Guidance for Nonprofit Organizations and Political Activities

02.28.2020

As the 2020 election draws ever nearer, nonprofit organizations should consider reviewing the Internal Revenue Service (“IRS”) rules relating to permissible and impermissible political activities such as endorsing specific candidates, general advocacy, and lobbying to influence legislation.  While employees of an organization may wish to “support the cause” by taking political action on behalf of the organization, and/or the organization itself may be inclined to spend funds to oppose or support certain ballot measures, organizations should take note that participation in some types political activities may jeopardize the organization’s tax-exempt status.

Certain political activities are absolutely prohibited for 501(c)(3) organizations and may result in the denial or revocation of an organization’s tax-exempt status, while other political activities or expenditures may not be prohibited depending on the specific facts and circumstances.

Candidate Electioneering

One type of political activity 501(c)(3) charitable organizations mush carefully avoid is “candidate electioneering,” which consists of activities that are aimed to influence the outcome of a candidate’s election for public office.  All nonprofit 501(c)(3) public charities 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 prohibition includes making public statements (verbal or written) on behalf of the organization in favor of or in opposition to any candidate for public office, as well as the more obvious action of making contributions to political campaign funds.  The prohibition on candidate electioneering applies to campaigns at the local, state and federal level.  Violation of this prohibition may result in the imposition of certain excise taxes and denial or revocation of an organization’s tax-exempt status.

Lobbying

Generally, activities which amount to attempts to influence legislation (as opposed to supporting a candidate) are considered “lobbying.”  An organization will generally be regarded as attempting to influence legislation if it advocates the adoption or rejection of specific ballot measures, or if the organization contacts, or urges the public to contact, members or employees of a legislative body for the purpose of proposing, supporting, or opposing legislation.  However, a 501(c)(3) organization cannot attempt to influence legislation as a substantial part of its activities.  While a 501(c)(3) organizations may 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.

Individual Activity by Organization Leaders

The IRS prohibition on political campaign intervention by 501(c)(3) organizations is not intended to be a restriction on the free expression on political matters by the individual leaders of organizations as long as those leaders are speaking for themselves, as individuals, and not on behalf of the organization.  That being said, leaders must avoid making partisan comments at official functions of the organization or in official organization publications.  Extreme care must be taken by leaders who speak or write in their individual capacities even outside of organization functions.  In order to avoid potential attribution of their comments to the organization, it is advisable that, at a minimum, leaders clearly and expressly indicate that their comments are personal in nature and are not intended to represent the views of the organization.

Do’s and Don’ts

Candidate Appearances

A candidate may choose to attend an organization’s event that is open to the public, such as a worship service, lecture, or concert.  The candidate’s presence at an organization-sponsored event does not, in and of itself, engage the organization in prohibited political campaign activity.  If, on the other hand, the organization publicly recognizes the candidate at the event or invites the candidate to speak, it may cause the organization to be engaged in prohibited political campaign activity.

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. 

In some cases, candidates may speak or make appearances at an organization event in their non-candidate capacity. For example, a candidate may be invited to speak or appear because the candidate is (a) a celebrity or distinguished military, legal, or public service leader; (b) currently holds, or formerly held, public office; or (c) is has expertise in a non-political field.  In such cases, an organization should not mention the individual’s political candidacy or the upcoming election, and should clearly indicate the capacity in which the individual is appearing.  That being said, if planning an event at which a political candidate will appear, a 501(c)(3) organization should carefully review the IRS rules and consult with legal counsel, because the IRS looks at a number of factors in determining whether candidate appearances are permissible activities.

Voter Education and Registration Activities

Certain activities focused on voter education, generally, and conducted in a non-partisan manner (including publishing voter education guides and presenting public forums) do not constitute prohibited political campaign activity.  Organizations may prepare and distribute educational materials, conduct educational meetings, or otherwise generally consider public policy issues in an educational manner without jeopardizing their tax-exempt status.  In addition, 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.

However, 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, would constitute prohibited candidate electioneering. 

Support for Issues

A 501(c)(3) organization may generally take positions on public policy issues, even if the issues divide candidates in an election for public office, so long as the activity furthers the organization’s exempt purpose and the organization avoids any issue advocacy that functions as political campaign intervention.  Note that a message which 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, can certainly constitute prohibited political campaign activity, depending on all the facts and circumstances.

Conducting Multiple Activities

When it comes to political campaign intervention, the IRS takes a big picture view of an organization’s activities.  The IRS does not consider each activity by a 501(c)(3) in isolation. That is to say, even though the various activities described herein were set forth individually, if a 501(c)(3) organization engages in more than one such activity, IRS may combine one or more of the activities and weigh them together when making a determination of whether the organization is engaged in political campaign intervention.

Need More Information?

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 the attorneys listed above.

This AALRR publication is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process. 

© 2020 Atkinson, Andelson, Loya, Ruud & Romo

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