by Marc Stern
For several election
cycles, substantial media attention has been devoted to compliance—or lack
thereof—by conservative churches and para-church groups with the ban on
tax-exempt organizations endorsing or opposing candidates. This time around,
the spotlight has broadened to illuminate the politically left-of-center.
Most of the initial attention focused on Presidential candidate Senator
Barack Obama’s appearance at the United Church of Christ’s 2007 convention,
and the resulting IRS investigation (which in May came to a determination
that there had been no violation).
there were also important stories about the Democratic candidates’ pursuit
of endorsements by black pastors, including coverage of what appeared to be
endorsements of Senator Obama and attacks on his opponent, Hillary Clinton,
by clergy at Obama’s home church, Chicago’s now famous Trinity United Church
Whether the focus is right- or left-leaning houses of worship, the issue of
politicking by such exempt organizations has now become a legitimate news
story, and not—as was the case not so long ago—just a tax compliance issue
of concern mostly to not-for-profit organizations themselves.
Public scrutiny of the activity of tax-exempt organizations has resulted in
enhanced IRS attention to the issue, which in turn has created yet more news
coverage. Much of the coverage has been well-informed, although (as is to be
expected of the daily press) sometimes too tightly focused on an immediate
charge or counter-charge.
Nevertheless, the amount of misinformation created not by journalists but by
“experts” and affected church officials is striking. This suggests the need
for reporters to check on confident assertions by interested parties, and to
compare claims about legal ambiguities or uncertainty to the IRS’s own
readily available pronouncements on what constitutes intervention in a
tax-exempt not-for-profit organization enjoys two privileges. The less
important one is that its does not have to pay taxes on its income. The more
important is that gifts to the organization are deductible from the gross
income of the donor.
Organizations exempt under these provisions are known as Section 501(c)(3)
organizations, after the provision of the Internal Revenue Code that exempts
the organizations’ own income from income taxes. (A different section,
Internal Revenue Code 26 U.S.C. § 170, allows the donor deduction.)
These privileges come with certain restrictions, two of which are relevant
here. The first is that no substantial part of the exempt organization’s
work may involve lobbying for legislation; the second, that the organization
is absolutely prohibited from endorsing or opposing candidates for elected
prescribed penalty is loss of tax exemption. The ban applies only to the
institution and to its officials when speaking for the organization. It has
no impact at all on those officials speaking in a private capacity. And it
applies to all tax-exempt groups, not just religious ones.
lobbying provision is long-standing and dates at least to the 1930s. (An
early case denied an exemption to Planned Parenthood.) The ban on political
intervention is newer, dating to 1954, and is the product of a floor
amendment introduced by Lyndon Johnson, who was then a U.S. senator from
the time, Johnson offered no explanation for his amendment, but recent
scholarship suggests that he was interested in silencing two militant
tax-exempt anti-communist groups that had aided his opponent in his
senatorial race that year. Religious organizations were included simply
because the amendment applied to all exempt organizations.
Requiring churches and, for that matter, other exempt organizations, to
choose between endorsing or opposing candidates and being tax exempt is not,
under well-settled law, unconstitutional. Two federal appeals courts have
said so explicitly, in 1972 and in 2000. Both decisions upheld revocation of
tax exemptions for churches that had openly endorsed a candidate, either on
church-owned radio or by taking out an ad in a newspaper.
people who should know better are often quoted in the press as suggesting
otherwise. Thus, in a May 12 article on a planned protest of the IRS rules,
the Wall Street Journal’s Suzanne Sataline quotes Rev. Steve Riggle
(of Houston, Texas) as saying, “As a pastor, a private citizen, I can
speak for myself. The IRS cannot quench my voice.”
These claims are bombast, not law as it is or is likely to be. While this
article was in preparation, the IRS (doubtfully) found that Rev. Wiley
Drake, a Southern Baptist pastor from California, had not violated the rules
by endorsing Mike Huckabee for President on church stationery, because his
letter was supposedly personal, not official.
Leaving aside the fact that the IRS does not tell private citizens what they
can say, the Supreme Court held in Jimmy Swaggert Ministries (1990)
that the federal tax exemption for churches is a matter of grace, not right.
So while the Journal quoted Professor Lloyd Mayer of the Notre Dame
Law School as saying that the rules “burden” religion, the Court has
repeatedly held that a failure to subsidize speech does not burden speech
under either the speech, religion, or due process clauses of the
government is thus free to deny subsidies (i.e., tax exemptions) to
organizations that engage in whatever activities it may choose, provided it
does not engage in viewpoint discrimination, for example by selectively
exempting only secular or only religious groups, or only liberal or
conservative ones. The slogan “the power to tax is the power to destroy”
(i.e., the power to tax churches is the power to destroy them) was once an
important constitutional principle, but it no longer has legal bite.
Once upon a time as well, the intricacies of 501(c)(3) law were of concern
mostly to the general counsels of not-for-profit organizations. The law was
not—and is not—particularly difficult to grasp for lawyers, although there
are, of course close questions.
When does a clergyperson or other organizational official speak for the
church (organization) and when for him—or herself? When does a statement on
an issue also amount to a statement about a candidate? How may an
organization relate to a public official who is also a candidate?
more difficult issue for lawyers used to be the huge gap between what the
IRS said the law demanded and how this was enforced.
Lawyers seeking to have their clients comply with the law were often met
with the response: “But X (our competition and/or ideological opponent) did
just what you said we cannot do. The IRS did nothing. You’re just being too
cautious. We are going to do what X did.”
so long as the IRS did little to enforce the restrictions, there was little
danger in violating them. But with stepped-up enforcement over the past
decade and increased public scrutiny of all charities, willful or
ignorant disregard of the law has become risky.
did compliance with 501(c)(3) come to be a public issue?
For one thing, there has been a substantial increase in the public salience
of religion in American politics and government since the election of Ronald
Reagan in 1980. Overt appeals for political support, in both campaigns and
governing, have become far more common than previously.
With presidential and other candidates seeking votes in houses of worship—a
process churches sometimes abetted with thinly disguised endorsements in the
form of “voter guides”—it was natural enough that their opponents would seek
to deny them that advantage. One way of doing so was to challenge the
tax-exempt status of churches that were (or were perceived to be) aiding an
Then, in 1996, Americans United for Separation of Church and State (AU)
began a formal campaign to file complaints with the IRS. According to a list
maintained by AU, it has to date filed over 80 of them. Most seem to involve
Republicans, but there are a good number of alleged Democratic violators as
AU campaign, called Operation Fair Play, has had several results. First,
given the absence of vigorous, independent, and evenhanded IRS enforcement
of the no-endorsement rules and AU’s notoriously antagonistic stance toward
the religious right, the campaign was regarded (though not accurately) as
targeting only conservative groups. That perceived tilt necessarily colored
perceptions of the enforcement process, creating the impression that
501(c)(3) enforcement was aimed mostly at muzzling evangelical pastors.
AU’s campaign thus prompted Rep. Walter Jones, a North Carolina Republican,
to introduce legislation to exempt religious institutions from the general
ban endorsing candidates. Although, after generating heated public debate,
the bill failed, it might well have been found unconstitutional for favoring
religious over secular speech on political topics.
number of complaints the IRS was receiving led to the impression on the part
of church officials that they faced for the first time a real risk of losing
their tax exemptions if they did not comply with the rules—which they
claimed not to understand.
response to charges that the rules were vague and not well known, the IRS
directed an educational outreach program at the non-profit community (and
especially at its religious sector) to explain what was forbidden and what
response to claims that it was not enforcing the law, the agency created a
special unit to review complaints of 501(c)(3) violations, and sought to
ensure uniform, swift, non-partisan, and public enforcement of the
non-endorsement rules. Its first effort in 2004 led to the interesting
finding that religious and secular tax-exempt organizations have,
proportionately, been equally guilty of breaking the rules.
did the IRS for so long ignore fairly widespread violations of the
restraints on partisan political activity?
Because the agency is chronically under-funded, it made perfect sense for it
to focus its enforcement efforts on cases more likely to produce actual
revenue. Moreover, enforcing the non-endorsement provision inevitably
exposed the agency to charges of partisanship, given that it will always be
functioning under a presidential administration that is, by definition,
partisan. (Of course, leaving the field to ideological groups like AU
created a different partisanship problem.)
Finally—and apparently unknown to the press—the 1984 federal Church Audit
Act imposes special procedural requirements on the IRS when it audits
religious institutions. The extra burden of auditing a church might well
have discouraged already overburdened officials from pursuing violations of
interesting development this year is the media’s focus on the political
activity of black churches, probably due to the fact that the Democratic
contenders fought hard for the votes of African Americans. Not that open
politicking in black churches is a new phenomenon.
decades, these churches (along with the NAACP) represented the bulk of civil
society in the African-American community. They thus served as a magnet for
politicians, and especially Democratic ones, as Seanna Adcox reported from
South Carolina for AP on December 26 and Meredith Heagney, Joe Hallet and
Jack Tory did for the Columbia Dispatch a month later. (The latter
article mistakenly claimed that only one church has ever lost its exemption
for violating the no-endorsement rule; at least two have.)
friend who is a long-time aide to Democratic legislators tells me he cut his
eye teeth in politics 30 years ago on Sundays accompanying a (white)
candidate from black church to black church. That the press so long gave
black church political involvement a pass is doubtless due to a number of
factors, not least a tacit acceptance of the importance of the black church
in the black community—a point underlined by the insistence of some pastors,
as Heagney, Hallet and Tory reported, that they have to endorse candidates
because it is essential for the guidance of their communities.
reporter stopped to ask if this was uniquely true of African American
churches or a commentary about all clergy and therefore equally applicable
to other faith traditions. In any event, black churches have begun to get
equal scrutiny as white churches in a possible sign of progress on America’s
march to racial equality.
Barack Obama’s speech to the annual convention of his denomination (the
United Church of Christ) in June of 2007 led to an IRS investigation of the
denomination’s continued entitlement to exemption. The invitation to speak
had been extended when Obama had not announced his presidential candidacy.
After he did, church officials subsequently insisted, they told him that his
address could not be campaign-related, and that no representative of the
campaign could appear with him inside the convention hall.
fact, most of Obama’s speech was not relevant to the campaign, although
there were two remarks that were part of his standard campaign oratory.
Outside the hall, Obama campaign volunteers manned a campaign desk. Jeffrey
Lord, a conservative “dissident” in the largely liberal UCC church, reported
in the September 7 American Spectator that despite these precautions
someone filed an anonymous complaint about the appearance.
Responding to the complaint, the IRS sent a letter asking the denomination
to explain whether the appearance by Senator Obama constituted an
endorsement, especially since only he and not any of his rivals had been
invited. (IRS publications make clear that had the church invited all
candidates, there likely would have been no problem.)
first glance, the IRS decision to initiate an investigation was puzzling. It
recognizes that not-for-profit organizations can invite an office-holder to
speak even when he or she is a candidate, so long as the purpose of the
invitation, and the topic of the address, is not the election, and as long
as the official is not introduced as a candidate. Obama’s speech—about what
his religious faith meant to him as a public official—was not, taken as a
whole, overtly political.
Melissa Rogers, a church-state expert who finds time to blog at
melissarogers.typepad.com, spelled out in a characteristically detached and
analytically detailed post the reasons why the UCC appears not to have
violated the law. Rogers also emphasized what almost all the journalists
missed: The IRS had not found a violation but was merely investigating
whether one had occurred. In any event, in May the IRS agreed with Rogers
that the UCC had not breached its duty to remain non-partisan.
be sure, investigations can be a burden, and they can be used as a means of
punishing political enemies. The 1972 Christian Echoes case, in which
a para-church organization noted for its strident anti-communism lost its
tax exemption for opposing “liberal” candidates, was reportedly undertaken
by the Kennedy-Johnson administration to punish a hard-line critic.
UCC inquiry set off a firestorm of press coverage, comprising descriptions
of the UCC (which in several articles, including a lengthy one in the New
York Observer by Alvin Chang March 26, was depicted as being pleased
with all the publicity); the IRS investigation itself; and commentary by
experts on the meaning of it all.
Susan Brooks Thistlewaite, President of the Chicago Theological Seminary, in
a contribution to the Washington Post’s online religion section,
On Faith, rose in righteous indignation at the very idea of such an
investigation. Her column is notable for its sublime ignorance of IRS
principles and procedure.
Thistlewaite complained that the IRS letter was sent nine months after the
speech (and thus further into the campaign). Not only is this well within
the relevant statute of limitations (three years), but also the not unusual
delay no doubt reflects the extra church-protective burden imposed by the
Church Audit Act.
complained, too, that the IRS did not contact the church when deciding
whether to investigate. Such contact might itself be illegal under the
Church Audit Act, and in any event is not legally required.
also displayed her ignorance of the law by asking how it could be that the
UCC was investigated but not churches that invited both Clinton and Obama to
speak. The answer is obvious. Inviting both candidates cannot be mistaken
for an endorsement of either one; inviting one only might be.
Thistlewaite concluded by contending that “there is true irony in the IRS
investigating the UCC for presentation of a speech that may go down in
history as one of the most profound articulations of how we as Americans
live into transcendent meaning….” But, of course, the IRS is not entitled to
overlook a denominational endorsement of a candidate on the grounds that he
gave a good speech.
there is any irony here, it lies in Thistlewaite’s claim that “the UCC is
standing up for individual freedom, especially the right to religious
expression, free of government persecution.” It would also be interesting to
know what she thinks of the IRS investigating a complaint filed by, among
others, several UCC pastors (after a meeting held at a UCC church) against
two evangelical ministers, their churches, and two para-church groups, the
Center for Moral Clarity and the Ohio Restoration Project, for “endorsing”
conservative Republican gubernatorial candidate Kenneth Blackwell. The
complaint, and what gave rise to it, are described by Mike Harden and Joe
Hallett in an excellent article in the January 16, 2006 Columbia Dispatch.
Harden and Hallett rely heavily for their understanding of the case on
Marcus Owens, the former head of the Exempt Organizations Section of the IRS
who helped file the complaint against the pro-Blackwell groups. There is no
question about Owens’ expertise.
What Harden and Hallett didn’t say is that Owens appeared to be working with
Americans United, whose antagonism towards the religious right is well
good paper on the non-endorsement issue written by Owens appears on the AU
website. Was it written at AU’s request? According to another AU website
posting, Owens also filed a complaint with the IRS charging the Missouri
Catholic Conference with opposing candidates supporting stem cell research.
There is nothing wrong with experts being advocates, or advocates being
experts. (I’m an advocate who is sometimes treated as an expert.) The reader
ought to be told, however, that the expert is not merely a detached
The IRS is in a no-win situation. It is obligated to enforce a law often
ignored by secular as well as religious not-for-profits. Strict enforcement
is both beyond the agency’s capacity and would be controversial beyond any
conceivable return to the agency. Less than strict enforcement opens the
agency up to charges (fair or not) of partisanship and selective
Perhaps the agency is hoping that its widely publicized increased
enforcement will lead to greater self-policing by not-for-profits. Whatever
the case, the dire predictions by some of incipient theocracy and by others
of religious persecution seem out of all proportion to reality.
*IRS Revenue Ruling
2007-31, available at http;//www.irs.gov/pub/irs-drop/rr-07-41.pdf