Are nonprofits allowed to participate in political activities? What about religious and other nonprofit leaders who feel compelled to speak up about economic and moral issues raised in election campaigns?
Since the mid-1950s, religious, educational, and charitable organizations have been prohibited from “directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for public office.” Nonprofits are allowed to engage in a very limited amount of legislative lobbying, and their workers may express their own personal views. The election prohibition, however, is absolute. So how can responsible nonprofits act appropriately in compliance with applicable rules? The following questions and answers address these and related questions regarding prohibited political campaign activity.
1. Q: Who is prohibited from engaging in political campaign activity?
A: All nonprofits organized and operated in accordance with Section 501(c)(3) of the Internal Revenue Code are covered by the election activity ban (collectively “section 501(c)(3) organizations”). These organizations include churches, mosques, temples, other religious institutions, nonprofit schools, and a wide variety of charitable organizations that enjoy the privilege of receiving tax-deductible contributions. Leaders and other representatives of section 501(c)(3) organizations are likewise barred from engaging in political campaign activity, in their capacities as organizational representatives. Tax-exempt entities organized under different subsections of Section 501(c), such as clubs and “action” organizations (and therefore not eligible to receive tax-deductible contributions), are not subject to these prohibitions.
2. Q: Who is a “candidate for public office”?
A: The IRS defines this term as anyone who offers himself or herself, or is proposed by others, as a contestant for an elective public office, whether such office is national, state, or local. The timing of when an individual becomes a “candidate” is sometimes difficult to assess, and cannot always be defined simply by an official registration or public announcement.
To illustrate, a nonprofit representative’s statements made several months ago for or against President Obama may not have constituted prohibited campaign activity, since Obama was not then a candidate for public office. Today, however, is a different story, as Obama is most definitely on the campaign trail for reelection. It thus can be challenging to comply with the political activity proscription in terms of who is a candidate.
3. Q: What constitutes unlawful “political campaign activity”?
A: In evaluating any questionable activity, the critical key is whether the section 501(c)(3) organization is seeking to influence an election for public office. Perhaps most obviously, an organization is not allowed to endorse a candidate, contribute to any election campaign, or make public statements for or against a candidate (including its website postings). Consequently, while a religious leader may mention a candidate’s name or speak of an upcoming election during a sermon, he or she may not speak – as a religious leader -- in favor of a particular candidate or encourage the congregation to vote for or against a candidate. In addition, it would be unlawful for a nonprofit to make its charitable resources available on a limited basis, such as its mailing list, in order to influence an election.
On the other hand, a nonprofit may allow its facilities to be used as an election forum, so long as it provides equal access to all the candidates. Some readers may remember famed Pastor Rick Warren’s interviews with the 2008 presidential candidates at Saddleback Church. This was entirely legal, since the church provided equal opportunities for then-candidates Obama and McCain to appear and speak. While the use of a church as an election forum may have been relatively unusual, no apparent indication existed that Warren’s efforts were intended to sway voters toward or against any candidate.
Apart from the above legal considerations, a further caution is in order. Political action is inherently personal and highly divisive, and it may be questionable – even unlikely – that a nonprofit’s constituents will share a uniform perspective of a political candidate. Leaders who seek to influence the political views of their members, employees, donors, etc. thus risk alienating the very people who are most critical to the success of the nonprofit’s nonpolitical mission. Moreover, for many faith-based organizations, it may be wiser to focus instead on the deeper, guiding religious principles implicated by the issues at stake.
4. Q: Are a section 501(c)(3) organization’s workers covered by the political campaign prohibition?
A: Yes, in their representative capacities on behalf of their organization, but not personally. In keeping with First Amendment free speech rights, nonprofit leaders, other workers, and volunteers may engage in political campaign activity on their own time. Accordingly, they may speak, write, donate to politicians’ campaigns, and go to campaign events. However, as appropriate, they must make clear that such activities are their own personal words, writings, or actions, and do not reflect the organization’s views.
5. Q: May a section 501(c)(3) organization speak up about the critical moral, economic, and other issues of the current times, which extend far beyond any individual election?
A: Definitely! An organization – itself and through its representatives – may advocate particular positions or viewpoints on public policy issues through the following means:
- disseminating educational information (i.e., “issue advocacy”);
- seeking to influence legislation through stirring up the public, such as by urging people to contact their legislators (a/k/a “grass-roots lobbying”); and
- directly contacting lawmakers (not surprisingly, “direct lobbying”).
Unlike with the absolute election prohibition, section 501(c)(3) organizations may engage in a very limited amount of lobbying without jeopardizing their tax-exempt status. (The IRS typically measures the extent of permitted lobbying in terms of financial expenditures.) But remember: nonprofits must always remain primarily engaged in furthering their tax-exempt purpose, whether that may be promoting religion, providing charity, or running schools. Given the complexity of the limitations, nonprofits should proceed with extreme caution -- and with the benefit of experienced counsel -- in connection with any lobbying effort.
Apart from these lobbying restrictions, section 501(c)(3) organizations are free to engage in “issue advocacy” – that is, providing educational or similar informative materials to others on issues of public concern, so long as such materials are not impermissibly intended to influence elections or legislation. For example, permissible issue advocacy may consist of brief and emotionally compelling statements conveyed through signs or bumper stickers, such as “Choose Life,” “Go Green,” or “No More Foreign Oil.” (Individuals, of course, have their own First Amendment freedom of expression rights.)
The distinguishing line between permissible issue advocacy and impermissible campaign activity may get extremely thin, however, close to election time. For example, “Choose Life” signage generally would not be construed as intended to influence an election. However, just before the 2008 presidential election, in which it was abundantly clear that one candidate was the pro-life groups’ preferred candidate and the other candidate was strongly preferred by the pro-choice groups, such a sign may well have been interpreted as intending to influence the election.
Similar divisive issues that have sharply distinguished the candidates have likewise been raised in this year’s presidential race, such as health care reform, foreign involvement, gay rights issues, and fiscal policy. Accordingly, it may be quite obvious from certain issue advocacy communications that an organization is intending to influence the election (or legislation), and not just seeking to educate the public more generally. On the other hand, when an organization remains focused on its tax-exempt mission and fashions its communications more broadly in the nature of informing others -- without regard to current political issues of the day -- such communications will much more likely be viewed as permissible issue advocacy, rather than as prohibited election activity or highly restricted lobbying.
6. Q: What about civic involvement in elections, such as through distributing of voter education materials?
A: Theoretically, a nonprofit organization may distribute voter education guides, and it may sponsor voter registration and get-out-the-vote drives as well. In practice, however, it is all too easy for a voter guide to run afoul of the election prohibition. As with all campaign activity, the key consideration is whether the voter guide evidences any intent to influence election, which of course is forbidden.
Permissible voter guides generally include the following elements:
- the issues covered are selected solely on the basis of their importance and interest to the electorate as a whole;
- neither the voter guide nor any underlying questions asked of any candidates (to elicit answers for the guide) evidence any bias or preference with respect to the views of any candidate;
- the guide contains no implied approval or disapproval of any candidates or their voting records;
- the voter guide is not concentrated on a narrow range of issues; and
- no comparisons are made among candidates. In short, the more objective and unbiased, the better!
7. Q: May a section 501(c)(3) organization’s website contain links to candidates’ websites or other partisan information?
A: An organization should be wary of allowing such links to appear on its website. According to the IRS, “[l]inks to candidate-related material, by themselves, do not necessarily constitute political campaign intervention.” Rather, the test is one of “facts and circumstances,” including the context for the link, whether all candidates’ links are posted, and whether there is any exempt, non-political purpose for the links.
Given the inherent ambiguities underlying this test and the ease with which the IRS can access websites, the most prudent course may be simply to avoid allowing any election-oriented links on a section 501(c)(3) organization’s website. If an organization allows such website links, then it should continually monitor the content of any linked websites to ensure that no improper efforts are being made to influence an election through the organization’s use of links.
8. Q: Our local public official is a well-respected community leader, but he is currently running for re-election. May our organization allow him to attend, and even invite him to be our featured speaker at our upcoming fundraiser?
A: Yes, and yes. The IRS recognizes that candidates for public office may be very much involved in community affairs. Accordingly, they may speak at a nonprofit’s events without violating the campaign prohibition, and they likewise certainly may attend such events. However, careful safeguards should be followed scrupulously to avoid problems resulting from featuring a campaigning politician as speaker. Before handing over the microphone to a candidate, make sure to address the following areas:
- The person is chosen to speak for reasons unrelated to his or her candidacy, such as that the candidate has been a long-time supporter of the nonprofit. (A nonprofit would be wise to document such reasons, and to communicate them to the attendees in the introductory remarks.)
- The candidate may speak only in a non-candidate capacity, with clear and thorough instructions beforehand.
- No mention of the person’s candidacy or election may be made at the event.
- No campaign activity whatsoever may occur at the event.
- The event itself should have an entirely non-partisan tone.
- Appropriate clarity is evident throughout the event regarding the person’s appearance in his or her non-candidate capacity. (E.g., as an expert on a pertinent topic, as a community leader, or as featuring some other leadership attribute.)
9. Q: What could happen to organizations that violate the campaign activity prohibition?
A: Organizations that violate the political campaign activity prohibition are subject to losing their tax-exempt status under 501(c)(3). That is a serious punishment, indeed, but one that has been rarely meted out. Less drastically, organizations (and leaders who “knowingly” engage in such violations) may be assessed excise taxes, based on the amount of funds used for improper election activity.
Most typically, as nonprofits occasionally run into problems (inappropriate links to obviously partisan materials, guest speakers who go “rogue,” inappropriate sermons), the IRS will issue a notice to the offending nonprofit and expect appropriate remedial measures to be taken. It likely will also be helpful to show that the organization has taken the IRS notice seriously by (a) hiring a knowledgeable attorney who can advise its leaders about legal compliance, and (b) adopting a written political campaign activity policy.
Historically, the IRS has investigated only a small fraction of nonprofit organizations for prohibited campaign activities, and only a handful of religious organizations. Indeed, since the political campaign activity prohibition was enacted, many attorneys, scholars, and others have questioned its constitutionality. Accordingly, while a nonprofit may not want the IRS to come knocking on its doors regarding this issue, it would be exceedingly unusual for it to be investigated. Nonprofits may nevertheless want to steer well clear of unintended legal troubles that could derail their missions, create tax liabilities, and damage their reputation as well-operated organizations.
10. Q: What preventive steps should a section 501(c) organization take to maintain compliance with the IRS’ prohibition against political campaign activity?
A: Organizational leaders should ensure that all incoming board members, staff leaders, and other workers involved with communications – including volunteers – are fully aware of the political campaign prohibition and its multifaceted applications. A good starting place is to use this article or similar guidance for board, staff, and volunteer training.
In addition, churches and other section 501(c)(3) organizations should seriously consider adopting a political campaign activity policy (available upon request from Mosher & Wagenmaker, LLC). In doing so, the nonprofit should make sure that its leaders and other responsible workers understand the policy and are supervised as needed. The organization should also monitor its communications, particularly its website, to make sure that they are legally compliant.
Responsible nonprofit leaders and other representatives must be continually careful with their communications. But they are also likewise often called – and even compelled -- to speak up! So what are nonprofits to do in connection with politically intertwined issues? First, proceed with caution in relation to election-related activities per the above legal guidance. Second, take ample comfort in understanding what is legally allowed. Within such parameters, nonprofit leaders and other representatives should be able to engage vigorously in current moral, economic, and other critical issues in which so many worthwhile nonprofits are involved.
This communication is distributed to the reader with the understanding that the author, publisher and distributor of this communication are not rendering legal, accounting, or other professional advice or opinions on specific facts or matters and, accordingly, assume no liability whatsoever in connection with its use. Pursuant to applicable rules of professional conduct, this communication may constitute Attorney Advertising.
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