Most Board Members and Charity CEOs know that the IRS prohibits their organizations from supporting or opposing candidates for public office. Public Charities exempt under Section 501(c)(3) such as charitable, educational or scientific organizations, schools and churches, can lose their exempt status and/or incur excise taxes if they engage in any partisan political activity. While charities are aware of the need to avoid endorsing any candidates for federal, state or local office, in an election year, emotions run higher and events move faster. Subtle changes can cause activities that seem non-political to turn partisan without warning. Once the election winds whip up, it can be hard to see the rocks until it’s too late.
One organization who will be on the lookout for prohibited political activity is the IRS. In its 2012 work plan, the IRS Office of Exempt Organizations says they will be focusing examination resources on allegations of impermissible political intervention. They intend to review information from outside sources to look for signs of political campaign intervention by charitable organizations. The work plan does not specifically identify these outside sources, but they could include the mention of your organization’s name in political ads, editorials, or news stories related to the election, and could even include tips or complaints involving allegations of impermissible political intervention. They will also be looking at information obtained from the revised Form 990 for signs of prohibited political activity. From your Form 990, the IRS can access your website address, and identify your leadership and your major supporters. They can evaluate what you reported on Form 990 about your mission, program activities, contribution expenditures and your lobbying efforts, and will analyze all of this information to select organizations for examination. In an examination, the IRS may also look at your newsletters, your events and your board minutes to evaluate whether the organization violated the ban on campaign intervention.
With all this attention, this year is a good time to brush up on the basics, so all leaders of the organization know what you can and can’t do. As a public charity, you can encourage people to vote, as long as you do so in an unbiased way. You can produce a voter’s guide, and you can sponsor a candidates’ forum or debate, but you can’t show preference in its content or in the way it is conducted. Your organization can not endorse candidates for federal, state or local office. You can’t make or solicit campaign contributions. You can’t make written or oral statements that encourage people to vote for or against a candidate and you can’t place political ads. Make sure these rules are incorporated into your policies and procedures, and review them with Board Members and employees annually.
While charities intend to follow these rules, situations can arise in which the political activity is more subtle and more difficult to identify and control. For example, Board Members or your CEO might inadvertently make political statements. Political activity could arise at your events. Political activity could creep in to your support of legislative issues, and could even lurk on your website. Because the presence of political activity depends on the facts and circumstances of each individual situation, the IRS issued Revenue Ruling 2007-41 which includes examples to help charities evaluate more complex situations to avoid partisan political activity. Now is a good time to look at the ways that partisan political activity might arise unexpectedly in these more complex areas.
Board Members and CEOs Must Speak as Individuals
While your Board Members and CEO are not prohibited from supporting candidates, they must be careful to do so as individuals and not as representatives of the charitable organization. You should develop a policy on this, and remind Board members to avoid using their organizational titles in connection with any personal political endorsements and at any political events they may attend. If organization leaders are speaking on their own, they should clearly state that their comments represent their personal views and not the views of the organization. Board Members and Executives should not make partisan comments in a charity’s publications or at the charity’s own meetings or events. Board meetings should not include any discussions related to supporting or opposing candidates for public office, and should not include any discussions on how a candidate’s views agree or disagree with the charity’s views on a campaign issue. Charities should not give candidates access to the charity’s mailing list or facilities unless they are made available equally to all candidates on a regular basis.
Don’t Say “Candidate” or “Election” at Your Events
Charities often encourage VIPs to attend their events to add visibility to the event and to their cause. To steer clear of unintentional campaign intervention, charities should have policies related to VIP guests who are also candidates. No political fundraising should take place at the event. If a candidate is introduced or asked to speak at an event, the charity should avoid appearing to endorse or support the candidate. If one candidate is singled out for a speaking opportunity or an introduction, it should be obvious that the charity invited them to speak or be introduced for some reason other than their status as a candidate. The candidate should not refer to election issues in his or her remarks unless all candidates are offered the same opportunity. If the charity recognizes a VIP at the event for his or her support of the organization, the charity should not mention the VIP’s candidacy for re-election. If a charity asks a candidate to serve in a special role at an event, such as emcee or auctioneer, it should be obvious that the individual is in the spotlight in their role as emcee or auctioneer, and not as a candidate for public office. Unless your event is a candidates’ debate or candidates’ forum, it’s difficult to provide the same recognition opportunities to all candidates equally. For most charity events, the best policy is to not to identify VIPs as “candidates” and not mention “the upcoming election” at your charity event at all.
Don’t Mention “The Upcoming Election” when Advocating for Your Issue
Charities often advocate their position on important issues that affect their mission. Charities may also advocate their position on a piece of legislation as long as it’s not a substantial part of their activities. However, if that issue becomes a prominent issue that distinguishes one candidate from another in a campaign, making a statement in support of historic preservation and tying that issue to an election becomes prohibited political activity. When a charity’s issue becomes a hot campaign issue, a charity can find itself in dangerous waters.
For example, if your mission is to promote historic preservation, you can make statements in favor of restoring historic buildings in general. If there is a piece of proposed legislation related to historic preservation, you can tell legislators how you would like them to vote on that piece of legislation as long as your lobbying effort is an insubstantial part of your activities. However, if historic preservation becomes a hot issue in an upcoming election campaign, and one candidate is identified with the issue of historic preservation in some way, you can’t make statements that link the importance of historic preservation to the upcoming election. Even if their statements do not include the candidate’s name or provide specific voting instructions, charities should avoid mentioning the election when commenting on prominent campaign issues that are strongly identified with one candidate or another.
Don’t Make Campaign Statements on Your Website
Charities often include information about current issues on their websites. Remember that the IRS has your website address from your Form 990. In an election year, review your website to ensure it does not contain statements on issues that could be construed to represent campaign statements. Watch links to other websites that appear to endorse partisan content or show preference for one candidate’s views over another’s. The context of the link matters as well as how many clicks it takes to connect you to the campaign material. If you’re using a link to indirectly communicate something you can’t say directly, the IRS will look for campaign intervention.
Charities who intervene in election campaigns risk losing their exempt status, and the IRS has stated that it will be looking for impermissible campaign intervention in 2012. It’s not always easy to see when subtle changes in the environment or changes in how activities are conducted threaten to turn non-political activities into election activities without warning, but small changes can have big consequences. For more information on how to avoid prohibited political activity, see the IRS Compliance Guide for 501(c)(3) Public Charities. Now is a good time to revisit your policies and procedures to protect your organization from inadvertently conducting political activity, and to review those policies with your Board and CEO. With awareness of the issue, you can navigate this election year without running aground.
©2014 Renner and Company, CPA, P.C., all rights reserved.