Churches are sometimes tempted to lend their support to political candidates with whom they share common values or interests. But U.S. tax law restricts the kinds of political speech churches and other nonprofits can engage in. To preserve their tax-exempt status churches need to think carefully about how the rules against political speech may affect them.
For federal income tax purposes most churches qualify for exemption from tax under Section 501(c)(3) of the Internal Revenue Code. Political speech by 501(c)(3) organizations can be divided into two categories:
Churches and other 501(c)(3) organizations have been prohibited from supporting specific political candidates since passage of the so-called Johnson Amendment in 1954. The Internal Revenue Code provides that, by definition, 501(c)(3) organizations 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.” In other words, taking an active role in a political campaign can negate a church’s tax-exempt status. If a church is determined to have violated this rule it may be required to pay income tax for every year it has failed to qualify for the exemption due to its political activities.
Activities that could risk violating the Johnson Amendment include most forms of material support for a specific political campaign. For example, a church should not organize volunteers to prepare a mailing for a candidate. Nor should a church solicit donations on behalf of a campaign. IRS guidelines indicate that a church can still engage in nonpartisan political activity without violating these rules. For example, a church can distribute nonpartisan voter information (such as a collection of statements by different candidates). A church can also host debates among candidates. A key focus in these examples will be whether a particular candidate is shown favor, or if the activity is truly neutral.
A “substantial part” of a 501(c)(3) organization’s activities may not be directed at influencing legislation (including regulatory rulemaking). A church is allowed to take positions on issues that are important to it and its congregation. Such “issue advocacy” can even touch on topics that are central to a political campaign without running afoul of the rules. But the line between issue advocacy and candidate endorsement is often blurry, and churches need to think carefully about how their specific context may affect the appropriateness of devoting significant resources or time to an issue that may be construed as partisan.
The IRS guidance we’ve linked to above gives a number of parameters that can factor into the partisan character of issue advocacy. The parameters include the proximity to an election, any specific mention of a candidate’s position on the issue, and whether the issue is a key topic of the campaign. Given the stakes involved and the complicated factual analysis required to reach a reliable decision, churches that want to express themselves about issues that are central to ongoing political campaigns should consult with an attorney.
The Church Law Center of California is here to help
The Church Law Center of California provides legal counsel to churches regarding all aspects of organizational governance and compliance. We can help your church craft strategies that will give room for expression of politically charged opinions without risking the church’s tax exemption. Call us today at (949) 892-1221 or through our contact page.