Political Campaign Restrictions for Charities
As the 2020 election draws near, it is important to remember the risks to an organization’s tax-exempt status when it comes to political campaign activities.
Charitable Nonprofits May Not Engage in “Political Campaign Activity”
In return for its favored tax-status, a charitable nonprofit promises the federal government that it will not engage in “political campaign activity” and if it does, IRS regulations mandate that the charitable nonprofit will lose its tax-exempt status. Similarly, the assets of a charitable nonprofit may not be provided as a campaign contribution to a candidate for public office.
“All charities…are absolutely prohibited from intervening in a political campaign for or against any candidate for an elective public office. If a charity does intervene in a political campaigning, it will lose both its tax-exempt status and its eligibility to receive tax-deductible charitable contributions.” – Source: IRS instructions for Schedule A, IRS Form 990.
Under the Internal Revenue Code, all section 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. Contributions to political campaign funds or 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 clearly violate the prohibition against political campaign activity. Violating this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes.
Non-Partisan Voter Education Activities
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. In addition, other activities intended to encourage people to participate in the electoral process, such as voter registration and get-out-the-vote drives, would not be prohibited political campaign activity if conducted in a non-partisan manner.
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, will constitute prohibited participation or intervention.
IRS Educational Tools for 501(c)(3) Compliance
As a key element in its program to secure compliance with the ban on political campaign activity by section 501(c)(3) organizations, the Internal Revenue Service educates organizations about the ban and puts them on notice of the enforcement program. Towards this end, the IRS employs an array of educational tools:
Guidance to exempt organizations on how to apply the ban in various factual situations. (https://www.irs.gov/charities-non-profits/charitable-organizations/published-guidance-on-political-campaign-activity-of-501c3-organizations)
IRS Stay Exempt. Video presentation re Political Campaigns and Charities: The Ban on Political Campaign Intervention.
Revenue Ruling 2007-41 and Fact Sheet 2006-17 distill IRS guidance in this area, each providing examples of how it applies.
News releases and other resources for the media discussing the ban.
The Tax Guide for Churches and Religious Organizations (Publication 1828) discusses the ban thoroughly.
IRS Publication 4221-PC Compliance Guide for 501(c)(3) Public Charities discusses the ban on political activities.
Other IRS resources for charities, churches, and educational organizations about political campaign intervention.
The IRS also provides printed guidance on other risks to tax exempt status.
Talk to a Nonprofit Attorney About Your Charitable Organization’s Political Activities
If you have questions regarding the prohibition of political activities and your charitable organization, or other questions about complying with laws regulating the activities of tax-exempt organizations, please contact Jonathan Grissom, a nonprofit lawyer dedicated to advising, guiding, and working with nonprofit organizations to help them thrive.