The Lazarus Project: 501c3 Noose or a Blessing?
Resurrecting the Religious Freedom Act
“Congressional. Record 9604 (1954)
On July 2, 1954, Senator Lyndon Johnson was recognized from the Senate floor and the following colloquy occurred:
Mr. JOHNSON of Texas: Mr. President, I have an amendment at the desk, which I should like to have stated.
The PRESIDING OFFICER: The Secretary will state the amendment.
The CHIEF CLERK: On page 117 of the House bill, in section 501(c)(3), it is proposed to strike out “individuals, and” and insert “individual,” and strike out “influence legislation.” And insert “influence legislation, and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of any candidate for public office.”
Mr. JOHNSON of Texas: Mr. President, this amendment seeks to extend the provisions of section 501 of the House bill, denying tax-exempt status to not only those people who influence legislation but also to those who intervene in any political campaign on behalf of any candidate for any public office. I have discussed the matter with the chairman of the committee, the minority ranking member of the committee, and several other members of the committee, and I understand that the amendment is acceptable to them. I hope the chairman will take it to conference, and that it will be included in the final bill which Congress passes.”1
And as history and the Congressional House Record has it, the voice of Church leadership was, in one stroke, rendered hostage by, ironically, the uplifting of hands. On that day, the Church became an incidental casualty of an aggressive campaign to silence the opposition of two political non profits, who openly opposed the reelection of Lyndon B. Johnson to Office.
According to the Annotation codes for the First Amendment, Churches were already Tax -exempt entities prior to the Johnson Amendment:
“Every State and the District of Columbia provide for tax exemptions for religious institutions, and the history of such exemptions goes back to the time of our establishment as a polity.”2
It has long been established and understood by the Courts that Churches were tax-exempt and treated differently under the generally applied laws. In a case focusing on the 501(c)3, the United States District Court expressed this very fact:
“The Internal Revenue Code treats churches differently from other tax-exempt organizations. While a church may file for Section 501(c)(3) status, it is not required to do so in order to be tax-exempt. A church may simply hold itself out as a church and claim tax-exempt status pursuant to Section 508(c). See 26 U.S.C. § 508(c) (“New organizations must notify Secretary that they are applying for recognition of section 501(c)(3) status,” but that requirement “shall not apply to churches, their integrated auxiliaries, and conventions or associations of churches”).” 3
That’s right, Churches were already tax-exempt BEFORE the Johnson Amendment was inserted into the IRS Tax Code revision of 1954, that placed churches under the 501(c)3 classification. So, in light of these facts, exactly what did the 501(c)3 do for the Churches, and why is it “the thing to do” once a person called to ministry wants to begin a Church?
Some want to appeal to potential donors and members by enabling them to deduct their contributions and offerings. Others are positioning themselves to receive grants from Funding Institutions and Foundations, which will allow them to further their programs; as it is established practice of these funding agencies to require Non Profits to obtain a 501(c)3 status before being eligible for grants.
Whatever the reason one may cite, one thing is for sure, the 501(c)3 is a topic that is misunderstood and in need of much clarification among the Churches of America. I want to take the time to look into the 501(c)3 for a moment to focus on what it is and how it affects ministries in general:
“Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.”4
This is stating that churches accept the 501(c)3 status at the cost of their ability to politically mobilize their membership and the community. Most social issues that you find experienced by the majority of the membership and the communities where they reside, have political implications; they must be dealt with from a political context to effectively change the social issues that the Church has been called to address and heal. It should be understood by the Church that we are the moral compass of our society, it is of grave importance that we retain our interaction under the First Amendment; as the 501(c)3 stands now, the Church has surrendered its First Amendment rights to free speech, and the most important part of the Gospel program, it’s voice.
Up until 1954 churches enjoyed tax-exemption, while still maintaining their ability to speak on the socio-political issues of the day; it was the church that was the backbone of the Civil Rights Movement, as well as other social movements that made considerable changes in their respective communities. But as time progressed, the churches, under political and legislative pressure, began to relinquish the frontlines of their communities to keep a tax-exemption status.
With the amended legislation, and the wide acceptance of the Church to concede their voice, many of the granting and lending institutions structured their requirements that churches come under the 501(c)3 status or be isolated from funding. With a lot of the ministries young and having limited membership saw the 501(c)3 as a means of keeping their programs and outreaches operating. The Great Spiritual Compromise!
While I personally believe the 501(c)3 in its present state, a noose around the neck of church leadership, how many churches would come from under the status? Not many.
But I began to ask myself, how could ministries reverse the “poison-dart” legislation. After an exhaustive amount of research, guess what I discovered under a pile of dead legislative bills? The House of Worship Free Speech Restoration Act; known in Congressional records as H.R. 235.
House Resolution 235 is a bill that was introduced to the House of Representatives, in 2005, by Rep. Walter Jones of North Carolina, to amend the Internal Revenue Code of 1986 to protect the religious free exercise and free speech rights of churches and other houses of worship.
Think People of God, if the 501(c)3 did not take the freedom of the voice from the Church, then why would legislators feel the need to amend the Tax code to RESTORE IT?
“No member or leader of an organization described in section 501(q) of the Internal Revenue Code of 1986 (as added by section 2) shall be prohibited from expressing personal views on political matters or elections for public office during regular religious services, so long as these views are not disseminated beyond the members and guests assembled together at the service.”5
The legislation was an attempt to return the power of the Church back into the hands of its leadership. But there was a very disturbing fact that was found upon further research of this bill; it languished in support and died after being sent to the committee of Ways and Means. ARE YOU KIDDING ME?!
All hope wasn’t lost, because the bill resurfaced in the House under a new name:
S. 3957 Religious Freedom Act of 2006:
“In General- Notwithstanding any other provision of law, no organization described in subsection (b) may be denied its Federal tax exemption under the Internal Revenue Code of 1986 by administrative or judicial action, nor shall donors to such organization be denied the deductibility of their contributions under such Code, because such organization engages in an activity that is protected by the United States Constitution, including comment on public issues, election contests, and pending legislation made in the theological or philosophical context of such organization.”6
And as the last introduction, it died in the House without, so much as, an uttered whimper from the Church. Where were the voices of the leadership concerning this issue? Where were the billboards and mass bulletin distribution for the passing of this vital piece of legislation, the like of what we see when some “prophetic” conference is being promoted? I am challenging our leadership and the people of God to begin contacting their local representatives concerning the resurrection of this Bill. There should be a mass mobilization of our Churches to enact this legislation, that would allow us to balance the protection of the 501(c)3 Status and the ability to speak out in our communities and churches concerning ALL ASPECTS OF SOCIETY. Do not allow this door to close and relinquish our ordained opportunity to be of a reasonable service to our membership and our communities.
The enactment of the Bill would unleash a political power in the church that would allow us to make significant changes in how funds and programs are appropriated to our communities. The power to effectively change our future and shape policy that would initiate true social outreach is within our grasp-the sword is embedded within the stone; we need only to wield it and return the greatness that our history so proclaims.
The Lazarus Project is a call to Church leaders and Ministries to unite and resurrect the House of Worship Free Speech Restoration Act, and to retake the power of OUR VOICE.
References:
1.) Edward McGlynn Gaffney, Jr., “The Unconstitutionality of Tax Regulation of Activities of Religious Organizations Relating to Politics”
2.) Tax Exemption of Religious Property http://caselaw.lp.findlaw.com/data/constitution/amendment01/04.html#1
3.) Branch Ministries, Inc. v Rossotti, 211 F.3d 137 (D.C. Cir. 2000). I am also providing a link to the case as well, where you can research the specifics. Internal Revenue Service website: http://www.irs.gov/pub/irs-utl/branch_ministries.pdf
4.) U.S. Code, Title 26, subtitle A, Chapter 1, subchapter F, Part I, 501(c)3:http://www.law.cornell.edu/uscode/26/usc_sec_26_00000501—-000-.html
5.) You can find the Full Text of the H.R. 235 at the Government Track website:http://www.govtrack.us/congress/billtext.xpd?bill=h109-235
6.) See the Full Text of S. 3957[109th] Religious Freedom Act of 2006:http://www.govtrack.us/congress/billtext.xpd?bill=s109-3957
