Nonprofit Corporations & Politics: The Entity/Coordination Tension
Federal tax law treats separate nonprofit corporations as distinct legal entities for almost all purposes, in common with most other areas of law. With respect to political activity, this means that one nonprofit corporation’s lobbying or election-related actions are generally not attributed to another nonprofit corporation. This is the case even if the two entities have overlapping or even identical boards of directors. It is also the case even if the two entities collaborate regarding their respective activities and share employees, facilities, outside vendors, and other resources, as long as the entities reasonably allocate the costs for those shared resources. In addition, longstanding Supreme Court precedents strongly indicate that the First Amendment requires Congress and the IRS to permit this overlapping, collaboration, and sharing.
That lack of attribution is important because different types of nonprofit corporations receive different tax benefits and face different restrictions on their political activity under federal tax law. For example, a charitable nonprofit corporation that is tax-exempt under Internal Revenue Code section 501(c)(3) and eligible to receive tax deductible charitable contributions is limited with respect to lobbying and is prohibited from supporting or opposing candidates for elected public office. In contrast, a social welfare nonprofit corporation that is tax-exempt under Internal Revenue Code section 501(c)(4) but not eligible to receive tax deductible charitable contributions can engage in unlimited lobbying related to its social welfare purpose and can also support or oppose candidates as long as doing so is not its primary activity. And a political organization that is tax-exempt under Internal Revenue Code section 527, although only with respect to contributions received for political purposes, can engage entirely in supporting or opposing candidates. Yet a section 501(c)(3) organization, a section 501(c)(4) organization, and a section 527 organization can have overlapping boards, collaborate about their respective activities, and share resources, as long as they reasonably allocate their expenses and avoid spending directly on political activity that is limited or prohibited given their specific exemption category. There are therefore many groups of nonprofit organizations that consist of affiliated organizations with different federal tax categorizations but a common political purpose.
This lack of attribution is in tension with an aspect of federal election law and the election laws of many states. Under these election laws, if an individual or entity coordinates its activities with a candidate committee or political party, that activity is considered a contribution to the benefitted candidate or party. This result means that any spending on that activity is subject to existing source and amount limits on such contributions. In effect, the activity is attributed to the candidate or party because of the coordination even though the candidate or party does not legally control that activity. This is a common sense approach because if it did not exist it would be easy for individuals and other entities to evade contribution limits by engaging in activities not only designed to benefit a candidate or party but done at the specific request of that candidate or party. This reasoning also provides the basis for Supreme Court decisions concluding that this approach is constitutional under the First Amendment.
This essay explores the tension created by federal tax law’s respect for separate entity status on one hand and the coordination rules of federal and state election law on the other hand. It also revisits whether, given this tension, the Supreme Court was correct to constitutionalize the former approach when it comes to tax-exempt nonprofits. I conclude that whether this difference is appropriate as a policy matter depends on the policy justification for the political activity limits on section 501(c)(3) charities. If the only such justification is to support the broader federal tax policy prohibiting the deduction of expenditures for political activities, then the lack of attribution is appropriate. If instead the justification is that political activity is inconsistent with status as a section 501(c)(3) charity for broader reasons, then there is a policy argument for attributing the political activity of noncharitable nonprofit corporations to closely affiliated charitable nonprofit corporations and so subjecting that activity to the section 501(c)(3) limits. I also conclude that this latter justification could provide a basis for revisiting the Supreme Court precedents that bar this attribution as a constitutional matter.
On August 14, 2023, the Ways and Means Committee of the U.S. House of Representatives issued a “Request for Information” (the Request) regarding political activities of tax-exempt organizations.1
H.R. Comm. on Ways and Means, Request for Info.: Understanding and Examining the Political Activities of Tax-Exempt Organizations under Section 501 of the Internal Revenue Code (2023), https://perma.cc/XQ4D-N7F2.
Id. at 2–3. All section references are to the Internal Revenue Code, 26 U.S.C., unless otherwise noted.
Id. at 7.
See Registering as a Super PAC, Federal Election Commission, https://perma.cc/NC7F-AGEU; see also Setting up and Operating a Federal Super PAC, Venable LLP, https://perma.cc/QGG2-58B3.
In the interests of full disclosure, note that the author was part of a group of tax-exempt organization scholars who submitted a response. See Ellen P. Aprill, Roger Colinvaux, Brian D. Galle, Philip Hackney & Lloyd Hitoshi Mayer, Response by Tax-Exempt Organization Scholars to Request for Information (2023), https://perma.cc/Z4H8-RM6M.
See H.R. Comm. on Ways and Means, Oversight Subcomm. Hearing on Growth of the Tax-Exempt Sector and the Impact on the Am. Pol. Landscape, https://perma.cc/S2B2-92KT; H.R.Comm. on Ways and Means Chairman Jason Smith, Chairman Smith and Oversight Subcomm. Chairman Schweikert Announce Subcomm. Hearing on Growth of the Tax-Exempt Sector and the Impact on the Am. Pol. Landscape (2023), https://perma.cc/G5GJ-6KEG.
There is no doubt that tax-exempt organizations spend significant amounts on political activity.7
See infra Part I.
See H.R. Comm. on Ways and Means, supra note 1, at 7.
See, e.g., Stephen R. Weissman & Kara D. Ryan, Nonprofit Interest Groups’ Election Activities and Federal Campaign Finance Policy, 54 Exempt Org. Tax Rev. 21 (2006).
See Roger Colinvaux, Political Activity Limits and Tax Exemption: A Gordian’s Knot, 34 Va. Tax Rev. 1, 26 (2014); see also Brian Galle, Charities in Politics: A Reappraisal, 54 Wm. & Mary L. Rev. 1561, 1607–09 (2013); Miriam Galston, Campaign Speech and Contextual Analysis, 6 First Amend. L. Rev. 100, 109–13 (2007).
This ability contrasts with the inability of individuals and other entities to work together with candidates and political parties under federal election law and many state election laws without becoming subject to the limits on contributions to candidates and political parties.11
See, e.g., Richard Briffault, Coordination Reconsidered, 113 Colum. L. Rev. Sidebar 88, 92–93 (2013); Brent Ferguson, Beyond Coordination: Defining Indirect Campaign Contributions for the Super PAC Era, 42 Hastings Const. L.Q. 471, 483–87 (2015); Bradley A. Smith, Super PACs and the Role of Coordination in Campaign Finance Law, 49 Willamette L. Rev. 603, 607–09 (2013); Jennifer Sutterer, Closing Loopholes for Coordination: Proposed Reforms to Federal Campaign Finance Laws, 49 Va. J. L. & Pol. 33, 44–55 (2023).
See Coordinated Communications, Fed. Election Comm., https://perma.cc/PST2-AL3D; Richard L. Hasen, Super PAC Contributions, Corruption, and the Proxy War Over Coordination, 9 Duke J. Const. L. & Pub. Pol’y 1, 16 (2014).
Ferguson, supra note 11, at 485–87; Sutterer, supra note 11, at 52–55.
See FEC, supra note 12; Briffault, supra note 11, at 92; Ferguson, supra note 11, at 483–86; Sutterer, supra note 11, at 46–49, 52–55.
This essay contrasts the federal tax law non-attribution rule with the election law attribution rule and considers whether this difference is supported either by the different policy goals of these two bodies of law or constitutional considerations. It concludes that the answers to these questions turn on the policy justification for the federal tax rule. One option, apparently assumed by the Supreme Court and embraced by some scholars, is that the only justification is preventing avoidance of the general federal tax rule denying a tax deduction for spending on political activity. If that is the only justification, that rule is fully vindicated by requiring section 501(c)(3) charities to limit the spending of their funds—including tax-deductible charitable contributions they receive—to activities other than political ones. It is also consistent with this rule to permit those charities to be closely affiliated with tax-exempt noncharitable nonprofits that are not eligible to receive tax-deductible charitable contributions but can engage in political activities. That is because this separation of funds is sufficient to keep section 501(c)(3) charities from being used as a vehicle for spending tax-deductible funds on political activity and so undermining the general rule.
The other justification option, suggested by the early history of the political activity limits on tax-exempt charities and embraced by some scholars, is that political activity is inconsistent with the charitable character that federal tax law supports through section 501(c)(3) and other tax provisions benefitting charities. If this justification is the correct one, then there is both a policy basis for expanding the federal tax law limits on political activity by charities to reach political activity conducted by closely affiliated noncharitable nonprofit organizations—effectively attributing that political activity to the charitable nonprofit organization—and a related argument for concluding that expansion is constitutional. However, the constitutional argument will only be successful if the Supreme Court were to reject its current, although contested, view that non-attribution in this federal tax context is constitutionally required.
For the 2022 federal election cycle, Open Secrets reported that section 501(c)(4) social welfare organizations, section 501(c)(5) labor unions, and section 501(c)(6) trade associations disclosed spending over $36 million on federal elections, while Super PACs disclosed spending almost $1.4 billion.15
Outside Spending, Open Secrets (2022), https://perma.cc/T6MK-EWCB.
Id.
Press Release, Statistical Summary of 24-Month Campaign Activity of the 2021-2022 Election Cycle, FEC (Apr. 3, 2023), https://perma.cc/8TPB-8GAK.
See 2022 Outside Spending, by Group, Open Secrets, https://perma.cc/9J74-99DG.
See Lobbying, Top Spenders, Open Secrets (2022), https://perma.cc/82SD-LWXS.
See Methodology, Open Secrets, https://perma.cc/G2FB-JXEE; Taylor Giorno & Pete Quist, Total Cost of 2022 State and Federal Elections Projected to Exceed $16.7 Billion, Open Secrets News (Nov. 3, 2022, 12:55 PM), https://perma.cc/V349-AZNM (estimating that state candidates, political committees, and ballot measure committees raised $7.8 billion during the 2022 election cycle).
All the largest nonprofit political spenders other than the entities closely associated with elected officials are affiliated with other types of tax-exempt organizations. The amount reported as spent by “Club for Growth” is the aggregate of spending by two Super PACs (Club for Growth Action and School Freedom Fund) affiliated with the Club for Growth, a section 501(c)(4) nonprofit corporation.21
See Club for Growth Outside Spending, Open Secrets (2022), https://perma.cc/B2H7-YNN6; Club for Growth, Form 990, at 1, 42 (Schedule R, Part II) (2022), https://perma.cc/6957-YT4W.
See Americans for Prosperity Outside Spending 2022, Open Secrets (2022), https://perma.cc/973J-JUEN; Americans for Prosperity, Form 990, at 1, 48 (Schedule R, Part II) (2021), https://perma.cc/RTL4-D3S7.
See Nat’l Ass’n of Realtors, Form 990, at 1, 89 (Schedule R, Part II) (2022), https://perma.cc/4R3X-LNNA.
See Chamber of Commerce of the USA, Form 990, at 1, 41 (Schedule R, Part II) (2022), https://perma.cc/83LY-X88J.
Such affiliations do not necessarily mean that the spending by, for example, a section 501(c)(3) organization is designed to enhance the political activity of its less restrained affiliates. For example, one of the 501(c)(3)s associated with the National Association of Realtors is a small foundation that focuses on funding international educational efforts outside of the United States.25
See Reaume Foundation, Nat’l Ass’n of Realtors, https://perma.cc/7JMZ-44YH.
See U.S. Chamber of Commerce Foundation, Form 990, at 2 (2022), https://perma.cc/2XYA-HQX7.
See id. at 7; Chamber of Commerce of the USA, supra note 24, at 7.
See What Should Nonprofits Know About 501(c)(4) organizations? Especially in an Election Year?, Cal. Ass’n of Nonprofits, https://perma.cc/WV59-LMGS (explaining why a section 501(c)(3) organization may want to create a section 501(c)(4) affiliate).
Federal tax law has a long history of permitting taxpayers to create separate legal entities that will be treated as separate taxpayers even if the first taxpayer controls that entity, as long as for financial and legal purposes the separate taxpayer status of the legal entity is respected. The Supreme Court upheld this principle in 1943 in the face of a taxpayer trying to argue against that separate status.29
Moline Properties v. Comm’r, 319 U.S. 436 (1943).
Id. at 439.
See Stephen B. Land, Entity Identity: The Taxation of Quasi-Separate Enterprises, 63 Tax Law. 99, 100 (2009); Martin J. McMahon, Jr., Understanding Consolidated Returns, 12 Fla. Tax Rev. 125 (2012); Walter D. Schwidetzky, Integrating Subchapters K and S – Just Do It, 62 Tax Law. 749, 751–52 (2009).
26 U.S.C. § 482; see also 26 U.S.C. § 269A (allowing the IRS to reallocate income, etc. between separate entities in certain specific circumstances to prevent tax evasion).
This federal tax treatment is consistent with state nonprofit corporation law, which is usually based on state (for-profit) corporation law that treats separate corporations as distinct entities that are legally and financially separate from their owners and other legal entities for most purposes, absent a failure to abide by corporate formalities. See Eric C. Chaffee, Collaboration Theory: A Theory of the Charitable Tax-Exempt Nonprofit Corporation, 49 U.C.D. L. Rev. 1719, 1729–34 (2016).
As a result, under federal tax law, as well as more generally, the actions of one entity usually may only be attributed to another entity if certain legal relationships exist. The most obvious such situation is when the two entities are in a principal-agent relationship, such that the actions of the agent are attributable to the principal.34
See generally Restatement (Third) of Agency (Am. L. Inst. 2006).
See generally Joachim Dietrich & Iain Field, Statute and Theories of Vicarious Liability, 43 Melb. U. L. Rev. 515 (2019).
This separate entity treatment extends to the limitations on tax-exempt nonprofit corporations with respect to political activity. A section 501(c)(3) organization is limited with respect to lobbying and prohibited from supporting or opposing candidates in any way (the latter activity is referred to as “political campaign intervention”).36
See 26 U.S.C. §§ 170(c)(2), 501(c)(3).
See I.R.S. Gen. Couns. Mem. 34,233 (Dec. 30, 1969); T.D. 6391, 1959-2 C.B. 139, 145–46 (reaching this conclusion with respect to section 501(c)(4) organizations); Ellen P. Aprill, A Case Study of Legislation vs. Regulation: Defining Political Campaign Intervention Under Federal Tax Law, 63 Duke L.J. 1635, 1664–65 (2014); Miriam Galston, Lobbying and the Public Interest: Rethinking the Internal Revenue Code’s Treatment of Legislative Activities, 71 Tex. L. Rev. 1269, 1276–77 (1993); Judith E. Kindell & John Francis Reilly, Election Year Issues, Exempt Organizations Continuing Professional Education Technical Instruction Program FY2002, at 340 n.56 (2001), https://perma.cc/QV5Z-ELD4 [hereinafter Kindell & Reilly, Election Year Issues]; Judith E. Kindell & John Francis Reilly, Lobbying Issues, in Exempt Organizations – Technical Instruction Program for FY 1997, at 236–37 (1997), https://perma.cc/VVM6-NUM3 [hereinafter, Kindell & Reilly, Lobbying Issues]; John Francis Reilly & Barbara A. Braig Allen, Political Campaign and Lobbying Activities of IRC 501(c)(4), (c)(5), and (c)(6) Organizations, in Exempt Organizations – Technical Instruction Program for FY 2003, at L-1 to L-3 (2002), https://perma.cc/QXL7-AETG.
See 26 U.S.C. § 527.
See 26 U.S.C. § 170(a)(1), (c)(2). Certain veterans’ organizations, cemetery companies, fraternal organizations (for gifts dedicated exclusively for charitable, religious, and similar purposes), and government entities (for gifts dedicated exclusively to public purposes) are also eligible to receive deductible charitable contributions. See id. § 170(c)(1), (3), (4). Contributions to section 501(c)(3) organizations are also generally deductible for gift and estate tax purposes, while contributions to section 501(c)(4), 501(c)(5), 501(c)(6), and 527 organizations are generally not subject to gift tax (but are not deductible or exempt for estate tax purposes). See 26 U.S.C. §§ 2055(a)(2), 2106(a)(2)(A)(ii), 2501(a)(4), (6), 2522(a)(2), 2522(b)(2).
Yet the IRS has a longstanding policy that predates the relevant Supreme Court decisions in this area discussed below of allowing a section 501(c)(3) organization to be closely affiliated with a section 501(c)(4), (5), or (6) organization, which can in turn be closely affiliated with a section 527 political organization.40
See Ward L. Thomas & Judith E. Kindell, Affiliations Among Political, Lobbying and Educational Organizations, Exempt Organizations Continuing Professional Education Technical Instruction Program FY2000, at 255 (1999), https://perma.cc/G9X9-W37J.
Id. at 258 (citing Center on Corporate Responsibility, Inc. v. Schultz, 368 F.Supp. 863 (D.D.C. 1973)).
Id. at 259–60.
Id.
In contrast, under federal election and some state election laws, there is a significant attribution rule. Even when legal control does not exist, if an individual or other entity “coordinates” its spending with a candidate or political party, then the entity is usually deemed to have made a contribution to the candidate or political party and so its spending in this regard becomes subject to the source and amount limits for contributions to the candidate or political party.44
See supra notes 11–12 and accompanying text.
See, e.g., supra note 11.
More specifically, current federal regulations state “[c]oordination means made in cooperation, consultation or concern with, or at the request or suggestion of.”46
26 C.F.R. § 109.20.
26 C.F.R. § 109.21(d)(1)(ii), (4).
See, e.g., CAL. ELEC. CODE § 18225.7 (request, suggestion, direction, corporation, or consultation); Me. Rev. Stat. tit. 21-A, § 1125 (cooperation or consultation).
Understanding both why artificial entities are treated as separate entities for most purposes and why sometimes they are not, especially in the political activity context, requires consideration of two bodies of law: organizational law and constitutional law.
At its core, organizational law addresses the extent to which artificial entities such as nonprofit corporations should have the facets of legal personality that we attribute to natural persons separate and apart from any other person, natural or artificial.49
See generally Henry Hansmann & Reinier Kraakman, The Essential Role of Organizational Law, 110 Yale L.J. 387, 391–93 (2000).
Paul B. Miller, The Concept of Personality in Private Law in Interstitial Private Law (Samual J. Bray, John C.P. Goldberg, Paul B. Miller & Henry E. Smith eds., forthcoming) (manuscript at 4), https://perma.cc/JE9N-7EKN.
More specifically and as already noted, federal tax law permits persons to choose to be grouped together for certain legal purposes.51
See supra note 31 and accompanying text.
See id.
See Am. L. Inst., supra note 34 and accompanying text.
See generally Stephen M. Bainbridge, Abolishing Veil Piercing, 26 J. Corp. L. 479 (2001).
Jonathan Macey & Joshua Mitts, Finding Order in the Morass: The Three Real Justifications for Piercing the Corporate Veil, 100 Cornell L. Rev. 99 (2014).
Mariana Pargendler, Veil Peeking: The Corporation as a Nexus for Regulation, 169 U. Pa. L. Rev. 717, 719–21 (2021).
Id. at 724.
Of course, even if a sufficient policy justification exists for attributing the actions of one person to another person, that attribution will be barred if it runs afoul of a constitutional protection. It is therefore also important for the purposes of this essay to determine the extent to which artificial entities and particularly nonprofit corporations enjoy, and should enjoy, the legal entitlements embodied in rights guaranteed by the U.S. Constitution and in particular with respect to political activity. In this regard, the Supreme Court has established some clear markers, although not without controversy, even among the Justices.
First, the Supreme Court’s decision in Citizens United58
558 U.S. 310, 342–43, 423–25 (Stevens, J., dissenting) (2010) (concluding that under the First Amendment, Congress has more leeway to regulate political speech by corporations as opposed to speech by natural persons).
See Va. State Bd. of Pharmacy v. Va. Citizens Consumer Council, Inc., 425 U.S. 748, 756–57 (1976) (citing cases).
See generally Adam Winkler, We the Corporations: How American Businesses Won Their Civil Rights (2018).
Second, when the Supreme Court upheld the congressionally imposed limitation on lobbying by section 501(c)(3) organizations as against a First Amendment free speech challenge in Regan v. Taxation with Representation,61
461 U.S. 540, 552–54 (Blackmun, J., concurring) (1983). The majority also mentioned the IRS’ treatment of 501(c)(3) and 501(c)(4) affiliates, but only in a footnote. Id. at 544 n.6.
Id. at 553 (Blackmun, J., concurring) (citations omitted).
Id.
Id. (citations omitted).
Later Supreme Court decisions endorsed Justice Blackmun’s approach.65
See, e.g., Rust v. Sullivan, 500 U.S. 173, 198 (1991); FCC v. League of Women Voters, 468 U.S. 364, 399–400 (1984).
See League of Women Voters, 468 U.S. at 406–07 (Rehnquist, J., dissenting) (joined by two other justices).
Agency for Int’l Dev. v. Alliance for Open Soc’y Int’l, 133 S.Ct. 2321, 2334 (Scalia, J., dissenting) (joined by Justice Thomas) (citations omitted) (2013) [hereinafter AOSI]; see also Agency for Int’l Dev. v. Alliance for Open Soc’y Int’l, 140 S.Ct. 2082, 2090 (Thomas, J., concurring) (emphasizing his continued support for the position taken in Justice Scalia’s AOSI dissent) (2020).
Third and in contrast, the Supreme Court has repeatedly upheld as constitutional the coordination rules found in election law, albeit not without some caveats and disagreement among the Justices. In Buckley v. Valeo,68
424 U.S. 1, 46–47 n.53 (1976); see also id. at 78 (repeating this conclusion).
Id. at 47.
Id. at 25; see also id. at 26–27 (concluding contribution limits satisfied this constitutional standard); McCutcheon v. FEC, 572 U.S. 185, 199 (2014) (concluding that preventing quid pro quo corruption or its appearance is a sufficiently important governmental interest when considering whether contribution limits survive First Amendment challenge, such that the limits will survive that challenge if they fit that that objective closely).
See FEC v. Colo. Republican Fed. Campaign Comm., 533 U.S. 431, 437 (upholding application of coordination rule to political party expenditures), 467–69 (Thomas, J., dissenting) (joined by three other justices) (arguing the existing definition of coordination and the application of the coordination rule were both unconstitutional) (2001); Colo. Republican Fed. Campaign Comm. v. FEC, 518 U.S. 604, 619–23 (Breyer, J., plurality), 626–30 (Kennedy, J., dissenting) (joined by two other Justices) (arguing that coordination rule should not apply to political parties), 631 (Thomas, J., dissenting) (joined by same two other Justices) (same), 648 (Stevens, J., dissenting) (joined by one other Justice) (arguing that all political party spending to support a particular candidate should be considered coordinated and so a contribution to the candidate’s campaign) (1996).
540 U.S. 93, 221–23, 273 (Thomas, J., dissenting) (2004).
There are therefore two issues when it comes to determining if the separate entity approach of federal tax law on one hand and the coordination approach of federal election law and the election laws of some states on the other are in tension or can be reconciled. The first issue is whether organizational law, and specifically the policy goals underlying these different regulatory schemes, provides a rationale for this differing treatment. The second issue is whether constitutional law, and specifically the First Amendment’s protection of speech, requires this differing treatment.
As noted earlier, organizational law permits the actions of one person, and particularly those of corporations, to be attributed to other persons for financial or regulatory liability purposes under only a limited set of circumstances.73
See supra notes 55–57 and accompanying text.
Turning first to federal tax law and its varying limitations on political activity depending on tax exemption category, it unfortunately is unclear what specific goals Congress had in mind when it imposed the limits on lobbying and the prohibition on political campaign intervention by section 501(c)(3) organizations.74
See John Simon, Harvey Dale & Laura Chisolm, The Federal Tax Treatment of Charitable Organizations, in The Nonprofit Sector: A Research Handbook 267, 285 (Walter W. Powell & Richard Steinberg eds., 2d ed. 2006) (“[i]t is generally agreed that no cogent, consistent rationale for the various restrictions on political activity in § 501(c)(3) and related provisions can be unearthed in the legislative record of their enactment.”).
See 78 Cong. Rec. 5861, 5959 (1934) (statement of Senator David Reed); Oliver A. Houck, On the Limits of Charity: Lobbying, Litigation, and Electoral Politics by Charitable Organizations Under the Internal Revenue Code and Related Laws, 69 Brook. L. Rev. 1, 16–23 (2003) (detailing Senator Reed’s long running battle with the National Economy League over veteran’s benefits and his citing of it as the prime example for why the lobbying restriction on charities should be enacted); William J. Lehrfeld, The Taxation of Ideology, 19 Cath. U. L. Rev. 50, 63–64 (1969) (reaching the same conclusion).
See T.D. 2831, 21 Treas. Dec. Int. Rev. 285 (1919) (regulation stating that disseminating controversial or partisan propaganda was not “educational” within the meaning of the charitable contribution deduction statute); Slee v. Comm’r, 42 F.2d 184, 185 (2d Cir. 1930) (concluding lobbying was inconsistent with eligibility to receive deductible charitable contributions); Kindell & Reilly, Lobbying Issues, supra note 37, at 261 (opining that Congress may have enacted the lobbying limitation “simply because there was a general sentiment that lobbying by charities should be restricted”).
Similarly, the reasons for the 1954 prohibition on political campaign intervention by section 501(c)(3) organizations are also obscure, in large part because then-Senator Lyndon Johnson added the prohibition to soon-to-be-enacted tax legislation on the floor of the Senate with no formal explanation or legislative history.77
See, e.g., Houck, supra note 75, at 28–29 (attributing the prohibition to then-Senator Lyndon B. Johnson’s desire to stop certain charities from opposing his re-election); Ann M. Murphy, Campaign Signs and the Collection Plate, 1 Pitt Tax Rev. 35, 54, 62 (2003) (arguing that the prohibition arose from a longstanding suspicion of political activities by charities that was strengthened by the McCarthy paranoia of the time, not primarily because of Senator Johnson’s desire to stop his political opponents).
Kindell & Reilly, Election Year Issues, supra note 37, at 448–51 (including three variations of the view that the prohibition was a reaction by Senator Johnson to his political opponents and an unrelated theory positing that the prohibition was a successful attempt to preempt a much more restrictive limitation on the activities of charities).
See, e.g., Ellen P. Aprill, Churches, Politics, and the Charitable Contribution Deduction, 42 B.C. L. Rev. 843, 844 (2001); Lloyd Hitoshi Mayer, Nonprofits, Taxes, and Speech, 56 Loyola L.A. L. Rev. 1291, 1345–46 (2023).
See, e.g., Galle, supra note 10, at 1591, 1625–27; Simon, Dale & Chisolm, supra note 74, at 286–87.
More specifically, John Simon, Harvey Dale, and Laura Chisolm identified four arguments for why both lobbying and political campaign intervention are inconsistent with being a charity: (1) political activity is “inherently inconsistent with the historical definition of charity”; (2) political activity diverts the attention of a charity from its charitable mission; (3) political activity by charities is socially inefficient; and (4) political activity by charities “simply amplifies the voices of those who are already heard.”81
Simon, Dale & Chisolm, supra note 74, at 286–87.
Id.
Id.
Similarly, Brian Galle has identified several ways that subsidizing political activity—whether lobbying or political campaign intervention—by permitting subsidized charities to engage in that activity may hurt charities.84
See Galle, supra note 10, at 1590–91, 1624–25.
Id. at 1591–1607.
Id. at 1595–96, 1599–60, 1607–12.
Id. at 1612–13.
It is beyond the scope of this essay to resolve this dispute. For purposes of this essay, it is sufficient to note that the lack of definitive legislative history and consensus among later commentators, including the IRS, regarding the justification for the political activity limits on tax-exempt charitable organizations makes it difficult to determine if the lack of attribution for political activity between closely affiliated but separate tax-exempt nonprofit corporations is consistent with the policy goals for those rules. More specifically, if the justification is only to prevent the deductibility of expenditures for lobbying and political campaign intervention, then the lack of attribution does not undermine that goal. This is because by requiring reasonable allocation of expenses among affiliated tax-exempt organizations and prohibiting or sharply limiting the use of, for example, a section 501(c)(3) organization’s (possibly deductible charitable contribution) funds for political activity, the goal of preventing tax-deductible contributions from being used for political activities is fully vindicated.
But the limits on political activity might instead be based on a broader view that lobbying and political campaign intervention are inconsistent with the charitable status recognized and supported by section 501(c)(3), as may have been the position of some members of Congress and as suggested by some scholars.88
See supra notes 76, 80–87 and accompanying text.
In contrast to the federal tax rules limiting political activity by section 501(c)(3) charitable organizations, the policy goal of federal and state election law coordination rules are well known and broadly accepted. These rules exist to prevent easy avoidance of election law rules limiting the sources and amounts of contributions to candidates and political parties, which limits are in turn designed to prevent corruption and the appearance of corruption.89
See Briffault, supra note 11, at 88–89; Smith, supranote 11, at 607–08; Sutterer, supra note 11, at 44–45; supra note 68 and accompanying text.
See supra notes 68–72 and accompanying text.
The bottom line is therefore that attribution through the coordination rules in federal and state election laws are supported by, and indeed required, to further the policy goal of such law to limit contributions to candidates and political parties to prevent corruption and the appearance of corruption. The lack of attribution under federal tax law of political activity between closely affiliated tax-exempt nonprofit corporations is less clearly justified because the policy goals of relevant political activity rules is uncertain. That said, there is an argument that this lack of attribution is problematic if one accepts that view that lobbying and political campaign intervention are inconsistent and indeed undermine the charitable status of section 501(c)(3) organizations and so allowing other types of tax-exempt organizations to be closely affiliated with section 501(c)(3) organizations and still engage in this political activity is unwise. But even if one accepts this policy argument, there is an additional hurdle: the Supreme Court’s decisions requiring this lack of attribution based on the free speech clause of the First Amendment.
The Supreme Court’s relevant constitutional decisions did not create the lack of attribution found in the federal tax law political activity rules for tax-exempt organizations, nor did they create the attribution found in the federal and state election law coordination rules. Such decisions instead reinforce the former and (for the most part) bless the latter. The blessing of the latter is evident from the Supreme Court decisions cited earlier and, since it is consistent with the policy goals already discussed, is not in tension with those policy goals.91
See supra notes 68–72 and accompanying text.
See supra notes 61–65 and accompanying text.
The 1983 Supreme Court decision in Regan v. Taxation with Representation93
461 U.S. 540 (1983). The organization also challenged the limit under the equal protection clause of the Fifth Amendment based on the differing treatment of tax-exempt veterans organizations, but the Court also rejected that argument. Id. at 550–51.
Id.at 543, 544 n.6.
Id. at 542, 543.
As noted earlier, the majority only mentioned the IRS policy of allowing close affiliation of section 501(c)(3) and section 501(c)(4) organizations in a footnote, but Justice Blackmun in concurrence took the position that this policy was essential to concluding that the lobbying limit was constitutional.96
See supra notes 61–64 and accompanying text.
See supra note 65 and accompanying text.
There is, however, a counter-argument suggested by disagreeing Justices. That argument is that once a nonprofit corporation accepts the benefits of section 501(c)(3) status—including the ability to receive tax-deductible charitable contributions under section 170(c)(2)—Congress can impose any speech limitation that is rationally related to the reasons for that status.98
See supra notes 66–67 and accompanying text.
See supra note 80 and accompanying text.
Taxation with Representation, 461 U.S. at 544 n.6.
See id. at 553 (Blackmun, J., concurring) (asserting that “Congress’ purpose in imposing the lobbying restriction was merely to ensure that no tax-deductible contributions are used to pay for substantial lobbying”).
There is therefore a basis for arguing that the Constitution would allow Congress, or even the IRS, to require attribution of the political activities of tax-exempt noncharitable nonprofits to their affiliated tax-exempt charitable nonprofits, effectively subjecting those activities to the political activity limits imposed on charities. To be clear, this argument requires two steps. First, Congress would need to clarify, or commentators would have to convincingly establish, that political activities—specifically lobbying and political campaign intervention—are inconsistent with the “charitable” activities that Congress seeks to support through section 501(c)(3) and other federal tax law benefits provided to charities, including eligibility to receive tax-deductible charitable contributions. Second, the Supreme Court would have to reject its embrace of Justice Blackmun’s concurrence in later decisions,102
See supra 65 and accompanying text.
In general, laws in the United States start with a presumption that persons—whether natural or artificial—are distinct and so attribution of the activities of one person to another is the exception. Yet exceptions do exist, including with respect to corporations (both for-profit and nonprofit). These exceptions include ones based on certain legal relationships, on the purposes of specific legal or regulatory schemes, and on preventing fraud.
With respect to political activity by nonprofit corporations, federal tax law and federal and state election law take differing approaches to attribution. Federal tax law does not attribute the political activity of a tax-exempt noncharitable nonprofit organization to a tax-exempt section 501(c)(3) charitable nonprofit organization even when the two organizations are under common control, coordinate activities, and share resources, as long as the latter organization’s funds are only spent on permitted activities (including only limited lobbying and no political campaign intervention). In contrast, federal election law and the election laws of some states attribute the election-related spending of a nonprofit corporation (and any other person) to a candidate or political party if that spending is done in coordination with them, thereby subjecting that spending to any applicable contribution limits.
The election law approach is justified by the need to prevent easy avoidance of contribution limits, which also provides the basis for concluding it is constitutional. Whether the federal tax law approach is justified depends on the policy goals of the limitation on political activity by section 501(c)(3) organizations. If those goals are only to prevent the deduction of spending on that activity, as the Supreme Court appears to have assumed and as some scholars argue, then the lack of attribution is justified and may be constitutionally required under the First Amendment’s free speech clause. If, however, those goals also include distancing section 501(c)(3) organizations from political activity because that activity undermines their charitable nature in some manner, as some members of Congress may have thought and some other scholars argue, then attributing the political activity of closely affiliated noncharitable tax-exempt nonprofit organizations to tax-exempt charitable organizations may both be justified as a policy matter and provide a basis for arguing against a constitutional requirement of non-attribution.
Given the significant amount spent not only by separate tax-exempt nonprofit corporations on political activity but done so in coordination by groups of affiliated tax-exempt nonprofit corporations of different types, it is important to clarify the justification for the political activity limits on section 501(c)(3) organizations. Unfortunately, the legislative history is not helpful and commentator views are divided. This result suggests that either congressional clarification or further scholarship is needed to establish which justification applies and so whether a change to the federal tax rule of non-attribution is both needed and constitutional.
- 1H.R. Comm. on Ways and Means, Request for Info.: Understanding and Examining the Political Activities of Tax-Exempt Organizations under Section 501 of the Internal Revenue Code (2023), https://perma.cc/XQ4D-N7F2.
- 2Id. at 2–3. All section references are to the Internal Revenue Code, 26 U.S.C., unless otherwise noted.
- 3Id. at 7.
- 4See Registering as a Super PAC, Federal Election Commission, https://perma.cc/NC7F-AGEU; see also Setting up and Operating a Federal Super PAC, Venable LLP, https://perma.cc/QGG2-58B3.
- 5In the interests of full disclosure, note that the author was part of a group of tax-exempt organization scholars who submitted a response. See Ellen P. Aprill, Roger Colinvaux, Brian D. Galle, Philip Hackney & Lloyd Hitoshi Mayer, Response by Tax-Exempt Organization Scholars to Request for Information (2023), https://perma.cc/Z4H8-RM6M.
- 6See H.R. Comm. on Ways and Means, Oversight Subcomm. Hearing on Growth of the Tax-Exempt Sector and the Impact on the Am. Pol. Landscape, https://perma.cc/S2B2-92KT; H.R.Comm. on Ways and Means Chairman Jason Smith, Chairman Smith and Oversight Subcomm. Chairman Schweikert Announce Subcomm. Hearing on Growth of the Tax-Exempt Sector and the Impact on the Am. Pol. Landscape (2023), https://perma.cc/G5GJ-6KEG.
- 7See infra Part I.
- 8See H.R. Comm. on Ways and Means, supra note 1, at 7.
- 9See, e.g., Stephen R. Weissman & Kara D. Ryan, Nonprofit Interest Groups’ Election Activities and Federal Campaign Finance Policy, 54 Exempt Org. Tax Rev. 21 (2006).
- 10See Roger Colinvaux, Political Activity Limits and Tax Exemption: A Gordian’s Knot, 34 Va. Tax Rev. 1, 26 (2014); see also Brian Galle, Charities in Politics: A Reappraisal, 54 Wm. & Mary L. Rev. 1561, 1607–09 (2013); Miriam Galston, Campaign Speech and Contextual Analysis, 6 First Amend. L. Rev. 100, 109–13 (2007).
- 11See, e.g., Richard Briffault, Coordination Reconsidered, 113 Colum. L. Rev. Sidebar 88, 92–93 (2013); Brent Ferguson, Beyond Coordination: Defining Indirect Campaign Contributions for the Super PAC Era, 42 Hastings Const. L.Q. 471, 483–87 (2015); Bradley A. Smith, Super PACs and the Role of Coordination in Campaign Finance Law, 49 Willamette L. Rev. 603, 607–09 (2013); Jennifer Sutterer, Closing Loopholes for Coordination: Proposed Reforms to Federal Campaign Finance Laws, 49 Va. J. L. & Pol. 33, 44–55 (2023).
- 12See Coordinated Communications, Fed. Election Comm., https://perma.cc/PST2-AL3D; Richard L. Hasen, Super PAC Contributions, Corruption, and the Proxy War Over Coordination, 9 Duke J. Const. L. & Pub. Pol’y 1, 16 (2014).
- 13Ferguson, supra note 11, at 485–87; Sutterer, supra note 11, at 52–55.
- 14See FEC, supra note 12; Briffault, supra note 11, at 92; Ferguson, supra note 11, at 483–86; Sutterer, supra note 11, at 46–49, 52–55.
- 15Outside Spending, Open Secrets (2022), https://perma.cc/T6MK-EWCB.
- 16Id.
- 17Press Release, Statistical Summary of 24-Month Campaign Activity of the 2021-2022 Election Cycle, FEC (Apr. 3, 2023), https://perma.cc/8TPB-8GAK.
- 18See 2022 Outside Spending, by Group, Open Secrets, https://perma.cc/9J74-99DG.
- 19See Lobbying, Top Spenders, Open Secrets (2022), https://perma.cc/82SD-LWXS.
- 20See Methodology, Open Secrets, https://perma.cc/G2FB-JXEE; Taylor Giorno & Pete Quist, Total Cost of 2022 State and Federal Elections Projected to Exceed $16.7 Billion, Open Secrets News (Nov. 3, 2022, 12:55 PM), https://perma.cc/V349-AZNM (estimating that state candidates, political committees, and ballot measure committees raised $7.8 billion during the 2022 election cycle).
- 21See Club for Growth Outside Spending, Open Secrets (2022), https://perma.cc/B2H7-YNN6; Club for Growth, Form 990, at 1, 42 (Schedule R, Part II) (2022), https://perma.cc/6957-YT4W.
- 22See Americans for Prosperity Outside Spending 2022, Open Secrets (2022), https://perma.cc/973J-JUEN; Americans for Prosperity, Form 990, at 1, 48 (Schedule R, Part II) (2021), https://perma.cc/RTL4-D3S7.
- 23See Nat’l Ass’n of Realtors, Form 990, at 1, 89 (Schedule R, Part II) (2022), https://perma.cc/4R3X-LNNA.
- 24See Chamber of Commerce of the USA, Form 990, at 1, 41 (Schedule R, Part II) (2022), https://perma.cc/83LY-X88J.
- 25See Reaume Foundation, Nat’l Ass’n of Realtors, https://perma.cc/7JMZ-44YH.
- 26See U.S. Chamber of Commerce Foundation, Form 990, at 2 (2022), https://perma.cc/2XYA-HQX7.
- 27See id. at 7; Chamber of Commerce of the USA, supra note 24, at 7.
- 28See What Should Nonprofits Know About 501(c)(4) organizations? Especially in an Election Year?, Cal. Ass’n of Nonprofits, https://perma.cc/WV59-LMGS (explaining why a section 501(c)(3) organization may want to create a section 501(c)(4) affiliate).
- 29Moline Properties v. Comm’r, 319 U.S. 436 (1943).
- 30Id. at 439.
- 31See Stephen B. Land, Entity Identity: The Taxation of Quasi-Separate Enterprises, 63 Tax Law. 99, 100 (2009); Martin J. McMahon, Jr., Understanding Consolidated Returns, 12 Fla. Tax Rev. 125 (2012); Walter D. Schwidetzky, Integrating Subchapters K and S – Just Do It, 62 Tax Law. 749, 751–52 (2009).
- 3226 U.S.C. § 482; see also 26 U.S.C. § 269A (allowing the IRS to reallocate income, etc. between separate entities in certain specific circumstances to prevent tax evasion).
- 33This federal tax treatment is consistent with state nonprofit corporation law, which is usually based on state (for-profit) corporation law that treats separate corporations as distinct entities that are legally and financially separate from their owners and other legal entities for most purposes, absent a failure to abide by corporate formalities. See Eric C. Chaffee, Collaboration Theory: A Theory of the Charitable Tax-Exempt Nonprofit Corporation, 49 U.C.D. L. Rev. 1719, 1729–34 (2016).
- 34See generally Restatement (Third) of Agency (Am. L. Inst. 2006).
- 35See generally Joachim Dietrich & Iain Field, Statute and Theories of Vicarious Liability, 43 Melb. U. L. Rev. 515 (2019).
- 36See 26 U.S.C. §§ 170(c)(2), 501(c)(3).
- 37See I.R.S. Gen. Couns. Mem. 34,233 (Dec. 30, 1969); T.D. 6391, 1959-2 C.B. 139, 145–46 (reaching this conclusion with respect to section 501(c)(4) organizations); Ellen P. Aprill, A Case Study of Legislation vs. Regulation: Defining Political Campaign Intervention Under Federal Tax Law, 63 Duke L.J. 1635, 1664–65 (2014); Miriam Galston, Lobbying and the Public Interest: Rethinking the Internal Revenue Code’s Treatment of Legislative Activities, 71 Tex. L. Rev. 1269, 1276–77 (1993); Judith E. Kindell & John Francis Reilly, Election Year Issues, Exempt Organizations Continuing Professional Education Technical Instruction Program FY2002, at 340 n.56 (2001), https://perma.cc/QV5Z-ELD4 [hereinafter Kindell & Reilly, Election Year Issues]; Judith E. Kindell & John Francis Reilly, Lobbying Issues, in Exempt Organizations – Technical Instruction Program for FY 1997, at 236–37 (1997), https://perma.cc/VVM6-NUM3 [hereinafter, Kindell & Reilly, Lobbying Issues]; John Francis Reilly & Barbara A. Braig Allen, Political Campaign and Lobbying Activities of IRC 501(c)(4), (c)(5), and (c)(6) Organizations, in Exempt Organizations – Technical Instruction Program for FY 2003, at L-1 to L-3 (2002), https://perma.cc/QXL7-AETG.
- 38See 26 U.S.C. § 527.
- 39See 26 U.S.C. § 170(a)(1), (c)(2). Certain veterans’ organizations, cemetery companies, fraternal organizations (for gifts dedicated exclusively for charitable, religious, and similar purposes), and government entities (for gifts dedicated exclusively to public purposes) are also eligible to receive deductible charitable contributions. See id. § 170(c)(1), (3), (4). Contributions to section 501(c)(3) organizations are also generally deductible for gift and estate tax purposes, while contributions to section 501(c)(4), 501(c)(5), 501(c)(6), and 527 organizations are generally not subject to gift tax (but are not deductible or exempt for estate tax purposes). See 26 U.S.C. §§ 2055(a)(2), 2106(a)(2)(A)(ii), 2501(a)(4), (6), 2522(a)(2), 2522(b)(2).
- 40See Ward L. Thomas & Judith E. Kindell, Affiliations Among Political, Lobbying and Educational Organizations, Exempt Organizations Continuing Professional Education Technical Instruction Program FY2000, at 255 (1999), https://perma.cc/G9X9-W37J.
- 41Id. at 258 (citing Center on Corporate Responsibility, Inc. v. Schultz, 368 F.Supp. 863 (D.D.C. 1973)).
- 42Id. at 259–60.
- 43Id.
- 44See supra notes 11–12 and accompanying text.
- 45See, e.g., supra note 11.
- 4626 C.F.R. § 109.20.
- 4726 C.F.R. § 109.21(d)(1)(ii), (4).
- 48See, e.g., CAL. ELEC. CODE § 18225.7 (request, suggestion, direction, corporation, or consultation); Me. Rev. Stat. tit. 21-A, § 1125 (cooperation or consultation).
- 49See generally Henry Hansmann & Reinier Kraakman, The Essential Role of Organizational Law, 110 Yale L.J. 387, 391–93 (2000).
- 50Paul B. Miller, The Concept of Personality in Private Law in Interstitial Private Law (Samual J. Bray, John C.P. Goldberg, Paul B. Miller & Henry E. Smith eds., forthcoming) (manuscript at 4), https://perma.cc/JE9N-7EKN.
- 51See supra note 31 and accompanying text.
- 52See id.
- 53See Am. L. Inst., supra note 34 and accompanying text.
- 54See generally Stephen M. Bainbridge, Abolishing Veil Piercing, 26 J. Corp. L. 479 (2001).
- 55Jonathan Macey & Joshua Mitts, Finding Order in the Morass: The Three Real Justifications for Piercing the Corporate Veil, 100 Cornell L. Rev. 99 (2014).
- 56Mariana Pargendler, Veil Peeking: The Corporation as a Nexus for Regulation, 169 U. Pa. L. Rev. 717, 719–21 (2021).
- 57Id. at 724.
- 58558 U.S. 310, 342–43, 423–25 (Stevens, J., dissenting) (2010) (concluding that under the First Amendment, Congress has more leeway to regulate political speech by corporations as opposed to speech by natural persons).
- 59See Va. State Bd. of Pharmacy v. Va. Citizens Consumer Council, Inc., 425 U.S. 748, 756–57 (1976) (citing cases).
- 60See generally Adam Winkler, We the Corporations: How American Businesses Won Their Civil Rights (2018).
- 61461 U.S. 540, 552–54 (Blackmun, J., concurring) (1983). The majority also mentioned the IRS’ treatment of 501(c)(3) and 501(c)(4) affiliates, but only in a footnote. Id. at 544 n.6.
- 62Id. at 553 (Blackmun, J., concurring) (citations omitted).
- 63Id.
- 64Id. (citations omitted).
- 65See, e.g., Rust v. Sullivan, 500 U.S. 173, 198 (1991); FCC v. League of Women Voters, 468 U.S. 364, 399–400 (1984).
- 66See League of Women Voters, 468 U.S. at 406–07 (Rehnquist, J., dissenting) (joined by two other justices).
- 67Agency for Int’l Dev. v. Alliance for Open Soc’y Int’l, 133 S.Ct. 2321, 2334 (Scalia, J., dissenting) (joined by Justice Thomas) (citations omitted) (2013) [hereinafter AOSI]; see also Agency for Int’l Dev. v. Alliance for Open Soc’y Int’l, 140 S.Ct. 2082, 2090 (Thomas, J., concurring) (emphasizing his continued support for the position taken in Justice Scalia’s AOSI dissent) (2020).
- 68424 U.S. 1, 46–47 n.53 (1976); see also id. at 78 (repeating this conclusion).
- 69Id. at 47.
- 70Id. at 25; see also id. at 26–27 (concluding contribution limits satisfied this constitutional standard); McCutcheon v. FEC, 572 U.S. 185, 199 (2014) (concluding that preventing quid pro quo corruption or its appearance is a sufficiently important governmental interest when considering whether contribution limits survive First Amendment challenge, such that the limits will survive that challenge if they fit that that objective closely).
- 71See FEC v. Colo. Republican Fed. Campaign Comm., 533 U.S. 431, 437 (upholding application of coordination rule to political party expenditures), 467–69 (Thomas, J., dissenting) (joined by three other justices) (arguing the existing definition of coordination and the application of the coordination rule were both unconstitutional) (2001); Colo. Republican Fed. Campaign Comm. v. FEC, 518 U.S. 604, 619–23 (Breyer, J., plurality), 626–30 (Kennedy, J., dissenting) (joined by two other Justices) (arguing that coordination rule should not apply to political parties), 631 (Thomas, J., dissenting) (joined by same two other Justices) (same), 648 (Stevens, J., dissenting) (joined by one other Justice) (arguing that all political party spending to support a particular candidate should be considered coordinated and so a contribution to the candidate’s campaign) (1996).
- 72540 U.S. 93, 221–23, 273 (Thomas, J., dissenting) (2004).
- 73See supra notes 55–57 and accompanying text.
- 74See John Simon, Harvey Dale & Laura Chisolm, The Federal Tax Treatment of Charitable Organizations, in The Nonprofit Sector: A Research Handbook 267, 285 (Walter W. Powell & Richard Steinberg eds., 2d ed. 2006) (“[i]t is generally agreed that no cogent, consistent rationale for the various restrictions on political activity in § 501(c)(3) and related provisions can be unearthed in the legislative record of their enactment.”).
- 75See 78 Cong. Rec. 5861, 5959 (1934) (statement of Senator David Reed); Oliver A. Houck, On the Limits of Charity: Lobbying, Litigation, and Electoral Politics by Charitable Organizations Under the Internal Revenue Code and Related Laws, 69 Brook. L. Rev. 1, 16–23 (2003) (detailing Senator Reed’s long running battle with the National Economy League over veteran’s benefits and his citing of it as the prime example for why the lobbying restriction on charities should be enacted); William J. Lehrfeld, The Taxation of Ideology, 19 Cath. U. L. Rev. 50, 63–64 (1969) (reaching the same conclusion).
- 76See T.D. 2831, 21 Treas. Dec. Int. Rev. 285 (1919) (regulation stating that disseminating controversial or partisan propaganda was not “educational” within the meaning of the charitable contribution deduction statute); Slee v. Comm’r, 42 F.2d 184, 185 (2d Cir. 1930) (concluding lobbying was inconsistent with eligibility to receive deductible charitable contributions); Kindell & Reilly, Lobbying Issues, supra note 37, at 261 (opining that Congress may have enacted the lobbying limitation “simply because there was a general sentiment that lobbying by charities should be restricted”).
- 77See, e.g., Houck, supra note 75, at 28–29 (attributing the prohibition to then-Senator Lyndon B. Johnson’s desire to stop certain charities from opposing his re-election); Ann M. Murphy, Campaign Signs and the Collection Plate, 1 Pitt Tax Rev. 35, 54, 62 (2003) (arguing that the prohibition arose from a longstanding suspicion of political activities by charities that was strengthened by the McCarthy paranoia of the time, not primarily because of Senator Johnson’s desire to stop his political opponents).
- 78Kindell & Reilly, Election Year Issues, supra note 37, at 448–51 (including three variations of the view that the prohibition was a reaction by Senator Johnson to his political opponents and an unrelated theory positing that the prohibition was a successful attempt to preempt a much more restrictive limitation on the activities of charities).
- 79See, e.g., Ellen P. Aprill, Churches, Politics, and the Charitable Contribution Deduction, 42 B.C. L. Rev. 843, 844 (2001); Lloyd Hitoshi Mayer, Nonprofits, Taxes, and Speech, 56 Loyola L.A. L. Rev. 1291, 1345–46 (2023).
- 80See, e.g., Galle, supra note 10, at 1591, 1625–27; Simon, Dale & Chisolm, supra note 74, at 286–87.
- 81Simon, Dale & Chisolm, supra note 74, at 286–87.
- 82Id.
- 83Id.
- 84See Galle, supra note 10, at 1590–91, 1624–25.
- 85Id. at 1591–1607.
- 86Id. at 1595–96, 1599–60, 1607–12.
- 87Id. at 1612–13.
- 88See supra notes 76, 80–87 and accompanying text.
- 89See Briffault, supra note 11, at 88–89; Smith, supranote 11, at 607–08; Sutterer, supra note 11, at 44–45; supra note 68 and accompanying text.
- 90See supra notes 68–72 and accompanying text.
- 91See supra notes 68–72 and accompanying text.
- 92See supra notes 61–65 and accompanying text.
- 93461 U.S. 540 (1983). The organization also challenged the limit under the equal protection clause of the Fifth Amendment based on the differing treatment of tax-exempt veterans organizations, but the Court also rejected that argument. Id. at 550–51.
- 94Id.at 543, 544 n.6.
- 95Id. at 542, 543.
- 96See supra notes 61–64 and accompanying text.
- 97See supra note 65 and accompanying text.
- 98See supra notes 66–67 and accompanying text.
- 99See supra note 80 and accompanying text.
- 100Taxation with Representation, 461 U.S. at 544 n.6.
- 101See id. at 553 (Blackmun, J., concurring) (asserting that “Congress’ purpose in imposing the lobbying restriction was merely to ensure that no tax-deductible contributions are used to pay for substantial lobbying”).
- 102See supra 65 and accompanying text.