Under Internal Revenue Code Section 501(c)(3), tax-exempt organizations including churches and religious institutions are strictly prohibited from participating or intervening, directly or indirectly, in any political campaign on behalf of or in opposition to a candidate for public office.
Historically known as the Johnson Amendment, this rule has been interpreted by the IRS to apply to sermons, public statements, and communications made in the ordinary course of religious activity.
A New Development: IRS – NRB Consent Decree
A recent consent decree between the National Religious Broadcasters (NRB) and the IRS in the U.S. District Court for the Eastern District of Texas marks a notable shift in interpretation.
The IRS clarified that speech occurring within the internal communications of a house of worship including messages to congregants during religious services does not fall within the Johnson Amendment’s restrictions.
According to the IRS, such internal religious speech may be viewed as equivalent to a “family discussion concerning candidates,” rather than political campaigning.
Constitutional and Legal Considerations
The NRB challenged the Johnson Amendment on multiple constitutional grounds, arguing that it violated:
- The First Amendment: freedom of speech and free exercise of religion.
- The Fifth Amendment: due process and equal protection rights.
- The Religious Freedom Restoration Act: by burdening religious exercise.
In response, the IRS acknowledged that interpreting the amendment to cover purely internal religious discussions would raise First Amendment concerns. It therefore clarified that the Johnson Amendment does not apply to speech made by a house of worship to its congregation in the course of religious services or other faith-based communications.
Implications for Faith-Based and Other Nonprofits
The reinterpretation has drawn mixed reactions within the nonprofit community.
- Supporters see it as an overdue recognition of religious freedom and autonomy.
- Critics warn that it could open the door for churches to become channels for partisan politics, potentially undermining the charitable framework that separates political activity from tax-exempt purposes.
From an accounting and compliance standpoint, this development raises key considerations:
- Monitoring Communications: Review public statements, newsletters, and online content to ensure focus on mission-related issues rather than candidate advocacy.
- Governance Oversight: Ensure board-approved policies clearly differentiate between education/advocacy and political intervention.
- Documentation and Training: Provide clear internal guidance for leadership and staff, especially around distinguishing spiritual messaging from external endorsements.
- Consistency Across Entities: Align political-activity restrictions across related entities (e.g., a church and a 501(c)(3) foundation) to prevent inadvertent violations.
What Nonprofits Should Watch For
While the IRS’s position narrows the Johnson Amendment’s application to internal religious communications, it does not repeal the political-activity prohibition. The statutory restriction remains in full effect for all 501(c)(3) organizations.
Nonprofits should remain vigilant regarding:
- Public Endorsements: Avoid statements supporting or opposing candidates in any public forum.
- Use of Resources: Prohibit use of organizational funds, facilities, or staff time for partisan purposes.
- Equal Access Policies: Ensure equal opportunity if facilities or communication channels are offered to any candidate.
- Ongoing IRS Guidance: Monitor IRS publications, court rulings, and legislative developments for further clarification.
Conclusion
The recent IRS – NRB consent decree represents a refinement, not a repeal, of rules governing political activity by religious institutions.
Accounting and advisory professionals should guide nonprofit and religious clients in balancing free-speech rights with regulatory compliance, ensuring policies, training, and documentation are up to date.
For all nonprofits, faith-based or secular serves as a timely reminder to maintain mission focus, separate charitable work from campaign activity, and keep thorough records. Doing so will protect both your tax-exempt status and public trust as interpretations continue to evolve.
