It is an election year and by all accounts it appears to be a rather contentious one. Because of the obvious desire of many nonprofits, and their employees, to provide an opinion directly or indirectly on the election it is important to understand the limitations which the IRS has placed on nonprofits and election activities. All 501(c)(3) organizations are 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. The prohibition applies to all campaigns including campaigns at the federal, state and local level. Violations may result in loss of exempt status.

Although 501(c)(3) organizations may engage in some activities to promote voter registration, encourage voter participation, and provide voter education in a nonpartisan manner, they will violate the prohibition on political campaign intervention if they engage in an activity that favors or opposes any candidate for public office. This prohibition extends beyond candidate endorsements. Contributions to political campaign funds or public statements of position (verbal or written) made by or on behalf of an organization in favor of or in opposition to any candidate for public office clearly violate the prohibition on political campaign intervention. This prohibition also applies to nonprofit leadership unless they clearly indicate they are providing their own personal opinions and are not appearing or speaking on behalf of a particular candidate.

Depending on the facts and circumstances, an organization may invite political candidates to speak at its events without jeopardizing its tax-exempt status provided if the candidate appears, the entity provides equal opportunity to other candidates, it does not indicate support for any candidate, and no fundraising occurs.

501(c)(3) organizations may take positions on public policy issues, however, they must avoid any issue advocacy that functions as political campaign intervention. Even if a statement does not expressly tell its audience to vote for or against a specific candidate, an organization delivering the statement is at risk of violating the political campaign intervention prohibition if there is any message favoring or opposing a candidate. Assessing whether this has occurred depends on the message, whether candidates are identified, whether the communications are similar to election activities, and whether the issue has been raised by the entity outside of the election cycle. A communication is particularly at risk of political campaign intervention when it references candidates or voting in a specific upcoming election.

Certain business activities may also create an issue, such as selling or renting of mailing lists, the leasing of office space, or the acceptance of paid political advertising. In this context, the IRS will consider whether the good, service or facility is available to candidates in the same election on an equal basis; whether the good, service, or facility is available only to candidates and not to the general public; whether the fees charged to candidates are at the organization’s customary and usual rates; and whether the activity is an ongoing activity of the organization or whether it is conducted only for a particular candidate.

If you are a nonprofit and considering undertaking activities which could be perceived as entering the political arena, reach out to an RKW attorney before you proceed.

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