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Monday, February 27, 2006


Generally, Section 501(c)(3) organizations and politics do not mix well. Under Section 501(c)(3), tax-exempt 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 federal, state or local public office. Violation of this prohibition may result in denial or revocation of tax-exempt status and the imposition of excise taxes.

It appears that many tax-exempt organizations are either not getting the message, or the temptation to support political candidates is too great to resist. In a review of the 2004 election cycle, the IRS determined that in nearly three-quarters of 82 examinations it conducted, tax-exempts, including churches (which term for tax purposes includes "temples" for those religions who practice through temples), engaged in some level of prohibited political activity. Mostly these were one-time, isolated occurrences, which IRS addressed through written advisories to the organizations. However, in three cases involving tax-exempts that weren't churches, the prohibited activity was so egregious that IRS proposed the revocation of the organizations' tax-exempt status. Violations that were found to occur included:

-Charities, including churches, distributing diverse printed materials that encouraged their members to vote for a preferred candidate

-Religious leaders using the pulpit to endorse or oppose a particular candidate

-Charities, including churches, criticizing or supporting a candidate on their website or through links to another website

-Charities, including churches, disseminating improper voter guides or candidate ratings

-Charities, including churches, placing signs on their property that show they support a particular candidate

-Charities, including churches, giving improperly preferential treatment to certain candidates by permitting them to speak at functions

-Charities, including churches, making cash contributions to a candidate's political campaign.

Where to draw the line between permissible educational activities and permissible non-partisan political activities on the one hand, and impermissible advocacy on the other hand, can be difficult to discern. For those who are interested, the IRS has provided some key points in this regard for many common fact situations. These key points include:

-Intervention in a political campaign includes not only endorsing a candidate for office, but also contributions to political campaign funds, public statements of position (verbal or written) in favor of or opposed to a candidate, distributing prepared statements that favor or oppose candidates, and, if other candidates aren't given an equivalent opportunity, allowing a candidate to use the tax-exempt's assets or facilities.

-If carried out in a non-partisan manner, tax-exempts can conduct certain voter education activities (including the presentation of public forums and the publication of voter education guides). They can also sponsor voter registration and get-out-the-vote drives, as long as they aren't conducted in a biased manner that favors (or opposes) a candidate.

-Tax-exempt's leaders cannot make partisan comments in official organization publications or at official functions of the organization. But they can speak for themselves, as individuals, on political matters or important issues of public policy. To avoid potential attribution of their comments, tax-exempt's leaders who speak or write in their individual capacity are encouraged to clearly indicate that their comments are personal and not intended to represent the views of the organization.

-An organization may invite political candidates (in their capacity as candidates or in their individual capacity) to speak at its events. Candidates may also appear without an invitation at organization events that are open to the public. When a candidate is invited to speak as a political candidate, the tax-exempt must ensure that: (1) it provides an equal opportunity to other political candidates seeking the same office; (2) it doesn't indicate any support for or opposition to the candidate (this should be stated explicitly when he is introduced and in communications concerning his attendance); and (3) no political fundraising occurs. In determining whether candidates are given an equal opportunity to participate, a tax-exempt should consider the nature of the event to which each candidate is invited, as well as the manner of presentation. For example, an invitation for one candidate to speak at a well attended annual banquet, and for his opponent to speak at a sparsely attended general meeting, will likely have violated the political campaign prohibition, even if the manner of presentation is otherwise neutral.

-A tax-exempt may take positions on public policy issues, including issues that divide candidates in an election. But, a statement by a tax-exempt is at risk of violating the political campaign prohibition if there is any message favoring or opposing a candidate, even it doesn't expressly tell an audience to vote for or against a candidate (who can be identified not only by name but also by other means, such as showing his picture, referring to his party, or other distinctive features of his platform or biography).

-A web site is a form of communication, and if a tax-exempt posts something on its web site that favors or opposes a candidate for public office, it will be treated the same as if it distributed printed material, oral statements or broadcasts that favored or opposed a candidate. Links to candidate-related material, by themselves, do not necessarily constitute political campaign intervention. IRS will examine all facts and circumstances to assess whether a link produces that result.

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