Scrolling through Twitter this morning, this tweet caught my eye:
Curious, I looked at the replies and, sure enough, the first three I read had some variation of, “Well, the Mormon church has to lose its tax exemption now, right?”[fn1] After replying to them, I decided that it would probably be easier to write an explainer than to reply to each one individually.
So: has the church risked its exemption by lobbying against the legalization of medical marijuana in Utah? Short answer: no.
Longer answer: still no.
Why not? The church is exempt from taxes under section 501(c)(3) of the Code. Section 501(c)(3) says that exempt organization include:
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.
There are two limitations in there. The second (which I’ve italicized) is the so-called Johnson Amendment, which I’ve written about here several times (my most recent brief mention being here). It’s an absolute prohibition on endorsing or opposing candidates for office.
But that’s not what the church did. The church lobbied politicians to oppose a ballot initiative. That kind of non-candidate lobbying is governed by the language I’ve bolded. Rather than an absolute prohibition, it’s a quantity prohibition. Section 501(c)(3) organizations—including the church—can lobby as long as the lobbying doesn’t represent a substantial part of their activities.
And how much lobbying still qualifies as “no substantial part”? Honestly, that’s a really good question, and one to which we don’t have a satisfying answer. There is some caselaw that hints at the contours of NSP, though. One case, from the 1970s, held that a tax-exempt organization that allocated somewhere between 16 and 20 percent of its annual expenditures to lobbying violated the NSP rule. Another, from the 1950s, held that where less than 5 percent of a tax-exempt organization’s activities involved lobbying, its lobbying activities were insubstantial.[fn2]
The Takeaway
Should the church be lobbying against the medical marijuana initiative? Honestly, I don’t know and don’t especially care.[fn3] I don’t live in Utah and haven’t followed the politics of it carefully. (And by “carefully,” I pretty much mean “at all.”) It’s not a question that interests me especially.
But on the question of whether the church can, consistent with its tax exemption, lobby against the initiative, the answer is an overwhelming yes. Sure, there are limitations on how much lobbying it can do. But even though those limitations are ambiguous at the margins, and even though I don’t know precisely how much lobbying the church has done on marijuana legalization, it doesn’t look to me, from the available public information, that the church’s lobbying even approaches a fraction of a substantial part, either of the church’s expenditures or its activities.
[fn1] Those replies were here, here, and here. (I also looked at the article’s comments, and, skimming the first comment or two, remembered that, whatever you think of the level of discourse on Twitter, it could be a million times worse, and left the comments section.) Also, bravo to Ben Winslow for jumping in on the side of accuracy.
[fn2] Note that the first case deals with expenditures, while the second with activities. Those are two different metrics, so, while the cases give us some sense of what is permissible and impermissible, they don’t delineate anything approaching a bright line.
[fn3] Full disclosure, though: I nearly always vote against ballot initiatives. They tend to be poorly drafted, are often inconsistent with existing law or other initiatives on the ballot, and frankly, I think that, more often than not, they represent an abdication by our elected officials of the job they’ve been elected to do.