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Trump Issues Executive Order on Nonprofit Political Activity

May 15, 2017

On May 4, President Donald Trump signed an executive order (EO) titled “Promoting Free Speech and Religious Liberty.” The stated intent of the order is to “vigorously enforce federal law’s robust protections for religious freedom” but its ultimate effect is not apparent. 

The EO follows a statement Trump made in February to “get rid of and totally destroy the Johnson Amendment” – the statutory language in Internal Revenue Code §501(c)(3) that prohibits all organizations described in section 501(c)(3) from participating in, or intervening in (including the publishing and distributing of statements), any political campaign on behalf of or in opposition to any candidate for public office. Then-Sen. Lyndon Johnson (D-TX) sponsored the legislation, which was enacted in 1954, citing unwelcome political intervention by charitable organizations in the Texas Democratic primary as his policy rationale.

The EO requires the secretary of the treasury and the Internal Revenue Service (IRS) to refrain from taking “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.”

It is unclear what the legal effect of this executive order will be because existing law (the Johnson Amendment) and the IRS’s interpretation of the existing law are clear about the limits of political activity by nonprofits, including religious organizations and their representatives.

For example, Revenue Ruling 2007-41 states that “[t]he political campaign intervention prohibition is not intended to restrict free expression on political matters by leaders of organizations speaking for themselves, as individuals… However, for their organizations to remain tax exempt under section 501(c)(3), leaders cannot make partisan comments in official organization publications or at official functions of the organization.”

Some nonprofit organizations have criticized the restriction on political campaign intervention for chilling their freedom of speech. Campaign finance public interest groups are concerned that charities will become “super-super PACs” if they can participate in politics because they would be able to offer donors not only anonymity but also deductible charitable contributions.

Colleges and universities are advised against taking actions based on perceived administrative forbearance with respect to the enforcement of the Johnson Amendment at this time.

Contact

Mary Bachinger
Director, Tax Policy
202.861.2581
E-mail