A CALL TO ACTION in Support of Nonprofit Nonpartisanship

Keeping Politics at Bay for

Charitable Nonprofits and Foundations

Oppose Efforts to Repeal or Weaken
the “Johnson Amendment”

Is it too much to ask that the charitable nonprofit and foundation community be respected and protected as the safe space from the damaging effects of partisan politics? The immediate answer from scores of 501(c)(3) leaders so far – and potentially tens of thousands of organizations – is – No, it is not too much to ask that nonpartisanship remains a cornerstone principle of what it means to be a charity or a foundation. By signing onto the Community Letter in Support of Nonpartisanship, charitable nonprofits, private foundations, religious groups, and their vast numbers of supporters can send a clear signal to Congress and the Administration that partisan politics has no place in the 501(c)(3) community. Join others from across the country to show that we intend to resist any and all efforts to weaken or repeal this longstanding protection in federal tax law that keeps 501(c)(3) organizations away from endorsing, opposing, or contributing to political candidates.

Why Nonpartisanship Matters

Nonpartisanship is a cornerstone principle that has strengthened the public’s trust of the charitable community. In exchange for enjoying tax-exempt status and the ability to receive tax-deductible contributions, 501(c)(3) organizations – charitable nonprofits, including religious congregations, and foundations – agree to not engage in “any political campaign on behalf of (or in opposition to) any candidate for public office.” The quoted and highlighted text is often referred to as the “Johnson Amendment” because it was proposed by then-Senate Minority Leader Johnson to legislation signed by President Eisenhower in 1954.

That provision of law protects the integrity and independence of charitable nonprofits and foundations. It shields the entire 501(c)(3) community against the rancor of partisan politics so the charitable community can be a safe haven where individuals of all beliefs come together to solve community problems free from partisan divisions. It screens out doubts and suspicions regarding ulterior partisan motives of charitable organizations, as undoubtedly would occur if even just a few charitable organizations engaged in partisan politics. Nonpartisan credibility is critical to the ability of 501(c)(3) organizations to work with elected officials of all parties at the local, state, and federal levels to address community needs.

Weakening the law by allowing leaders of individual 501(c)(3) entities to endorse candidates for public office and engage in limited partisan electioneering activities would damage the integrity and effectiveness of all charitable organizations and spawn litigation as innovative partisans seek to expand gray areas in the proposed legislation. Repealing the Johnson Amendment would damage the federal Treasury as people take tax deductions for political contributions they could then funnel through charitable nonprofits, undercut fair elections by providing a loophole to avoid campaign contribution disclosure laws, and empower politicians to exert pressure for access to foundation assets and charitable funds for their own partisan campaigns rather than for the public good.

The Issue: Whether the Johnson Amendment Needs Fixing

In recent weeks, the President vowed to “get rid of and totally destroy the Johnson Amendment,” the Chairman of the House Ways & Means Committee said he intends to repeal the law as part of comprehensive tax reform, and the House Majority Whip became a lead sponsor of one of the bills to weaken the protection. That legislation (H.R.781; S.264) would blur the current clear language (quoted above) that conditions tax-exempt status and the ability to receive tax-deductible contributions in part on not engaging in partisan, election-related activities for or against candidates for public office.

Proponents of the legislation, primarily a subsection of the broad religious community, generally focus on perceived restrictions on preachers who say they want to speak out about issues of the day, plus endorse candidates from the pulpit. Most commentators, however, emphasize the legal reality that charitable nonprofits, including religious congregations, already are free to speak on important matters of the day and advocate on public policy issues and legislation. Private foundations, while barred from most lobbying activities, are free to engage in public debates, promote public education efforts, and fund a wide range of issue-focused activities. Section 501(c)(3) of the federal tax code merely prohibits campaign intervention, defined to include endorsing or opposing candidates for public office, publishing or distributing statements for or against candidates, or using tax-deductible and other resources to support partisan campaign activities. See the recent Chronicle of Philanthropyarticle for a more detailed description of the arguments.

Who’s on the Side of Nonpartisanship?

(and opposes changes to the Johnson Amendment)

Charitable nonprofits and foundations from across the country are beginning to express strong opposition to any efforts to politicize our community by altering the tax-law ban on partisan, election-related activities. The National Council of Nonprofits has taken a strong stance in support of nonprofit nonpartisanship as have several other mainstream nonprofits and associations, including Association of Fundraising Professionals, BoardSource, Independent Sector, and (so far) 23 state associations of nonprofits. Although the issue is frequently couched as a concern to some preachers, numerous faith-based organizations, such as the Baptist Joint Committee for Religious Liberty, Faith Voices Arkansas,Interfaith Alliance, and North Carolina Council of Churches, have expressed strong opposition to changes in the law. Likewise, the Council on Foundations issued a strong statement in support of maintaining nonpartisanship as the hallmark of philanthropy.

Is it Legal for My Organization to Sign Onto the Community Letter in Support of Nonpartisanship?

As noted above, charitable nonprofits have the right to lobby on many legislative issues. Signing the Community Letter in Support of Nonpartisanship is consistent with that legal right. The lobbying rules for private foundations are more restrictive, but in this case organizations, such as the Council on Foundations, have determined that signing onto the letter is legal. The Council on Foundations published a statement clarifying that foundation lobbying on this issue is legal under the “self-defense” exception.

What Good Will It Do to Sign the Community Letter in Support of Nonpartisanship?

Nonprofit and foundation voices matter. A small minority of individuals in the religious community have made the case to some political leaders that allowing churches and charities to endorse political candidates would be good for those preachers and politicians. The truth is that the vast majority of nonprofit and foundation leaders not only oppose changing the law, but see repeal or revision of the Johnson Amendment as being very harmful to the identity, independence, and integrity of our community. As with many issues, numbers matter. The more charitable nonprofits, foundations, religious congregations, and their many supporters – accounting firms, law firms, corporations that care – that stand up for the community and their missions by supporting nonpartisanship, the stronger is the message that changing the Johnson Amendment is unpopular and viewed as destructive by real people back home. Your voice matters!

This newsletter on public policy issues affecting nonprofits is provided as a benefit of membership in the New York Council of Nonprofits, part of the state association network of theNational Council of Nonprofits.

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Protecting Nonprofit Nonpartisanship, National Council of Nonprofits web resources

Infographic, “Protecting Nonprofit Nonpartisanship,” National Council of Nonprofits

Worth Quoting“

“With this editorial, NPQ now adds its voice to those who resist any repeal of the Johnson Amendment, and we urge others to do the same. The nonprofit sector should assertively protect itself and the public from this baldly partisan effort.”

-- “Losing the Johnson Amendment Would Destroy the Unique Political Role of Nonprofits,” editorial, Nonprofit Quarterly, February 6, 2017, and quoting, among others, Robert P. Jones, CEO of the Public Religion Research Institute: “Church members could give tax-deductible donations to a church, which would then be used by the church to campaign for a specific candidate. It could effectively turn churches into campaign offices and pastors into party operatives.”

"Politicizing churches is not a solution to a problem – it is a problem in search of a problem.”  - “Politicize our charities and churches? No, thanks,” Amanda Tyler, Executive Director of the Baptist Joint Committee for Religious Liberty, Religion News Service, February 9, 2017.

“[W]ith the Johnson Amendment, preachers are totally free to attack greed, support health care, wrestle with war, decry injustice and anything else at the intersection of biblical faith and public policy. We are free to preach on these critical matters which are, first of all, issues of faith planted firmly in the Bible. Preachers can go at the issues full-on – and then let the people decide who gets their vote.”

- “On religious liberty and the Johnson Amendment,” Rev. Jean Larson, ret., Missoulian (MT), February 18, 2017. The Johnson Amendment, she continues, “supports the integrity of churches. It keeps churches from being pawns of big money and restrains the partisan hijacking of our pulpits.”

“The Johnson Amendment has been the target of politicians and preachers who want to politicize pulpits. They may not own up to that fact, but the truth is they want to leverage the voting mass of congregations to turn elections in their favor. They lust for … the ability of the clergy to direct the political clout of the faithful by telling them how to vote.” “Johnson Amendment repeal would ‘destroy’ church unity,” Marv Knox, editor, The Baptist Standard (Feb. 8, 2017).

“The Johnson Amendment, thankfully … keeps the political parties out of our churches. Can you imagine if churches could become a political organ of the Republican or Democratic Parties? Can you anticipate the money and muscle that would be spent to convince church leaders to advocate for one side or the other?”

- “Why we need the Johnson Amendment,” Mathew Whoolery, instructor at Brigham Young University–Idaho, Idaho Standard Journal, February 13, 2017. Whoolery added, “I realized that my time in church, worshipping, is one of the only safe places left in my life where politics doesn’t intrude.”

Worth Reading

Association of Fundraising Professionals Position on Repeal of the Johnson Amendment, February 22, 2017

Baptist Joint Committee for Religious Liberty News Release, February 2, 2017

Council on Foundations Letter to Congress, February 9, 2017

Independent Sector Statement on the Johnson Amendment, February 2, 2017

Interfaith Alliance News Release, February 2, 2017

National Council of Nonprofits Opposes Latest Efforts to Politicize Charitable Nonprofits and Foundations, February 2, 2017

Government Resources

IRS Publication 1828: 501(c)(3) Tax Guide for Churches & Religious Organizations (Rev. 8-2015)

IRS website: “Restriction of Political Campaign Intervention by Section 501(c)(3) Tax-Exempt Organizations”

Copyright 2017 National Council of Nonprofits. All rights reserved.

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Washington, DC 20001

www.councilofnonprofits.org

National Council of Nonprofits: Nonprofit Advocacy Matters

View this email in your browser               OMB Webcast Provides Clarity, Highlights Need for Collaboration with Nonprofits The Uniform Guidance from the White House Office of Management and Budget will be binding on most of the contracts and grants between state and local governments and nonprofits when federal discretionary funding is utilized, according to government officials during an OMB webcast conducted on October 2. Presented as a “conversation” among stakeholders, the webcast provided opportunities for various interests affected by the Uniform Guidance to raise questions and seek clarity on key topics that have caused confusion. OMB officials kicked off the event by discussing how the new Uniform Guidance, among other things, is intended to lower barriers to entry for smaller nonprofit organizations to perform services in communities on behalf of governments.   Matt Hammoudeh, Assistant Secretary at the Illinois Department of Human Services, discussed the steps taken in Illinois to implement numerous requirements of the OMB Uniform Guidance and to change state policies to ensure consistency across government programs. In responses to questions from David L. Thompson of the National Council of Nonprofits, Hammoudeh confirmed that the requirement in the Uniform Guidance for governments to pay nonprofits their indirect costs is binding on governments at all levels of contracting and grantmaking, and that nonprofits cannot be asked to waive their reimbursement rights. The Illinois official also made a strong statement against arbitrary caps to indirect costs, pointing out that caps undermine nonprofit innovation and hurt service delivery. Hammoudeh stressed the importance of the lesson learned by the state of collaborating with nonprofits at the beginning of the process to develop the changes needed to implement the OMB Uniform Guidance. He note that nonprofits are the experts who can identify in advance the positive and negative impacts that new policies will have on delivering services in communities. Other panels during the webcast addressed questions related to audits and internal controls, procurement, and innovative funding. OMB will post a recording of the webcast within a week.    Public Supports Clear Rules on What Counts as Politicking  A large majority of American voters (60 percent) believe that having clear rules defining political activity for social welfare organizations is important, according to a recent public opinion poll. Eight in 10 voters believe that political operatives and donors take advantage of vague rules and blurry lines defining what is and is not permitted. Among voters who had an opinion, a majority favored changing the way that activities of social welfare nonprofits organized under Section 501(c)(4) of the tax code are regulated to establish clearer and fairer rules for what counts as partisan political activity. The poll, which was conducted for Public Citizen and released in conjunction with the Hudson Institute, comes at a time when the Internal Revenue Services is seeking to clarify the rules for 501(c)(4) social welfare nonprofits (as opposed to charitable nonprofits) and recover from a scandal involving alleged targeting of various groups based on presumed political leanings.     Communications Challenge: When Technology Meets Regulation Calls and texts to old cellphone numbers could result in significant liability, according to legal pleadings in numerous federal class-action lawsuits. Briefly stated, nonprofits and other callers could potentially be liable if they make calls or send texts to cellphone numbers that they previously received authorization to call but, unbeknownst to the caller, had been reassigned to a new person who has not given “prior express consent” to receive communications. According to one report, more than 37 million cellphone numbers have been reassigned in the past 10 years, so the likelihood of organizations having old numbers on their records is great. The National Council of Nonprofits filed comments with the Federal Communications Commission (FCC) asking for an expedited declaratory judgment confirming that “callers who obtain prior express consent from a called party are not liable for phone calls and text messages to telephone numbers for which the caller has obtained prior express consent, but that have been reassigned without the caller’s knowledge, or for other types of ‘wrong number’ calls.” The FCC may rule on the issue this fall.     Candidate Forums Connecting Office Seekers with Nonprofit Missions This election season several state associations of nonprofits are using candidate forums in non-partisan ways to educate the voting public about the candidates and their positions. Providers’ Council in Massachusetts recently hosted the Human Services Gubernatorial Forum where four candidates addressed 700 attendees on human services topics. Significantly, all four candidates expressed their support for a 2008 statute that was designed to bring human services reimbursement rates up to market value, but whose full implementation has been delayed. The video of the event can be found here. Connecticut Association of Nonprofits co-sponsored the state’s second 2014 Gubernatorial Debate last week. Big topics of the debate included economic growth in the state and education reform. Go here for a recording of the Connecticut debate.   The “No Vote No Grumble” campaign, of which the Hawai`i Alliance of Nonprofit Organization is a partner, will hold a gubernatorial candidate forum on Wednesday, October 8th. The mission of No Vote No Grumble is to “increase civic engagement, including registering and educating voters, especially with the underrepresented/underserved communities.” HANO stresses that this is an important opportunity for nonprofits to share their community’s concerns with candidates. The Colorado Nonprofit Association will be holding a forum during its 2014 conference that will focus on the races for Secretary of State and Attorney General. Colorado’s PBS station will record and air the forum, giving the public the opportunity to learn more about the candidates in these “down ticket” races that often get overlooked. Each forum gives nonprofits the opportunity to educate policymakers on the work and impact of the nonprofit community to their respective states and the ways in which lawmakers can work with nonprofits to identify and promote solutions in communities.     Taxing Student Housing on the Rise The tax-exempt status of student housing facilities is under attack in the courts, at city hall, and in the ballot box. The Texas Supreme Court agreed last week to decide whether the Texas Student Housing Authority must pay property taxes on a dorm facility on the campus of Texas A&M University. County tax assessors had determined that the use of the facilities during summer months by high school students disqualified the dorms under Texas law. In Waleska, Georgia, the City Council is considering a tax on student residence halls at Reinhardt University, a local nonprofit. The Mayor said that the idea for the tax on the small Methodist university was proposed by the state Department of Community Affairs. The city would base the tax on the state’s hotel-motel tax, but is awaiting comment from the Attorney General on the legality of the proposal. Georgia voters in November will also be voting on whether to tax student housing across all public institutions in the University System of Georgia.   Taxes, Fees, PILOTs Taxes: A bill in Pennsylvania would impose real estate taxes on nonprofits owning property valued at more than $200,000. The bill’s sponsor has repeatedly introduced measures to tax tax-exempt nonprofits in the Commonwealth based on the common misconception that taxpayers end up paying more, but without recognizing the numerous community benefits of nonprofits, including the lower cost to governments. PILOTS: Pittsburgh’s Mayor has proposed his budget for 2015 that assumes $24 million annual contributions, or payments in lieu of taxes (PILOTs), from the city’s largest nonprofits. Large landholding nonprofits, such as University of Pittsburgh Medical Center, have expressed a willingness to negotiate on contribution size, as long as they are allowed some say in how the funds will be allocated.   California Adopts Paid Sick Leave Employment Policy Governor Brown has signed the law requiring nonprofits and other employers, starting in July 2015, to pay employees one hour of sick leave for every 30 hours worked. In an alert to nonprofits, CalNonprofits reports that the amount of sick time used can be capped by employers at 3 days per year (24 hours) and any unused sick time at the end of the rolling-12-month period must be rolled to the next 12-month period.    Southern Voters Consider Income Tax Restrictions Voters in Georgia and Tennessee will have the opportunity on November 4 to alter their states’ constitutions to significantly restrict the power of their legislatures to levy personal income taxes. Voters in Georgia will decide on Amendment A, which would permanently cap the top income tax rate at six percent. Polls show that the ballot measure has broad popular support. If approved by voters in Tennessee, Amendment 3 would prohibit the legislature from levying, authorizing, or permitting any state or local tax upon payroll or earned personal income. Critics of both measures argue against removing taxation from the tools the legislatures have to address economic downturns and unforeseen challenges.     Tax Approved to Fund Philadelphia Schools Pennsylvania passed a cigarette tax intended to provide additional funding for Philadelphia city schools. The new tax comes in time to avoid layoffs of more than 1,000 employees. Public schools in the area had been looking into alternative funding streams, such as fundraising through social media, as the vote on the tax loomed. However, a bill is still advancing in the state Senate that would lock in education cuts and result in future funding challenges that could result in appeals to nonprofits and the public to fill resource gaps.   North Carolina Budget Cuts Demanded The North Carolina Office of State Budget and Management has instructed state agencies that their FY2015-17 budgets must be at least 2% lower than their current budgets. According to the North Carolina Center for Nonprofits, state agencies in the past imposed disproportionate cuts on programs affecting populations and communities served by nonprofits through state contracts and grants.        Because Now is When Candidates are Paying Attention The people and communities served by charitable nonprofits “win” elections when all the candidates learn about the significant impact of nonprofits, look to nonprofits as community problem solvers, and agree with the policy priorities of nonprofit organizations. It’s not a partisan matter of who gets elected, but about using the elections to inform candidates and the public about the value of the contributions of nonprofit organizations. The non-partisan election-related activities performed by state associations of nonprofits and many other organizations across the country this election season are helping to educate voters and promoting good policy results.   The lead state article, above, highlights effective non-partisan advocacy actions in Colorado, Hawai’i, and Massachusetts in using candidate forums to focus on the work of nonprofits in communities. Other organizations, like the North Carolina Center for Nonprofits, are engaging candidates through questionnaires that address a broad array of issues that will help voters gauge the priorities of each public office hopeful. Still other nonprofit advocates are sharing their public policy and legislative agendas with all of the candidates with the expectation that some will recognize the value, adopt the priorities, and give public voice to the needs of the communities that nonprofits serve. In all of these cases the same strategy is at play: communicate with the candidates about policy priorities while they are most interested in what constituents think – from now until election evening.       Federal Issues OMB Uniform Guidance 501(c)(4) Partisan Politicking Cell Phone Regulation State and Local Issues Candidate Forums: CO, HI, MA Taxing Student Housing: GA (2): TX Taxes, Fees, PILOTs: PA (2) Paid Sick Leave: CA Constitutional Amendments: GA, TN Public School Funding: PA State Budgets: NC Advocacy in Action   ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦    Nonprofit VOTE Webinar Nonprofits Get Out the Vote Thursday, October 9th at 2:00pm Eastern Election Day is just four weeks away. Find out what non-partisan activities your nonprofit can legally do to encourage voting and help get your community to the polls. Register Now!     Survey Reminder Protect Positive Grants Reforms Take the Survey In less than three months, new reforms governing payments to nonprofits for their indirect costs (overhead) and other reforms will go into effect. You can help in the development of tools to turn the promise of the new reforms into reality for your organization and others by completing this short survey and encouraging your colleagues at other nonprofits to fill it out as well.    Worth Quoting “The cost principles are designed to provide that the Federal awards pay their fair share of the costs recognized under these principals.” - Frequently Asked Questions, U.S. Office of Management and Budget, August 29, 2014, explaining the underlying reason for the mandate in the OMB Uniform Guidance that pass-through entities (typically state and local governments) reimburse nonprofits for their indirect costs.      Worth Reading Federal Grant and Contract News for Nonprofits, Venable LLP, September 2014, highlighting new procurement standards that federal grantees and subrecipients will be required to follow under the OMB Uniform Guidance.   Worth Studying Income Growth Varies Widely Across States, Governing, September 19, 2014, providing state- and county-specific data on personal income growth since 2000 through 2011, utilizing three interactive maps.     Numbers in the News On November 4, voters will decide the following: 435 seats in the U.S. House of Representatives 36 U.S.Senate seats 36 Governorships 31 Attorneys General races 6,049 state legislative seats in 46 states 136 statewide ballot measures in 41 states   Nonprofit Events Oct. 6-7, Fall Nonprofit Conference, Colorado Nonprofit Association Oct. 7, High Desert Nonprofit Leaders Conference, Nonprofit Association of Oregon Oct. 9-10, Camp Finance, New York Council of Nonprofits Oct. 23, Helping 501(c)(3) organizations with charitable contributions (a primer), Internal Revenue Service webinar Oct. 28-29, Kentucky Nonprofit Leadership Forum, Kentucky Nonprofit Network    Share this newsletter with your staff, board, and nonprofit colleagues         Did you receive this email from a friend? Sign up now to receive this free e-newsletter every other Monday. © Copyright 2014 National Council of Nonprofits. All rights reserved  1200 New York Avenue, NW | Suite 700 | Washington, DC 20005 | www.councilofnonprofits.org