H.R. 2357, titled the “Houses of Worship Political Speech Protection Act”, would allow religious organizations to support or oppose candidates for public office without losing their tax-exempt status. (Current tax law prohibits all nonprofits exempt under 501(c)(3) of the tax code from attempting to influence elections.) H.R. 2357’s sponsors claim: ? The bill is needed to allow religious leaders to speak on issues of the day. ? This year’s campaign finance reform law will prevent religious congregations from spending funds on partisan electioneering even if H.R. 2357 becomes law. Why are they wrong?

1. This Bill is NOT Needed to Allow Religious Leaders To Speak on Issues.
Most of the nonprofits in the United States fall into the category of charitable, religious, educational or scientific organizations exempt from tax under Section 501(c)(3) of the tax code. Donors to these organizations can deduct their contributions from their taxes. The only significant limitation on these groups is that they cannot support or oppose candidates for office.

Current Law Allows Unlimited 501(c)(3) Time and Money for:
? Commentary on public issues from the pulpit, in newsletters, etc.
? Public education campaigns
? Publication of pamphlets, research, newsletters and analysis
? Litigation
? Comment on proposed regulations
? Participation in agency and commission proceedings
? Nonpartisan voter education, registration and get out the vote activity

Limitations on 501(c)(3) Legislative Lobbying
? All public charities, including religious organizations, can lobby at the local, state or national level as long as it is not a “substantial part” of its overall activities. Non-religious public charities can use an expenditure test to define “substantial”.

Prohibition on Supporting or Opposing Candidates for Office
? The tax code prohibits public charities, including religious organizations. From supporting or opposing candidates, but there are no regulations that clearly define what activities are allowable and what are not. The IRS uses a “facts and circumstances” test to determine whether a 501(c)(3) has in fact engaged in partisan electioneering. This lack of clarity leaves all 501(c)(3)s, not just religious organizations, without clear guidance.

Current Law Allows Public Charities to Create Affiliates That Can Be Partisan in Elections
? Court decisions have made it clear that any 501(c)(3), including religious organizations, can create 501(c)(4) affiliate that can endorse or oppose candidates. Contributions to these organizations are not tax deductible.

Clergy, Members of Congregations and Others Can Act as Individuals
? Any person, acting on their own behalf, can endorse candidates, volunteer on campaigns, or even run for public office, as long as they do not use the resources of a 501(c)(3) organization.


2. The Bipartisan Campaign Reform Act of 2002 (BCRA) Will NOT Prevent Religious Congregations From Spending Funds on Partisan Electioneering if H.R. 2357 Becomes Law.

BCRA would not prevent religious congregations from spending money on partisan campaigns. While corporate entities, including religious congregations, generally cannot make direct contributions to federal candidates from their treasuries, there are several ways that religious organizations could spend funds for partisan electioneering without creating a 501(c)(4) affiliate if HR 2357 becomes law. The following examples illustrate some of the ways this might happen:

? BCRA does not apply to state or local elections. Religious organizations could participate in partisan electioneering in these campaigns to the extent allowed by state or local law.

? Congregations could establish separate segregated funds (SSF) that could solicit donations from their members and make direct contributions to federal candidates;

? The religious SSF could pay for campaign activities, such as direct mail appeals or telephone banks, that ask its members to vote for a specific candidate as long as the effort is not coordinated with the candidate’s campaign;

? A religious organization meeting the requirements for Qualified Nonprofit Corporations in 2 USC 441(b) could spend funds to expressly advocate election or defeat of a federal candidate through newspaper ads, direct mail, telephone banks, bumper stickers or other means. To qualify the group would have to show it has no business activities and does not receive funds from corporations or labor organizations;

? A religious organization could spend funds on general public communications that do not expressly call for election or defeat of a specific federal candidate, but do, through their message, support or oppose candidates or parties.