Let’s start with the obvious; 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. The penalty for doing so is the revocation of an entity’s tax-exempt status plus the imposition of certain excise taxes – see below.
The Don’ts
Now that we have your attention, let’s define what political activities are prohibited.
Contributions to a political campaign:
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Public statements of position:
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Use of the Organization’s assets (facilities):
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Hopefully, your organization is answering the following question – found on Form 990, Part IV – “NO”
3 Did the organization engage in direct or indirect political campaign activities on behalf of or in opposition to candidates for public office? If “Yes,” complete Schedule C, Part I…
However, if you find yourself answering this question “Yes,” your organization will be subject to a two-tier excise tax on both the organization and the management determined as follows:
- 10% of the political expenditure the organization and 2½% of the political expenditure the manager.
- And if the political expenditure is not returned, the penalty increases to 100% of the amount to be paid by the organization and 50% of the amount to be paid by the manager.
The Dos
Now let’s discuss what activities are allowed – in a non-partisan manner of course:
- Voter Education
- Voter registration
- Get out the Vote
You can promote community involvement by having a booth at the local fair encouraging people to register to vote as long as there is no reference to any candidate or political party.
In summary, you should avoid making contributions or statements in favor of or in opposition to any candidate or political party anytime, but especially during an election cycle when public/oversight scrutiny is at a heightened level of awareness.
Be on the lookout for future articles regarding:
- Political activities of 501(c)(4) and other 501(c) organizations
- Lobbying Expenditures of 501(c)(3) organizations
- To Elect or Not to Elect
If you have questions or comments about evaluating this issue, please feel free to reach out to us.
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