ICNL logo

The International Journal
of Not-for-Profit Law

Volume 7, Issue 1, November 2004

A publication of the International Center for Not-for-Profit Law

Table of Contents

Letter from the Editor

Nurturing Civil Society

The UN and Civil Society
John D. Clark

Civil Society and Media Freedom: Problems of Purpose and Sustainability in Democratic Transition
Craig L. LaMay

Religion in its Place
Jim Sleeper

Women, Civil Society, and NGOs in Post-Soviet Azerbaijan
Nayereh Tohidi


Legal Changes Affecting Not-for-Profits in Japan
J. Hana Heinekin and Robert Pekkanen

Lazarus Rising: Civil Society and Sierra Leone's Return from the Grave
J. Peter Pham

Ten Emerging Principles of Governance by Nonprofit Corporations and Guides to a Safe Harbor
Thomas Silk

Emerging International Information Collection and Sharing Regimes: The Consequences for Canadian Charities
Terrance S. Carter and Sean S. Carter

Politics and the Pulpit
Milton Cerny


Effective Economic Decisionmaking by Nonprofit Organizations
By Dennis R. Young
Reviewed by David Robinson

Framing Democracy: Civil Society and Civic Movements in Eastern Europe
By John K. Glenn III
Reviewed by Gerald M. Easter

American Creed: Philanthropy and the Rise of Civil Society, 1700 - 1865
By Kathleen D. McCarthy
Reviewed by Matthew Crenson

- - - - - - - - - -

Download this issue (PDF) | Editorial Board

Politics and the Pulpit

By Milton Cerny*

With every election season comes a flurry of information  — and misinformation — about what churches and other religious organizations can and cannot do. Fortunately for religious leaders, the law is relatively clear.

The Law

Like all organizations that are exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code and eligible to receive tax-deductible contributions under section 170(c)(2) of the Internal Revenue Code, churches are prohibited from supporting or opposing any candidate for elected public office. This prohibition applies to candidates for federal, state, and local offices. The IRS enforces this prohibition through audits, fines, and loss of tax-exempt status.

Q: Doesn’t the First Amendment allow churches to support and oppose candidates?

A: No. Churches, like all organizations tax-exempt under section 501(c)(3) of the Internal Revenue Code, are absolutely prohibited from supporting or opposing candidates for elected public office. As recently as 2000, a federal appellate court squarely rejected a church’s claim that the First Amendment’s free exercise of religion clause allowed the church to urge the public to vote against a candidate. Branch Ministries and Dan Little, Pastor v. Rossotti, 211 F.3d 137 (D.C. Cir. 2000); see also Bob Jones University v. United States, 461 U.S. 574, 603 (1983) (Supreme Court held that “not all burdens on religion are unconstitutional . . . . The state may justify a limitation on religious liberty by showing that it is essential to accomplish an overriding governmental interest.” (citation omitted)). The fact that a church may be motivated by its religious principles will therefore not prevent a church from losing its tax-exempt status and facing other penalties if it supports or opposes any candidate.

What Is Supporting or Opposing a Candidate?

The courts and the IRS consider all of the relevant facts and circumstances in determining whether a church has supported or opposed a candidate. While making donations to candidates, raising funds for candidates, and endorsing candidates are prohibited, so are more subtle efforts to support or oppose candidates. In its recently updated Tax Guide for Churches and Religious Organizations (Publication 1828), the IRS provides the following examples of prohibited activities by churches:

Court decisions, IRS rulings, and IRS publications provide the following additional examples of prohibited activity:

Q: Does this mean churches and pastors can’t do anything related to an election?

A: No. Churches are allowed to engage in strictly non-partisan election-related activities. For example, churches can encourage their members to register to vote and to vote as long as they do not encourage them to support or oppose particular candidates or parties. Encouraging support of a candidate includes oblique references, such as, for example, referring to a candidate for reelection as President by talking about all of the progress made during the “past 3-1/2 years” immediately before the election and discussing the importance of protecting the “conservative” (or “liberal”) agenda, even if the candidate is not mentioned by name.

Pastors are also allowed to personally support and even endorse candidates, but they must not use any church resources, such as letterhead, newsletters, or facilities to do so and must make it clear that they are speaking on their own behalf and not on behalf of the church.

Q: Does this mean churches can’t speak out on public policy issues?

A: No. Churches can speak out on public policy issues as long as such messages are not attempts to urge support for or opposition to any candidate. Churches can also engage in lobbying (supporting or opposing legislation, including ballot initiatives) as long as doing so remains an insubstantial part of the church’s total activities. Neither the IRS nor the courts have set a bright line for what is “insubstantial,” but generally spending less than five percent of the church’s expenditures, time, etc. on such activities should be insubstantial.

What Can Happen if a Church Supports or Opposes a Candidate?

A church that supports or opposes a candidate can find itself facing an IRS audit, fines and loss of tax-exempt status. Public information about IRS audits is relatively scarce because the IRS is not permitted to release such information, but here are a few examples of what has happened to some churches and other religious organizations:

These examples illustrate the following burdens churches that support or oppose candidates may face:

Q: Isn’t loss of tax-exempt status only “symbolic,” and so there is no real penalty for a church that supports or opposes a candidate?

A: Mathew D. Staver, President and General Counsel of Liberty Counsel, has stated that because churches can easily reclaim tax-exempt status, and donations to churches are not taxable as income, “churches do not need to fear the loss of their tax-exempt status” as a result of supporting or opposing candidates. He bases this view on the result of the Branch Ministries case, described above. This position is wrong for several reasons.

Even if a church does not suffer any financial penalty from the loss of tax-exempt status for one or more years because its only income is contributions, a church will still bear the burden of responding to an IRS inquiry and possible audit. More important, an IRS investigation will almost certainly distract church leaders from their other responsibilities and duties, often for several years.

A church may also face financial penalties. The IRS may assess excise taxes on both the church and its leaders. If the church received investment or other non-contribution income during the year for which it is no longer tax-exempt, it may be required to file IRS Form 1120 (corporate income tax return) and pay tax on that income. State or local authorities may also demand taxes for that period as well, including property taxes.

Rev. Jerry Falwell, in the July 21, 2004, edition of his e-newsletter Falwell Confidential, cites Mr. Staver’s views and states that Branch Ministries only lost its “IRS letter” for one day. This is simply incorrect. The IRS revoked the tax-exempt status of Branch Ministries on January 19, 1995, retroactively to January 1, 1992, and the courts upheld that revocation. The only reason this may not have resulted in tax was if Branch Ministries’ sole source of income was contributions.

Rev. Falwell also states that no church has ever really lost its tax-exempt status. This is clearly false. A simple search of IRS announcements for the word “church” reveals that on average about one church a year loses its tax-exempt status.

The greatest penalty, however, may be reputational. If the church becomes, fairly or not, primarily known in the community as the church that violated the law by supporting or opposing particular candidates, its ability to witness to the community may be irrevocably damaged.

Additional Resources

Additional information about the rules for churches and election-related activity include:


* Milton Cerny is a partner in the Washington, D.C., law firm of Caplin & Drysdale, Chartered. Before joining the firm, he served at the Internal Revenue Service for 28 years, including as the Chief of the Exempt Organizations Rulings area and as the Technical Advisor to the Assistant Commissioner for Employee Plans and Exempt Organizations. He is the Adjunct Professor of Law on Nonprofit Organizations at American University’s Washington College of Law and a former Chairman of the Political and Legislative Activities Subcommittee of the American Bar Association’s Exempt Organizations Tax Section Committee.


Copyright © 2012 The International Center for Not-for-Profit Law (ICNL)
ISSN: 1556-5157