to spend up to 49% of their expenditures on electioneering. According to Dark Money Watch, about $309 million dollar in dark money was spent on the 2012 elections. It is expected that the figure for the 2016 elections will be much, much higher.

If the Johnson Amendment is repealed, dark money will also flow through 501(c)(3) organizations, including, but not limited to churches. And unlike with donations to 501(c)(4) and 501(c)(6) organizations, donations to 501(c)(3) organizations provide donors with the opportunity to take a charitable tax deduction. This means the donor who takes itemized deductions will not be taxed on the income the donor uses to make the donation. Accordingly, there is a cost to the federal government for permitting such deduction. Policy experts may debate whether or not this means that the government is subsidizing the charitable contribution, but a repeal of the Johnson Amendment will mean that donors will be able to spend money on influencing elections and get a tax benefit (at cost to the federal government) by doing so.

It’s important to recognize that mosques, temples, synagogues, churches and other houses of worship may self-declare themselves to be tax-exempt under 501(c)(3) and to be able to receive deductible contributions. They never have to apply for recognition of federal tax-exemption. And they never have to file annual information returns. Moreover, their donors can remain anonymous not only to the public but also to the government, which is generally not the case with major donors to 501(c)(4) and 501(c)(6) organizations. And with repeal of the Johnson Amendment, these anonymous donors will be able to fund elections through self-declared tax-exempt churches and get a tax benefit to boot.

So, we’ve got the problem of a relatively small number of wealthy donors influencing elections, the politicians they help to elect, and the laws these politicians create. And it imposes a cost on the federal government because of the loss of tax revenues resulting from the deductions.

But we can’t forget how this will also adversely impact (1) public trust of the charitable sector, (2) charities manipulated by wealthy donors to influence elections, (3) charitable operations receiving less focus due to the diversion of charitable resources towards electioneering, and, most importantly, (4) beneficiaries of such charities. Repeal of the Johnson Amendment will create more inequities, a weaker civil society, and a poorer country.

This is one bill everyone should oppose. Don’t convert charities (including churches) into dark money political organizations.

UPDATE: Your organization can sign on to the Community Letter in Support of Nonpartisanship here. Join NEO Law Group and hundreds of nonprofits including Independent Sector, the National Council of Nonprofits, the Council on Foundations, BoardSource, the American Red Cross, Habitat, Volunteers of America in supporting nonpartisanship. The deadline to sign the letter is Friday, March 31. Please act now!