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Nonprofit charitable organizations & elections: A recipe for disaster

Sep 02, 2020

Since it’s election season — and a big one at that — we wanted to help nonprofit organizations understand what they can and cannot do in regard to politics in order to keep their tax-exempt status.

A nonprofit charitable organization with exemption under IRC 501(c)(3) is absolutely prohibited from either directly or indirectly participating in, or intervening in, any political campaign for public office (national, state or local public office) on behalf of (or opposition to) any candidate.  

Contributions to political campaign funds or public statements, verbal or written, that are made in favor of or in opposition to any candidate for public office clearly violate the prohibition against political campaign activity.  

What activity you might be able to engage in

There are certain activities or expenditures that may be allowed, depending on the facts and circumstances. For example:

  • Certain voter education activities conducted in a non-partisan manner, such as presenting public forums and publishing voter education guides.
  • Voter registration and get-out-the-vote drives. The charity and the people conducting these activities should avoid mentioning the candidates or political parties in written or spoken communications about the activity. This would include publicity, posters, placards, registration materials and handouts.

What to watch out for

However, it is very easy for an educational activity to cross over into political campaign intervention, depending on how it is used. This can occur where:

  • The statement identifies one or more candidates for a given public office
  • It expresses approval or disapproval of a candidate’s positions or actions
  • It is delivered close in time to the election
  • It mentions voting or the election with regard to a particular candidate
  • It raises an issue on which the candidates disagree

What not to do

A charity engages in political campaign intervention when it:

  • Makes or solicits contributions to or for candidates or political organizations
  • Endorses a candidate or rates the candidates 
  • Publishes or distributes partisan campaign literature or written statements
  • Has its representatives speak out about a candidate
  • Uses its resources to influence an election

The prohibition isn’t intended to restrict free speech on political matters by leaders of charitable organizations when they are speaking for themselves as individuals. However, in order to protect the charitable organization, the leaders cannot make partisan comments in official organization publications or at official organization functions. It’s highly encouraged for the leaders to clearly indicate that their comments are personal and not intended to represent the views of the organization.

Can candidates speak at nonprofit events?

A charitable organization may invite political candidates to speak at its events in their capacity as candidates without jeopardizing its tax-exempt status if:

  • It provides an equal opportunity to other political candidates seeking the same office
  • It does not indicate any support for or opposition to the candidate. This “neutral” position should be stated explicitly when the candidate is introduced and in any communications concerning the candidate’s attendance. 
  • No political fundraising occurs

Why your website matters

It’s important to remember that an organization’s website is a form of communication. Therefore, if an organization posts something on its website that favors or opposes a candidate for public office, it will be treated the same as if it distributed printed material, oral statements or broadcasts that favored or opposed a candidate. 

Links to candidate-related material do not necessarily constitute political campaign intervention. The IRS will take all facts and circumstances into account when assessing if a link violates the prohibition on political intervention: 

  • The context for the link
  • Whether all candidates are represented
  • Any exempt purpose served by offering the link
  • The directness of the links between the organization’s website and the webpage that contains material favoring or opposing a candidate for public office

Nonprofits and political activity: Staying tax-exempt

The consequence of violating the prohibition on political intervention can result in revocation of tax-exempt status and the imposition of certain excise taxes. Therefore, it’s important to make sure that any activity your organization undertakes during a political campaign will not be considered political intervention.

For additional assistance, please contact your Wipfli relationship executive.

Author(s)

Terri Rexrode
Terri Rexrode, CPA
Director
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