sholeh: Can nonprofits get political?

The tentacles of today’s charged political climate reach beyond cafes, couches and courtrooms. Even some churches seem to have become political platforms.

Is that legal?

To put it in those most annoying of lawyerly words, it depends. 

Tax-exempt organizations fall under several sections of the Internal Revenue Code, each with different legal requirements. The best-known and most common, such as churches, humane societies and other common charities, are 501(c)(3)s, defined by the IRS as a nonprofit organization established exclusively for charitable, religious or other specific purposes (e.g., educational, scientific, animal protection or public safety).

Most churches fall under section 501(c)(3). Even if a church doesn’t elect it, the IRS treats them as tax-exempt under its provisions unless they learn otherwise. Other types of nonprofits tend to formally choose tax-exempt options and business structures.

According to the Internal Revenue Code, all section 501(c)(3) organizations are “absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office.” 

Any such “public statements of position … clearly violate the prohibition against political campaign activity.” Violations can result in denial or revocation of tax-exempt status (assuming the IRS finds out and enforces it).

What about voting drives in general? If it’s “conducted in a non-partisan manner,” voter education and public forums are allowed.

What about promoting one party, or a group of candidates with certain positions? Nope. 

“Voter education or registration activities with evidence of bias that (a) would favor one candidate over another; (b) oppose a candidate in some manner; or (c) have the effect of favoring a candidate or group of candidates, will constitute prohibited participation or intervention.” 

Prohibitions include oral and written communications, as well as websites. For example, if a nonprofit website adds links to political sites, even posited as “simply sharing information,” that’s a potential violation risking their nonprofit status. 

Does this mean churches and other nonprofits can’t share positions on policy issues in general, in accordance with their beliefs? It doesn’t. They generally can share policy positions, if they disclose it.

This is where it gets more specific. Non-religious organizations under sections 501(c)(4), (c)(5), and (c)(6), such as social clubs and business associations, generally may lobby and engage in political activities relevant to their purpose, including for or against candidates, without losing their exempt status if (a) such activity isn’t their primary mission, and (b) they disclose it to the IRS and, possibly, their members.

However, 501(c)(3)s, including most churches, still can’t endorse or oppose candidates or parties. They can, however, take positions on issues generally “as long as the message does not in any way favor or oppose a candidate.”  

That means no cheating, including photos, party affiliations or other “distinctive features” of a political candidate’s platform or biography, even if they’re not named.

In response to the First Amendment argument, this doesn’t mean church leaders can’t express opinions in other contexts or settings. It just means if they do so explicitly or impliedly on behalf of the church, they may lose tax-exempt status as charitable entities.

Can a 501(c)(3) invite candidates to speak? Yes, if all seeking the same office are invited, it’s in a nonpartisan atmosphere, and the organization doesn’t express opposition to, or support for, any candidate.

If a candidate simply attends a service or event, is that a violation? No, but if the candidate is publicly recognized by the organization or invited to speak, it may be construed as engaged in prohibited political campaign activity.

What about financial or in-kind contributions to candidates, campaigns, or parties? Generally, political donations are violations, whether or not they come from a separate or dedicated account. If a nonprofit offers services to a political candidate or campaign, the IRS looks at several factors, including whether the same services are offered to all sides and under the same terms.

However, supporting a public referendum or ballot initiative is not a violation, if it doesn’t add up to a substantial part of the nonprofit’s activities.

Only the IRS or a court can enforce these rules, but concerned citizens can raise the question by submitting Form 13909 the IRS’s Tax-Exempt Organization Complaint (Referral) Form by post or email to eoclass@irs.gov.

For more information see “Exempt Organization Types” at irs.gov/charities-non-profits.

Thanks to reader R.P. for the topic suggestion.

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Sholeh Patrick, J.D. is a columnist for the Hagadone News Network. Email sholeh@cdpress.com.