Its Political Season: What 501(c)(3) organizations can and can’t do
Labor Day is the traditional start of the political season for even year elections (though it seems to start earlier every year). While nonprofits cannot support political candidates for office, what can you do? Today’s update will give an overview of some things you can and cannot do.
What is political activity: The IRS defines “political activity” as any partisan activity by which you support or oppose a candidate for office or a political party. This applies to national, state and local candidates and political parties.
Some cases are obvious. For example, you cannot encourage people to vote for candidate X and your organization cannot give money to a particular candidate. Some cases are less obvious, and here the IRS will apply a facts and circumstances test (otherwise known as the smell test).
What are the consequences of violation? There are two consequences to a violation. First, the IRS can revoke or refuse tax exempt status. Second, the IRS can impose an excise tax on the dollar amount that may have been spent on political activity.
Specific activities:
Using organization equipment. Make sure your Board members and staff don’t use organization equipment for candidate political uses. For example, don’t permit use the organization’s copy machine to copy political literature.
Individual political involvement. Board members and staff can support the candidates of their choice. However, make sure that they don’t imply by word or action that the organization supports that candidate. For example, if your organization’ s president supports Candidate X, and he is listed on the candidate’s letterhead, don’t list him as President of your organization.
Using organization facilities. If you permit a candidate to use your facilities, make sure you extend the same opportunity to other candidates running for the same office. You don’t want to be seen favoring one over the other.
Issue advocacy. If you engage in issue advocacy, be careful about attacking a particular candidate’s stand on an issue. The closer you are to an election, the more likely it is to be interpreted as a partisan activity.
We will discuss issue advocacy and lobbying in a later post. Section 501(c)(3) organizations are allowed to do a limited amount of advocacy and lobbying.
RECOMMENDATIONS: Prepare a policy on what activities your organization will allow. Distribute it to relevant Board and staff people and train them on what the policy says.
If you have a question, call to discuss how the how the IRS will view your activity. It is better to avoid a problem, the bad publicity and worse, possible loss of tax exemption. If you have questions, please give us a call.
