By Benjamin Leff
Last Sunday was Pulpit Freedom Sunday. With all of the speculation over Donald Trump’s tax strategies (personal and charitable), and then the publishing of the video showing Donald Trump saying terrible things, my Twitter feed had very little to say about pastors endorsing candidates from their pulpits. In fact, the news coverage has been surprisingly slim. But, all that notwithstanding, I thought I’d take the opportunity to finally explain why I think that the law does not prohibit pastors of tax-exempt churches (or leaders of any other 501(c)(3) organization) from communicating an express endorsement of a candidate in a regular meeting of the organization. I’ve mentioned this position in a number of previous posts here and here (and annoyingly to them I’m sure, on my friends’ Facebook feeds) and keep linking to a 2009 article I wrote on the topic. But who wants to read that? The dominant argument against me appears to be that churches are free to endorse candidates or be tax-exempt, but not both, and forcing that choice is not a Constitutional problem. But that argument is not an accurate description of the law, as I understand it (although, of course, I have to caveat that I’m a tax guy, not a Constitutional law scholar).
The Internal Revenue Code requires that an organization qualifying for tax exemption under section 501(c)(3) “does 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.” Any organization that does intervene in a political campaign fails to qualify for tax-exempt status, and so it is fair to say that 501(c)(3) organizations are prohibited from intervening in political campaigns. This is the so-called Johnson Amendment that the folks behind Pulpit Freedom Sunday (and, apparently, Donald Trump) are so worked up about.
Obviously, what constitutes an intervention can be a complicated issue, and, helpfully, the IRS has published guidance to assist organizations to understand when the IRS will view their behavior as impermissible. The IRS’s guidance states clearly that non-neutral speech about the qualifications of a candidate for public office will constitute intervention when the speech can be attributed to the organization itself. And, the speech of an “organizational leader” can be attributed to the organization when they “make partisan comments in official organization publications or at official functions of the organization.” Thus, IRS guidance suggests that a pastor speaking favorably about Hilary Clinton’s qualifications for office at a Sunday worship service, or a university dean speaking favorably about Donald Trump’s qualifications for office at a monthly faculty meeting, would constitute impermissible campaign intervention by the church or university since the “partisan” comments by the organizational leader could be attributed to the organization and constitute campaign intervention.
This analysis is why certain commentators complain that the law muzzles religious leaders, since they are not free to urge support for (or opposition to) candidates from their pulpits, although the IRS Guidance is equally clear that they can speak freely about politically-charged moral issues, like abortion and same-sex marriage, and can even lobby extensively about legislative matters. So, why do I keep saying that pastors are free to endorse candidates from their pulpits? It’s because of the Constitution.
Previously, I’ve been citing myself for this argument, but, in all fairness, the late Laura Brown Chisolm made it eighteen years before I did, and better. As she explained, the leading case about the constitutionality of political-speech restrictions in the tax-exempt context is Regan v. Taxation With Representation of Washington, 461 U.S. 540 (1983)(“TWR”). TWR was actually about the lobbying restriction, not the campaign-intervention prohibition. In TWR, the Court held that tax-exempt organizations have a constitutional right to engage in speech, including political speech, but that the government was not required to “subsidize” that speech by permitting tax-deductible contributions to fund it. In a concurrence that was later adopted by the Court, Justice Blackmun famously wrote, “Because lobbying is protected by the First Amendment… §501(c)(3) therefore denies a significant benefit to organizations choosing to exercise their constitutional rights. The constitutional defect that would inhere in §501(c)(3) alone is avoided by §501(c)(4)…. TWR may use its present §501(c)(3) organization for its nonlobbying activities and may create a §501(c)(4) affiliate to pursue its charitable goals through lobbying.” In my article, I called this aspect of the law the “affiliate organization solution,” but it has more famously been called the “alternate channel doctrine.” The alternate channel doctrine holds that the Constitution permits the speech of 501(c)(3) organizations to be limited as a condition of their tax-exempt status, but only if they have some “alternate channel” to engage in that protected speech. But, Justice Blackmun went on to describe in some detail what the limits of the alternate channel doctrine are:
“It must be remembered that §501(c)(3) organizations retain their constitutional right to speak and to petition the Government. Should the IRS attempt to limit the control these organizations exercise over the lobbying of their §501(c)(4) affiliates, the First Amendment problems would be insurmountable. It hardly answers one person’s objection to a restriction on his speech that another person, outside his control, may speak for him. Similarly, an attempt to prevent §501(c)(4) organizations from lobbying explicitly on behalf of their §501(c)(3) affiliates would perpetuate §501(c)(3) organizations’ inability to make known their views on legislation without incurring the unconstitutional penalty. Such restrictions would extend far beyond Congress’ mere refusal to subsidize lobbying…. In my view, any such restriction would render the statutory scheme unconstitutional.” (emphasis added).
So, how does this case on lobbying relate to campaign intervention? The short answer is that IRS guidance on campaign intervention differs from its guidance on lobbying because it denyies 501(c)(3) organizations who want to endorse candidates the “alternate channel” that is provided for lobbying. And therefore current guidance is unconstitutional. According to IRS guidance, even if a church created a 501(c)(4) organization to pay all the costs of its parent church’s endorsement activities, the church would violate the campaign-intervention prohibition. Remember, Justice Blackmun made it clear that the question is not who is speaking, but who pays for the speech. So, a pastor should be free to communicate the official endorsement of the 501(c)(3) church without the church risking its tax-exempt status, as long as such endorsement was paid for by the affiliate.
If the IRS has not given 501(c)(3) organizations an alternate channel, then organizations must be free to attempt to create one that preserves their constitutionally-protected speech rights, as long as respects the government’s interest in preventing them from using subsidized funds for campaign intervention. One possibility would be for 501(c)(3) organizations to create 501(c)(4) affiliates to communicate their endorsements. So, a church or other 501(c)(3) organization would craft whatever communication it wanted to make about a candidate’s qualifications for office (including an express endorsement, if it chose), and then rather than make this communication at a worship service or other regular meeting of the organization, its affiliated 501(c)(4) organization would fund the means of communication, whether that was a special meeting or an ad in a national newspaper or something else. But, I am more and more convinced that, despite its flaws, another adequate solution is just for the organization or its leaders to say what they want to say in a regular meeting, and then make sure that they are careful not to use the 501(c)(3) organization’s funds to communicate those views to a wider audience. If they want to take out an ad, or make a slick video, or pay for a direct-mail campaign, they have to use an affiliate’s funds for that. But they can treat the initial constitutionally protected speech as “free” when it is made at a regular meeting of the membership of the organization. I know it is not really free, and that’s what a bunch of my article is about. But I have now become convinced that, in the absence of IRS guidance that solves this problem, it is sufficient for an organization to treat such a communication as free, and therefore permitted.
I do not support legislation that simply repeals the so-called Johnson Amendment, because that would create a big campaign-funding loophole that would allow charities (or, even worse, as sometimes crafted, just houses of worship) to spend unlimited amounts of tax-deductible contributions to elect or defeat a candidate for office, in effect creating a government subsidy for the political speech of some that is denied to all others. That would horribly distort the balance between free speech and governmental subsidy that complicates this issue (and if it applied only to houses of worship would probably be unconstitutional). But I do support legislation that creates a limited safe-harbor for the kind of speech I’ve described above.
For example, the Free Speech Fairness Act of 2016 (sponsored by two Republican representatives) does an adequate job. It permits 501(c)(3) organizations to engage in speech, no matter how political, so long as such speech “(A) is made in the ordinary course of the organization’s regular and customary activities in carrying out its exempt purpose, and (B) results in the organization incurring not more than de minimis incremental expenses.” It does not distinguish between religious organizations and others.
But, in the absence of Congress acting, I am in favor of pressing this issue through litigation, and letting a court force the IRS into modifying its position to better balance organizational speech rights and the government’s interest in refraining from subsidizing campaign-related speech.