Last Thursday, President Donald Trump marked the National Day of Prayer with an executive order that at most expressed the administration’s desire that the Department of the Treasury should not unnecessarily threaten the tax-exempt status of religious non-profit organizations if they engage in political activity. Despite stating during the campaign that he would “destroy” the Johnson Amendment, the administration ultimately made a benign gesture affirming existing law while describing its parameters and limits.
The text of the May 4 order reads as follows:
Sec. 2. Respecting Religious and Political Speech. All executive departments and agencies (agencies) shall, to the greatest extent practicable and to the extent permitted by law, respect and protect the freedom of persons and organizations to engage in religious and political speech. In particular, the Secretary of the Treasury shall ensure, to the extent permitted by law, that the Department of the Treasury does not take any adverse action against any individual, house of worship, or other religious organization on the basis that such individual or organization speaks or has spoken about moral or political issues from a religious perspective, where speech of similar character has, consistent with law, not ordinarily been treated as participation or intervention in a political campaign on behalf of (or in opposition to) a candidate for public office by the Department of the Treasury. As used in this section, the term “adverse action” means the imposition of any tax or tax penalty; the delay or denial of tax-exempt status; the disallowance of tax deductions for contributions made to entities exempted from taxation under section 501(c)(3) of title 26, United States Code; or any other action that makes unavailable or denies any tax deduction, exemption, credit, or benefit.
Analysis:
The key phrase “to the extent permitted by law” appears twice. First, Federal agencies need to “respect and protect the freedom of persons and organizations to engage in religious and political speech.” Secondly, the Department of the Treasury should not take “adverse action” against religious organizations or individuals because of what they have said about moral or political issues.
The inclusion of the phrase “to the extent permitted by law” is a signal that the order is not intended to overturn the Johnson Amendment or other federal laws, but rather to define what the administrations believes to be the parameter of those laws.
The order mostly leaves the Johnson Amendment intact, affirming the prohibition of tax-exempt organizations from endorsing specific candidates. According to the order, the government can continue to challenge the tax-exempt status of organizations that engage in “participation or intervention in a political campaign on behalf of (or in opposition to) a candidate for public office.”
In recent months members of Congress have introduced legislation that would go much farther than this, fundamentally changing the law by permitting churches to engage in political campaigning while maintaining their tax-exempt status. The Trump order wisely does not go this far.
Instead, the Trump order underscores the right of non-profit religious organizations to speak to the moral or political issues of the day without fear of losing their tax-exempt status. The only thing they cannot do is engage in direct campaigning on behalf of or against particular candidates.
Although the ACLU had prepared to file a lawsuit in anticipation of a more sweeping order, the civil rights organization decided against it because the order does not change the existing law. However, the Freedom from Religion Foundation (FFRF) did file a lawsuit claiming that because the order only mentioned religious organizations and not secular non-profits, and as such the order violates the Establishment Clause of the First Amendment. The FFRF lawsuit is not likely to get past the initial stages because there is no evidence of selective enforcement of the Johnson Amendment and no “live” case upon which to base such a challenge although it is likely to achieve a lot of attention. Both the ACLU and FFRF are 501(c)(3) non-profit organizations and the Trump order presumably protects their right to advocate on moral and political issues as well, but if they engage in partisan politicking on behalf of or against particular candidates they too could find their tax-exempt status in jeopardy.
For now, the best practice for non-profits is to stick to the issues and avoid ad hominem arguments.
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