Exempt Organizations: What Kind of Activity is Political?

Over the past few years, it feels like politics have become intertwined with so many areas of life. It is hard to listen to a news cycle without hearing about politics. As elections, campaigns and dollars have taken over center stage, it is a good time for tax-exempt organizations to refresh their awareness on the kind of activities that are acceptable for exempt entities and what might draw the attention of IRS.

IRS issued a Ruling, 2007–41, that describes various factors to consider as they determine what activity crosses the threshold for political activity. Organizations can engage in activities that encourage certain issues, particularly as they relate to the mission of the exempt-entity. While I always advise that you have a professional team to help you along, it is good for you to also have some knowledge to support that advice and know when to seek it out. Here are the factors IRS considers.

· Does the statement identify a specific candidate for office or express approval/disapproval for a candidates’ position?

· Is an entities statement released close to an election or reference voting or that election?

· Is the statement raised as an issue or position that distinguishes a candidate for office?

· Is the statement independent or part of an ongoing series of statements related to the same issue where some of the series have been made outside the time leading up to an election?

· Does the timing of the statement and mention of a candidate relate to an event outside of an election such as a vote on legislation? Is the officeholder that is voting also a candidate?

There are some areas that are generally safe. It is acceptable to encourage voting generally, protecting the right of lawful voting, and the right for those votes to be counted. Here are some other ways to reduce risk in this area.

· Use care to make sure that any issue advocacy will not be confused with or suggest candidate advocacy or opposition. Many organizations charitable purpose could be tied with elections and political parties so this can be especially challenging as elections arise.

· not have events that are sponsored or conducted with political groups.

· Communications that focus on the voting process and right to engage in it rather than focusing on the outcome of those elections.

· Messages related to ensuring an accurate count of votes and the integrity of the election process are acceptable so long as they do not connect with a candidate that could benefit from that message.

· Avoid specifically naming candidates before an election and after since there may still be determinations to be made and subsequent races that are still not resolved.

Keep in mind, this is a calculation for the exempt organization. If the organization is very averse to risk then they will want to be more cautious and distance themselves from potentially political activities.

Did you really even know the Electoral Count Act existed?

Now that you have the basic information, recent elections have brought to light another issue to be aware of; the Electoral Count Act. The timing that surrounds an election seems pretty obvious, however, in recent elections when circumstances have made the winner of an election unclear for months following the election, the timing in which exempt-entity statements could appear to look more like political activity has broadened. There are specific dates set out for which controversies over elections need to be settled, dates for when voting can begin, and processes for how votes can be counted.

501(c)(3) organizations are prohibited from participating in or intervening in political campaigns. That prohibition is for direct and indirect influence and intervention for or against any candidate for public office. When IRS evaluates whether activities are considered political, it looks at the facts and circumstances as well as the context of those actions. Organizations will need to consider the message they want to get out, how it might be interpreted by IRS with the context of the communication, and the timing of any messages keeping an eye out for any run-off elections that may be coming. Again, if you have questions, feel free to reach out to SEED to help you operate effectively without risking your exempt status.

This article is an overview of legal considerations and does not cover every legal right or obligation, consideration, exception, or restriction. Every business decision should be well researched and discussed with a professional before being made.

To schedule a consultation with a SEED Law attorney, you can give us a call at (816)945–4249 or schedule your consultation here.