Wednesday, May 2, 2012

The Archbishop of Seattle and a Lesson in What Doesn't Violate 501(c)(3)

I guess this is my week to comment on Catholic bishops and the rules regarding tax exemption (that I feel compelled to do so might make one wonder if the bishops are spending their time wisely, but that's a different issue that has nothing to do with tax exemption).

There's a controversy in Seattle among Catholics, but unlike Bishop Jenky in Peoria (see prior post here), this one doesn't involve a violation of the restrictions on political activity by exempt charities. In fact, contrasting what is going on in Seattle to Bishop Jenky's homily a couple of weeks ago is good instruction on the differences between issue advocacy by charities, which is given fairly wide latitude in 501(c)(3), and political campaign intervention, which is not given any latitude at all (in theory; IRS practice often results in a closing agreement with a first-time offender, rather than pulling exemption).

So here goes. In April, Archbishop Sartain of Seattle wrote a letter authorizing the local parishes (I might say "requesting the local parishes," but you can read the letter for yourself and see what you think) to gather signatures to place a referendum on the ballot in Washington called R-74, which would repeal the prior action by the state legislature and governor approving gay marriage.

So does this kind of activity violate any rules regarding tax-exempt charities under 501(c)(3)? Almost certainly not. Unlike Bishop Jenky, whose homily fairly clearly called for Catholics to vote against President Obama in the upcoming election, Bishop Sartain does no such thing. His letter isn't about voting for or against or supporting (or not) "any candidate for public office." It is solely about the issue of gay marriage and R-74.

Now, 501(c)(3) does say that "no substantial part" of the activities of an exempt charity can be "attempting to influence legislation." But note the difference: political campaign activity is absolutely prohibited by 501(c)(3); lobbying ("attempting to influence legislation") clearly is permitted, as long as the lobbying activity is not "a substantial part" of the activities of the exempt organization.

I've written before about the interpretation of the no-substantial-part rule in the context of the Mormon and Catholic church's efforts regarding Proposition 8 in California (see post here) and noted there why this kind of activity almost certainly is NOT "a substantial part" of the activities of the Church. I won't repeat that analysis here. Bottom line: Archbishop Sartain managed to stop before crossing the line; Bishop Jenky did not. Maybe Sartain has better lawyers . . .

JDC

http://lawprofessors.typepad.com/nonprofit/2012/05/the-archbishop-of-seattle-and-a-lesson-in-what-doesnt-violate-501c3.html

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