Pacific Business News

July 14, 2006

Nonprofits have to be cautious to avoid illegal political work

by Sally Little

After the 2004 elections, the Internal Revenue Service, investigated a number of 501(c)(3) tax-exempt nonprofit organizations for possible political intervention activities.

Under the Internal Revenue Code, all such organizations are prohibited 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. This includes political campaigns on the federal, state and local level.

Nonprofits who engage in political intervention activities risk losing their tax-exempt status and paying certain excise taxes.

\With the election season looming and campaign materials beginning to appear, the following guidelines will help nonprofits avoid political intervention activities.

* Use caution in encouraging citizens to vote. You may telephone potential voters and educate them on issues that are important to your nonprofit's mission. However, you may not encourage voters to support a candidate who also supports these issues. Even providing transportation to the polls is dangerous if the nonprofit only drives those who agree with a favored candidate's position.

* Make sure partisan comments are unofficial. Nonprofit leaders may not make partisan statements in either an official organization publication such as a newsletter or at an official organization function such as an annual dinner. If these leaders choose to write or speak as individuals beyond their organization's publications or events, they must clearly indicate that their comments are personal and not intended to represent the views of the nonprofit.

* Invite all candidates for an office to speak at your event. An event may be an annual meeting or board of director's meeting. Do not confuse this type of activity with the sponsorship of a candidates' public forum as different rules apply. When the meeting announcement is distributed to your membership and again when the candidates are introduced at the event, the nonprofit must state that it does not support or oppose these candidates. As well, political fundraising may not occur. A nonprofit may choose to invite a candidate to one event and the opposing candidate to another. To avoid appearing partisan, the nonprofit must insure that each event is equally important and has the same number of attendees.

* Monitor candidates at your activities that are open to the public. These may include lectures, concerts, fundraisers and worship services among others. Again, campaigning for candidates is prohibited at these activities. If a candidate in attendance is introduced no mention may be made of his/her candidacy. In addition, if the candidate is invited to speak, he/she must be chosen to do so for reasons other than being a candidate. For example, the candidate may be a founding member and speak on the history of the organization.

* Know the difference between issue advocacy and political campaign intervention. Nonprofits may take positions on public policy issues, including those that divide candidates who are running for public office. However, use caution as any of these statements may be considered inappropriate if they are delivered close to an election, refer to voting or the election, or address an issue that distinguishes the candidates for a given office.

* Examine voter guides before distribution. A nonprofit may be asked to distribute a voter guide prepared by another organization. Make sure the voter guide is unbiased, covers a broad scope of issues and uses a neutral format. If not, even the distribution of the voter guide may be considered a political campaign intervention by your nonprofit.

* Engage in equitable business activity. A candidate may ask to buy your nonprofit's mailing list, rent of fice space or buy paid political advertising. Make sure that this is an activity that your nonprofit regularly offers to everyone with a set fee schedule. If you only sell your mailing list to a specific candidate, you may be engaging in political intervention.

* Review links from your web site. If your web site is linked to others, make sure these links support your mission, treat candidates equitably and contain no bias towards any candidate. Your nonprofit is still responsible for the consequences of making and maintaining the link, even though you have no control over the content of the other Web site.

* Seek professional advice. If you are in doubt about whether an activity constitutes a political intervention, contact a tax attorney, CPA or review the IRS's recently issued fact sheet, FS-2006-17, on their Web site at www.irs.gov.

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