Are 501(c)(3) Nonprofits Still Required to Be Nonpartisan? 

Yes. The Law Hasn’t Changed – but interpretation has gotten confusing.

You may have seen recent headlines suggesting that the IRS is backing off the ban on churches – and 501c3s, in general – making partisan political endorsements. That’s not exactly true — and it doesn’t apply to all nonprofits. 

On July 7, the IRS asked a federal court in Texas to settle a lawsuit and allow two churches to make political endorsements to their church members using customary communication channels.  The IRS (along with the two churches) filed a joint motion asking the court to issue a permanent injunction preventing the IRS from enforcing the nonpartisanship provision of the IRS tax code, also known as the “Johnson Amendment,” against the two churches named in the suit.  

These churches had previously sued the IRS, arguing that the ban on political endorsements violates their First Amendment rights. They had argued that churches are especially restricted, because they are automatically classified as 501(c)(3)s under the tax code. Unlike other nonprofits, they don’t have the option to apply as 501(c)(4) “social welfare” organizations — which can endorse or oppose candidates but don’t offer tax deductions for donors. 

The IRS agreed with the plaintiffs’ arguments — but the settlement only applies to these two churches. 

No. The law itself hasn’t changed. Only Congress can change the law — not the IRS and not a court decision in one case. This court agreement would only apply to two churches in Texas. 

However, the IRS is signaling a willingness to limit how it interprets and enforces the rule for religious organizations, which raises concerns. 

If the IRS stops enforcing the nonpartisanship rule for churches, it could open the door for more 501(c)(3)s to engage in politics — intentionally or not. That could harm the whole nonprofit sector in Montana by: 

The IRS decision in this case doesn’t change the law for your organization. If you’re a Montana 501c3 nonprofit, existing federal law is still in effect — no endorsing candidates, no campaign contributions.  Many questions remain unanswered, including within the statement provided by the IRS – How is “congregation” defined? What constitutes “usual channels of communications”? What are “matters of faith” that are protected? 

Even as political pressure and confusion grow, staying nonpartisan protects your mission, your funding, and your reputation. If you have questions about what’s allowed, reach out to MNA, although please remember that neither this post nor further guidance constitute legal advice for your organization.