With an election year upon us (and the recent disruption to activities and potential legislation due to COVID-19), it is prudent for nonprofit 501(c)(3) organizations to review the Internal Revenue Service (IRS) rules relating to political activities, such as lobbying to influence legislation and endorsing specific candidates. An organization may desire to spend funds to oppose or support certain ballot measures or its employees may want to “help the cause” by taking action on behalf of the organization.
Certain political activities or expenditures in the category of “general advocacy” may not be prohibited depending on the facts and circumstances, while other political activities are absolutely prohibited and can result in the revocation of an organization’s tax-exempt status.
Candidate electioneering is generally described as activities that are aimed to influence the outcome of a candidate’s election for public office. All nonprofit 501(c)(3) organizations 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. This includes contributions to political campaign funds and public statements of position (verbal or written) made on behalf of the organization in favor of or in opposition to any candidate for public office. Violating this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes.
Lobbying activities generally include attempts to influence legislation. An organization will be regarded as attempting to influence legislation if it contacts, or urges the public to contact, members or employees of a legislative body for the purpose of proposing, supporting, or opposing legislation, or if the organization advocates the adoption or rejection of specific ballot measures. While nonprofit 501(c)(3) organizations can engage in some lobbying activities as long as such activities further the organization’s exempt purpose, too much lobbying activity risks loss of tax-exempt status.
Website Posts and Links
If an organization posts something on its website that favors or opposes a candidate for public office, it is engaging in prohibited political campaign activity. In addition, if an organization establishes a link to another website, it is responsible for the consequences of establishing and maintaining that link, even if the organization does not have control over the content of the linked site. Because the linked content may change, it is critical that the organization monitor the linked content and adjust or remove any links that could result in prohibited political campaign activity.
Voter Education and Registration. Certain activities or expenditures may not be prohibited depending on the facts and circumstances. For example, certain voter education activities (including presenting public forums and publishing voter education guides) conducted in a non-partisan manner do not constitute prohibited political campaign activity. On the other hand, voter education or registration activities with evidence of bias that (a) would favor one candidate over another, (b) oppose a candidate in some manner, or (c) have the effect of favoring a candidate or group of candidates, constitute prohibited candidate electioneering.
Candidate Appearances. If a candidate is invited to speak at an organization’s event in his or her capacity as a political candidate, the organization must take steps to ensure that (a) it provides an equal opportunity to participate to all political candidates seeking the same office; (b) it does not indicate any support for or opposition to any candidate (including during candidate introductions and in communications concerning any candidate’s attendance); and (c) no political fundraising occurs.
A candidate may choose to attend an event that is open to the public (once we can again have events open to the public, of course), such as a lecture, concert, or worship service. The candidate’s presence at an organization-sponsored event does not, by itself, cause the organization to be engaged in prohibited political campaign activity. However, if the candidate is publicly recognized by the organization or is invited to speak, it may cause the organization to be engaged in prohibited political campaign activity.
Support for Issues. A nonprofit 501(c)(3) organization may take positions on public policy issues, even if the issues divide candidates in an election for public office, as long as the message does not in any way favor or oppose a candidate. Be aware that a message that shows a picture of a candidate, refers to a candidate’s political party affiliations, or contains other distinctive features of a candidate’s platform or biography, even without identifying the candidate by name, may be prohibited political campaign activity.
If your organization is considering engaging in political activities this election year, and if you would like further information about whether such activities are permissible or prohibited, please contact us.