David Heinen, Vice President for Public Policy and Advocacy, North Carolina Center for Nonprofits
February 10, 2017
At February’s National Prayer Breakfast, President Donald Trump announced his plans to “get rid of and totally destroy the Johnson Amendment,” a long-standing law that prevents charitable nonprofits from engaging in partisan, election-related activities. While the President’s remarks focused on political speech by religious institutions, the underlying law he proposes to eliminate is essential to preserving the integrity of all charitable nonprofits, including food banks, hospices, child care services, hospitals, arts organizations, schools, and affordable housing providers.
The prohibition on partisan activities by charitable nonprofits – which President Trump has termed the “Johnson Amendment” because it was introduced in 1954 by then-Senator Lyndon Johnson before being signed into law by President Dwight Eisenhower – lays out the ground rules that help insulate 501(c)(3) organizations from getting entangled in partisan politics. The law provides that charitable nonprofits can’t endorse or oppose candidates for office, can’t coordinate their activities with candidates, political parties, or PACs, and must refrain from making political campaign contributions.
Eliminating the law would mean that individual 501(c)(3) nonprofits could come to be regarded as Democratic charities or Republican charities instead of the nonpartisan problem solvers they are. In today’s polarized political environment, this would diminish the public’s overall trust in the nonprofit sector and consequently would limit nonprofits’ effectiveness in carrying out their mission-related programs and activities.
The law also ensures that donors’ charitable contributions are used for the charitable, religious, and educational purposes for which they are intended rather than being diverted to political parties or candidates. Without this assurance, many donors will feel less comfortable giving generously to nonprofits. Also, if the prohibition on partisanship by 501(c)(3) organizations were eliminated, private foundations and community foundations (which also fall under Section 501(c)(3) of the Internal Revenue Code) would likely be pressured to spend their money on political campaigns rather than investing it in the work of community-based nonprofits.
A change in the law is not necessary to protect free speech rights of nonprofits. Under the current law, nonprofits – and their individual staff and board leaders – have three significant legal avenues for making their voices heard on policy issues without getting involved in partisan politics.
First, 501(c)(3) nonprofits can advocate on policy issues. Charitable nonprofits can help shape the public dialogue on topics related to their missions, such as the needs of homeless veterans, the effectiveness of early childhood education, or the best ways of delivering health care to individuals with mental illness. Leaders of nonprofit religious institutions often – and properly – help inform their congregations about a variety of policy issues important to their faith, such as the sanctity of all human life, social justice, immigration policy, and religious freedom. Federal tax law even allows charitable nonprofits to lobby to directly influence legislation related to their missions.
Second, nonprofit staff, board members, and volunteers are free to get involved in politics as long as they clearly separate their personal political activity from their nonprofit’s operations. Many nonprofit leaders share their political views on social media, work or volunteer for political campaigns, donate their money to political causes, and even run for office.
Third, nonprofits that are interested in taking sides in partisan politics have the option of seeking tax-exemption under other provisions of the Internal Revenue Code. While 501(c)(3) nonprofits must remain nonpartisan, other types of tax-exempt organizations – including 501(c)(4) social welfare organizations like the National Rifle Association and the Sierra Club, 501(c)(5) labor unions, and Section 501(c)(6) trade associations – can endorse candidates and contribute financially to political campaigns. Unlike 501(c)(3) nonprofits, these organizations don’t rely on tax-deductible charitable contributions for their revenue, since the charitable deduction is premised on the notion that donations are used for public purposes that help entire communities rather than for potentially divisive political purposes.
The current law on nonpartisanship is a major reason why charitable nonprofits are safe havens from politics, a place where North Carolinians from across the political spectrum can come together to actually solve community problems rather than simply posture and attack people with differing viewpoints. Eliminating or restricting this law would have significant negative ramifications for nonprofits, their donors, and the communities that they serve. Keeping the law the way it is would benefit all 501(c)(3) nonprofits.
Learn more about how your nonprofit can be nonpartisan and advocate.