As we enter the final stretch of this election, it is important to remember how the political arena can affect many nonprofits. As information about the candidates, key political issues as well as political activities of nonprofits fill the news, here is a refresher on the political activity laws that apply in the exempt organization area.
What 501(c)(3)s CAN’T do
For all 501(c)(3) organizations, there is an absolute prohibition on political campaign activity. This means that nonprofits cannot endorse candidates, contribute to campaigns, distribute candidate campaign materials, display campaign materials or otherwise participate in campaigns. This prohibition extends to in-kind support as well as monetary, so a 501(c)(3) organization could not let a campaign use its facilities or lend its volunteers to the campaign effort. The IRS will also scrutinize issue advocacy, to determine if it is merely subterfuge for candidate advocacy.
What 501(c)(3)s CAN do
However, 501(c)(3) organizations can permissibly engage in some voter education and registration efforts, so long as those activities are not biased toward a particular party or candidate, coordinated with a particular party or candidate, or targeted at a particular audience that favors a particular party or candidate (note that there are some additional requirements for private foundations in the voter registration area). In addition, 501(c)(3) organizations can host candidate debates or appearances under certain circumstances. Here are some examples of activities in which a 501(c)(3) can participate:
- Producing a voter guide that compares candidates (e.g., mailing a questionnaire to all candidates and publishing results so voters can make informed decisions);
- Publishing a report on voting records of incumbent members of a legislature;
- Hosting a nonpartisan candidate debate or forum (i.e., all candidates are invited and given equal time to present views, the questions are prepared by a nonpartisan panel and cover a wide range of issues, and there is no commentary on the part of the moderator); and
- Inviting candidates to make event appearances (so long as this is done in a nonpartisan manner, with invites extended to all candidates).
More flexibility (and uncertainty) for other nonprofits
For nonprofits like 501(c)(4) and 501(c)(6) organizations, there is not an all-out prohibition on political activity. However, political activity cannot be the primary purpose or activity of the organization. This issue has been in the news a good deal lately, as the IRS has expressed an interest in drilling down on the extent of political activities of 501(c)(4) organizations like American Crossroads and Priorities USA. Some individuals have pushed for the IRS to more clearly define what constitutes the primary purpose of an organization—such as specifying a percentage limitation, as the IRS has done in some other regulated areas. Other individuals have urged the IRS not to make any quick changes in the midst of the current political environment.
How has your organization leveraged what you CAN do in the political arena?
How is your organization preparing for the post-election period?
Next post: Citizens United and Super PACs