Tax-Exempt Organization’s Involvement in Political Activities

March 2nd, 2020

With the political campaign season already underway, now is a good time to revisit the role of tax-exempt organizations in this environment, especially considering the prominent role politics plays in today’s media.

Organizations that are exempt under 501(c)(3) of the Internal Revenue Code are organizations that have been created for religious, charitable, scientific, testing, public safety, literary, or educational purposes, or for the prevention of cruelty to children or animals. In exchange for granting organizations tax-exempt status, the Internal Revenue Service (IRS) requires those organizations to follow certain rules and regulations. These organizations should also consider the requirements and restrictions of their funders, which may have their own limitations.

501(c)(3) organizations are absolutely prohibited from intervening directly or indirectly in a political campaign on behalf of any candidate. Furthermore, they must be bi-partisan in their actions and in their messages. Failure to adhere to these rules may expose an organization to the threat of losing their tax-exempt status.

501(c)(3) organizations are also limited in their ability to attempt to influence legislation, known as lobbying. Examples of lobbying include contacting, or urging the public to contact, members or employees of a legislative body for proposing, supporting, or opposing legislation, or advocating for the adoption or rejection of specific legislation. 501(c)(3) organizations may do some lobbying, but those activities cannot be more than an insubstantial part of their overall activities.

Tax-exempt organizations do not, however, need to be silent, as their voices are important in raising public awareness and establishing them as problem solvers. 501(c)(3) organizations can involve themselves in public policy without it being considered lobbying, including such activities as holding informational meetings, distributing educational materials, or participating in voter registration. Additionally, 501(c)(3) organizations have the right to express their views by contacting legislators and mobilizing supporters. Discussing policy issues is acceptable if discussions do not refer to specific legislative matters.

Advocacy remains an important component of a tax-exempt organization’s mission in that it is a vehicle used to inform society about the organization’s mission, the needs of the organization and the people they serve, and/or the environment in which it operates.

This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.

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