Churches, Charities, and Elections

These are highly charged political times.  The level of public political discourse is not the most erudite and leaves much to be desired.  To put it mildly, there is more heat than light these days. 

Times like these are such that nonprofit leaders must be more vigilant than ever about the prohibition against nonprofit organizations from engaging in political campaign activity

Under the Internal Revenue Code, 501(c)(3) organizations, including charities and churches, are prohibited from engaging in political campaign activity.  This was enacted by Congress in 1954 and later strengthened over the years to include a prohibition against issuing statements opposing individual candidates. 

The concept of the prohibition arises from a close reading of Section 501(c)(3), which defines a 501(c)(3) organization as one "which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office."

One may ask why nonprofit leaders should be concerned about violating this rule.  Quite simply, the IRS may revoke the nonprofit's tax exempt status either permanently or for a specified period of time.  The IRS also has authority to impose significant monetary penalties on the nonprofit  organization.  

This begs a separate question: What exactly constitutes “political campaign activity”? 

Not surprisingly, the IRS has issued voluminous regulations on this exact question.  The IRS analysis and answers to this questions are of course, highly fact specific. 

What follows is a non-exhaustive list of situations which should stop nonprofit leaders in their tracks and consult legal counsel before the situation or activity happens:

  • Voter Education, Voter Registration and Get Out the Vote Drives;
  • Individual Activity by Organization Leaders;
  • Candidate Appearances;
  • Candidate Appearances Where Speaking or Participating as a Non-Candidate;
  • Issue Advocacy vs. Political Campaign Intervention;
  • Business Activity (i.e. renting or selling mailing lists, leasing office space, advertising); and
  • Web Site Linkage

Also, the ban by Congress is on political campaign activity regarding a candidate;  so churches and other 501(c)(3) organizations can engage in a limited amount of lobbying (including ballot measures) and advocate for or against issues that are in the political arena. 

In summary, this is an extremely fact specific issue, and there are very real penalties for failure to follow the rules.  For any questions on this subject matter, please contact me