Politics and political activity are sticky and difficult subjects for nonprofits, particularly in recent years. Even a hint of political activity is enough to raise a lot of blood pressure for both sides. It’s difficult to avoid, because politics is everywhere, and it directly affects everyone no matter where they stand.
Nonprofits walk a tightrope when it comes to political activity. Much depends on what type of nonprofit because not all are prohibited from political participation.
Avoiding offensive, controversial “hot button” issues can be difficult. On the one hand, you don’t want to isolate potential constituents. But you also don’t want to break the law and risk losing your tax-exempt status either. Your nonprofit could hold robust views on the issues some of which relate to your mission. The organization may even prefer constituents who hold the same beliefs. But if you’re, there are strict limits on a 501(c)(3) nonprofit and permitted political activity.
Types Of Nonprofits
Most people are familiar with the 501(c)(3) nonprofit, but there are several varieties of nonprofits with different rules regarding political activity. Not all nonprofits are created—or treated—equally.
- 501(c)(3), the best-known type for general charitable purposes, and are generally restricted from most political activities.
- 501(c)(4), also known as a “social welfare organization,” such as the NRA and the AARP. They are NGOs that are allowed to engage in political activity; some restricted, and some unrestricted, and keep political activity as only a part of their mission. They can participate in favor or against a specific candidate.
- 501(c)(5), for agricultural and labor organizations
- 501(c)(6), for professional and trade associations
- 501(c)(7), for recreational and social clubs
Even though all of these organizations are under Section 501 and are “tax-exempt,” only donations to the 501(c)(3) are tax-deductible to the donor. The 501(c)(3) also has the most restrictions regarding any involvement in the political arena.
The IRS code states that all 501(c)(3) are specifically prohibited from participation in any political campaign for a candidate for public office. This includes direct or indirect participation as well as intervention, whether for or against any candidate. The IRS considers lobbying and political activity to be two different things.
What Political Activity Is Permissible For A 501(c)(3)?
This type of nonprofit can, in fact, participate in the political process on a limited, but nonpartisan basis. The activity must be limited to non-electoral voter education and “get-out-the-vote” types of campaigns. However, endorsing a specific candidate, contributing to their campaign, or otherwise making statements in favor of one over the other can jeopardize the nonprofit’s tax-exempt status.
Any activity intended to affect the outcome of an election is prohibited for this type of nonprofit, such as campaigning on behalf of a particular candidate. Other types of nonprofits described above have more flexibility to participate in political activity, so long as it is not their primary mission.
However, a 527 organization, or Political Action Committee, is an entirely different nonprofit that is allowed to actively and directly participate in political activities.
Can You Host A Candidate Running For Office?
If a political candidate wants to speak to your group, what do you say? Find out why they want to speak to your nonprofit. Is it campaigning, or another reason?
If the candidate wants to speak about their campaign, they can—but the nonprofit will be required to give equal time to all other candidates running for the same office. That could be a number of candidates. Will you have time for all of them to speak?
If the candidate is speaking for a different reason—such as presenting awards to constituents or staff—it’s permissible as long as he or she does not mention their candidacy or other political issues. Political fundraising is also prohibited. The event must be nonpartisan with no campaign activity, and the organization is not inviting the candidate because of their political campaign.
501(c)(3) participation is limited to general voter education issues without taking aside, especially if it directly affects the nonprofit’s mission. This includes comments on social media, watched closely by media outlets and participants. Any political involvement must be inclusive of all viewpoints involved. Bolder Advocacy, a group dedicated to nonprofit education, lists examples of allowable and non-allowable activity for Illinois.
Protect Your Nonprofit Tax-Exempt Status
If your nonprofit is involved with any political activity, make sure that it falls within the correct parameters and the organization it is properly classified with the IRS. Otherwise, your tax-exempt status could be taken away. Should you have any questions, we are very happy to help and clarify.
For over 25 years, attorney James C. Provenza has worked with nonprofits to help them comply with the law and concentrate on doing their mission’s work. Need help? Contact our office at (847) 729-3939 today, or get in touch with our online contact form. We look forward to helping your nonprofit succeed.
