Political Campaign Activity by
Nonprofit Organizations
Do’s and Don'ts
By:
Clifford Perlman
Perlman & Perlman, LLP
41 Madison Avenue, Suite 4000
New York, NY 10010
Ph: 212-889-0575 Fx: 212-748-8120
Email: cliff@perlmanandperlman.com
Scope of Rules
 501(c)(3) provides federal tax exemption to a
charitable organization Section so long as it:
–
“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.”
 These rules apply to all of your organization’s
political activities from a presidential election to
local school board elections.
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The Statutes
 Federal tax law - means those federal laws,
regulations and rulings under the Internal Revenue
Code ("IRC") of 1986, as amended, that pertain to a
nonprofit organization's tax-exempt status.
 Federal election law - means those federal laws,
regulations and rulings under the Federal Election
Campaign Act ("FECA") of 1971, as amended, which
govern nonprofits' participation in campaigns for
federal office. The term "election law" includes
federal, state and local law relating to the financing
and conduct of elections.
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Scope of Prohibitions
 The prohibition also includes:
- third-party movements
- efforts to "draft" someone to run
- exploratory advance work
 Code forbids tax-exempt nonprofits from trying to
prevent a public official from being re-nominated
or re-elected.
 Code does not bar working for or against the
appointment of a public official.
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Penalties for
Violating these Rules
 The IRS may revoke your tax-exempt status
 No exception for "de minimis" violations
 The IRS also can impose a tax on your organization
and its managers personally
- 10 percent tax on political expenditures of 501(c)(3) groups.
- 2% percent tax on 501(c)(3) organization managers who approve
such expenditures. (nonprofit managers can be protected from the
personal 2% percent tax if they obtain and rely upon - a written,
reasonable opinion of legal counsel supporting the organization's right
to conduct a particular activity).
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Issue Advocacy and Express
Advocacy as Compared to
Political Activity
 501(c)(3) organizations can and should use the occasion of an
election to get greater exposure for their issues of concern.
 501 (c)(3)s may not attempt to intervene surreptitiously in a
political campaign by using "code words" such as
"conservative", "liberal", "anti-gay" or "pro-choice" in messages
timed to improve or diminish the prospects for the election of
candidates with whom they agree or disagree.
 The IRS frowns on 501(c)(3)s encouraging voters to "vote
green", "vote pro-life" or "throw out the liberals", considering
such forms of expression to be implied advocacy and a form of
"political intervention.
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Criticism of Incumbents
 If a 501(c)(3) has a record of criticizing
incumbents, lobbying them and working to
hold them accountable, it may continue those
activities during an election year. However, be
warned: close to an election, the IRS may
view negative comments about someone
running for re-election as illegal "intervention"
in the campaign.
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Endorsements
 Individuals associated with 501(c)(3) organizations
are free to endorse, support or oppose candidates,
so long as it is clear that they speak for themselves
and not on behalf of an organization and so long as
they do not in any way utilize the organization's
financial resources, facilities or personnel, and
clearly and unambiguously indicate that the actions
taken or statements made are those of the
individuals and not of the organization.
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Candidate Appearances
 A 501(c)(3) may sponsor an appearance by a candidate or public
official, but proceed cautiously.
 If he or she was invited as a candidate, you must take steps to
ensure that you indicate no support of or opposition to the
candidate at the event. No political fundraising should occur at the
event, and the other candidates should be given an equal
opportunity to participate, either at the same event or a comparable
one.
 If you invited the person in a capacity other than candidate,
you don't need to invite the opposition, but do everything you can
to make sure that the event does not turn into a campaign
appearance.
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Other Issues
 Voter registration and get-out-the-vote
(GOTV)
 Candidate questionnaires and voter guides
 Candidate debates and forums
 Issue briefings for candidates
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 Public opinion polls
Contributions - Again
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
501(c)(3) organizations may not contribute to a candidate, political
action committee (PAC) or political party, pay to attend partisan
political dinners and similar events, or provide loans.

Other restrictions are less obvious. The IRS considers you to be
making "in-kind contributions" when you provide anything of
value to a candidate, party or political organization and do not
receive fair market value in return, your mailing list, facilities,
equipment, staff time or any other resource.

For example, the IRS takes the position that you may only rent
your mailing list to a candidate or political group if you charge full
price, offer the list to other contenders, and report unrelated
business taxable income on the transaction.
End
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