Managers and board members of tax-exempt organizations may find the tax law’s prohibition of political activities somewhat confusing.
Tax-exempt charitable organizations – Section 501(c)(3) organizations – are prohibited from directly or indirectly participating or intervening in any political campaign on behalf of, or in opposition to, any candidate for public office.
The ban on political activity is not as strict for organizations that qualify for exemption as civic leagues under Section 501(c)(4), which must be operated exclusively for the promotion of social welfare.
An organization is considered to be operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the people of the community. Promoting social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of, or in opposition to, any candidate for public office.
The IRS now has published a list of activities that constitute “political campaign intervention.” While the list is relevant only to the tax-exempt status approval process, it sheds light on the IRS’s current thinking on what constitutes political campaign intervention.
On June 24, acting IRS Commissioner Daniel Werfel issued a report entitled “Charting a Path Forward at the IRS: Initial Assessment and Plan of Action.” The report observes that, to date, there has been a lack of a clear and concise definition of “political campaign intervention.”
Direct or indirect participation or intervention includes time or money spent on:
- Any written, printed, or electronic or oral statement supporting or opposing the election or nomination of a candidate
- Financial or other support provided to, or the solicitation of such support on behalf of, any candidate, political party, political committee, or Section 527 organization
- Conducting a voter registration drive that selects potential voters to assist on the basis of their preference for a particular candidate or party
- Conducting a get-out-the-vote drive that selects potential voters to assist on the basis of their preference for a particular candidate or, in the case of general elections, a particular party
- Distributing material prepared by a candidate, political party, political committee or Section 527 organization
- Preparing and distributing a voter guide that rates favorably or unfavorably one or more candidates
- Any public communication within 60 days prior to a general election or 30 days prior to a primary election that identifies a candidate in the election
- Conducting an event at which only one candidate is, or candidates of only one party are, invited to speak
- Any grant to an organization described in Section 501(c) if the recipient of the grant engages in political campaign intervention