501(c)(3) Politics

August 15, 2013
posted by Bob Bauer

A report produced by the Commission on Accountability and Policy for Religious Organizations calls for the reform of the IRS ban on campaign intervention by 501(c)(3) groups. Government Regulation of Political Speech by Religious and Other 501(c)(3) Organizations (2013). It makes the point that the test by which the IRS judges political intervention is loosely constructed and unpredictable in application. The report also notes the additional problem that IRS enforcement is erratic; this is not the agency’s favorite assignment and the agency by and large either does what it can to avoid it, or gives up quickly in the face of dedicated resistance. The report’s authors, presenting their recommendations to Senator Chuck Grassley, propose a remedy in two major parts: one to address the treatment of “no cost” sermons and other religious statements made in the ordinary course of a religious organization’s operations, and the other to cover any other institutional expenditures for political purposes. The first of the recommendations makes sense, but the second does not.

Its first recommendation captures what is largely the state of current IRS enforcement directed against sermons and other forms of religious commentary delivered in the course of worship services. The agency dislikes the communication of plainly partisan messages in sermons, but it is loath to take action against them. An example is a protracted controversy over a California church sermon that included, during the 2004 Presidential campaign, criticism of President George W. Bush and warm words for his opponent, then-Senator John Kerry. The IRS investigated the matter, concluded that the sermon’s political content was inconsistent with the Church’s tax status—and declined to take further action. Rebecca Trounson, IRS Ends Church Probe But Stirs New Questions, Los Angeles Times (September 24, 2007). The report notes that a number of churches now regularly draw attention to their refusal to follow the prescribed legal line, but the IRS has generally refused to take the bait.

So in this first part of their recommendation, the report calls for the protection of any communication “related to one or more political candidates or campaigns that is made in the ordinary course of a 501(c)(3) organization’s regular and customary … exempt purposes … so long as the organization does not incur more than incremental de minimis costs.” Government Regulation at 28. This exemption for “no cost” speech would apply expressly to sermons and other communications given “as part of a religious organization’s regular and customary worship services.” Id. The Department of the Treasury would provide by rule guidelines for determining which types of communications are properly treated as made in the “ordinary course,” and what qualifies as a de minimis cost.

But then the report runs into trouble. Where the institution does spend money, the report recommends that it be free to do so on activities that could influence elections, so long as the communications avoid “express advocacy,” or the solicitation of or making of contributions to candidates. The “express advocacy” condition is not much of a limitation in this context, one in which the organization financing the communications is paying its way with tax-deductible contributions. Does the report have in mind express advocacy in the most restricted sense of the term, consisting entirely of the so-called “magic words”? Or also the “functional equivalent of express advocacy” within the meaning of Wisconsin Right to Life v. Federal Election Commission, 551 U.S. 449 (2007). See also 11 C.F.R. §114.5. Either way, the report would leave institutions considerable room to fund, with tax-deductible contributions, campaign-season—and to the reasonable judgment of many, campaign-related—communications. The report is inviting a fair amount of so-called issue advertising—“Call Jones and tell him to stop raiding the Treasury to help his friends”—that has occasioned so much controversy in campaign finance. See, e.g. Wisconsin Right to Life at 525 (Souter, J., dissenting) (“Any alert voters who heard or saw WRTL’s ads would have understood [from the advertising] that WRTL was telling them that the Senator’s position…should be grounds to vote against him.”)

Many who are open to protecting the political sermon—“no cost” pure speech—will balk at widening the allowance to include, on a tax-subsidized basis, advertising campaigns with an election-related purpose or impact. The report itself acknowledges the importance of “not permitting the use of tax-deductible funds for political purposes.” Government Regulation at 28, 30. But, in proposing only an “express advocacy” restriction on political spending by 501(c)(3) tax-exempts, this is just what the report’s recommended solution would permit.

Leave a Reply