The 508(c)(1)(a) Faith Based Organization (FBO) is a religious, non-profit, tax exempt organization. The 508(c)(1)(a) FBO is separate and distinct from a 501(c)(3) charity and unincorporated FBO’s. The 508(c)(1)(a) is applicable in all 50 states and recognized internationally under the Hague Convention of the United Nations Charter. Since its inception in 1954 with the Johnson Amendment, the 501(c)(3) has been promoted and advertised by many as the only option to organizing a FBO. This is fatally incorrect. Federal law, IRS publications, and court cases all confirm and establish the rights and protection of the 508(c)(1)(a) FBO. (Please see legal information.) The 508(c)(1)(a) FBO enjoys a mandatory exception from all the restrictions a 501(c)(3) FBO has including free speech restrictions, IRS reporting requirements, rules and regulations that the IRS may from time to time prescribe and providing testimony under oath.
Why was it added to the Internal Revenue Code?
“Congress shall make no law respecting an establishment of religion or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.” Constitution of United States of America 1789, Amendment 1
Legislation approved in 1954, commonly known as the Johnson Amendment, put into place a law that churches and other nonprofit organizations that are tax exempt “are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office,” according to the IRS website. This mandated that those organizations be registered under the IRC as a 501(c)(3) with reporting requirements that would allow the government to monitor their activities.
Section 508 of the Internal Revenue Code (IRC) was codified to formalize a standard that had been implicit since America’s independence in 1776 – freedom of religion, freedom of speech and freedom to peaceably assemble.
Due to the violation of First Amendment rights on the religious organizations in America with the requirements of the 501(c)(3) designation, the decision was made to establish a new law which returned to FBO’s their First Amendment Rights. As a result, 508(c)(1)(A) was approved by Congress.