Election Involvement by Section 501(c)(3) Organizations\u00a0(including Churches)<\/p>\n
Our session today is about the prohibition on political campaign activity by organizations recognized as section 501(c)(3) tax exempt organizations, including churches.\u00a0 Let\u2019s start by talking about the specific language in the code that gives rise to the prohibition.\u00a0 The gist of the provision was added by amendment during the Senate floor debate over the Revenue Act of 1954.\u00a0 This amendment was proposed by Texas Senator Lyndon B. Johnson, who was then the Senate minority leader.\u00a0 The provision was accepted and became part of the code.\u00a0 There\u2019s no legislative history explaining Senator Johnson\u2019s reasons for proposing the amendment, but nonetheless, the provision has been in the code for over half a century now.\u00a0 And to the extent Congress has revisited it over the years, it has in fact strengthened it.\u00a0 Most recently, in 1987, Congress amended the language to clarify that the prohibition also applies to statements opposing candidates.<\/p>\n
So the current language applicable to section 501(c)(3) organizations reads, \u2026\u201d[an organization] which does not participate in or intervene in, including the publishing or distributing of statements, any political campaign on behalf of or in opposition to any candidate for public office.\u201d\u00a0 Note that the prohibition includes publishing and distributing statements \u2013 so the distribution by a section 501(c)(3) organization of biased material prepared by a third party could jeopardize the organization\u2019s tax exempt status.<\/p>\n
An important point to remember is that the prohibition applies to intervention in political campaigns, and not all activity that might be described as \u201cpolitical.\u201d\u00a0 For example, section 501(c)(3) organizations may engage in a limited amount of lobbying activity, which is defined as the attempt to influence legislation.\u00a0 There are other rules that govern lobbying activities by section 501(c)(3) organizations, however, we won\u2019t have time to get into those today.<\/p>\n
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Let me stress here that the prohibition applies to section 501(c)(3) organizations as a condition for exemption.\u00a0 It\u2019s not directed just at churches or any other particular type of organization, and it\u2019s not a freedom of speech or free exercise of religion issue.\u00a0 It is a requirement imposed by Congress for the privilege of being exempt from federal income tax under this specific sub-section of the Code.<\/p>\n
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The Code does not contain a \u201cbright line test\u201d as to what constitutes political campaign intervention.\u00a0 So the IRS considers all the \u201cfacts and circumstances\u201d of a particular situation, striving to interpret and apply the laws enacted by Congress, regulations written by the Treasury Department and decisions reached by the courts.<\/p>\n
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To illustrate the facts and circumstances test, I\u2019ll discuss several scenarios from Fact Sheet 2006-17, which the IRS released this past February, although I won\u2019t be covering all of the examples from the fact sheet.\u00a0 The fact sheet was distributed to you prior to this forum.\u00a0 You can also download the fact sheet from the EO page of the IRS website.\u00a0 That\u2019s www.irs.gov\/eo<\/a>, and the fact sheet number is 2006-17.<\/p>\n <\/p>\n First, understand that the prohibition on political campaign intervention extends beyond simple candidate endorsements or contributions to political campaign funds.\u00a0 Those acts are clearly campaign intervention, as are written or verbal public statements made by or on behalf of an organization in favor of or in opposition to any candidate for public office.\u00a0 The scenarios I will be discussing involve the tougher calls where all of the facts and circumstances must be considered to determine whether the organization has intervened in a political campaign.<\/p>\n <\/p>\n Let\u2019s look first at activities some organizations engage in to encourage people to participate in the electoral process by educating voters, registering voters, or encouraging higher voter turnout at the polls.\u00a0 These kinds of activities can be legitimate, permissible activities of a section 501(c)(3) organization if they are carried out in a non-biased manner.<\/p>\n <\/p>\n So, in Example 1 of the fact sheet, an organization established to promote community involvement sets up a booth at the state fair where citizens can register to vote.\u00a0 The signs and banners in and around the booth give only the name of the organization, the date of the next upcoming statewide election, and notice of the opportunity to register.\u00a0 No reference to any candidate or political party is made by the volunteers staffing the booth or in the materials available at the booth, other than the official voter registration forms which allow registrants to select a party affiliation.\u00a0 Under these circumstances, the organization is not engaged in political campaign intervention when it operates its voter registration booth.\u00a0 This is an example of a situation where an organization can be involved in the election process without violating the prohibition.<\/p>\n <\/p>\n Contrast that situation with Example 2 from the fact sheet dealing with an organization that educates the public on environmental issues.\u00a0 A candidate for the state legislature is challenging the environmental policies of the incumbent as an important element of her platform.\u00a0 Shortly before the election, the organization sets up a telephone bank to call registered voters in the district in which the candidate is seeking election.\u00a0 In the phone conversations, the organization\u2019s representative discusses the importance of environmental issues, asking questions about the voter\u2019s views on these issues.\u00a0 If the voter appears to agree with the incumbent\u2019s position, the organization\u2019s representative thanks the voter and ends the call.\u00a0 If, on the other hand, the voter appears to agree with the challenger\u2019s position, the organization\u2019s representative reminds the voter about the upcoming election, stresses the importance of voting in the election and offers to provide transportation to the polls.\u00a0 Even though the organization\u2019s representative never makes an express endorsement of any candidate during the calls to the voters, the organization has intervened in the campaign on behalf of the challeger through the manner in which it conducted its get-out-the-vote drive.<\/p>\n <\/p>\n Next, we will look at activity by the leaders of an organization.\u00a0 The question is, when is the leader speaking only for him or herself as an individual on political matters, \u2013 which he or she can certainly do \u2013 and when are his or her statements attributable to the organization, and therefore political campaign intervention?\u00a0 After all, an organization acts through its individual members.<\/p>\n <\/p>\n Consider Example 4 from the fact sheet.\u00a0 A section 501(c)(3) university publishes a monthly newsletter that is distributed to all alumni of the university.\u00a0 In each issue, the president of the university has a column titled \u201cMy Views.\u201d The month before an election, the president states in the \u201cMy Views\u201d column, \u201cIt is my personal opinion that Candidate U should be reelected.\u201d For that one issue, the president uses his personal funds to pay the portion of the cost of the newsletter attributable to the \u201cMy Views\u201d column. Even though he paid part of the cost of the newsletter, the newsletter is an official publication of the university so the remarks by the president are attributable to the university and constitute campaign intervention by the university.<\/p>\n <\/p>\n How about appearances by candidates at exempt organizations\u2019 functions?\u00a0 Depending on the facts and circumstances, an organization may invite political candidates to speak at its events without jeopardizing its tax exempt status, but the factors to be considered are based on the capacity in which the candidate appears.\u00a0 Political candidates may be invited in their capacity as candidates, or in their individual capacities.\u00a0 Candidates may also appear without an invitation at organization events that are open to the public.<\/p>\n <\/p>\n A candidate may seek to reassure the organization that it is permissible for the organization to do certain things in connection with the candidate\u2019s appearance.\u00a0 An organization in this position should keep in mind that the candidate may not be familiar with the organization\u2019s tax-exempt status and that the candidate may be focused on compliance with the election laws that apply to the candidate\u2019s campaign rather than the federal tax law that applies to the organization.\u00a0 The organization will be in the best position to ensure compliance with the prohibition on political campaign intervention if it makes its own independent conclusion about its compliance with federal tax law.<\/p>\n <\/p>\n When a candidate speaks at an organization\u2019s event as a political candidate, the organization must take steps to ensure that: <\/p>\n In determining whether candidates are given an equal opportunity to participate, an organization should consider the nature of the event to which each candidate is invited, in addition to the manner of presentation. <\/p>\n Candidates may also appear or speak at organization events in a non candidate capacity.\u00a0 For instance, a political candidate may be a public figure who is invited to speak because he or she <\/p>\n In addition, the organization should clearly indicate the capacity in which the candidate is appearing and should not mention the individual\u2019s political candidacy or the upcoming election in the communications announcing the candidate\u2019s attendance at the event.<\/p>\n <\/p>\n Illustrating this is Example 10 from the fact sheet.\u00a0 A section 501(c)(3) historical society is located in the state capital where state officials occasionally come to its meetings and the president of the society customarily acknowledges their presence.\u00a0 During the state gubernatorial race, the Lieutenant Governor, who is also running for Governor, attends a meeting of the historical society where the president acknowledges the Lieutenant Governor\u2019s presence in his customary manner, saying, \u201cWe are happy to have joining us this evening Lieutenant Governor Y.\u201d\u00a0 The president makes no reference in his welcome to the Lieutenant Governor\u2019s candidacy or the election.\u00a0 The historical society has not intervened in a political campaign due to the president\u2019s acknowledgement.<\/p>\n <\/p>\n The last topic from the fact sheet that I want to cover is one of the most difficult issues: the difference between issue advocacy and political campaign intervention.\u00a0 Under federal tax law, section 501(c)(3) organizations may take positions on public policy issues, including issues that divide candidates in an election for public office.\u00a0 However, section 501(c)(3) organizations must avoid any issue advocacy that functions as political campaign intervention.\u00a0 Even if a statement does not expressly tell an audience to vote for or against a specific candidate, an organization delivering the statement is at risk of violating the political campaign intervention prohibition if there is any message favoring or opposing a candidate.\u00a0 A statement can identify a candidate not only by stating the candidate\u2019s name but also by other means such as showing a picture of the candidate, referring to political party affiliations, or other distinctive features of a candidate\u2019s platform or biography.\u00a0 All the facts and circumstances need to be considered to determine if the advocacy is political campaign intervention.<\/p>\n <\/p>\n For our last scenario, consider Example 16 from the fact sheet:\u00a0 There are two candidates for the state senate in a district where the issue of state funding for a new mass transit project in the district is a prominent issue in the campaign.\u00a0 Both candidates have spoken out on the issue.\u00a0 One candidate supports the new mass transit project, whereas the other opposes the project and supports more funding for highway improvements instead.\u00a0 At the annual fundraising dinner of a section 501(c)(3) organization that promotes community development, which takes place in that district the month before the election, the executive director gives a lengthy speech about community development issues including the transportation issues.\u00a0 He does not mention the name of any candidate or any political party.\u00a0 However, at the conclusion of the speech, he makes the following statement, \u201cFor those of you who care about quality of life in our district and the growing traffic congestion, there is a very important choice coming up next month.\u00a0 We need new mass transit.\u00a0 More highway funding will not make a difference.\u00a0 You have the power to relieve the congestion and improve your quality of life in our district.\u00a0 Use that power when you go to the polls and cast your vote in the election for your state senator.\u201d<\/p>\n <\/p>\n The organization has violated the prohibition on political campaign intervention as a result of its executive director\u2019s remarks.\u00a0 This is so because the act occurred at its official function shortly before the election, its executive director referred to the upcoming election after stating a position on an issue, and the issue is a prominent one that distinguishes the candidates.<\/p>\n <\/p>\n I encourage you to review Fact Sheet 2006-17 after this forum, both the examples I just covered and the rest.\u00a0 In addition, I recommend you look at Publication 1828, Tax Guide for Churches and Other Religious Organizations<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" Election Involvement by Section 501(c)(3) Organizations\u00a0(including Churches) Our session today is about the prohibition on political campaign activity by organizations recognized as section 501(c)(3) tax exempt organizations, including churches.\u00a0 Let\u2019s start by talking about the specific language in the code that gives rise to the prohibition.\u00a0 The gist of the provision was added by amendment Read 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\n\u2022\u00a0It provides an equal opportunity to other political candidates seeking the same office;
\n\u2022\u00a0It does not indicate any support for or opposition to any candidate.\u00a0 This should be stated explicitly when the candidate is introduced and in communications concerning the candidate\u2019s attendance); and
\n\u2022\u00a0No political fundraising occurs.<\/p>\n
\nFor example, an organization that invites one candidate to speak at its well attended annual banquet, but invites the opposing candidate to speak at a sparsely attended general meeting, will likely have violated the political campaign prohibition, even if the manner of presentation for both speakers is otherwise neutral.<\/p>\n
\n\u2022\u00a0currently holds, or formerly held, public office;
\n\u2022\u00a0is considered an expert in a non political field;
\n\u2022\u00a0is a celebrity or has led a distinguished military, legal, or public service career.
\nA candidate may also choose to attend an event that is open to the public, such as a lecture, concert or worship service.\u00a0 The candidate\u2019s presence at an organization-sponsored event does not, by itself, cause the organization to be engaged in political campaign intervention.\u00a0 For example, the IRS has never taken the position that candidates can not attend church services while running for office.\u00a0 However, if the candidate is publicly recognized by the organization, or if the candidate is invited to speak, the organization must ensure that:
\n\u2022\u00a0The individual is chosen to speak solely for reasons other than candidacy for public office;
\n\u2022\u00a0The individual speaks only in a non-candidate capacity;
\n\u2022\u00a0Neither the individual nor any representative of the organization makes any mention of his or her candidacy or the election;
\n\u2022\u00a0No campaign activity occurs in connection with the candidate\u2019s attendance; and
\n\u2022\u00a0The organization maintains a nonpartisan atmosphere on the premises or at the event where the candidate is present.<\/p>\n