Election Year Dos and Don’ts for a 501(c)(3)

Given that 2016 is an election year and the campaign season has kicked into hyper-drive, we want to provide a brief reminder of what you CAN and CANNOT do regarding political activities. Please note there is a difference between political activities vs. lobbying activities. Political activities (“electioneering”) are geared towards the election process, while lobbying activities attempt to influence legislation.

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:

  • Includes payments, loans, advances, deposits, gifts or anything of value

Public statements of position:

  • In favor of or in opposition to a specific candidate
  • Websites
    • Be extra careful with monitoring you organization’s website. Remember that your website is a means of communicating with the public, so whatever is posted is treated as the same as if you distributed printed information.
    • You are also responsible for links posted on your website. So we recommend that you monitor these links more closely as election day nears.

Use of the Organization’s assets (facilities):

  • If you invite candidates to speak at your organization, the terms of the speaking engagement must be fair. You cannot invite one candidate on the night of your annual meeting that is attended by all members of the board then invite another candidate to a normal monthly meeting that is attended by only a few members and the board.

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.

Need More Information?

If you have any questions about this not-for-profit update, please contact your Withum professional, a member of Withum’s Not-for-Profit & Education Services Group or fill in the form below.

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