Many states have already held primary elections, and the airwaves are clogged with candidate ads. Yes, the November “mid-terms” election season has begun! So now is a good time to review political activity restrictions that affect Section 501(c)(3) organizations.
What activities are forbidden?
In general, tax-exempt organizations aren’t allowed to act directly or indirectly in federal, state, or local campaigns either for or against a candidate or party (generally known as campaigning). What does this mean in practical terms? Your nonprofit can’t support or oppose a declared candidate or party for election. It also can’t engage in efforts to draft candidates or perform advance exploratory work for a candidate or party.
What about financial contributions?
Tax-exempt organizations are explicitly barred from donating funds to a candidate or party and can’t use another event to raise funds. Section 501(c)(3) nonprofits are also barred from making loans to candidates or parties.
Are there any other prohibitions?
Your organization can’t ask for “support” from a candidate, political party, or other political organization in exchange for your endorsement. You can’t distribute campaign materials or anything that tells recipients how to vote. (This includes online communications as well.)
What activities are allowed?
Of course, there are ways your nonprofit can participate in elections. For example, you can:
- Sponsor a candidate forum. Invite all the candidates to a nonprofit hosted debate. Have an independent panel prepare the questions to be asked, and make sure every candidate has equal speaking opportunities. An impartial moderator should state that the views expressed within the debate don’t represent those of your organization.
- Launch a “get out the vote” drive. The effort must be designed to educate the public about voting and can’t promote or oppose a candidate or party.
- Support a political issue. You can try to sway candidates to your way of thinking and encourage them to take a public stand. However, you can’t endorse them.
- Help build political party platforms. Your nonprofit can deliver testimony to a party’s platform committee, so long as you clarify that the testimony is strictly educational.
- Make a nonpolitical invitation. If a candidate is invited to talk to your organization’s base, make sure it’s as a supporter of your charitable mission. You don’t want the appearance to turn into a campaign stop or fundraiser.
Avoiding penalties
Violators of political campaigning rules are potentially subject to fines, excise taxes, and even revocation of their tax-exempt status. However, such IRS actions are rare. Nevertheless, you don’t want to put your organization and programs in jeopardy. So if you have questions about a proposed election-related activity, contact us before participating in it.
How HoganTaylor Can Help
The HoganTaylor Nonprofit team of business advisors and CPAs is comprised of former CFOs, controllers, and industry experts with extensive experience providing the guidance organizations need to lean forward again in their leadership. If you have any questions about this content, or if you would like more information about HoganTaylor’s Nonprofit practice, please contact Jack Murray, CPA, Nonprofit Practice Lead.
INFORMATIONAL PURPOSE ONLY. This content is for informational purposes only. This content does not constitute professional advice and should not be relied upon by you or any third party, including to operate or promote your business, secure financing or capital in any form, obtain any regulatory or governmental approvals, or otherwise be used in connection with procuring services or other benefits from any entity. Before making any decision or taking any action, you should consult with professional advisors.
