The House and Senate Appropriations Committees has released the text of the $1.3-trillion omnibus spending bill. The Consolidated Appropriations Act of 2018, which is to fund the federal government through the fiscal year ending Sept. 30, features a number of positives for nonprofits and the populations that they serve.
The National Endowment of the Arts will see increased funding. Low-income tax credits will be expanded. What has some sector leaders most excited, however, is what’s not in the bill — language, originally included in the bill, to repeal of the Johnson Amendment.
The Johnson Amendment, which prohibits 501(c)(3) organizations from engaging in partisan politics, has been popular topic within the sector since a repeal was placed in the Republican Party’s platform in the autumn of 2016. While some tax-exempt organizations, particularly houses of worship, have supported a repeal, many in the sector have questioned whether a repeal could cost organizations their credibility in the public eye.
Lawmakers have sought to repeal the Johnson Amendment through two channels, according to David L. Thompson, vice president of public policy for the National Council of Nonprofits. First, the House of Representatives placed a provision in the initial draft of its tax bill to repeal the amendment for houses of worship. The exception was later broadened before being taken out of the bill entirely. The 2018 appropriations bill, until Wednesday, had been the second means of freeing up 501(c)(3)s for partisan speech.
An appetite for the repeal remains, according to Thompson, with some lawmakers and advocates believing that the speech of a religious leader ought not to be controlled. The counterpoint, Thompson said, is that religious leaders’ speech is already controlled by the inability to share individuals’ confessions or scream “fire” in a crowded congregation. The Joint Committee on Taxation has estimated that a church-specific repeal could also cost the U.S. Treasury $2.1 billion over 10 years as political supporters get wise and shift contributions from non-exempt entities to exempt ones. Taxpayers do not currently get a deduction for donating to entities such as political action committees, Thompson said.
The council is particularly concerned about potential pop-up churches as churches do not need to seek approval to form from the Internal Revenue Service (IRS) or file an IRS Form 990. Politically motivated churches could conceivably pop up before an election, raise money to support candidates, and then disappear without much of a paper trail.
Thompson predicted that a repeal of the Johnson Amendment could surface again in a tax technical corrections bill or the 2019 appropriations bill to be completed by Oct. 1, though it is possible that that can gets kicked down the road until the end of the year. Hadar Susskind, senior vice president of government relations for the Council on Foundations, believes that the Johnson Amendment will continue to be a point of focus for some lawmakers in many future must-pass bills. Susskind is confident that a bill that seeks only to repeal the Johnson Amendment would fail to gain traction. The question is whether, like how some legislators have inserted Affordable Care Act repeals in legislation, supporters of the repeal will insert repeal language into future laws and dare opponents to vote against it.
Susskind noted that repeal language originally in the omnibus was among the final provisions taken out before Wednesday evening’s release. The Council on Foundations has, since the passing of the tax bill in December, continued education efforts with Congressional leadership. Some lawmakers have viewed a repeal only for houses of worship, as initially proposed in the House of Representatives’ first tax bill, as a compromise or, alternatively, a bargaining chip. Council messaging has specifically rejected any partial repeal, Susskind said.
“Compromise is great so long as it’s real and meaningful,” he said. “The loophole with the churches is so large that you could drive the rest of 501(c)(3)s right through it.”
Other charity-related provisions currently in the bill include:
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