I have worked for nonprofit organizations my entire career. For over thirty years, their mission had to do with helping troubled young people. Now I write about politics for a nonprofit organization – the Washington Monthly. Nonprofits come in all different shapes and sizes.
Back when I was the executive director of a nonprofit, I attended a training where one of the speakers said, “when it comes to finances, the only difference between a for-profit and a nonprofit – a (501(c)(3) – is the tax code.” That applies in two directions. First of all, nonprofits are exempt from paying taxes. Secondly, contributions to nonprofits are tax deductible. In order to gain nonprofit status, the IRS requires that an organization comply with a few simple rules. For example:
Under the Internal Revenue Code, all section 501(c)(3) organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office.
That restriction was passed in 1954 in order to prevent donors from being able to deduct political contributions from their federal tax liability. It has applied to every nonprofit I have ever worked for – including the Washington Monthly. If you’ll notice, we write very openly about issues and politics. What we don’t do is ever explicitly endorse a particular candidate. To do so would threaten the organization’s nonprofit status.
I say all of that by way of explanation of something you might have heard Donald Trump say during his speech last night.
At this moment, I would like to thank the evangelical and religious community in general who have been so good to me and so supportive. You have much to contribute to our politics, yet our laws prevent you from speaking your minds from your own pulpits.
An amendment, pushed by Lyndon Johnson, many years ago, threatens religious institutions with a loss of their tax-exempt status if they openly advocate their political views. I am going to work very hard to repeal that language and protect free speech for all Americans.
Republicans have also called for the repeal of this amendment to the tax code in their party platform. They often call it the “Johnson amendment” because LBJ was in Congress when it passed. So let’s take a minute to look at how Trump’s description of this is all wrong.
First of all, as I’ve explained, this restriction doesn’t only apply to “religious institutions.” Even the media is bad at pointing that out. For example, here is the headline from an article on the topic in TIME: “Republican Platform Calls for Repeal of Ban on Political Organizing by Churches.” Nonprofits as large as private universities and as small as the community-based organizations I worked for have to comply with this restriction in order to maintain their tax exempt status. This is important to keep in mind when Republicans try to suggest that religious organizations and churches are being targeted. That is simply not true.
Secondly, this part of the tax code does not keep organizations from speaking their minds nor does it restrict their free speech rights. As you can observe right here at the Washington Monthly, we talk openly about politics every day. Beyond that, nonprofits like this one are always free to give up their tax exempt status if they want to advocate on behalf of a specific political candidate. Nothing in the law stops them from doing that. It is just that the benefits of tax exempt status far outweigh the narrow gains that would be made in giving it up.
What this all comes down to is that certain religious leaders (like Jerry Falwell, Jr. and Franklin Graham) want all of the benefits of their tax exempt status with none of the rules about what that means. Were they to be successful, their churches and religious organizations would be turned into funnels through which donors could contribute to a political candidate and write it off as a charitable contribution. People who advocate for that are obviously attracted to the power that would give them. But it would become a terribly corrupting influence on their own organizations.