Political gifts by churches break IRS rules

THE BALTIMORE SUN

More than 100 churches in Maryland - including dozens in Baltimore - have made campaign contributions to political candidates in recent years, an act that is prohibited by federal tax law and blurs the line between politics and the pulpit.

Some have given repeatedly, such as the Southern Baptist Church in East Baltimore, which made a dozen campaign donations between 2000 and 2004 that add up to more than $3,000, according to a review by The Sun of candidate finance reports.

Statewide, at least 115 churches have given to about 40 candidates since 2000, according to the review, and while the donations are generally small and sporadic, they flout Internal Revenue Service regulations that prohibit churches from advocating for specific political candidates.

"They're not supposed to do that," said Rob Boston, a spokesman for Americans United for Separation of Church and State, a Washington group that has filed complaints against churches with the IRS for similar lapses.

Churches that give to candidates can face revocation of their tax-exempt status or a 10 percent excise tax on the contributions, according to the IRS.

Critics of the nonprofit tax code say it stifles the free speech of religious leaders and undermines the role churches play as advocates for their communities. Others argue that allowing congregations to become politically active could turn the collection plate into a vehicle for tax-free campaign finance.

On Friday, the IRS released a report showing that nearly three-quarters of 82 tax-exempt organizations investigated nationwide during the 2004 election campaign had participated in some form of prohibited political activity - including 37 of 47 churches that were examined. The agency moved to revoke the tax-exempt status of three of those organizations, though none were churches.

While IRS Commissioner Mark W. Everson emphasized in a Cleveland speech that "the vast majority of charities, including churches, do not engage in politicking," he said the agency neverthless saw "increasing political intervention in 2004" - particularly as both parties sought religious support - and promised expanded education and enforcement.

In Maryland, contributions by churches have been small - averaging about $170, according to The Sun's analysis, and ranging from $5 to $2,000 - but for candidates, a little faith can go a long way.

Del. Emmett C. Burns Jr., a Baltimore County Democrat, for instance, has received about $16,000 from churches since 2000, according to the review, including $500 from Rising Sun First Baptist Church in Woodlawn, where he is pastor. Baltimore Democratic Sen. Nathaniel J. McFadden, the Senate's majority leader, took a dozen contributions, which add up to more than $2,000.

A variety of candidates from both parties - including many in top leadership positions - have taken money from churches in recent years. They include Baltimore City Council President Sheila Dixon; Baltimore State's Attorney Patricia C. Jessamy; and Sen. Thomas M. Middleton, a Charles County Democrat and chairman of the Senate Finance Committee.

Some who received a contribution from a church said they were not aware of the federal provisions barring them. Burns said he believes that the IRS should change its rules to allow churches to make donations, especially given the Bush administration's emphasis on religion-based initiatives.

"We're talking about faith-based this and faith-based that - why not? We're moving in that direction," Burns said. "It doesn't mean that because a church buys a ticket that it supports a political position; they're just going to be at an event."

A proposal to ease political restrictions on churches has been introduced in Congress but has stalled for more than a year.

Nothing in state or federal law bans candidates from taking a contribution from a church - the onus, tax experts say, is on church leaders to know better. But some candidates acknowledge that they do not inform churches of the law, and some pastors said they didn't realize they were attending a political event.

"We never considered it a contribution. We never considered ourselves making a contribution," said Pastor Matthew Jones of Concord Baptist Church in West Baltimore, which appears on campaign disclosure reports as making seven donations since 2001.

Jones said the church bought tickets to political banquets at Martin's West, a Woodlawn catering hall, that were organized by Burns and other officials. But he said he did not know the money counted as a political contribution.

"It appeared to be some kind of fundraiser," he said, but "we haven't made ... contributions to any campaign."

In another case, Cecil County Sheriff Barry A. Janney Sr., a Republican, attended an annual banquet and dinner at the Immaculate Conception Church in Elkton, near the Delaware border. He put in for the raffle, a staple at such events, and won a $2,000 cash prize.

When the time came to cut the check, Janney asked that it go to his campaign. The church obliged.

"He won the money fair and square," said Peg Callahan, the church business manager, who said she was not aware the money could present a problem - especially because it was won by chance and was not an endorsement. "We will never do it again, since we know now we weren't supposed to do it."

The IRS has discretion over enforcement and may exercise leniency in cases where the activity was inadvertent.

Other churches identified in the review were Baltimore County's Greater Bethlehem Temple Church, which made six contributions totaling $2,700, and the Mount Pleasant Church Ministries, on the city-county line, which gave $1,100 through six contributions.

Pastors at those churches, as well as at Southern Baptist, could not be reached for comment, either by phone or visits to their buildings.

The IRS has cracked down on some churches that made explicit political moves in the past. The agency revoked the tax-exempt status of a church in Vestal, N.Y., that bought anti-Clinton advertisements in national newspapers in 1992.

A year later, the IRS forced the Rev. Jerry Falwell to pay $50,000 in taxes for contributions he made to congressional candidates.

Recently, the most voluble debate over churches and politics has turned on how far preachers may go toward supporting a candidate from the pulpit and whether the prohibition against such endorsements extends to, say, discussions about current events.

Experts said they are surprised campaign contributions, which are a more blatant example of support, are even an issue in Maryland because they are clearly forbidden. Officials at the Becket Fund for Religious Liberty, which supports churches in fights against the IRS, would not comment on the practice.

Churches "are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign," according to a 28-page brochure published by the IRS that summarizes tax code for churches.

"Contributions to political campaign funds or public statements of position ... violate the prohibition against political campaign activity. Violation of this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise tax," the brochure reads.

Churches may give to political action committees - so long as their advocacy does not become a substantial part of their operations - and many have done so in Maryland.

Unlike other nonprofits, churches need not file with the IRS to obtain tax-exempt status - they are automatically categorized that way, though some choose to apply for official recognition. An IRS spokesman said the agency does not keep track of how many file for the status, which excuses the organization from federal income tax and allows it to receive tax-deductible contributions.

Candidates who received money from churches said they don't review each check written to their campaign. They also said that when they sought support from churches, they assumed individual parishioners and pastors would give - which is legal - not that contributions would be made on behalf of the church.

The distinction is key: Parishioners must pay tax on income they contribute to a campaign. But if they gave money to the church, they could write it off on their taxes.

"We will give them a call and say, 'Look, we're having a fundraiser.' We don't say, 'You're a not-for-profit, and so you've got to make sure that the money comes from an individual,'" said Middleton, who has received about $450 from churches. "I'm sure that wasn't something that was done intentionally."

McFadden agreed that church leaders are often confused about the specifics of the tax code but said that shouldn't stop them from playing some role in politics. "One of my bases is my church, and it has been my whole political career," he said. "They don't run around with the campaign finance laws in their offices."

Black churches especially have been active politically, McFadden said. Though a variety of denominations gave to candidates, the analysis shows many of the churches are Baptist or African Methodist Episcopal congregations in predominantly African-American neighborhoods.

Black churches are more politically involved out of necessity, experts said. In many cases, churches historically were the only institutions offering a voice to generations of African-Americans struggling against racism.

"Black churches feel there is always a full-time job trying to seek equality and freedom," and Alton B. Pollard III, director of the Black Church Studies Program at Emory University. "It has carried over from the civil rights period to a continuing preoccupation with political equality."

Burns, the Baltimore County delegate - whose district once included portions of the city - agreed.

"The black church was always the center of the civil rights movement. That was the only place they could be," he said. "The black church is the only institution that black people owned."

But others counter that the rules governing political activity for all churches - right or wrong - have been in place since the Johnson administration and that while it is true that many never think about the business of religion, the IRS demands that pastors stay attuned.

"I would just remind religious leaders in cases like this they need to be extra careful in dealing with politicians. The politician's bottom line is to raise as much money as possible," said Boston, of Americans United.

"It's not the politician's campaign that's going to suffer" from a contribution, he said. "It's going to be the house of worship."

john.fritze@baltsun.com

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