The Foraker Group

On July 7, the Internal Revenue Service filed a motion in a federal court in Texas asking a judge to allow two churches to make political endorsements to members of their congregations. The motion asks the court to issue a permanent injunction preventing the IRS from enforcing the nonpartisanship provision in Section 501(c)(3) of the Internal Revenue Code (which is called the “Johnson Amendment”) against the two churches that are part of the lawsuit.

The IRS and the plaintiffs are asking the court to rule that “[w]hen a house of worship in good faith speaks to its congregation, through its customary channels of communication on matters of faith in connection with religious services, concerning electoral politics viewed through the lens of religious faith, it neither ‘participate[s]’ nor ‘intervene[s]’ in a ‘political campaign,’ within the ordinary meaning of those words… Thus, communications from a house of worship to its congregation in connection with religious services through its usual channels of communication on matters of faith do not run afoul of the Johnson Amendment as properly interpreted.”

Certainly! The IRS is asking the court to drop the case and is asserting that it’s okay for churches to make political endorsements to their constituents.

The court request stems from a case that was originally filed in a federal court in Texas in August 2024 by two Texas churches and two other 501(c)(3) nonprofits. In their complaint, the plaintiff churches and nonprofits challenged the provision in Section 501(c)(3) of the Internal Revenue Code that prohibits charitable nonprofits from engaging in partisan political activities. The complaint alleges that the nonpartisanship provision violates the First Amendment of the U.S. Constitution because it prevents churches and other charitable nonprofits from speaking out on partisan political matters, and the Fifth Amendment because it is allegedly unevenly enforced by the Internal Revenue Service. The complaint claims that churches are particularly harmed because they are automatically deemed to be 501(c)(3) nonprofits and therefore don’t have the option of engaging in partisan political activity legally.

Most nonprofits have this option, but churches don’t. In their complaint, the plaintiffs point out that: “Churches are placed in a unique and discriminatory status by the IR Code. Under Section 508(c)(1) of the Internal Revenue Code, churches need not apply to the IRS to obtain recognition of their 501(c)(3) status. The Code places them automatically within the ambit of 501(c)(3) and thereby silences their speech while providing no realistic alternative for operating in any other fashion. Churches have no choice; they are automatically silenced vis-a-vis political candidates.”

This is actually a great point! Unlike other nonprofits, churches do not have the option of seeking tax-exempt status under other subsections of Section 501(c) of the Internal Revenue Code that allow organizations to engage in partisan political activities. Typical nonprofits that are operating for public purposes can choose to apply for tax-exemption as 501(c)(4) social welfare organizations, enabling them to endorse or oppose candidates for office and make political expenditures, but also giving up the ability of donors to receive tax deductions for their contributions.

Congress could address this “unique and discriminatory status” by amending the Internal Revenue Code to give churches and other houses of worship the opportunity to opt out of 501(c)(3) status and instead apply to become 501(c)(4) social welfare organizations. Alternatively, the IRS could potentially create a process for churches and other houses of worship to apply for 501(c)(4) status. If either Congress or the IRS were to address this issue, churches could have an avenue for engaging in partisan political speech without having to violate the nonpartisanship requirement from Section 501(c)(3).

The nonpartisanship provision was added to Section 501(c)(3) of the Internal Revenue Code through an amendment to the Internal Revenue Code of 1954 that was sponsored by then-Senator Lyndon Johnson.  Essentially, the Johnson Amendment is shorthand for the law that provides that 501(c)(3) nonprofits and houses of worship cannot make campaign contributions and cannot support or oppose candidates for office or political parties.

No. The nonpartisanship requirement is part of Section 501(c)(3) of the Internal Revenue Code, which provides that charitable nonprofits and houses of worship may not “participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.” Only Congress – not the IRS or the President – can change that law.

However, the IRS can decide how to interpret the law and how vigorously to enforce it. In 2007, the IRS published very helpful guidance (Revenue Ruling 2007-41) that provided analysis of 21 fairly common situations of election-related activities by 501(c)(3) nonprofits to demonstrate examples of partisan vs. nonpartisan activities. Practically, the IRS has conducted very few investigations into partisan political intervention by 501(c)(3) tax-exempt entities over the past two decades.

In the proposed consent judgment, the IRS is asserting that its interpretation is that the nonpartisanship provision has a narrow exemption for communications from churches and other houses of worship to their congregations “through [their] customary channels of communication on matters of faith in connection with religious services.”

That’s right.

Practically, it is a formal statement from the IRS that, despite the clear language in Section 501(c)(3) of the Internal Revenue Code to the contrary, it is okay for churches and other houses of worship to make political statements to their congregations. By allowing some 501(c)(3)s to engage in partisan political speech, this potentially harms the entire charitable nonprofit sector in six ways:

1. It could take money away from other nonprofits’ missions. In 2017, the nonpartisan Joint Committee on Taxation (JCT), the congressional entity that assesses the fiscal impact of tax law changes, estimated that legislation weakening the nonpartisanship provision for five years would reduce federal revenue by $2.1 billion. That’s because billions of dollars of campaign contributions would be diverted from direct contributions to candidates, political parties, and PACs into tax-deductible payments to churches and other 501(c)(3) organizations to influence electoral outcomes. This would make fundraising more challenging for traditional campaign committees (which would then have to compete for funds with nonprofits that could offer a tax deduction to political contributors) and for nonprofits seeking support for their program and activities (which would then have to compete with political contributions for tax-deductible dollars).
2. It creates (more) confusion among the public and other nonprofits about what types of entities are allowed to engage in partisan political activities. Already, some media reports and social media posts have misstated or overstated what the IRS did, suggesting: (a) that the “Johnson Amendment” no longer applies to churches and other houses of worship; and or (b) that it may now be legal for all 501(c)(3)s to make partisan political statements (or perhaps even to contribute money to political campaigns). Misleading information in traditional media and on social media will create confusion among nonprofit staff, board members, volunteers, clients, and donors and among politicians and the general public.
3. It could create a slippery slope. It is likely that more churches and houses of worship will decide to make partisan political statements to their constituents. It is also possible that the IRS could begin to carve out other exceptions to the nonpartisanship requirement in Section 501(c)(3) of the Internal Revenue Code.
4. The confusion and/or slippery slope mentioned above may encourage politicians to exert greater influence over nonprofits’ work. One of the great things about the nonpartisanship provision is that it protects charitable nonprofits from getting dragged down by pay-to-play politics. Without the shield of nonpartisanship, nothing would stop mayors and city council members from denying funding to worthy nonprofits that didn’t endorse them in the most recent election. And state legislators might be motivated to shut their doors to nonprofits that decline to use their names – and quite possibly even their money – to support these politicians’ next campaigns. This means that many nonprofits would effectively have the choice of: (a) giving up their nonpartisanship; or (b) giving up their voice on public policy issues and their access to government grants and contracts.
5. It would give donors leverage to force nonprofits into partisan politics. The reality is that many nonprofit donors also have strong opinions on politics. If the nonpartisanship provision is effectively removed for some or all 501(c)(3)s, these donors could condition their contributions on nonprofits’ endorsements of their chosen candidates or political parties. Or, they could be slightly more subtle and hint that: “I was thinking about writing a big check to your nonprofit. It sure would be great (wink, wink!) if your organization invited my friend, the polarizing politician, to be the keynote speaker at your big fundraising gala the weekend before next November’s election!”
6. It will weaken nonprofits’ brand. If more people think that charitable nonprofits can get involved in partisan politics, they may start to characterize 501(c)(3) nonprofits as Democratic charities and Republican charities instead of the nonpartisan problem solvers that they are today. By its nature, partisan politics is divisive. Nonprofits, on the other hand, are generally inclusive by their nature. When churches and other nonprofits become pulled into the game of endorsing or opposing political parties or individual candidates for office, they sacrifice this inclusiveness and run the risk of losing the trust of people with different political viewpoints, including some of their staff, board members, volunteers, donors, and clients. This effectively taints nonprofits’ brand.

Not really. While the IRS is only making an exception for churches and other houses of worship (and technically only for two of them), the proposed language of the consent judgment includes several qualifications that are not clearly defined. Specifically, it covers communications that are:

1. “To its congregation” – It is unclear how “congregation” is defined. Is it just registered members of a church? Or could it include anyone who has ever showed up for a church service?
2. “In connection with religious services” – Again, it is unclear how broadly “religious services” should be construed? Is it merely regularly scheduled Sunday worship services? Or could it include any gathering of the church?
3. “Through its usual channels of communication” – Could a church that streams its Sunday services on its website or through social media where they may be viewed by a much wider audience than its typical “congregation” make political endorsements to a broad online audience?
4. “On matters of faith” – Does this mean that the church needs to have a formal doctrine that certain topics that are closely tied to partisan politics are a part of its faith?

Without further clarity on what these terms mean, the IRS’s statement could allow churches and other houses of worship to make a wide range of partisan political statements to large audiences. It also could give some donors incentives to make significant, tax-deductible contributions to churches and other houses of worship to make political statements – donations that could come at the expense of contributions to other charitable nonprofits.

Absolutely! The underlying law prohibiting 501(c)(3)s from engaging in partisan politics remains unchanged. And, as we explained two questions ago, getting involved in partisan politics is harmful for charitable nonprofits for a host of reasons (including the six we enumerated).