It is the height of the 2016 election season. Not only will we soon have a new White House resident, but there may also be noticeable shifts in control of both the House and Senate. Nonprofits, including health centers and behavioral health organizations, have much vested in the outcomes of national, state and local elections. While it may be tempting to speak in favor of or against a candidate that will be in a position to affect your organization’s bottom line, and therefore, the communities you serve, organizations, their employees and their Board members must be careful to avoid getting in trouble with the Internal Revenue Service (IRS).
Requirements for Organizations
The Internal Revenue Code strictly prohibits all section 501(c)(3) organizations “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 prohibition on political campaign intervention applies to federal, state and local campaigns. Political campaign intervention includes any and all activities that favor or oppose one or more candidates for public office. Organizations may not make verbal or written statements in favor of or in opposition to any candidate for public office, endorse any candidates, donate to political campaign funds, engage in fundraising, or allow a candidate to use their assets or facilities.
Organizations may take positions on public policy issues; however, they must avoid any issue advocacy that functions as political campaign intervention. Organizations must avoid any message favoring or opposing a candidate. For example, an organization can write an article in support of the expansion of health insurance to offer better coverage for their patients; however, they are restricted from tying that policy statement to a particular candidate or to voting in a specific upcoming election. If there is a perception of impropriety, the IRS will consider all the facts and circumstances when determining whether issue advocacy is political campaign intervention.
Requirements for Board Members and Employees
Board members and employees cannot make partisan comments on behalf of their organization, in their organization’s publications or at the organization’s functions. Board members and employees may express their support of or opposition to a particular candidate as long as it is clear that they are not doing so on behalf of the organization. For example, a Board member or employee can put a particular candidate’s bumper sticker on their personal vehicle; however, such materials cannot be displayed on vehicles owned by the organization or used for organization business. The IRS encourages Board members and employees who speak or write in their individual capacity to clearly indicate that their comments are personal and not intended to represent the views of the organization.
Violating the prohibition on political campaign intervention is considered to be evidence that an organization is not engaged in charitable activities and it may result in denial or revocation of an organization’s tax exempt status. Organizations may also have excise taxes imposed on their organization and any managers who knowingly agreed to political campaign expenditures.
Organizations should educate their Board members and employees on the prohibition on political campaign intervention for 501(c)(3) organizations. Board members and employees should be instructed that when speaking on behalf of the organization, they must not make partisan comments. When speaking or writing in their individual capacity, they should clearly indicate that their comments are personal and not intended to represent the views of the organization. Further, Board members and employees should be instructed not to use the organization’s resources to support or oppose a candidate.
For more detailed discussion of this topic please contact an attorney at Feldesman Tucker Leifer Fidell LLP at (202) 466-8960, or join our webinar on September 29th titled, Navigating the Minefield of Political Campaign Activities: A guide for 501(c)(3) Organizations.