A CALL TO ACTION in Support of Nonprofit Nonpartisanship

Keeping Politics at Bay for

Charitable Nonprofits and Foundations

Oppose Efforts to Repeal or Weaken
the “Johnson Amendment”

Is it too much to ask that the charitable nonprofit and foundation community be respected and protected as the safe space from the damaging effects of partisan politics? The immediate answer from scores of 501(c)(3) leaders so far – and potentially tens of thousands of organizations – is – No, it is not too much to ask that nonpartisanship remains a cornerstone principle of what it means to be a charity or a foundation. By signing onto the Community Letter in Support of Nonpartisanship, 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 away from endorsing, opposing, or contributing to political candidates.

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. See the recent Chronicle of Philanthropyarticle for a more detailed description of the arguments.

Who’s on the Side of Nonpartisanship?

(and opposes changes to the Johnson Amendment)

Charitable nonprofits and foundations from across the country are beginning to express strong opposition to any efforts to politicize our community by altering the tax-law ban on partisan, election-related activities. The National Council of Nonprofits has taken a strong stance in support of nonprofit nonpartisanship as have several other mainstream nonprofits and associations, including Association of Fundraising Professionals, BoardSource, Independent Sector, and (so far) 23 state associations of nonprofits. Although the issue is frequently couched as a concern to some preachers, numerous faith-based organizations, such as the Baptist Joint Committee for Religious Liberty, Faith Voices Arkansas,Interfaith Alliance, and North Carolina Council of Churches, have expressed strong opposition to changes in the law. Likewise, the Council on Foundations issued a strong statement in support of maintaining nonpartisanship as the hallmark of philanthropy.

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!

This newsletter on public policy issues affecting nonprofits is provided as a benefit of membership in the New York Council of Nonprofits, part of the state association network of theNational Council of Nonprofits.

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Protecting Nonprofit Nonpartisanship, National Council of Nonprofits web resources

Infographic, “Protecting Nonprofit Nonpartisanship,” National Council of Nonprofits

Worth Quoting“

“With this editorial, NPQ now adds its voice to those who resist any repeal of the Johnson Amendment, and we urge others to do the same. The nonprofit sector should assertively protect itself and the public from this baldly partisan effort.”

-- “Losing the Johnson Amendment Would Destroy the Unique Political Role of Nonprofits,” editorial, Nonprofit Quarterly, February 6, 2017, and quoting, among others, Robert P. Jones, CEO of the Public Religion Research Institute: “Church members could give tax-deductible donations to a church, which would then be used by the church to campaign for a specific candidate. It could effectively turn churches into campaign offices and pastors into party operatives.”

"Politicizing churches is not a solution to a problem – it is a problem in search of a problem.”  - “Politicize our charities and churches? No, thanks,” Amanda Tyler, Executive Director of the Baptist Joint Committee for Religious Liberty, Religion News Service, February 9, 2017.

“[W]ith the Johnson Amendment, preachers are totally free to attack greed, support health care, wrestle with war, decry injustice and anything else at the intersection of biblical faith and public policy. We are free to preach on these critical matters which are, first of all, issues of faith planted firmly in the Bible. Preachers can go at the issues full-on – and then let the people decide who gets their vote.”

- “On religious liberty and the Johnson Amendment,” Rev. Jean Larson, ret., Missoulian (MT), February 18, 2017. The Johnson Amendment, she continues, “supports the integrity of churches. It keeps churches from being pawns of big money and restrains the partisan hijacking of our pulpits.”

“The Johnson Amendment has been the target of politicians and preachers who want to politicize pulpits. They may not own up to that fact, but the truth is they want to leverage the voting mass of congregations to turn elections in their favor. They lust for … the ability of the clergy to direct the political clout of the faithful by telling them how to vote.” “Johnson Amendment repeal would ‘destroy’ church unity,” Marv Knox, editor, The Baptist Standard (Feb. 8, 2017).

“The Johnson Amendment, thankfully … keeps the political parties out of our churches. Can you imagine if churches could become a political organ of the Republican or Democratic Parties? Can you anticipate the money and muscle that would be spent to convince church leaders to advocate for one side or the other?”

- “Why we need the Johnson Amendment,” Mathew Whoolery, instructor at Brigham Young University–Idaho, Idaho Standard Journal, February 13, 2017. Whoolery added, “I realized that my time in church, worshipping, is one of the only safe places left in my life where politics doesn’t intrude.”

Worth Reading

Association of Fundraising Professionals Position on Repeal of the Johnson Amendment, February 22, 2017

Baptist Joint Committee for Religious Liberty News Release, February 2, 2017

Council on Foundations Letter to Congress, February 9, 2017

Independent Sector Statement on the Johnson Amendment, February 2, 2017

Interfaith Alliance News Release, February 2, 2017

National Council of Nonprofits Opposes Latest Efforts to Politicize Charitable Nonprofits and Foundations, February 2, 2017

Government Resources

IRS Publication 1828: 501(c)(3) Tax Guide for Churches & Religious Organizations (Rev. 8-2015)

IRS website: “Restriction of Political Campaign Intervention by Section 501(c)(3) Tax-Exempt Organizations”

Copyright 2017 National Council of Nonprofits. All rights reserved.

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www.councilofnonprofits.org

Special Edition   This Special Edition presents breaking news from late last week:   Congress Passes Bipartisan Spending, Tax Legislation; Charitable Giving Incentives Made Permanent Late last Friday, President Obama signed into law bipartisan legislation that funds the government through the current fiscal year (until September 30, 2016) and changes a significant number of tax provisions. The massive bill addresses numerous policy issues of interest to charitable nonprofits, ranging from funding for mission-related programs to restoring and making permanent three expired incentives for charitable giving. Two bills passed the House as separate measures that were subsequently merged and approved by the Senate as the Consolidated Appropriations Act, 2016. See summaries ofspending provisions and of the tax provisions for full details.   Three charitable giving incentives are restored and made permanent in the tax portion of the law, originally titled theProtecting Americans from Tax Hikes Act of 2015 (PATH Act): The food donation tax deduction provision raises the cap on giving and allows small businesses donating wholesome excess food to a qualified nonprofit to take the same enhanced tax deduction that C corporations have been permitted to take since 1976. The provision also raises the ceiling for business donations from 10 percent to 15 percent of adjusted gross income and helps farmers and ranchers through a new special rule for valuing food inventory. (Sec. 113) The enhanced tax deduction for conservation easement donations has helped America’s land trusts work with farmers, ranchers, and other modest-income landowners to increase voluntary land conservation by a third, to over a million acres a year when the tax incentive is in effect. (Sec. 111) The IRA charitable rollover option, which allows individual taxpayers aged 70½ and older to donate up to $100,000 from their individual retirement accounts (IRAs) directly to charitable nonprofits, has provided needed support for the work of social service programs, religious organizations, arts and cultural institutions, schools, healthcare providers, and other charitable organizations — all of which benefit Americans across the country. (Sec. 112) The package does not include the streamlined foundation excise tax provision from the America Gives More Act nor a revision sought by community foundations to expand the IRA rollover. Nonprofits and foundations active on those issues are vowing to continue the advocacy efforts in the New Year.   The bill contains many other provisions important to nonprofits, including those serving low-income families. For instance, it makes permanent three key enhanced tax credits that were scheduled to expire at the end of 2017: the child tax credit (Sec. 101), the American Opportunity tax credit (Sec. 102), and the earned income tax credit (Sec. 103). A dozen “integrity” provisions were included to reduce concerns over perceived fraud and abuse in those programs (Secs. 201-212).   The Consolidated Appropriations Act, 2016, includes a provision that temporarily stalls further action by the Internal Revenue Service on proposed revisions to regulations governing partisan political activities of 501(c)(4) social welfare organizations (Sec. 127). The law also freezes funding for the IRS at 2015 levels, except for added resources to support taxpayer services, fraud detection, and cybersecurity.     IRS Proposed Gift Substantiation Regulation More than 37,000 concerned individuals and organizations submitted comments on the proposed gift substantiation regulation, and virtually all that are viewable expressed a common theme: it is a very bad idea for nonprofits to be asking for donors’ Social Security numbers, maintaining that personal information in their files, and submitting it to the IRS. In the view of many, “never is the better answer” when the question is whether individuals should give their Social Security numbers to people claiming to be soliciting on behalf of a charity.   The question arose in September when the Treasury Department and Internal Revenue Service published proposed regulations to permit, but not require, charitable nonprofits to file a new, separate information return with the IRS (in addition to the Form 990) by February 28 every year to substantiate contributions of more than $250 in value. The new informational tax return (“Donee Report”) would require the nonprofit using it to collect the donor’s name, address, and Social Security number (SSNs) or other taxpayer identification number. Nonprofits taking this option would also be required by that date to provide a copy to each donor listed (but only the portion that contains “information related to that donor”).    Opposition to the proposed rules was broad-based and consistent. A set of joint comments submitted by the 215 nonprofits expressed concern that the collection of SSNs would “expose the public to increased risk from identity theft, impose significant costs and burdens on nonprofit organizations, and create public confusion and disincentives for donors to support the work of nonprofits.” See also the joint news release from Independent Sector and the National Council of Nonprofits. In separate detailed comments, the National Council of Nonprofits challenged the procedural irregularities in the rulemaking process and demonstrated that the proposal to collect SSNs runs counter to IRS’ own advice, the policies of law enforcement agencies across the country, and clear directives from the federal government and Congress.   The National Association of State Charity Officials (NASCO) expressed similar concerns about the likelihood of identity theft, stating that “based upon our experience in regulating charities and charitable fundraising, many donors, particularly elderly, will fall for this scheme and could wind up victims of both fraudulent charitable fundraising and identity theft.” The charity regulators went farther, warning nonprofits that voluntarily adopt the proposed voluntary reporting regime: “Nonprofits that collect social security numbers and fail to protect or improperly protect that data could be subjecting themselves and their boards to regulatory and legal action for a breach of their fiduciary duties.”   The proposed regulation also drew negative responses from Capitol Hill. On December 17, Representatives Keith Rothfus (R-PA-12) and Brian Higgins (D-NY-26) introduced theCharitable Giving Privacy Protection Act (H.R. 4281), a bipartisan bill designed to prevent the IRS from requiring or accepting donor Social Security numbers as part of the gift substantiation process. This narrowly crafted bill would fix the primary problem raised by the nonprofit community concerning the need for protecting donors, nonprofits, and the public from identity theft. See the news release on the bill. Another bill introduced by Senator Pat Roberts (R-KS) seeks to block the rulemaking.     2016 Public Policy Agenda The board of directors of the National Council of Nonprofits approved the 2016 Public Policy Agenda  that will guide the advocacy priorities of the nation’s largest network of nonprofits. The agenda sets priorities in six focus areas: tax policy, budget and spending, employment, public-private partnerships and government contracting, nonprofit advocacy rights, and public trust and nonprofit independence. Among other changes and updates, the revised public policy agenda more overtly expresses opposition to so-called “taxpayer bill of rights” (TABOR) and other budget gimmicks that limit the options for policymakers to address critical and immediate needs in their communities.   The 2016 agenda also recognizes the growing attention at the state and local levels to various proposed employment policies, such as hiking the minimum wage and requiring paid leave. The policy agenda makes clear that “federal, state, and local government changes to employment laws and rules … affect the work of and people served by charitable nonprofits differently depending on each organization’s mission and focus area.” As the Council of Nonprofits stressed when nonprofits were submitting comments on the proposed changes to federal overtime policy, the agenda encourages frontline nonprofits to conduct mission-based analyses to determine how proposed employment policy proposals will affect the people they serve and the ability of the organization to meet those needs. The policy agenda goes on to make clear that “fundamental fairness dictates that any changes in governmental employment policies should incorporate revisions to existing and future contracts and grants through which charitable nonprofits perform services in communities on behalf of governments.”  Spending/Tax Legislation Proposed Gift Substantiation Rules 2016 Public Policy Agenda ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦    Worth Quoting “Charities can confidently plan and expand the good work they do.” - Senator Ron Wyden (D-OR), ranking member of the Senate Finance Committee, quoted in ajoint news release with the chairmen of the Senate Finance and House Ways and Means Committees, December 15, 2015, singling out the permanent extension of the charitable giving incentives for special note as a key achievement in the PATH Act.   “Charitable nonprofits are an essential element of our society that positively affect the lives of millions of Americans. This commonsense bipartisan legislation will serve to better protect these valuable organizations and their supporters and ensure that they can continue to provide important services to communities across the country.”   - Representative Keith Rothfus (R-PA-12) announcing the introduction of the Charitable Giving Privacy Protection Act(H.R. 4281); see related article.     Worth Reading Charitable Community Applauds Congress’s Historic Deal on Tax Incentives for Charitable Giving, December 18, 2015, news Release of 16 nonprofit organizations celebrating the passage of the PATH Act (incorporated into the Consolidated Appropriation Act, 2016).   Legislation Introduced To Block IRS’s Donor SSN Rule, Andy Segedin, The NonProfit Times, December 18, 2015, reporting on legislation to prevent the IRS from requiring or accepting Social Security numbers as part of the gift substantiation process.   Bill Texts Worth Studying   Consolidated Appropriations Act, 2016, the bill passed by the Senate and signed by the President that contains both og the following tax and spending bills as passed by the House:   Protecting Americans from Tax Hikes Act of 2015 (PATH Act)   Omnibus Appropriations Act of 2015       Numbers in the News   318 to 109 PATH Act House Vote (Vote Count)   316 to 113 Omnibus House Vote (Vote Count)   65 to 33 Combined PATH/Omnibus Senate Vote (Vote Count)   More Numbers in the News 37,937 Number of comments submitted in response to the Treasury/IRS proposed Gift Substantiation Regulation. Those publicly viewable are almost universally negative.     Nonprofit Events January 9, Session Line Up, Minnesota Council of Nonprofits January 11, 2016 Legislative Preview, Maryland Nonprofits January 14, Nonprofit Day at the State House, Maine Association of Nonprofits  Publishing Note The next regularly scheduled edition of Nonprofit Advocacy Matters will be published on Monday, January 11, 2016. Watch for updates and breaking news on the Council of Nonprofits' Twitter pages (@NatlCouncilNPs and@buildnpcapacity) unless there is a need for another special edition.   Happy Holidays     Share this newsletter with your staff, board, and nonprofit colleagues         Did you receive this email from a friend? Sign up now to receive this free e-newsletter every other Monday. © Copyright 2015 National Council of Nonprofits. All rights reserved  1001 G Street NW | Suite 700E | Washington, DC 20001 | www.councilofnonprofits.org