The Nonprofit FAQ
| Can 501(c)(3)s get involved in helping (or hindering) candidates for public office? |
| In March of 2009 the Chronicle of Philanthropy reported that the IRS ruled against a 501(c)(3) organization that allowed an affiliated advocacy group to use space on its website for "electioneering" (i.e., urging people to vote for or against candidates) even though the affiliate paid all the expense incurrec. The IRS said that because the pages of the two organizations were "virtually indistinguishable" the charitable organization had stepped over the line into impermissable political activities. The Chronicle article is http://philanthropy.com/news/government/7294/irs-says-charity-web-site-crossed-line-into-prohibited-activity">here; the IRS Technical Advice Memorandum containing the decision is published by Scholz Nonprofit Law http://scholznonprofitlaw.com/?p=147">here (or by the IRS itself, in a large .pdf file, at http://www.irs.gov/pub/irs-wd/0908050.pdf). Following complaints that religious organizations were exceeding the boundaries of permitted political activities and complaints that its own handling of such complaints was politically skewed, the IRS undertook a review of how such cases were dealt with in the years 2004-2006 and issued several new statements designed to clarify the range of permitted activities for organizations that are exempt from corporate income taxes in the US. Here is the summary page from the IRS website with links to several related documents: IRS Reports on Political Activity Compliance Initiative(This page is on the IRS website at http://www.irs.gov/charities/article/0,,id=154622,00.html.) Internal Revenue Service officials have released a report, with executive summary, on the agency's examination of political activity by tax-exempt organizations during the 2004 election campaign. The report found some level of prohibited political activity by section 501(c)(3) organizations in nearly three-quarters of the cases reviewed. In connection with the report, the IRS is also unveiling new procedures for the 2006 election season, which provide additional guidance to charities regarding political activities. As part of its approach to combating this activity, the IRS has begun its educational and enforcement efforts to help ensure that charities have enough advance notice of the statutory rules against engaging in political activities. Additional information
On April 28, 2004, the IRS issued advisory IR-2004-59 with the title "Charities May Not Engage in Political Campaign Activities". Here is the text: WASHINGTON -- Charities should be careful that their efforts to educate voters comply with the Internal Revenue Code requirements concerning political campaign activities, the tax agency said Monday in a presidential election-year advisory. Organizations described in section 501(c)(3) of the Code that are exempt from federal income tax are prohibited from participating or intervening in any political campaign on behalf of, or in opposition to, any candidate for public office. Charities, educational institutions and religious organizations, including churches, are among those that are tax-exempt under this code section. These organizations cannot endorse any candidates, make donations to their campaigns, engage in fund raising, distribute statements, or become involved in any other activities that may be beneficial or detrimental to any candidate. Even activities that encourage people to vote for or against a particular candidate on the basis of nonpartisan criteria violate the political campaign prohibition of section 501(c)(3). Whether an organization is engaging in prohibited political campaign activity depends upon all the facts and circumstances in each case. For example, organizations may sponsor debates or forums to educate voters. If the debate or forum shows a preference for or against a certain candidate, however, it becomes a prohibited activity. The federal courts have upheld this prohibition on political campaign activity, most recently in Branch Ministries v. Rossotti, 211 F.3d 137 (D.C. Cir. 2000). The courts have held that it is not unconstitutional for the tax law to impose conditions, such as the political campaign prohibition, upon exemption from federal income tax. (For the court's opinion in that case, see http://1stam.umn.edu/archive/fedctapp/branch-ministries.txt. -- Ed.) If the IRS finds a section 501(c)(3) organization engaged in prohibited campaign activity, the organization could lose its tax-exempt status and it could be subject to an excise tax on the amount of money spent on that activity. In cases of flagrant violation of the law, the IRS has specific statutory authority to make an immediate determination and assessment of tax. Also, the IRS can ask a federal district court to enjoin the organization from making further political expenditures. In addition, contributions to organizations that lose their section 501(c)(3) status because of political activities are not deductible by the donors for federal income tax purposes. The political campaign prohibition as it applies to churches is discussed in Publication 1828, Tax Guide for Churches and Religious Organizations. This publication, along with other information about the political campaign prohibition, is available on IRS.gov at www.irs.gov/eo. The IRS issued similar election-year advisories to charities in 1992, 1996 and 2000. (Note that political activity -- sometimes called electioneering -- is different from policy advocacy and lobbying. There is no prohibition against 501(c)(3)s adopting positions on questions of policy. Direct efforts to influence the outcome of legislative action -- lobbying -- is permitted under certain restrictions. For discussion of the lobbying rules and related questions about policy positions, see the FAQ items listed at http://www.idealist.org/en/faqcat/63-12. -- Ed.) Posted 4/28/04; 2006 initiative reports added 9/24/06 -- PB |