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IRS Clarifies Some Civic Engagement Rules for 501(c)(3)s

The last thing any civic engagement 501(c)(3) group wants is to jeopardize its tax-exempt status. Solid legal knowledge and good legal counsel are the best and, in the end, only ways to avoid both vulnerability to an IRS challenge or the paralyzing dread of one. Most readers already know that the basic rule governing the conduct of 501(c)(3) organizations in the political process is that they: “may 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.” So far, so good, but what does this mean when it is applied to specific activities like voter education, voter registration and GOTV campaigns? Do local activists lose their personal freedom of political speech if they accept leadership roles in 501(c)(3) organizations? And, can 501(c)(3) organizations conduct business like renting their space or membership lists to candidates running for office?

One way to avoid train wrecks here is to eliminate as much confusion as possible regarding what the law is and what considerations are key to enforcement decisions. In June 2007, the IRS issued some pretty clear guidelines in the form of 21 “situations” or enforcement scenarios where 501(c)(3) organizational activities either complied with or violated IRS rules. Presumably, these situations were selected because they clarify IRS rules that 501(c)(3) groups often perceive as unclear or confusing. Although we strongly recommend that you read all of the “situations” in the Internal Revenue Bulletin, we present four excerpted examples here to give you a sense of the value of this bulletin. Excerpted text from the Internal Revenue Bulletin is italicized below.

Voter Education, Voter Registration and Get Out the Vote Drives

Section 501(c)(3) organizations are permitted to conduct certain voter education activities (including the presentation of public forums and the publication of voter education guides) if they are carried out in a non-partisan manner. In addition, section 501(c)(3) organizations may encourage people to participate in the electoral process through voter registration and get-out-the-vote drives, conducted in a non-partisan manner. On the other hand, voter education or registration activities conducted in a biased manner that favors (or opposes) one or more candidates is prohibited.

. . . Situation 2. C is a section 501(c)(3) organization that educates the public on environmental issues. Candidate G is running for the state legislature and an important element of her platform is challenging the environmental policies of the incumbent. Shortly before the election, C sets up a telephone bank to call registered voters in the district in which Candidate G is seeking election. In the phone conversations, C’s representative tells the voter about the importance of environmental issues and asks questions about the voter’s views on these issues. If the voter appears to agree with the incumbent’s position, C’s representative thanks the voter and ends the call. If the voter appears to agree with Candidate G’s position, C’s repres entative reminds the voter about the upcoming election, stresses the importance of voting in the election and offers to provide transportation to the polls. C is engaged in political campaign intervention when it conducts this get-out-the-vote drive.

Individual Activity by Organization Leaders

The political campaign intervention prohibition is not intended to restrict free expression on political matters by leaders of organizations speaking for themselves, as individuals. Nor are leaders prohibited from speaking about important issues of public policy. However, for their organizations to remain tax exempt under section 501(c)(3), leaders cannot make partisan comments in official organization publications or at official functions of the organization.

. . . Situation 6. Chairman D is the chairman of the Board of Directors of M, a section 501(c)(3) organization that educates the public on conservation issues. During a regular meeting of M shortly before the election, Chairman D spoke on a number of issues, including the importance of voting in the upcoming election, and concluded by stating, “It is important that you all do your duty in the election and vote for Candidate W.” Because Chairman D’s remarks indicating support for Candidate W were made during an official organization meeting, they constitute political campaign intervention by M.

Issue Advocacy vs. Political Campaign Intervention

. . . A communication is particularly at risk of political campaign intervention when it makes reference to candidates or voting in a specific upcoming election. Nevertheless, the communication must still be considered in context before arriving at any conclusions.

Situation 14. University O, a section 501(c)(3) organization, prepares and finances a full page newspaper advertisement that is published in several large circulation newspapers in State V shortly before an election in which Senator C is a candidate for nomination in a party primary. Senator C represents State V in the United States Senate. The advertisement states that S. 24, a pending bill in the United States Senate, would provide additional opportunities for State V residents to attend college, but Senator C has opposed similar measures in the past. The advertisement ends with the statement “Call or write Senator C to tell him to vote for S. 24.” Educational issues have not been raised as an issue distinguishing Senator C from any opponent. S. 24 is scheduled for a vote in the United States Senate before the election, soon after the date that the advertisement is published in the newspapers. Even though the advertisement appears shortly before the election and identifies Senator C’s position on the issue as contrary to O’s position, University O has not violated the political campaign intervention prohibition because the advertisement does not mention the election or the candidacy of Senator C, education issues have not been raised as distinguishing Senator C from any opponent, and the timing of the advertisement and the identification of Senator C are directly related to the specifically identified legislation University O is supporting and appears immediately before the United States Senate is scheduled to vote on that particular legislation. The candidate identified, Senator C, is an officeholder who is in a position to vote on the legislation.

Business Activity

The question of whether an activity constitutes participation or intervention in a political campaign may also arise in the context of a business activity of the organization, such as selling or renting of mailing lists, the leasing of office space, or the acceptance of paid political advertising.

…Situation 18. Theater L is a section 501(c)(3) organization. It maintains a mailing list of all of its subscribers and contributors. Theater L has never rented its mailing list to a third party. Theater L is approached by the campaign committee of Candidate Q, who supports increased funding for the arts. Candidate Q’s campaign committee offers to rent Theater L’s mailing list for a fee that is comparable to fees charged by other similar organizations. Theater L rents its mailing list to Candidate Q’s campaign committee. Theater L declines similar requests from campaign committees of other candidates. Theater L has intervened in a political campaign. VCM

For the complete text of Internal Revenue Bulletin: 2007-25 please see: http://www.irs.gov/irb/2007-25_irb/ar09.html

Winnett Hagens is the Executive Director of Democracy South and Managing Editor of Voter Contact Magazine.

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