Nonprofits and Political Campaigns: Dos and Don’ts
For organizations who are classified as 501(c)(3) tax-exempt organizations, there are restrictions on how money can be spent. The tax-exempt status of the organization and the tax deductions that are granted to donors mean that the funds of 501(c)(3) charities are supplemented by the federal government. This means the government has an interest in their activities and, specifically, their political activity.
During an election season, it is important for nonprofits to know their boundaries and operate within them. These boundaries do not prohibit or exclude all political activities, but there are some very particular things that these organizations can and cannot do.
Don’t endorse or oppose candidates
The Johnson Amendment is a part of the tax code dealing directly with political activities of 501(c)(3) organizations. The amendment explicitly prohibits these nonprofits from endorsing or opposing political candidates.
The Johnson Amendment reaches further than just donating to a campaign, stating that nonprofits with this designation must not intervene in a campaign in any way. It specifically includes a prohibition about making statements for or against a candidate.
Violating the Johnson Amendment can spark an investigation by the IRS. When the IRS is notified of a potential conflict, they may choose to investigate the matter further. If wrongdoing is found, penalties could include sanctions or even loss of tax-exempt status.
Do lobby for issues important to the organization
Despite the restrictions on endorsing or opposing candidates, 501(c)(3) nonprofits are allowed to participate in the political arena. Lobbying is an excellent way for nonprofits to be politically involved. Lobbying includes educating elected officials about an issue and asking them to vote for or against a particular piece of legislation. Organizations can lobby for legislation at the local, state, or federal level.
“Lobbying includes educating elected officials about an issue and asking them to vote for or against a particular piece of legislation.”
Do engage in grassroots lobbying
Grassroots lobbying is asking the public to support a particular piece of legislation, including encouraging people to call on their elected representatives to vote in a particular way. This approach is a wonderful way for nonprofits to educate the public and influence the laws that affect them and their operations directly.
Do separate the individual from the organization
If a board member or executive takes a stand or makes a political speech, ensure a clear distinction is drawn between the individual’s position and the organization’s position. Being on a board or employed by a 501(c)(3) nonprofit does not need to strip away a person’s political affiliations. However, in that political free speech, the individual must be sure they are not appearing to speak on behalf of the organization.
In practical terms, this means adding disclaimers on personal social media pages that clearly state all opinions are of the individual and do not represent other organizations. It means not wearing shirts or other marketing materials for the nonprofit while campaigning for a candidate. It means any sign in the yard of a personal residence is not accompanied by signage for the nonprofit. If there is an appearance that the individual is speaking on behalf of the 501(c)(3) organization, it could be reported to the IRS and investigated as a violation of the Johnson Amendment.
Do give equal invitations
In a situation where an organization would like to invite a particular candidate to an event, the invitation must be extended to all candidates from that particular race. Whether or not all the candidates accept the invitations, it does need to be extended to avoid opposing a candidate by excluding them.
Don’t conflate issues with candidates
Sometimes, candidates are tied very closely to an issue. When this happens, it can be tempting to use campaigning against the issue as a way to support or oppose a particular candidate. This is another area in which a perception of wrongdoing and a report to the IRS can result in an investigation of wrongdoing.
With election season upon us, many nonprofits are eager to jump into the political arena. Politics are more heated than perhaps ever before, and even those who have never been drawn in may now feel the need to speak out. When doing so, be sure to stay within the guidelines for 501(c)(3) nonprofits to avoid jeopardizing the future of the organization.
