Like oil and water, theological schools and political advocacy never mix. Right? Wrong! say many informed voices in both law and religion. In fact, actions to influence legislation are appropriate — sometimes even vital — for seminaries and other religiously affiliated organizations. The well-known “wall of separation between church and state” is not intended to silence advocacy that helps policy makers understand religious issues.
Discussion of political activity by nonprofits has become especially fervent recently, with news stories focusing on political activism of some organizations that claim tax-exempt status under different sections of the tax code.
Most churches and religious organizations are governed by section 501(c)(3) of the code, which gives donors tax-deductibility for their contributions, and the IRS says that “no substantial part” of a 501(c)(3) organization’s activity may attempt to influence legislation. Does that mean that religious groups should avoid any kind of lobbying at all? Experts say no — especially if the group’s mission includes influencing public policy.
“It’s perfectly their right” to try to inform and educate legislators, says David Warren, president of the National Association of Independent Colleges and Universities (NAICU). NAICU lobbies on behalf of its membership, which includes the Association of Theological Schools. His organization’s lobbying efforts include communications and meetings with legislators, collecting petition signatures, and holding educational forums with a political point of view.
The mission of a theological school might intersect with public policy in several ways, giving it good reason to try to inform or even influence. Some issues are the same ones that affect other nonprofits — property tax exemptions and incentives for charitable giving, for example. Likewise, student loan regulations are a concern that theological schools share with other schools, both public and private.
But some issues are more specific to religious organizations. For example, new Affordable Care Act requirements that employers provide health insurance that covers birth control are controversial, and some universities with religious affiliations have filed suit to be exempted. Other religious organizations have tried to influence local legislation to allow the use of public buildings such as schools for religious services.
Lobbying efforts to affect legislation and regulations about issues like these are legally permissible, say those involved in such efforts, although there is a mixed record of success.
“If you don’t run the race, you won’t be part of the finish,” says Mat Staver, president of the Liberty Counsel, an association of lawyers who specialize in issues affecting religious liberty.
Dan Busby, president of the Evangelical Council on Financial Accountability (ECFA), says that faith-based nonprofits should speak out on “any issue where it appears that religious organizations are being treated unfairly.” In early 2011, Senator Charles Grassley, then chair of the Finance Committee in the United States Senate, enlisted ECFA to research and report on tax and regulatory policies affecting nonprofits, with a special focus on religiously based nonprofits.
When the tax code says that “no substantial part of the activities” of 501(c)(3) organizations may be utilized for attempting to influence legislation, what does that mean?
An informal definition of “substantial” is anything more than 15 percent of a nonprofit’s overall activity, with 5 percent considered safe. But the IRS has never provided a clear definition of “substantial,” and nonprofits have chafed at that lack of certainty.
Attorney Marcus Owens, who headed the Exempt Organizations Division of the IRS for 10 years before entering private law practice in Washington, believes that theological schools should be involved in helping shape legislation on the issues affecting them, and he has some advice for the faith-based institutions that are pondering their involvement.
“My view on lobbying, as a policy matter, is that in a democracy, all individuals and groups should be able to communicate with the government, particularly the part of the government that makes laws,” Owens says. “A prohibition on such communication by any particular group seems fundamentally antidemocratic and, consequently, inappropriate — even dangerous in the long term.”
While the tax code limits 501(c)(3) lobbying activity to an insubstantial amount of an organization’s activities, there is clear prohibition on participating in political campaigns on behalf of candidates for public office. Certain voter education activities, such as nonpartisan political forums, are not included in this prohibition. Enforcement of the prohibition has been spotty, however, and there are increasing calls for its repeal.
This is the hottest of current topics. For evidence of this, look no further than “Pulpit Freedom Sunday,” held this past June, in which more than 1,000 ministers across the country protested the prohibition on partisan political activity by their churches and related organizations. ECFA recommends that organizations with tax-exempt status be permitted to engage in electioneering as part of their mission so long as they do not use tax-deductible funds received from donors to do so. Michael Batts, who chaired the ECFA commission, said it is “both disturbing and chilling that the federal government regulates the speech of religious organizations.” Other observers say that a religious organization that chooses to express partisan political views should not be permitted tax preferences.
Adopt a board policy on issue advocacy
A nonprofit organization with 501(c)(3) tax status, which enables its donors to take deductions for their charitable gifts, needs to enter the political scene with its eyes wide open.
That’s the advice of those who have been long involved in nonprofit advocacy. While many of these same people encourage nonprofits to engage in legislative lobbying to protect and enhance their stated missions, they caution that it makes sense to follow the rules.
Nonprofits that aren’t careful risk an audit — or, even worse, the revocation of their tax status that allows tax deductibility of their contributions.
There’s a right way for nonprofits to participate in the nation’s political process without endangering their exempt status or even encouraging IRS audits, and many voices encourage faith-based organizations to engage in protecting their rights and advancing their missions through issue advocacy.
Marcus Owens is one of those voices, and as a former director of the IRS Exempt Organizations Division, he has the background to provide advice on doing it right. Such organizations “need to emphasize that they are educating legislators (and the public) on an issue,” he says, but when an election is coming soon, the nonprofit must take greater care to avoid endorsements.
Owens recommends that boards of church-related nonprofits adopt a policy on advocacy to make it clear that “we don’t endorse or oppose candidates, but we do hold opinions on social issues — especially where they intersect with our religious beliefs.” The policy can state that the organization will make its views on such issues known to elected officials and government entities when those issues are subject to governmental action.
Owens says that when assessing the appropriateness of such political activity, the IRS typically looks at an organization’s track record, and a stated policy on advocacy can provide a basis for acknowledging that it is part of the organization’s ongoing objectives.
For more information, see “Tax Guide for Churches and Religious Organizations,” available at www.irs.gov/pub/ irs-pdf/p1828.pdf.
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