Corporate Responsibility

Is Relaxing the Johnson Amendment Good or Bad for Faith-Based Investments?


President Trump has signed an executive order relaxing IRS enforcement of the Johnson Amendment, which bans tax-exempt organizations (including churches) from political speech and activities. The order will make it easier for religious organizations and charities to get involved in politics, should they choose to. But that’s a big “If.” Some organizations welcome the opportunity, while others aren’t so sure.

Religious and nonprofit organizations have already been involved in politics. They’ve long been free to run voter registration guides, publish voting guides, and advocate on areas of concern, as long as lobbying is not their primary function. And in fact, America is experiencing a swell in political activity from religious groups. What’s changed with the recent executive order is that churches and other charitable religious organizations can now spend tax-deductible donations on campaign contributions and make direct endorsements.

According to NPR, the Johnson Amendment was a change in tax law sponsored by Lyndon Johnson in 1954, when he was a member of the US Senate. It banned all 501(c)(3) nonprofits from involvement in political campaigns. But now, with the new leeway granted by the executive order, religious groups have more options than ever—and must carefully consider the way ahead.

Questions to Consider and Potential Rewards

While the risks of getting involved in politics are high, some organizations may be willing to take that risk in order to cause change. After all, having influence on who is elected may be more effective than advocating for legislation after voters have already made their choice. For religious organizations, participation in political campaigns could bring a new wave of energy. And supported politicians could push changes that reflect stakeholders’ values and vision.

Of course, as with any major decision, organizations need to determine how political activity aligns with their missions and strategic plans. Grant-making organizations will need to consider how political contributions fit into their missions. Since it’s doubtful that the IRS would allow political activity to count as part of a foundation’s giving requirement, trustees of private and community foundations will need to determine how political activities might fit into investment and spending policies.

Concerns and Potential Risks

While the stakeholders of some religious nonprofit organizations may find common cause during election season, others may find themselves on opposing sides. Members of the same denomination don’t necessarily support the same politicians. For example, preliminary results from a Pew Research Center survey about voting trends in the 2016 presidential election revealed a split among Catholics, with 45% voting for Clinton and 52% for Trump. It’s important for an organization to know if a similar split exists within its membership before entering the political sphere.

It’s not just internal strife that may cause religious organizations to stay out of political campaigns. For many, cooperation with other groups is an essential tool in carrying out mission goals. Interfaith organizations and religious coalitions can be powerful and even essential. But if religious organizations help elect politicians whose beliefs conflict with those of fellow coalition members, they may find themselves excluded and less able to enact change overall.

Additionally, secular groups may object to the very idea of religious organizations influencing elections and slow or stop any cooperation. Public trust may also suffer, especially if supported politicians are later embroiled in scandal or take unpopular actions. In the end, religious organizations must carefully weigh the opportunities against what they may lose out on.

The changes to the Johnson Amendment could allow some nonprofit organizations to further their missions, but the pitfalls are real. Political activity must be approached strategically and with a great deal of planning.

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