The Johnson Amendment Lives Another Day
President Trump says he wants to “totally destroy” the Johnson Amendment, the provision that denies § 501(c)(3) status to organizations that intervene in campaigns for public office. His comments come one day after two House Republicans introduced the Free Speech Fairness Act, and Trump’s “totally destroy” remark seems to be a reference to that legislation. Yet the Free Speech Fairness Act would do nothing of the sort: indeed, it would leave the Johnson Amendment in place and allow only “de minimis” campaign expenditures by § 501(c)(3) organizations.
Let’s start with the text of § 501(c), reproduced in relevant part below with the words added by the Johnson Amendment in bold:
The following organizations [are exempt from taxation]:
. . .
(3) Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition . . . , or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.
History has it that then-Senator Lyndon B. Johnson added the bolded language because he was worried about a right-wing Dallas millionaire using a § 501(c)(3) organization to bolster Johnson’s challenger in the 1954 Democratic primary. Johnson was then seeking — and would ultimately win — reelection to a second Senate term. Note that the Johnson Amendment is not limited to churches; indeed, it was probably not targeted at churches but at two nonreligious organizations aiding LBJ’s opponent. (Congress added the parenthetical “(or in opposition to)” in 1987.)
Next, let’s look at the Free Speech Fairness Act, the bill that Representatives Jody Hice (R-Ga.) and Steve Scalise (R-La.) introduced yesterday. The 2017 version is not yet posted on the Congress website, but the same members introduced an identically titled bill last year whose language we do have (and by all indications the new bill tracks the 2016 version).
The Free Speech Fairness Act of 2016 leaves the language of § 501(c)(3) in place — Johnson Amendment and all. What it does instead is add to the statute a new subsection (s), which reads as follows:
(s) Special Rule Relating To Political Campaign Statements Of Organization Described In Subsection (c)(3). —
“(1) IN GENERAL. — For purposes of subsection (c)(3) and sections 170(c)(2), 2055, 2106, 2522, and 4955, an organization shall not fail to be treated as organized and operated exclusively for a purpose described in subsection (c)(3), nor shall it be deemed to have participated in, or intervened in any political campaign on behalf of (or in opposition to) any candidate for public office, solely because of the content of any statement which —
“(A) is made in the ordinary course of the organization’s regular and customary activities in carrying out its exempt purpose, and
“(B) results in the organization incurring not more than de minimis incremental expenses.”
In short, the Free Speech Fairness Act adds a “de minimis” exception to the Johnson Amendment. So a member of the clergy who endorses a political candidate in the course of a weekly sermon wouldn’t endanger her congregation’s § 501(c)(3) status. Ditto for a college newspaper with § 501(c)(3) status that prints an endorsement of a presidential candidate on its editorial page. The limits on lobbying by § 501(c)(3) organizations would remain unaffected. Meanwhile, a § 501(c)(3) organization that spent more than a “de minimis” amount on campaigning would put its status in jeopardy.
Three quick takeaways:
— (1) It’s not obvious that the Free Speech Fairness Act would favor Republicans. It would allow Planned Parenthood the same freedom to endorse candidates that it would give to, say, Samaritan’s Purse.
— (2) The phrases “ordinary course” and “de minimis incremental expenses” are not self-defining. I would think that a § 501(c)(3) organization that, say, orchestrates a get-out-the-vote campaign targeted at supporters of a particular candidate would run afoul of the Johnson Amendment and would not be saved by the new subsection (s). But much will depend on the way that the IRS interprets — and enforces — the ambiguous language that Hice and Scalise have put forward.
— (3) It’s also not obvious to me that this is a bad idea. Without a de minimis carevout, the Johnson Amendment acts as a potential tripwire for organizations like the Yale Daily News that simply failed to understand the § 501(c)(3) rules. That is (speaking of endorsements) far from an endorsement of the proposal, but of all the policy ideas to come out of the Trump administration so far, this seems like one of the least objectionable.
