Both section 501(c)(3) public charities and section 501(c)(4) social welfare organizations face distinct constitutional tensions between the IRS’s regulation of their tax-exempt limitations and the U.S. Supreme Court’s interpretation of their First Amendment rights. This tension is perhaps most evident for “issue advocacy,” which is the term coined for nonprofits’ educational communications on public policy matters related to their tax-exempt goals.
In the midst of the IRS’s proposed regulations to impose new restrictions on Section 501(c)(4) social welfare organizations (and the duly deserved emerging backlash against them), it is critically important to remember that both Section 501(c)(3) public charities and Section 501(c)(4) organizations enjoy a First Amendment constitutional right to engage in “issue advocacy,” so long as such communications are not “too” political or otherwise improper. In a nutshell, that means these organizations – and their leaders – should be able to educate people about a wide variety of public policy iss
As of last week, religious institutions and the clergypersons who serve them have been put on notice: Subject to appeal, a Federal statute that provides an exemption for the housing allowance for clergy members has been held unconstitutional. For now, the holding affects only clergy who receive cash compensation for a housing allowance, not clergy who reside in a parsonage or other accommodations provided for the convenience of the employer.