I recently drove by the residence of a minister for whose church I serve as legal counsel. I observed on the front lawn a large political sign with the name of a candidate running for a state office. It brought to mind the rights of churches and ministers with respect to involvement in politics. The following sets forth some of the basic law relative to churches and nonprofit organizations and their involvement in political activities.
501 (c)(3) Organizations
Not-for-profit organizations can elect a 501(c)(3) status under the Internal Revenue Code (Code). There are obvious benefits to doing so in that they secure tax exempt status under federal law, and contributions to the organization by donors are tax deductible. Individual donors who itemize on their tax returns can take a federal tax deduction for their contributions under Section 170 of the Code. Churches may apply to be exempt under 501 (c)(3) provided they are organized exclusively for charitable or religious purposes. However, they are not required to do so. So long as they are organized exclusively for charitable or religious purposes, they are exempt from federal taxes. IRS Form 1023 is the vehicle for applying for tax exempt status under 501 (c)(3). Along with the benefits of tax exempt status and tax deductibility of contributions, there come restraints on certain types of activities. The Code says:
"…no substantial part of the activities … is carrying on propaganda, or otherwise attempting to influence legislation … and which does not participate in or intervene in (including the publishing or distributing of statements) any political campaign on behalf of any candidate for public office"1. (Emphasis added.) According to treasury regulations2, an organization attempts to influence legislation if it: 1.) Contacts or urges the public to contact members of the legislative body for the purpose of proposing, supporting or opposing legislation; or 2.) Advocates the adoption or rejection of legislation.
A 501(c)(3) organization that engages in legislative activities exceeding more than a substantial part of its total activities risks losing its tax exempt status. There is an absolute prohibition on this type of organization from engaging in a political campaign on behalf of any candidate for public office. That is, directly endorsing or opposing a candidate for public office is prohibited.
The 501(h) election is available to 501(c)(3) organizations that seek to engage in lobbying activities. The 501(h) organization uses an "expenditure test" instead of the "substantial" part test applicable to a 501(c)(3) organization. The 501(h) election is not available to churches, integrated auxiliaries of churches, conventions and associations of churches nor to governmental units or private foundations. IRS Form 5768 is used for a 501(c)(3) organization to elect 501(h) status. Under this tax election, it is the total expenditures of the organization directed toward lobbying and not the activities of the organization that are the determining factor for appropriate activity. Even under the 501(h) election, the subject organization may not directly endorse or oppose a political candidate for public office, although it certainly has more flexibility in engaging in such lobbying activities.
The 501(c)(4) organization in the Code is sometimes referred to as a social welfare organization. While entitled to tax exempt status, contributions to this organization are not tax deductible. That being the case, there is no prohibition on a 501 (c)(4) organization from engaging in activities to influence legislation. According to a U.S. Supreme Court decision, a 501(c)(3) organization can establish a separate organization under 501(c)(4) for the purpose of lobbying activities.3 This type of organization also is subject to the prohibition from directly opposing or supporting political candidates for public office, but it may engage in lobbying activities.
Political Action Committees (PAC)
If organizations desire to get politically involved to the extent of directly opposing or supporting candidates for public office, they must establish a political action committee (PAC). PACs can directly support or oppose candidates for public office. However, there are strict reporting requirements. Any contributions to a PAC are not tax deductible.
Pastors’ and Churches’ Political Involvement
The U.S. Supreme Court, in 1970, noted that "churches frequently take strong positions on public issues including … vigorous advocacy of legal or constitutional positions. Of course, churches as much as secular bodies and private citizens have that right.4 There have been at least two cases where churches ran into trouble with the IRS relative to endorsements of candidates for public office. Jimmy Swaggert Ministries endorsed Pat Robertson for president in the late 1980s. The IRS’ response was that "when a minister of a religious organization endorses a candidate for public office at an official function of the organization, or when an official publication of a religious organization contains an endorsement of a candidate for public office by the organization’s minister, the endorsement will be considered an endorsement of the organization since the acts and statements of a religious organization’s minister at official functions of the organization and its official publications are the principal means by which a religious organization communicates its official views to its members and supporters."
An author in questioning whether the IRS’ position would be supported in the event of a court challenge goes on to state that:
"… the IRS’ view (is) that when a minister speaks at an official church function, the expression of that minister will be considered the expression of the church. Prior to this news release, most assumed that a minister could appear in a pulpit during a worship service and state personal views so long as a disclaimer was made that the church was not endorsing or opposing those views. The IRS has apparently taken a different position on this matter. Presumably, a minister should be able to express personal views outside of an official church function so long as a disclaimer is made that the church is not endorsing or opposing a specific candidate for public office".6
The IRS later pursued Reverend Jerry Falwall for his "Old-Time Gospel Hour" improperly engaging in political activities in the 1980s. His organization was fined by the IRS for $50,000 in back taxes, and as part of the settlement, the organization’s tax exempt status was revoked by the IRS for the years involved. The IRS’ contention was that there was an improper tax application of personal and church assets to political fund-raising efforts.7
The following chart sets forth political and legislative guidelines for churches and pastors.8
In conclusion, the pastor with the political sign on his front lawn endorsing a candidate for election was well within his rights to do so.
That pastor, however needs to be careful to avoid the appearance that his church is also making the same endorsement.
"Pastors, churches and other nonprofit organizations can clearly be involved in the political process. It would be literally impossible for such organizations not to be involved in the political process because the viewpoints and issues advocated by churches and nonprofit organizations naturally have political consequences. To avoid the political process is to limit the effectiveness of churches and nonprofit organizations".9
I.R.S. Legalities of Supporting or Opposing Political Candidates
Endorsing or opposing political candidates No Yes
Contributions to political candidates No Yes
In-kind and independent expenditures for or against political candidates No Yes
Contributions to political action committees No Yes
Appearance of political candidate at church meeting or service Yes N/A
Introduction of political candidates at church Yes Yes
Political candidate to preach or read scripture
(contributions should not be solicited and sermon should be non-partisan) Yes N/A
Voter registration (non-partisan) Yes Yes
Distribution of candidate surveys and incumbent voting records (avoid editorial opinions) Yes Yes
Distribution in church parking lot of political statements and options on
political issues (so long as no church endorsement) Yes N/A
Rent or loan church mailing lists to political candidates
(list must be made available to all candidates on similar terms and prices) Yes Yes
Church bulletin political ads at regular price and news stories Yes N/A
Church bulletin editorial where the pastor or staff member endorses or opposes a candidate No No
Church bulletin editorial regarding political issues or two different church
members take opposing views on a candidate Yes N/A
Use of church facilities by political candidates
(as long as all other candidates are allowed or invited) Yes N/A
Fund raising for candidates No Yes
Campaigning for candidates No Yes
Educate members of the public about viewpoints of candidates Yes Yes
Discuss church doctrine pertaining to candidate views such as abortion Yes Yes
Granting use of name to support a political candidate No Yes
Support or oppose judicial, department or cabinet appointments Yes Yes
Support or oppose judicial candidates No Yes
Support or oppose other political appointments of non-elected officials Yes Yes
I.R.S. Legalities of Supporting or Opposing Legislation
Use of church facilities by lobbying groups to discuss social issues Yes N/A
Rent or loan church mailing list to lobbying groups Yes N/A
Preach sermons on social issues and political issues and activism Yes Yes
Educate on political process and political/social/legislative issues Yes Yes
Petition drives supporting or opposing legislation Yes Yes
Support or oppose legislation unrelated to the church organization Yes* Yes
Support or oppose legislation that directly relates to the organization Yes** Yes
Encourage members to voice their opinions in favor or in opposition to certain legislation Yes* Yes
Lobby candidates to support or oppose legislation Yes* Yes
Distribute position papers supporting or opposing legislation Yes* Yes
1 I.R.C. (_)501(c)(3)
2 Treas. Reg. (-)501(c)(3)-1(c)(3)(ii)
3 Regan v. Taxation with Representation, 461 U.S., 540 (1983).
4 Walz v. Tax Commission of the City of New York, 397 U.S. 664 (1970).
5 Richard Hammar, ed., "Political Acticity by Churches," Church, Law and Tax Report, Vo. V, No. 5, Sept/Oct 1992, PP. 7-8, as referred to in Faith and Freedom, below at P.382
6 Faith and Freedom, 2d Ed., Mathew D. Staver, Liberty Counsel (1998), p. 382. Much of the material for this article is gleaned from this new book which the author recommends for those wanting comprehensive up-to-date coverage of religious liberty issues.
7 Nonprofit Alert, May 1993; Lynn Buzzard, ed., Religious Freedom Reporter, Vol. 13, No. 4, April 1993, p. 140, as referred to in Faith and Freedom, supra, p. 382.
8 These guidelines are reproduced verbatim from a memorandum authored by Attorney Mathew D. Staver and published by Liberty Counsel, P.O. Box 540774, Orlando, Florida 32854. Liberty Counsel is a not-for-profit religious civil liberties education and legal defense organization and can be contacted at (407) 875-2100; Fax (407) 975-0770.
9 Faith and Freedom, supra. p. 393
John C. Voorn is a Member of Buikema, Hiskes, Dillner, O’Donnell & Marovich, Ltd., Orland Park. He is a General Practitioner. He received his Undergraduate Degree in 1966 and his Law Degree in 1973 from Valparaiso University.