President Trump signed an executive order today that’s got religious nonprofits (and Nonprofitland in general) a bit confused. Legal for Good would like to help clarify and keep you informed about political campaign activity.
What the Order Says
Today’s executive order instructs the IRS to “exercise maximum enforcement discretion” in cases of tax-exempt religious organizations who participate in political campaign activity. In other words, it’s asking the IRS to back off in taking legal action against organizations that violate the current law prohibiting such activity, commonly known as the Johnson Amendment.
The Law the Order is Referring To
The Johnson Amendment states that tax-exempt nonprofit organizations cannot engage in “political campaign activity,” which is defined as supporting or opposing a candidate for public office, whether federal, state, or local. “All charities…are absolutely prohibited from intervening in a political campaign for or against any candidate for an elective public office. If a charity does intervene in a political campaigning, it will lose both its tax-exempt status and its eligibility to receive tax-deductible charitable contributions.” – IRS instructions for Schedule A, IRS Form 990.
Note that campaigning is different than lobbying or participating in legislative activities. Charitable organizations are allowed to participate in limited political activities such as voter engagement, hosting candidates’ forums, and lobbying for legislative changes – though be careful, political activity needs to constitute an insubstantial amount of a charity’s expenses if you do not want to incur IRS penalties.
What the Order Isn’t Doing
Today’s executive order does not change the Johnson Amendment, as laws can be changed only by Congress. And, executive orders can be recanted and changed at any time. Legal for Good recommends religious organizations (and all nonprofits) to play it safe – don’t change how you’ve been doing things and start engaging in campaign activity. The law hasn’t changed, and no one knows how or whether the executive order will affect the IRS’s future actions. Continue to focus on your mission, and if you decide to take on certain political activities, talk to us first so you know you’re in the clear. Your nonprofit, your mission, and, most importantly the people and communities you are serving, are too important for you to jeopardize your tax-exempt status.