Political and Legislative
Activities
1
Information Sources and
Reference Materials
CPE Articles:
“Lobbying Issues”
FY1997
“Election Year Issues”
FY2002
“Political Campaign
and Lobbying
Activities of IRC
501(c)(4), (c)(5) and
(c)(6)
Organizations”
FY2003
IRM 4.76.30
Rev. Rul. 2004-6
Rev. Rul. 2007-41
Rev. Proc. 86-43
2
Outline:
I.
II.
III.
IV.
Objectives
Overview
Political Activity
Legislative Activity
3
I. Objectives



What can 501(c)(3) organizations do?
Identify prohibited political activities
Distinguish between legislative
activities & political activities
4
5
Types of Exempt Organizations that
engage in political and/or lobbying
activities:
§ 501(c)(3)
§ 501(c)(4)
§ 501(c)(5)
§ 501(c)(6)
§ 527
Charitable Organizations
Social Welfare Organizations
Labor Organizations
Business Leagues
Political Organizations
• Other types of exempt organizations may
engage in these activities but these are the
most common ones.
6
Prohibition on 501(c)(3)
organizations - Political

A 501(c)(3) organization cannot intervene in any
political campaign for or against a candidate.
Authority
IRC 501(c)(3):
 “…an organization exempt from tax is one...
which does not participate in or intervene
in…any POLITICAL CAMPAIGN on behalf of (or
in opposition to)… any candidate for public
office...”
7
§501(c)(3) issues
Political activity:






Absolute prohibition
Be aware of related §501(c)(4)
organizations with §527 funds
Subject to potential revocation
Subject to §4955 excise tax
§6852 authority for termination
assessments for flagrant abuse
§7409 authority to seek injunction for
flagrant abuse
8
Prohibition on 501(c)(3)
organizations – Legislative Activity

A public charity cannot devote a “substantial”
amount of its activities in attempting to
influence legislation.
Authority
IRC 501(c)(3):
 “…an organization exempt from tax... in which
no substantial part of its activities is carrying on
propaganda or otherwise attempting to
influence LEGISLATION…”
9
§501(c)(3) issues
Legislative activity:






May be germane
Risk their exemption if an “action”
organization
May make §501(h) election
Subject to §4911 excise tax for excess
lobbying
Subject to §4912 excise tax for
disqualified lobbying
Private foundations subject to §4945
excise tax
10
Excess lobbying
expenditures
By filing Form 5768, most §501(c)(3)
organizations may make an election to
be held to the expenditure limits of
§501(h), in order to avoid treatment
under §4912 for disqualifying lobbying
expenditures.
11
Excess lobbying
expenditures
The following types of organizations can not
make the election:



Churches
Associations of
Churches
Integrated
Auxiliaries of
Churches

Organizations
affiliated with:
– Churches,
– Associations of
Churches,
– Integrated
Auxiliaries of
Churches
12
Excess lobbying
expenditures
The following types of
organizations also can not make the
election:


§509(a)(3) organizations that
support §501(c)(4), §501(c)(5), or
§501(c)(6) organizations
Private foundations
13
14
What is participation or
intervention in a Political
Campaign?

Publishing/distributing
written/printed statements or making
oral statements
for or against a candidate for
public office
15
Participation and Intervention,
cont.

Providing or soliciting $$ or other
support for candidates or political
organizations

Establishing a political (“action”)
organization (“PAC”)
16
Political activities
Listed below are some common activities that
may be political campaign intervention:







Radio & TV attack ads
Partisan voter guides
Guest speakers at events
Rallies
Dinner fundraisers
Newspaper editorials
Endorsements
17
Political expenses
Listed below are some common expenditures
that may be political campaign intervention:
 Checks to candidates; for speeches,
material, contributions
 Checks to committees
 Advertising & publicity
 Honorariums
 Travel expenses
 Polls, Surveys, white papers
 Fundraisers
 Newsletters
 Written, printed or oral statements
18
What is a political
campaign?
Man on the street:
“It’s a candidate
running for office!”
19
Who is a candidate?
Anyone who offers
him/herself (or is proposed
by others) as a contestant for
elective public office whether
it is national, state or local.
20
What is public office?
Position created by
statute
 Position is continuous
 Position not contractual
 Fixed term of office
 Required oath of office

21
Is this political?
Fed up with the candidates running in the
primary for the US Senate, the officers of an
exempt organization decide to have the
organization endorse the US Ambassador to
Japan for the position, encouraging voters to
write in the candidate. The ambassador states
that she has no wish or intention to run for the
senate. The ambassador wins the primary.
Is this a political activity and/or expense? Yes
or no? Why or why not?
22
Advocacy vs. Political

Advocacy is generally defined as
the act of pleading for, supporting
or recommending something, such
as a cause, idea or policy.

A public charity is not restricted
from taking a position on issues
providing the position does not
involve the participation or
intervention in a political campaign.
23
Advocacy vs. Political, cont.
Some factors to consider when
determining whether a communication
results in political campaign intervention:



Whether the statement identifies one or
more candidates
Whether the statement makes
reference to voting or an election
Whether the statement expresses
approval or disapproval of one or more
candidates’ positions and/or actions.
24
Education or Political
Participation?
 Unsupported facts
 Distorted facts
 Inflammatory terms based on
emotions
 Not aimed at developing audience’s
understanding
25
Partisan vs. NonPartisan
Political
Opinions on
certain issues
Educational
Everybody’s
voting record
Voting record on All candidates’
certain issues
opinions
26
EXAMPLES:

Situation 1.

B, a section 501(c)(3) organization that promotes
community involvement, sets up a booth at the state fair
where citizens can register to vote. The signs and
banners in and around the booth give only the name of
the organization, the date of the next upcoming statewide
election, and notice of the opportunity to register. No
reference to any candidate or political party is made by
the volunteers staffing the booth or in the materials
available at the booth, other than the official voter
registration forms which allow registrants to select a
party affiliation. B is not engaged in political campaign
intervention when it operates this voter registration
booth.
27
EXAMPLES (cont.)

Situation 2.

President B is the president of University K, a section
501(c)(3) organization. University K publishes a monthly
alumni newsletter that is distributed to all alumni of the
university. In each issue, President B has a column titled
“My Views.” The month before the election, President B
states in the “My Views” column, “It is my personal
opinion that Candidate U should be reelected.” For that
one issue, President B pays from his personal funds the
portion of the cost of the newsletter attributable to the
“My Views” column. Even though he paid part of the cost
of the newsletter, the newsletter is an official publication
of the university. Because the endorsement appeared in
an official publication of University K, it constitutes
campaign intervention by University K.
28
29
Measuring Legislative
Activities

Substantial
Part Test

Expenditure
Test
30
Substantial Part Test

Facts & Circumstances Test

Activities and financial aspects of
the organization are analyzed to
determine the substantiality of the
legislative activities
31
Expenditure Test

Described in IRC section 501(h)

Applied to the expenditures of the
IRC 501(c)(3) organization in order
to determine if a substantial part of
the organization’s activities are
conducted to influence legislation
32
What Is Legislation?

Action on:

Action on:
By:

By:
Acts
Bills
Resolutions

Congress
State legislature
Local council or
similar
Referendum
Initiative
Constitutional
amendment
The Public
33
Action includes





Introduction
Amendment
Enactment
Defeat
Repeal
34
Influencing Legislation = Lobbying
35
Definition of Lobbying
Attempting to influence legislation by…
 Affecting the general public’s opinion
 Communicating with a legislative body
member or employee
 Communicating with government
official or employee who can affect
legislation
36
DIRECT Lobbying
Factors:
 Communication with
 Member or employee of a legislative
body
 A government official or employee
who can influence legislation
 Communication must
 Refer to specific legislation and
 Reflect a view on the legislation
37
EXAMPLE:

An organization exempt under IRC
501(c)(3) whose purpose is the
prevention of cruelty to animals
contacts their Legislators in the
State of Michigan regarding
legislation to prevent greyhound
racing in the state.
38
Indirect Lobbying = Grass Roots
Lobbying
39
INDIRECT Lobbying
Factors:
 Attempting to influence legislation by
 Influencing the general public’s
opinion
 Communication must
 Refer to specific legislation
 Reflect a view on the legislation
 Encourage reader to take action
40
EXAMPLE:

An organization exempt under IRC
501(c)(3) whose purpose is the
prevention of cruelty to animals
uses TV and radio ads to ask the
general public to contact the state
legislators in the State of Michigan
regarding legislation to prevent
greyhound racing in the state.
41
QUESTIONS?
42
The END
43