Why We Must Preserve the Johnson Amendment

For decades, a provision of the tax code called the Johnson Amendment has prohibited tax-exempt organizations from endorsing political candidates. And since its enactment, it has been largely uncontroversial. Despite the longstanding nature of this rule and its general acceptance across the country, the tax reform bill recently passed by the House of Representatives threatens to change the rules for all 501(c)(3) tax-exempt organizations, with serious implications for our elections.

What is the Johnson Amendment?

Originally enacted in 1954, championed by then-Senator Lyndon B. Johnson, the Johnson Amendment prohibits 501(c)(3) organizations, such as religious groups, charities, foundations, and universities, from endorsing any political candidate. This condition is part of the requirements these organizations follow in exchange for the benefit of not being taxed on the money they raise through charitable contributions.¹

The Johnson Amendment doesn’t prevent these organizations from taking a stance on specific issues—merely from endorsing candidates in an election. For example, churches are completely free to publicly oppose or support marriage for gay couples, and an organization focused on environmental issues can run a public ad campaign on climate change. The law has never kept these organizations from speaking on issues about which they care deeply. It merely ensures that non-partisan, non-profit organizations do not use tax-exempt dollars to support political candidates.

What does the House Tax Bill Do?

The House-passed tax reform bill, the Tax Cuts and Jobs Act, contains a provision that effectively repeals the Johnson Amendment.² The bill would allow non-profit organizations to endorse or oppose political candidates if done in the “ordinary course” of their tax-exempt purpose, as long as they did not spend more than a “de minimis incremental expense” in endorsing the candidate. Essentially, this means an organization could endorse someone if they did so in a way connected to their typical work, and if they did not spend significant extra money on the endorsement. This new language would allow a tax-exempt organization to include candidate endorsements in speeches and sermons, group member mailers, and potentially even advertising campaigns, if paired with their usual causes.

Additionally, while the repeal keeps prohibitions on financial contributions to a candidate by a 501(c)(3), groups could still use tax-exempt money to support a candidate’s campaign. If the law is changed, a non-profit organization could potentially spend countless tax-exempt dollars on an ad campaign that promotes the candidates’ priorities and perhaps even the candidate him or herself. The organization could then argue that the ads were part of their regular tax exempt purpose and any component that referenced a candidate did not incur more than a “de minimis incremental additional expense.”³

The House repeal is also much broader than a recent executive action President Trump issued in May relating to the Johnson Amendment. That order, which largely was viewed as symbolic, spoke only about religious organizations and didn’t change existing law preventing political endorsements.⁴ It effectively changed no federal enforcement or regulation of houses of worship. The House-passed tax bill, on the other hand, actually alters the tax code to specifically allow political endorsements by any 501(c)(3) tax-exempt organization.

What are the Implications?

The House-passed language repealing the Johnson Amendment would have far reaching implications for our elections if it were signed into law. It would enable a surge of candidate endorsements by non-profit, tax exempt organizations, without the same oversight and safeguards that apply to political organizations who currently engage in those activities.

Allowing 501(c)(3) organizations to endorse candidates would create an entirely new way to inject untraceable money into American politics—making every non-profit in the country into a kind of super-super PAC. While the “de minimis” spending language of the repeal bill would likely prohibit a tax-exempt organization from running an independent advertisement in favor of a candidate, if the ad combined messages typical to the organization with an endorsement, it could potentially be allowed. Moreover, for churches or religious organizations that regularly televise their content, they could be allowed to broadcast their endorsement on TV through those same methods. And serious questions remain as to how this will impact the autonomy and independence of houses of worship and other organizations. When churches endorse a candidate, would they have to keep records of their sermons to prove an endorsement was made in compliance with the amended tax code?

Moreover, 501(c)(3)s are not subject to the stringent donor reporting requirements and limits that come with political campaigns. Instead, they are permitted to keep donors’ identities anonymous from the public, and there are no limits on how much an individual may contribute to a charitable organization.⁵ With the Johnson Amendment in place, this hasn’t been problematic because these organizations do not directly engage in influencing elections. But if the Johnson Amendment is repealed, large donors, including possibly foreign citizens, could give politically active non-profit groups unlimited amounts of money to impact our elections and the public would have no way of knowing.

Repealing this law would also let individuals receive tax deductions for the money they give to organizations that endorse candidates. Contributions to political campaigns or candidates are not tax deductible, but donations to 501(c)(3)s are.⁶ The Johnson Amendment repeal therefore would let donors funnel money to organizations that are particularly active in making endorsements, while receiving a tax benefit—effectively creating tax deductible super PACs.

Conclusion

Given these concerns, it’s unsurprising that a majority of Americans oppose repealing the Johnson Amendment. A recent poll found that 79% of all Americans object to repeal. And opposition holds strong among specific religious groups as well.⁷ Fifty-six percent of white Evangelicals oppose repeal, while only 36% favor it. Among Catholics, opposition is even stronger, with 69% opposing and just 25% favoring.⁸ Without question, most Americans want to keep their churches separate from partisan politics.

For over 60 years, the Johnson Amendment has existed without much controversy or problem. The current state of the law allows organizations to weigh in on issues they care deeply about, without risking the integrity of our campaign finance laws. In repealing the Johnson Amendment, Congress is attempting to create an unpopular problem where none existed before.