Brian Galle[*]
In the days before and after the passage of California’s “Proposition 8,” a ballot initiative barring legal recognition of same-sex marriages in the state, it was widely reported that the LDS Church, together with other religious organizations, played a significant role in supporting the initiative.[1] National attention peaked with a New York Times report detailing some of the church’s efforts, which included e-mails to members imploring them to donate money to “Yes on 8” organizations as well as other logistical support for proponents of the measure.[2] Gay rights advocates and others have now called for an investigation of the Church’s activities, arguing that they violate federal restrictions on political activities by tax-exempt charities.
This Essay considers the merits of the argument that the Mormon Church’s support for Proposition 8 violated federal tax law. I take as given the facts reported by the New York Times and other major news outlets. Although the facts are not really in dispute, much of the underlying law is. There are few clear guidelines governing lobbying by charities. In the end it is impossible to say whether the Church’s conduct will have any tax-law repercussions. My conclusion that there is uncertainty, though, stands in contrast with existing claims that the expenditures of the LDS Church and others are clearly unproblematic.
My discussion here is also aimed at revealing some of the weaknesses of the law of charities. In particular, the Proposition 8 episode exposes a serious hole in the fabric of the federal law: the possibility that massive, multi-million dollar lobbying expenditures, large enough to swamp any opposition, may be perfectly legitimate, so long as they are undertaken by a sufficiently gigantic organization. It is hard to see a good justification for a rule that would, in effect, grant political influence only to the largest charities, but that seems to be one plausible interpretation of current law (albeit an interpretation I argue against here). Further, recent events show that the IRS so far has failed to grapple with the most important questions surrounding the rules against lobbying, such as the problem of how to value the use of mailing lists, websites, e-mail, and phone trees—tools that now are central to modern politics.
Part I of the Essay sets out the background rules governing charities. Part II explains how these rules, as interpreted to date, lead to fairly inconclusive results in the Prop 8 scenario, largely because of valuation problems and uncertainty about the extent of permissible activities for large organizations. Part III presses more closely towards a thorough understanding of the political-activity laws, arguing that the two best candidates for the purposes underlying those laws both suggest that the LDS Church’s expenditures should be problematic.
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