Nonprofits May Be Able to Go Politically Wild Thanks to House Republicans

New Orleans   The “law of unintended consequences” is not one that was passed by the US House of Representatives and its far right, ideological Republican majority, but it is certainly one that they might soon learn at their peril.

One of the many hidden time bombs in their recent tax bill, now heading towards conference with the Senate, was originally a repeal of the Johnson Amendment that prohibits tax-exempt charities from political activity. Initially, their amendment was only a wet kiss to the heavy breathers in their religious base who wanted a special exemption to practice politics from the pulpit. Not to be outdone – the final version of the House bill instead opens a political floodgate for charities to go wild. Their bill says that any tax-exempt charity can boost or bust political candidates if “the preparation and presentation of such content” is “in the ordinary course of the organization’s regular and customary activities” and does not result in more than de minimis incremental expenses.” (thanks to Ellen P. Aprill a tax law professor at Loyola Law School who read and reported the language!)

So, sure, that would cover preaching, because there’s no cost in adding an endorsement into a sermon, but it would also cover a world of other things that fit fully into a nebulous “de minimis” standard like a banner across a website’s home page, constant Twitter and Facebook posts, and endless email blasts all of which have virtually no cost. Remember as well that these standards are all set and monitored by the Internal Revenue Service, which to date, since the passage of the Johnson Amendment, has never clarified the existing standard of what might be permissible political activity, leaving the matter to institutional restraint and lawyer empowering, as one outfit after another takes a stab at a number, whether less than 5% or 8% or zero. Remember also that because of that the penalties are also somewhere between nil and a hand slap. President Trump’s own foundation was caught in this mess, as you may also remember, when he used the foundation’s funds to make several political contributions at the 5-figure levels, all of which he remedied by repaying the foundation. There was never a question about whether he was going to surrender the tax exemption of his foundation and certainly no evidence that the IRS was threatening to take it away. Without the thin shield of the Johnson Amendment, there will be no practical limits to what nonprofits might be able to do.

The Republican House may think more activism from the pulpit makes it all worthwhile, but they aren’t the only nonprofits who can jump into the partisan playgrounds. Take nonprofit hospitals for example, which still make up almost 60% of hospitals. A list of the top six systems from Ascension to Kaiser in the Wall Street Journal indicated they were turning over $158.5 billion dollars annually. Hospitals were pretty united in their opposition to the Republican efforts to repeal the Affordable Care Act, and will be even more committed to any cutbacks in Medicaid or Medicare. If “de minimis” was 5%, they could spent almost $8 billion, but even dropping notices in every bill or banners on every sign-up for your medical records online now would certainly get the message out. It would also cost just the same for doctors and nurses to whisper in patients’ ears as it cost for the pastor to slip an endorsement in a prayer.

Churches are shrinking while many other parts of the nonprofit sector, like healthcare, are soaring. The Republican House might should get on their knees and offer something up to the Republican Senate to save them from this repeal before the law of unintended consequences makes them give more than they hope to receive.

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Church Exemption: Good for the Goose is Good for the Gander

New Orleans   The membership of legacy religious institutions may be falling like a rock, but their privileges are increasing. President Trump last week signed an executive order that sought to do a couple of things for churches. On one hand he wanted to give them some more flexibility in opposing abortion for their workers and institutions, but most of that had already been done by the courts in the Hobby Lobby case. The other penance he offered was protection for political endorsements being made by pastors right from the pulpit, and that’s interesting.

The Internal Revenue Service provides a tax exemption under its 501c3 classification for religious institutions and other nonprofits providing charitable, educational, and other benefits. In exchange for such a tax exemption there are some restrictions including the level of profit-making enterprises escaping taxation, unless they are directly related to the mission and purpose of the exempt nonprofit. There is also a ban on political activity and endorsements.

Trump’s executive order was a promise to the evangelical and religious community that he would get them around the Johnson Amendment and its restriction on religious endorsements. In some ways this was a bit of a straw man. Priests and pastors have been making political endorsements from the pulpit for years without provoking any investigations from the IRS, so they have been able to do so with impunity. Evangelical preachers have hardly been quaking in their brogans as they have embraced and endorsed conservative politicians from right to far-righter for fear of losing their tax privileges. Archbishops and Cardinals in heavily Catholic cities and states have sometimes jumped into the middle of political campaigns, including threatening excommunication of parishioners for voting for governors, senators, and representatives bold enough to support abortions. Trump’s claim was that his order would now protect them and give them license to jump into politics at their will and whim.

Talking to the director and organizer of an environmental group the other day who was debating whether his tax exempt group needed to form an entity that could be more aggressively active in pushing climate change into the political agenda, I had jokingly suggested that since a lot of environmentalists already talked about nature as their church, a simple fix for this problem would be to just say his outfit was now religious, and say whatever they wanted to say. Now in truth Trump’s order doesn’t mean much. The IRS will likely just ignore it and given the way they’ve ignored such blatant politics in the pulpit in the past and their depleted ranks in the exemption debate, it doesn’t add up to much.

But, what’s good for the goose, should be good for the gander. If the IRS lightened up on one group of nonprofits, they would have to lighten up on the whole bunch, equal protection being what it is once the matter finds its way to the courts. Nonprofit staff and leadership wouldn’t have to dance around whether they were speaking and acting personally and not as representatives of their organizations as they jumped into politics any more than pastors and priests. The President may not care that if he opens the door for one, everybody can walk in, but if this order has any weight, that’s what it should end up meaning. What’s good for one is good for all.

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