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Markkula Center for Applied Ethics

What Nonprofits Should Do Now in Response to the Tax Bill

Social Sector Flag

Social Sector Flag

Life after the Johnson Amendment

Joan Harrington

Joan Harrington is the assistant director of Social Sector Ethics at the Markkula Center for Applied Ethics. Views are her own.

The tax bill now before Congress contains a number of issues that will impact nonprofits, including a change to the Johnson Amendment, which bars nonprofits from supporting or opposing candidates for public office.  Although it is not clear whether the Johnson Amendment will be repealed, reformed, or remain in place, nonprofits should not wait to have the discussion.  Creating a policy on political campaign activity, even if it is temporary, will prevent unnecessary pressure on the nonprofits from donors, board members, and staff who, during these challenging times, do not need additional turmoil.

The vast majority of nonprofits have advocated keeping the ban on political campaign activity in place.  The reasons are largely grounded in the risk to nonprofits of entering the political fray, including concerns about erosion of public trust through the creation of Democratic and Republican charities and undue pressure from funders, including federal, state, and local governments, to choose a political side.  

Additional worries are that a new law will create a loophole for campaign financing laws that could spiral out of control.  Tax deductions could be taken for political contributions and campaign contribution disclosure laws might be avoided.  State Attorneys General have raised challenges arguing that engaging in political campaign activities is not a charitable purpose and that a change in the law could make their job of combating charity fraud more difficult based on the political affiliation of elected officials.

These are all legitimate concerns that could and should be addressed proactively by enacting an organizational policy on political campaign activities.

Now is the time for nonprofits and their boards to strategize about their new policies on political campaign activities.  If the repeal of the Johnson Amendment happens, it will be best for nonprofits to have a clear position to communicate to their stakeholders.

Dec 1, 2017

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