Before the House of Representatives Ways and Means Subcommittee on Oversight May 14, 2002

Comments on The Houses of Worship Political Speech Protection Act (HR 2357) and the Bright Line Act of 2001 (HR 2931)

Submitted by Kay Guinane, Counsel and Manager, Community Education Center


OMB Watch is a nonprofit organization that promotes government accountability and citizen participation in public issues and decision-making. We appreciate the opportunity to comment on HR 2357 and HR 2931, on our own behalf and in the interest of the nonprofit sector.

OMB Watch works with and through the nonprofit sector because of its vital place in communities and our faith that the sector can play a powerful role in reinforcing our democratic principles. Because of our commitment to strengthening the voice of the nonprofit sector in public policy debates we fully support the right of all nonprofits to speak out publicly on the moral and political issues of the day, regardless of their religious character. This right is protected the First Amendment to the Constitution and current tax law. There is nothing in current law to stop religious congregations or any other 501(c)(3) organization from fully exercising this right.

1. Current Law is Adequate to Protect the Right of Religious Organizations to Speak on Public Policy Issues

Proponents of HR 2357 and HR 2931 claim passage is necessary to protect the right of religious organizations to speak on moral and political issues, and that its impact would only be to free clergy to speak on issues and their principles of faith. However, the tax code specifically limits the definition of prohibited “political” to speech the support of or opposition to a candidate for office. This hardly puts a muzzle on clergy that wish to address the morality of abortion, the death penalty or any other public issue. HR 2357 and HR 2931 ignore current legal protections for speech by 501(c)(3) organizations.

Current Law Allows Unlimited 501(c)(3) Time and Money for:

? Commentary on public issues from the pulpit
? 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.

Prohibition on Supporting or Opposing Candidates for Office

? The tax code prohibits support or opposition to 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.
? Religious organizations can create 501(c)(4) affiliates 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.

Based on the above, we believe there is no need for new legislation to protect the right of religious organizations to speak on issues.


2. HR 2357 and HR 2931 Would Turn Religious Organizations Into Soft Money Conduits

The proposed bills would have an enormous financial impact on campaign finance. They would create an enormous soft money loophole, and turn religious congregations into conduits for campaign contributors seeking to avoid campaign finance laws. They would allow religious congregations to spend money and use their institutional resources for a wide range of partisan political activity, from operating phone banks to running ads on radio or TV.

The soft money problem would be exacerbated by two factors:
? Donations to 501(c)(3) organizations are tax deductible and
? Religious organizations are not required to file IRS Form 990, the annual information return filed by most 501(c)(3) organizations. Since there is less public accountability, it would be impossible to know the extent of the use of religious organizations as conduits for unregulated campaign contributions, or to know who is contributing and what candidates they support or oppose.

This is clearly contrary to the intent of Congress is passing the Bipartisan Campaign Finance Reform Act earlier this year, and for that reason alone is sufficient justification to defeat these bills.


3. HR 2357 and HR 2931 Discriminate Against Non-religious 501(c)(3) Organizations

If free speech rights of 501(c)(3) organizations are to be extended, they should be extended fairly, to all public charities, not just religious organizations. By limiting new rights to congregations, the proposed legislation unduly discriminates against other charities that can be equally concerned with the moral and political issues of the day. There is no rational justification for such a distinction.

Conclusion

All 501(c)(3) organizations share the same experience with the current lack of clarity of what constitutes prohibited partisan electioneering. If, as is claimed by the proponents of this legislation, the problem is the chilling effect this lack of clarity has, the uneven enforcement that results, the solution should be fashioned to fit the problem. HR 2357 and HR 2931 go well beyond what is needed to bring clarity to the law. If, on the other hand, the sponsors of these bills believe that tax deductible dollars should be used for candidate campaigns, they should clearly state why, and allow for a debate on that issue.




Kay Guinane
OMB Watch
1742 Connecticut Ave NW
Washington, DC 20009
202/234-8494
fax 202/234-5150
kguinane@ombwatch.org

Supplemental Comments on The Houses of Worship Political Speech Protection Act (HR 2357) and the Bright Line Act of 2001 (HR 2931)
House of Representatives Ways and Means Subcommittee on Oversight
May 28, 2002
Submitted by Kay Guinane, Counsel and Manager, Community Education Center


At the May 14, 2002 hearing on HR 2357 and HR 2931 witness Colby May of the American Center for Law and Justice stated, in response to a question, that these bills would not result in expenditures on partisan electioneering by religious congregations, because such expenditures would be prohibited under the Bipartisan Campaign Finance Reform Act of 2002 (BCRA). We are submitting these supplemental comments to respond to this incorrect interpretation of BCRA.

While no corporate entity, including religious congregations, is allowed to make direct contributions from their treasury to federal candidates, there are several ways that religious organizations could spend funds for partisan electioneering if HR 2357 or HR 2931 were to become law. The following examples illustrate some of the ways this might happen:

? 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, asking 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;
? 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.

We urge the members of the Subcommittee on Oversight to carefully review the campaign finance implications of any version of these two bills before proceeding. This area of law is complex, and the impact of these bills would be much greater than stated by its proponents.