In this election year, many nonprofit organizations may feel more inclined than ever to voice political opinions. However, most nonprofits are unsure about the extent to which they may discuss issues of political importance or interact with elected officials or candidates. Because legislative and political activity may jeopardize an organization’s tax-exempt status, it is vital to know and comply with the rules. This article is intended to help public charities qualifying under Internal Revenue Code § 501(c)(3) understand the boundary between permitted and prohibited behavior.
I. Definitions. How to be clear about what you are doing and why
Understanding what a nonprofit and its leaders can and cannot do requires knowing three fundamental definitions.
Political Campaign Activity. Any action or speech which favors or opposes candidates for elected public office, such as endorsements, contributions (to either candidates or political action committees (PACs), public statements for or against candidates, or distribution of materials which favor or oppose candidates. Simply stated, political campaign activity is any speech or activity intended to impact the election of an individual to a public office.
Lobbying. Any action or speech which attempts to impact the adoption or defeat of legislation, such as direct contact with voting members of a legislative body to encourage them to vote for or against a particular bill, encouraging the public to contact legislators about a particular bill, or advocating a position on a public referendum. Lobbying is any speech or activity intended to influence how an individual member of a legislative body votes.
Advocacy. Any action or speech directed to the public for informational or educational purposes regarding an issue of interest to the nonprofit, or activities or speech directed to non-legislative governing bodies, e.g. regulators. Advocacy is any speech or activity intended to share general education and information.
II. Understand Your Tax Status. Different rules apply to different types of organizations
The rules applicable to different types of tax-exempt nonprofits are easy to summarize.
IRC §501(c)(3) – Religious, Charitable, Educational, Scientific Organizations may not engage in any political campaign activity. Although enforcement of this prohibition is sporadic at best, violation of this rule could result in a loss of 501(c)(3) status. These organizations may conduct some lobbying and unlimited advocacy.
IRC §501(c)(4)- Social Welfare, IRC §501(c)(5)- Labor, IRC §501(c)(6)- Business League and IRC §501(c)(7) – Fraternal and Social Organizations may engage in limited political campaign activity. They may engage in lobbying and advocacy without limits.
III. What Can Your Organization Do? Applying the rules is not easy
The IRS applies a facts and circumstances analysis to determine whether an organization has engaged in impermissible activities. In other words, the IRS looks at each situation individually and makes its determination based on the actual facts and circumstances it uncovers. The examples below are intended to guide exempt organizations as to what constitutes political campaign activity. This is especially important for 501(c)(3) organizations which may not engage in any political campaign activity, and also for social welfare (501)(c)(4)) and other exempt organizations which may engage in only limited political campaign activity.
a. Voter Registration and Get Out the Vote
Voter registration and get out the vote campaigns are permissible activities for 501(c)(3) organizations if they are carried out in a non-partisan manner. Printed materials and verbal communications must not specify any candidate. The organization should instruct staff and volunteers that they cannot talk with voters about candidates, provide any endorsement about any candidate, or seek any pledge of support for a candidate, financial or otherwise.
b. Candidate Questionnaires and Forums
501 (c)(3) organizations may provide candidate questionnaires and make the responses available to the public as long as (1) all candidates are provided the same questions and (2) the questions are clear and unbiased and not drafted to favor one candidate or another. The questionnaire must cover all major topics of interest and may not focus on any one issue applicable to a particular candidate. There can be no indication that the organization favors a position clearly identified with one candidate. Candidates must be provided a reasonable time to respond. If yes/no answers are requested, the questionnaire must include an opportunity for the candidate to explain a position. A 501(c)(3) organization cannot grade the responses or endorse any candidate based on the responses. If a guide is produced based on the questionnaire, the format of the guide must display the questions exactly as presented to the candidates with their unedited responses presented next to the questions.
Candidate forums may be hosted by 501(c)(3) organizations if the facts and circumstances are like those outlined for permissible questionnaires. All candidates must be invited to the forum or offered similar speaking opportunities. No endorsements or petitions are allowed at the event. No fundraising may be conducted at the event. The format of questions must be clear and unbiased, cover all major topics of interest and not be crafted to indicate support for one candidate over another. If all candidates do not appear at the same event, the format and questions of each event must be the same. Forum locations, audiences, moderators and topics must be neutral.
c. Voter Guides
501 (c)(3) organizations may publish voter guides related to issues of interest to the organization. Voter guides may include legislative scorecards. Their content and format must assure that there is no direct or implied endorsement for any political candidate. Factors to consider include how close in time publication is to an election and how closely the candidates are linked to the issues in the guide. Communications must not reference any candidates, parties, or elections. Legislative scorecards must include all legislators and track a variety of issues. No editorial comments are permitted, just the voting record.
d. Individual Activity by Organization Leaders
Nonprofit leaders do not lose their free speech rights by virtue of their position, but they must be careful. This applies to board members and senior leadership who are widely associated with the exempt organization. Any political activity by a nonprofit leader must be clearly identified as being undertaken in the leader’s individual capacity. To avoid confusion, any political activity by a leader should be conducted outside the organization’s property and events. Leaders may not include any personal opinions on campaign issues in any publication by the organization, even if the leader pays for the article. Leaders should not make any comments or endorsements about candidates at board meetings.
e. Issue Advocacy
All tax-exempt organizations may take positions on public policy issues, including issues that divide candidates. However, in advocating on an issue, 501(c)(3) organizations may not create an impression that they favor a candidate. Issue advocacy materials must not include anything that might identify a candidate or express approval or disapproval of a candidate. In considering the facts and circumstances to determine whether any activity is issue advocacy and not political campaign activity, the IRS will consider how close in time the activity is to an election, whether there is any reference to voting and whether the activity is part of an ongoing campaign by the organization related to the issue.
Websites are important communication tools for nonprofit organizations. The IRS views a website like any printed material or personal speech by individuals in the organization, and all the above rules regarding political communication apply to websites. Links on the website can create additional concerns. If a link connects directly to a campaign or endorsement of a candidate, the organization may have violated the prohibition on political campaign activity. A voter guide published on a website with links to all candidates for information purposes only, however, is permitted. Given the high stakes of violating the prohibition on political campaign activity, 501 (c)(3) organizations should monitor the links on their web pages.
This summary is not intended as legal advice. Application of the IRS rules to the specific facts and circumstances of any particular activity requires a case-by-case analysis. The information in this alert is accurate as of the day of publication, but regulations and their interpretation can change over time. Please consult one of our Firm’s attorneys listed below or your own lawyers to understand the implications of any political, lobbying or advocacy activity.