For an organization to be tax-exempt under section 501(c)(3), it cannot “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.”
What is political campaign activity?
Political campaign activity is directly or indirectly participating in any political campaign on behalf of or in opposition to any candidate for elective public office. This includes making contributions to political campaign funds or making public statements in favor of or in opposition to any candidate for public office.
What is the ban on political activity?
It is a requirement imposed by Congress for the privilege of being recognized as exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code.
As a key element in its program to secure compliance with the ban on political campaign activity by section 501(c)(3) organizations, the Internal Revenue Service educates organizations about the ban and puts them on notice of the enforcement program. What types of organizations are restricted by this ban?
Charities, educational institutions and religious organizations, including churches, are among those tax-exempt organizations restricted.
What is the difference between lobbying and political activity?
Lobbying is activity in support of or in opposition to the legislation. (Think “L & L”—Lobbying & Legislation.) Political activity is about supporting or opposing a candidate for elective office.
What are the consequences of participating in political activity?
For a 501(c)(3), violating the political campaign prohibition may result in revocation of tax-exempt status, and the imposition of certain excise taxes.
What activities can jeopardize tax-exempt status?
For 501(c)(3)s, the four main activities that can jeopardize the organization’s tax-exempt status are:
- activity that results in private benefit or inurement;
- lobbying activity, if it constitutes a substantial part of the organization’s overall activities or if it exceeds a predetermined dollar amount;
- any political campaign activity; and
- unrelated business activity that is substantial when compared with the organization’s exempt-function activities.
Doesn’t the First Amendment grant an individual the right to his or her political beliefs?
The ban on political campaign activity does not restrict leaders of organizations from expressing their views on political matters if they are speaking as individuals. Nor are leaders prohibited from speaking about important issues of public policy. However, for their organizations to remain tax exempt under section 501(c)(3), leaders cannot make partisan comments in official organization publications or at official functions of the organization.
For example, a minister of a church can attend an event for a particular candidate and express his support of the candidate as long as he does not state or otherwise imply that he is speaking on behalf of his church. However, if a minister made the same statement at an official church function or in an official church publication, it would constitute prohibited political activity.
Can an organization conduct voter registration and get-out-the-vote drives?
Yes, if they are conducted in a non-partisan manner. However, voter education or registration activities conducted in a biased manner that favors (or opposes) one or more candidates is prohibited. In addition, a private foundation is subject to tax if it expends funds for a voter registration drive that does not meet the requirements listed in section 4945(f) of the Internal Revenue Code.
Can an organization invite a political candidate to speak at its events without jeopardizing its tax-exempt status?
If a candidate is invited to speak at an organization event in his or her capacity as a political candidate, the event will not be considered prohibited political activity if:
- The organization provides an equal opportunity to participate to all political candidates seeking the same office;
- The organization does not indicate any support for or opposition to any candidate; and
- No political fundraising occurs in conjunction with the speech.
Can an organization invite a political candidate to speak at an organization event for reasons other than his or her candidacy for public office?
An organization can invite a candidate to speak in a non-candidate capacity and it will not be considered prohibited political activity as long as:
- The individual is chosen to speak solely for reasons other than candidacy for public office;
- The individual speaks only in a non-candidate capacity;
- Neither the candidate nor any representative of the organization makes any mention of the individual’s candidacy or the election;
- No campaign activity occurs;
- The organization maintains a nonpartisan atmosphere on the premises or at the event where the candidate is present; and
- The organization clearly indicates the capacity in which the candidate is appearing and does not mention the individual’s political candidacy.
What happens if a candidate attends an organization event that is open to the public?
A candidate may choose to attend an event that is open to the public, such as a lecture, concert or worship service. The candidate’s presence at an organization-sponsored event does not, by itself, cause the organization to be engaged in prohibited political activity. However, if the candidate is publicly recognized by the organization, or invited to speak it may cause the organization to be engaged in prohibited political activity. See Inviting Candidate to Speak for more details.
Can an organization state its position on public policy issues that candidates for public office are divided on?
An organization may take positions on public policy issues, including issues that divide candidates in an election for public office as long as the message does not in any way favor or oppose a candidate. Be aware that the message does not need to identify the candidate by name to be prohibited political activity. A message that shows a picture of a candidate, refers to a candidate’s political party affiliations, or other distinctive features of a candidate’s platform or biography may result in prohibited political activity.
Can an organization conduct business activities with a candidate for public office?
A business activity such as selling or renting of mailing lists, the leasing of office space or the acceptance of paid political advertising may constitute prohibited political activity. Some factors to consider in determining whether an organization is engaged in prohibited political activity include:
- Whether the good, service or facility is available to candidates in the same election on an equal basis,
- Whether the good, service or facility is available only to candidates and not to the general public,
- Whether the fees charged to candidates are at the organization’s customary and usual rates, and
- Whether the activity is an ongoing activity of the organization or whether it is conducted only for a particular candidate.
Can an organization post information on its website (or link to other websites) about a candidate for public office?
A website is a form of communication. If an organization posts something on its website that favors or opposes a candidate for public office, it is prohibited political activity. It would be the same as printed material, oral statements or broadcasts that favor or oppose a candidate.
May a section 501(c)(3) organization make a contribution to a political organization described in section 527 (such as a candidate committee, political party committee or political action committee (PAC))?
No, a section 501(c)(3) organization may not make a contribution to a political organization described in section 527 (such as a candidate committee, political party committee or political action committee (PAC)). Nor may such an organization establish and maintain a separate segregated fund under section 527.
May a section 501(c)(3) organization make a contribution to a ballot measure committee (committees supporting or opposing ballot initiatives or referenda)?
Yes, a section 501(c)(3) organization may make a contribution to a ballot measure committee (committees supporting or opposing ballot initiatives or referenda), but it must include such contributions in its lobbying calculations for purposes of determining whether a substantial part of its activities consist of attempting to influence legislation.
What happens if an organization engages in prohibited political activity?
Violating this ban may result in denial or revocation of the organization’s tax-exempt status and the imposition of an excise tax on the amount of money spent on the activity.
Where can I find more information about the ban on political activity by section 501(c)(3) organizations?
For more detailed information, including IRS Revenue Ruling 2007-41, which outlines a number of scenarios to help charities and churches understand the ban on political campaign activity and actions that may arise, see our website at http://www.irs.gov/charities/index.html. An online minicourse is also available.
In addition, you should subscribe to Exempt Organization’s regular email newsletter, EO Update, which highlights new information posted on the Charities and Non-Profits pages of irs.gov. To subscribe go to http://www.irs.gov/charities/index.html and click on EO Newsletter.
FEC Filing Required for Some 527 Organizations – Overview of FEC “electioneering communcations” filings required for some section 527 exempt organizations.
Filing Requirements – Political parties; campaign committees for candidates for federal, state or local office; and political action committees are all political organizations subject to tax under IRC section 527 and may have filing requirements with the Service.
Political Organization Filing and Disclosure – File and search for notices and reports filed with the Service under IRC section 527.
Exemption Requirements – Political Organizations – A brief description of the requirements for exemption under IRC section 527.
Taxable Income – A brief explanation of how political organizations are taxed under IRC section 527.
Solicitation Notice – A brief description of the solicitation notice requirements under IRC section 6113.
Employment Taxes for Exempt Organizations – Links to information about employment taxes for tax-exempt organizations.
Political Organizations – Resource Materials – Resources available on irs.gov concerning tax-exempt political organizations (section 527).
Guidance to exempt organizations on how to apply the ban in various factual situations.
Revenue Ruling 2007-41 and Fact Sheet 2006-17 distill IRS guidance in this area, each providing 21 examples of how it applies.
News releases and other resources for the media discussing the ban.
Phone Forum on Rules for Tax-Exempt Organizations During an Election Year: Topics include the distinctions between political activity, lobbying, and general advocacy, and which activities are permissible by 501(c)(3), 501(c)(4), 501(c)(5), 501(c)(6) and 527 organizations. Read the script and see the slide show.
Access to internal training materials.
Note: These materials were designed for training purposes only; under no circumstances should the contents be used or cited as authority for setting or sustaining a technical position.