This month, we’re dedicating our newsletter to an important issue: your right to support non-partisan, charitable organizations.When you donate to a non-profit or foundation, you do so with the understanding that your contributions will go to the public good. A federal provision has been introduced that could drastically alter the way non-profits and foundations operate. With the healthcare debate dominating the headlines, you may not have heard this worrisome news. We want to make sure you know the basics.
Some in White House, Congress Want to Make Nonprofits More Partisan
President Donald Trump on May 4 signs an executive order aimed at easing an IRS rule limiting political activity for religious organizations. Evan VucciAP
Earlier this month, the U.S. House Appropriations committee slipped in a provision to the 2018 spending bill that would allow 501(c)(3) charitable organizations, foundations, and religious groups to engage in partisan, election-related activities.
Current law prevents these groups from campaigning for candidates for public office. This provision, called the Johnson Amendment, was created to ensure tax-deductible donations from donors go toward the charitable purpose for which they are intended, rather than be diverted to political parties or candidates.
The President believes this provision stifles the free speech of religious leaders, and on May 4, National Prayer Day, he signed an executive order directing the IRS not to enforce the Johnson Amendment. Others in Congress followed suit, and now the bill awaits a vote from the full House.
While the congressional action was aimed at increasing free speech for faith groups, under current law, these organizations already have three legal avenues for making their voices heard without getting involved in partisan politics.
Leaders and staff of 501(c)(3) nonprofits can advocate on policy issues. They can shape public dialogue on topics related to their missions, such as the needs of homeless veterans, the effectiveness of early childhood education, or ways to prevent heart disease.
Nonprofit staff, board members, and volunteers can get involved in politics, as long as they clearly separate their political activity from their nonprofit’s operations.
Nonprofits can engage in partisan politics if they seek tax-exemption under other provisions of the Internal Revenue Code. While 501(c)(3) nonprofits must remain nonpartisan, other types of tax-exempt organizations – including 501(c)(4) social welfare organizations, 501(c)(5) labor unions, and Section 501(c)(6) trade associations – can endorse candidates and contribute financially to political campaigns. Unlike 501(c)(3) nonprofits, these organizations don’t rely on tax-deductible charitable contributions for their revenue, since the charitable deduction is premised on the notion that donations are used for public purposes that help entire communities rather than for potentially divisive political purposes.
The current law on non-partisanship is a major reason why charitable nonprofits are safe havens from politics, a place where Montanans from across the political spectrum can come together to solve community problems rather than attack people with differing viewpoints. Eliminating or restricting this law is unnecessary and would have negative ramifications for nonprofits, their donors, and the communities they serve.