Roll Call Thursday, October 11,2012



Separation of State and Nonprofits IsValuable
BYDIMITRI CAVALLI Every so often there are calls for the federal government to revoke the tax-exempt status of churches. The most common arguments made for taxing churches arethat exemptions deny the government important sources of revenue to pay itsbillsandthat many churches often abuse their tax-exempt status by violating IRSguidelines that prohibit them from engaging inpolitical activity. In fact, churches areonly partof the larger nonprofit sector in the United States. According todata collected by the National Center forCharitable Statistics, there are more than 1.5 million nonprofit organizations (with combined total assets of almost $5.7 trillionas ofAugust 2012) registered withtheIRS, andmany of them are nonreligious institutions andorganizations that also seekto influence public policy despite being tax-exempt. Houses of worship and charities are registered withthe IRS as 501 (c) (3) nonprofit organizations. Because financial contributions to 501 (c) (3)nonprofits are tax-deductible, donors havetheincentive to open their wallets. When most people hear the term "taxexempt," they usually thinkofchurches and charities. In fact,the IRS exempts many typesoforganizations from paving taxes, includinglabor unions, chambers of commerce, social clubs, social welfare organizations (suchas theNational Organization forWomen and the American Civil Liberties Union) andfraternal organizations (suchasindividual branches of the Freemasons and Elkslodges). Along with churches and charities, the IRS provides the coveted501(c)(3) nonprofit status to scientific, literary and educational organizations. Because they qualify as educational organizations, most colleges and universities in the United States, including those that have generous endowments andcashproducing sports programs,arealso taxexempt. Other 501(c)(3) nonprofits include: Americans UnitedforSeparation of Church and State, American Atheists, American Humanist Association, Freedom From Religion Foundation, Catholics for Choice, Feminist Majority Foundation, Centerfor Reproductive Rights, Ayn Rand Institute,the Gay & Lesbian

Guest Observer

Alliance Against Defamation and Mother Jones, theleftist magazine. IRS guidelinesfor nonprofits, which are available on the agency's website, are often misunderstood. While many people use these terms interchangeably, the IRS defines "politics" asseeking influence to the election ofcandidates and"lobbying" as seeking toinfluence legislation. According to the IRS,all501(c)(3) nonprofits cannot officially endorse or oppose candidates forelected office and make financial contributionstopolitical campaigns. In 1964, the liberal Protestant magazine Christian Century lost its tax-exempt status for oneyear after it endorsed President Lyndon Johnson for re-election. Nonprofits, however, can certainly praise or criticize candidates, elected officials, political parties and theirstands on public policy issues and controversies without specificallytelling peopleto vote for or against them. This iswhat many nonprofits have been doing since the passage of the 1954 Internal Revenue Act, which added section 501(c) regulating nonprofit organizationsto the tax code. The IRS recognizesthat the heads of nonprofits, including churches, can exercise their rights asprivate citizens without jeopardizingthetax-exempt status of their organizations.The IRS affirms also that 501(c)(3)nonprofitscanengage in some lobbying — if lobbying is not a"substantial"partof theorganization's regular activities. The IRS imposes noadditional restrictions on churches; itrequiresall registered 501 (c) (3)nonprofits, religious and nonreligious, to follow the same guidelines at the risk oflosing theirtax exemptions. The Catholic, Evangelical andMormon churches, which seemto be the only nonprofits thatareever accused of violating IRS guidelines, shouldnot feelthat they have to scale back their activities in American public life because they may lose their tax-exempt status. Since 1990, the IRS hasrevoked thetax-exempt status of exactlyonechurch. Perhaps theleaders of these churchescanstart asking whether the many other nonprofits (especially the liberal activist ones)are followingthe same IRSrules that critics wish selfto righteously impose onothers.
Dimitri Cavalli is a freelance York City. writer


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