2017 Lane Reports

Politics and Charity Donít Mix

The Lane Report, May 2017
Monday, May 1, 2017 10:00 am
by Marc J. Lane

In accepting his party’s nomination for president on July 21 last year, Donald Trump singled out “the evangelical and religious community” for their help in getting him nominated and acknowledged that, “They have much to contribute to our politics, yet our laws prevent you from speaking your minds from your own pulpits.” He went on to explain that, “An amendment, pushed by Lyndon Johnson many years ago, threatens religious institutions with a loss of their tax-exempt status if they openly advocate their political views. Their voice has been taken away. I am going to work very hard to repeal that language and to protect free speech for all Americans.” Repealing the so-called Johnson Amendment was part of the Republican National Committee’s platform last summer.

The Johnson Amendment regulates what tax-exempt organizations such as churches can do in the political arena. While nonpartisan voter education and church-organized voter registration and get-out-the-vote drives are legal—and pastors are free to preach on social and political issues of concern, the 1954 legislation named for then-Senator Lyndon B. Johnson, its principal sponsor, prohibits churches and other nonprofits from participating in, or intervening in, political campaigns.

The President doubled down on his promise at the National Prayer Breakfast on February 2 when he assured his audience that, “ I will get rid of and totally destroy the Johnson Amendment and allow our representatives of faith to speak freely and without fear of retribution. I will do that, remember.”

Now it appears that Republican leaders in Congress may tuck a repeal of the Johnson Amendment into the tax reform bill they plan to send the President before the year is out. While a stand-alone bill would almost certainly face a filibuster in the Senate where opponents fear the measure would effectively turn churches into super PACS, including the repeal in broader tax legislation could bolster its chances for enactment.

Siding with the President, some conservative groups that favor a greater role for religion in the public space see the Johnson Amendment as a gag order unconstitutionally backed by the power of the State. They argue that the prohibition authorizes political appointees at the IRS to decide when moral issues become political issues. The result, they claim, is to censor churches and religious organizations, denying them their right to free speech with the threat of crippling penalties and even the loss of tax-exempt status.

President Trump appears to misunderstand the law, wrongly believing that it prohibits religious leaders from expressing their political beliefs and even that it denies them the right to talk about religion itself. In a speech last September 9, candidate Trump insisted that, “The Johnson Amendment has blocked our pastors and ministers and others from speaking their minds from their own pulpits. If they want to talk about Christianity, if they want to preach, if they want to talk about politics, they are unable to do so. If they want to do it, they take a tremendous risk, that they lose their tax-exempt status.”

One reason the President may be championing the repeal of the Johnson Amendment is that tax-free donations to churches could then be put to work in support of political candidates. But politicizing houses of worship would put pulpits up for sale to partisan interests, jeopardizing the public’s trust in our charitable institutions and undermining  their ability to fulfill their missions, including campaigning for positive social change.

Repealing the Johnson Amendment would invite donors to funnel their political donations through charities, rendering them tax-deductible and avoiding campaign contribution disclosure laws; would empower politicians to pressure charities to fund their campaigns rather than the common good; and would undercut fair elections.

Nonprofits ought not become bigger money players in politics. Let’s preserve the integrity of charities, including churches and religious organizations, by supporting the tax-law ban on electioneering and partisan political activities, and strongly resist any effort to repeal or relax the Johnson Amendment.

Peterborough's problem was daunting: Sixty percent of prisoners serving short-term sentences historically had gone on to re-offend within a year after their release. But policymakers were confident that a solution was within their reach. They attracted private investment to pay experienced social service agencies to provide intensive, multidisciplinary support to short-term prisoners, preparing them to re-enter society and succeed outside the penal system. - See more at: http://www.chicagobusiness.com/article/20131007/OPINION/131009850/a-new-kind-of-futures-contract-for-illinois#sthash.ThgxeiFt.dpuf

The world's first social impact bond, or SIB, was introduced in 2010 to fund innovative social programs that realistically might reduce recidivism by ex-offenders in Peterborough, England, and, with it, the public costs of housing and feeding repeat offenders. Prudently building on the strengths of that initiative, Illinois Gov. Pat Quinn is rolling out SIBs to help solve some of the state's most vexing social problems.

A SIB isn't a traditional bond where investors are guaranteed a fixed return but a contract among a government agency that agrees to pay for improved social outcomes, a private financing intermediary and private investors. SIBs shift the risk of experimenting with promising but untested intervention strategies from government to private capital markets, with public funds expended only after targeted social benefits have been achieved.

Peterborough's problem was daunting: Sixty percent of prisoners serving short-term sentences historically had gone on to re-offend within a year after their release. But policymakers were confident that a solution was within their reach. They attracted private investment to pay experienced social service agencies to provide intensive, multidisciplinary support to short-term prisoners, preparing them to re-enter society and succeed outside the penal system.

The government decided which goals would be supported, but exactly how those goals would be achieved was left to the private sector. It was the investors, through a bond-issuing organization, who ultimately endorsed the allocation of investment proceeds — how much would be invested in job training, drug rehabilitation and other interventions.

If the Peterborough plan eventually shrinks recidivism rates by 7.5 percent or more, the government will repay the investors' capital and share the taxpayers' savings with them, delivering up to a 13 percent return. If the target isn't hit, the investment will have failed and the government will owe the investors nothing.

Illinois' SIB effort was spearheaded by the state's Task Force on Social Innovation, Entrepreneurship and Enterprise — the governor's think tank on social issues, which I am privileged to chair — with support from Harvard University's John F. Kennedy School of Government, the Rockefeller Foundation and the Aurora-based Dunham Fund. A request for information issued by the Office of Management and Budget on May 13 yielded responses from service providers eager not only to reduce recidivism here but also to create jobs, revitalize communities, improve public health outcomes, curb youth violence, cut high school dropout rates and alleviate poverty.

Now the governor has issued a request for proposals intended to spur better outcomes for Illinois' most at-risk youth — by increasing placement stability and reducing re-arrests for youth in the state's Department of Children and Family Services, and by improving educational achievement and living-wage employment opportunities justice-involved youth most likely to re-offend upon returning to their communities.

Kudos to Mr. Quinn for bringing SIBs to Illinois. May they soon start delivering on their promise.

- See more at: http://www.chicagobusiness.com/article/20131007/OPINION/131009850/a-new-kind-of-futures-contract-for-illinois#sthash.ThgxeiFt.dpuf
The world's first social impact bond, or SIB, was introduced in 2010 to fund innovative social programs that realistically might reduce recidivism by ex-offenders in Peterborough, England, and, with it, the public costs of housing and feeding repeat offenders. Prudently building on the strengths of that initiative, Illinois Gov. Pat Quinn is rolling out SIBs to help solve some of the state's most vexing social problems. - See more at: http://www.chicagobusiness.com/article/20131007/OPINION/131009850/a-new-kind-of-futures-contract-for-illinois#sthash.ThgxeiFt.dpuf

Marc J. Lane is a Chicago attorney and financial adviser and the vice chair of the Cook County Commission on Social Innovation.


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