We have a nonprofit application for exempt status that
has gone off the rails.
The reviewing (IRS) officer wanted them, for example,
to recharter under a different category of nonprofit status.
I considered it arbitrary, but if it made him happy….
He called this week threatening to terminate his
review altogether. I called him back immediately.
What happened, I asked
You have not forwarded all the information I asked
for, he explained.
I faxed you several documents in early June. I said. I
am unaware of having omitted anything.
I need state certification of the amendment to the
charter, he replied.
Which he had not requested previously.
Fine. I called the secretary of state’s office,
explaining my situation. They were very helpful and by the end of the day I
received a verification that I could forward to the IRS.
The nonprofit, by the way, is a high school booster
club. The IRS is treating them like they were Amazon. Folks, these are parents
selling pop and snacks at high school games. All they are trying to do is buy
bleachers and build restrooms nearer the athletic fields. The IRS overkill here is ridiculous.
My previous exempt application, on the other hand,
went smoothly. I had one conversation with the reviewing officer and that was
it.
Yes, one’s experience with the IRS can vary greatly
depending on whom one is working with.
I am looking at IRS response to an application by an
organization called Christians Engaged. It caught my attention for two reasons:
first, the response came out of Cincinnati; second, the organization got turned
down. I get curious when an application is rejected. I remember, for example, an
application rejected for being little more than a masquerade for sending family
members to college on a tax-deductible basis.
Let’s set this up:
(1) The organization was organized in Texas in
2019.
(2) The founder and president is a former Republican
Congressional candidate and a preacher.
(3) The vice president is a former Promise Keepers
prayer coordinator and a homeschool mom.
(4) The secretary is a millennial managing
Republican field teams in Collins county, Texas.
Sounds 2021-ish.
The organization’s mission statement includes the
following:
a. Regular
prayer for the nation
b. Impact
culture by voting every election
c. Encourage
political education and activism
d. Educate
Christians on the importance of prayer, voting and nonpartisan political engagement
Got it. There is noticeable call-to-action here.
So what are the activities of Christians Engaged?
(1) Hold weekly prayer meetings for state and
federal leaders, including distribution of program outlines to participating
churches.
(2) Maintain a website and social media providing
educational materials and connections for Christians to become politically
active.
(3) Educate believers on issues central to
biblical faith, such as the sanctity of life, the meaning of marriage, private
versus governmental ethics, religious liberty, and so on.
(4) Conduct educational activities, including a course
in political activism, with a basis in Biblical and Christian value systems.
(5) Educate on how to select between imperfect
candidates as well as political party impact on elected officials.
Tax-exempts have to be careful when they approach political activities. The type of exempt we are discussing here is the (c)(3) - the most favorable tax status, as contributions to a (c)(3) are tax-deductible.
As a generalization, a tax-exempt is permitted to
advocate on issues affecting them, the community, society and the nation. Think
environmental protection or domestic abuse, for example, and you will get a
feel for it.
What it cannot do is lobby (at least, not to any
significant extent).
What is lobbying?
An obvious example is direct lobbying: contacting an
elected or government official with the intent of influencing new or existing
legislation.
Less obvious is indirect lobbying, sometimes referred
to as grassroots lobbying. Rather than contacting an elected or government official
directly, the goal is to influence and motivate the public to do so.
To me this definition is soapy water. A tax exempt is
allowed to advocate, and obviously it will advocate on behalf of its mission
statement. An early education (c)(3) will, for example, advocate with the goal
of getting someone to leave the couch and take action on early education matters.
We have to tighten-up the definition of grassroots
lobbying to make it workable.
How about this:
Attempt
to influence the general public through communications that:
· Refer
to specific legislation
· Reflect
a point of view on said legislation, and
· Include
a call to action
Better. It seems that a general education or exhortation
mission – and leaving specific legislation or candidates alone - will fit into
this definition.
What did the IRS reviewing officer see in the
Christians Engaged application?
(1) The activities approach that of an action
organization, involving itself with political campaigns and candidates.
How, me asks?
The organization involves
itself on issues prominent in political campaigns, instructing what the Bible
says about the issue and how the public should vote.
(2) The issues discussed are more commonly affiliated with certain candidates of one political party rather than candidates of another party, meaning the organization’s activities are not neutral.
(3) The organization itself is not neutral, as it instructs people on using and voting the Bible.
(4) The organization serves the interest of the
Republican party more than incidentally, meaning it serves a substantial
nonexempt purpose.
Let’s just quote the IRS:
Specifically,
you educate Christians on what the Bible says in areas where they can be
instrumental including the areas of sanctity of life, the definition of
marriage, biblical justice, freedom of speech, defense, and borders and
immigration, U.S. and Israel relations. The bible teachings are typically affiliated
with the [Republican] party and candidates.”
That took a turn I did not expect.
I expected an analysis of applying soapy-water
standards of grassroots lobbying to societal reality in the 21st
century.
We got something … else.
The matter is being appealed, of course.