From social media to cable news shows, presidential politics is a constant topic in 2020. What does a presidential election year mean for charitable organizations, the most common type of tax-exempt not-for-profit? The IRS has specific prohibitions against campaigning by tax-exempt organizations.
Charitable organizations are prohibited from participating in any political campaign on behalf of or in opposition to any candidate for public office, including foreign candidates. Violation of this prohibition may result in imposed excise taxes and even revocation of tax-exempt status. (Note: Charitable private foundations are subject to additional restrictions above those applicable to public charities.)
Consider the following scenarios, adapted from IRS Revenue Ruling 2007-41:
A) Can my charitable organization’s communications (newsletters, Twitter feeds, website, etc.) link issues that we care about to specific candidates that support our position on those issues or call out candidates that oppose our position?
No; the IRS would consider such actions to be participation in political campaigns.
B) The CEO of my charitable organization is well known in my community. On her own time, she is a volunteer for Presidential Candidate B. Local news reports (that included pictures and video) identified my CEO as being a volunteer at a recent Presidential Candidate B rally in my hometown. They also identified her as being affiliated with my charitable organization. No statements were made by my CEO at the rally. Are the news reports a problem for my organization?
No, because the CEO’s attendance at the rally was on her own time, her participation was not related to an official charitable organization function, and she did not indicate that she was representing the organization.
C) My charitable organization has been asked to participate with a coalition of other organizations to present a congressional candidates forum. Are we able to do that?
Yes, you can participate in the candidates’ forum as long as:
All candidates are invited to attend,
The questions are prepared and presented by an independent nonpartisan panel,
The issues covered are of broad interest to the public,
Each candidate has an equal opportunity to present their views,
No questions link directly to your organization, and
The moderator is neutral and does not imply approval or disapproval in any of the candidates.
D) My charitable organization rents certain facilities to the general public on a first-come, first-served basis and numerous types of organizations have rented the facilities in the past. Presidential Candidate D’s team wants to rent our facility for a fundraising dinner and would pay the standard fee. Are we allowed to rent the hall to the campaign?
Yes, you can rent the facility on your standard terms and the IRS would not consider the rental to be considered political campaign intervention.
E) Some of my charitable organization’s employees are very involved in the current campaign season. How much of the campaign activity can spill over into our charitable organization’s workplace (T-shirts, buttons, bumper stickers, conversations, emails, etc.)?
Consult your employment law attorney to properly address this question. Your organization can have policies that place limitations on this type of activity in the workplace, but state law, the National Labor Relations Act, and your stated practices among, other factors, must be considered.