December 8, 2005 | Read Time: 6 minutes
Before calling on their congregations to promote “peace on earth” this holiday season, religious leaders throughout the United States would be well-advised to consult their lawyers, not just their Bibles.
The reason church leaders need to stay on top of the laws that govern nonprofit organizations is that the Internal Revenue Service has been aggressively examining organizations that might have violated laws that prohibit tax-exempt groups from getting involved in partisan politics.
Last month, All Saints Episcopal Church, in Pasadena, Calif., let it be known that it was under investigation, and national religious leaders, as well as the news media, have been paying close attention to the case. Just before last year’s election, a former minister of the church took to the pulpit there to criticize President Bush over the war in Iraq and urge congregation members to go to the polls and “vote all your values.” The IRS has not concluded its inquiry, but the church has vigorously defended its actions and says it has done nothing wrong.
This episode is just one in a growing number of controversies over nonprofit advocacy.
Leaders in the nonprofit world have been so afraid to lose the right to speak out on hot-button issues that they have been reluctant to acknowledge the need for charities and churches to do a better job of following the law. In so doing, they are doing the opposite of what they hope to achieve: By defending most of what charities do, and not acknowledging that some groups have indeed crossed an improper line, they are inviting tougher law enforcement, as well as new and tighter restrictions on advocacy.
Indeed, such restrictions are already being imposed or considered by every branch of the federal government.
For instance, the IRS is looking at more than 100 groups, including All Saints Episcopal. In two-thirds of those cases, according to a Treasury Department inspector general, the evidence justified further examination.
Beyond the organizations now getting a more thorough investigation, other churches and nonprofit groups have been warned by government officials that they should be careful.
For instance, a Unitarian church in South Bend, Ind., that was planning a forum on Social Security reform said it had been warned by an Indiana government official to avoid taking sides in such hotly contested issues.
Moreover, in response to allegations that Fannie Mae and other government-sponsored mortgage lenders were mobilizing nonprofit groups to lobby on their behalf, the U.S. House of Representatives has passed a housing-finance bill that includes what one supporter of nonprofit political advocacy called a “gag provision.” The legislation forbids organizations from receiving federal grants to run low-cost housing programs if they lobby or run other political activities, including voter registration. While it is unclear whether the Senate will agree to add the advocacy restriction to its housing legislation, it is possible that lawmakers will start spreading the idea and adding the restriction to all kinds of federal spending bills.
On top of this, the U.S. Supreme Court is scheduled next month to consider whether the federal campaign-finance law applies to charities.
Wisconsin Right to Life is appealing a lower-court judgment that ads it sponsored just before the 2004 election — which mentioned several candidates for office by name — violated the law’s restrictions on communications efforts designed to influence voters.
The Wisconsin organization says that the ads were focused on the issues, not on the candidates, and were therefore not within the law’s reach, and it has persuaded many other advocacy groups (including those on the other side of the abortion issue) to join its case. However, some campaign-finance watchdog groups, such as Public Citizen, say the ads were clearly designed to influence voters and therefore broke the law.
Champions of nonprofit advocacy view efforts to curtail the political activity of charities as the result of problems with existing laws, which they regard as either too vague or too broad. As a result, they fear that government has chosen to enforce the law selectively, advancing its own political views — and therefore nonprofit groups have been overly cautious about taking part in efforts that would help the people or causes they serve.
Yet, few nonprofit officials would go so far as to suggest that advocacy restrictions be repealed altogether, even though the First Amendment to the Constitution bars any limits on freedom of speech, assembly, and religion.
To the contrary, a measure backed chiefly by conservative religious groups, the Houses of Worship Free Speech Restoration Act, which would allow churches to endorse candidates for public office, has been opposed by organizations, such as OMB Watch, a Washington group that normally promotes greater nonprofit advocacy. To OMB Watch, current law serves “as a valuable safeguard for the integrity of charities, religious institutions, and the political parties,” a position that seems hard to reconcile with its vigorous complaints that All Saints Episcopal Church is being unfairly attacked by the IRS.
Instead, nonprofit leaders tend to favor creating “bright line” tests designed to make it clear to organizations whether their actions are likely to violate tax or campaign-finance laws.
However, where to draw such lines can be controversial. In effect, the House of Representatives established such a line by forbidding housing charities that receive federal aid from lobbying, but many nonprofit advocates consider that limit to be overly restrictive.
Most groups can usually find loopholes to achieve their lobbying aims, so it is hard to say what restrictions really make sense.
In a political world in which the distinctions between candidates and issues, partisans and nonpartisans, expressions of values and calls to vote in a certain way, are often blurred, doubts about what is allowable and what is not are bound to arise.
Though imperfect, the rules regarding nonprofit advocacy seek to define the inherently undefinable, while relying on intermittent enforcement to punish and deter violators.
As long as the IRS and other government agencies use their powers sparingly and without bias, such a system can provide a fuzzy, but generally workable, way of balancing the rights of nonprofit organizations with the public’s expectation that they will not take advantage of their tax-exempt status for political gain.
But this system also requires nonprofit groups to exercise restraint and not challenge the rules by engaging in activities that are egregiously partisan. Financial excesses, such as overcompensating executives and making large payments to fund-raising companies, have harmed the philanthropic world’s reputation and led to calls for increased self-regulation in lieu of more stringent government controls. Judging from the growing concern throughout government, perhaps the time has come for similar calls about nonprofit political advocacy.
Leslie Lenkowsky is a professor of public affairs and philanthropic studies at Indiana University and a regular contributor to these pages. His e-mail address is llenkows@iupui.edu.
