As the United States presidential election season is amping up, people across the country are becoming more politically motivated and many express interest in serving a political campaign in some capacity. Others express interest in engaging in political activism within their own organizations or even establishing organizations with the intention of influencing public opinion. While these ambitions normally are the result of the best intentions, those who are working in the third sector need to be aware of some of the regulations associated with political activity and maintaining a tax-exempt status.
501(c)(3) organizations, the designation that many third-sector organizations fall under, are explicitly prohibited in engaging in political activities, which encompasses everything from expressing their endorsement for a particular candidate to providing a particular political candidate or party resources or campaign funds. If nonprofit organizations are found to have violated these regulations and have actively worked to benefit a particular candidate or to assist a campaign, they face both a loss in their tax-exempt status as well as the possibility of being heavily fined or otherwise penalized. Because of this, many who might normally be interested in working with a third-sector organization with the hopes of advocating for a particular candidate or cause are compelled to look to other organizations that are not bound by these regulations (but who normally don’t enjoy many of the financial benefits and incentives that third-sector organizations do). However, for those who are willing to be flexible and creative, there are a number of different opportunities to advocate from the third sector!
Working within the Laws
While direct campaigning for candidates and transferring funds to candidates is expressly prohibited, nonprofit organizations and workers are free to advocate for select policies and causes that are closely aligned with a candidate’s or party’s platform. In an effort to educate voters, this type of information would be important to convey. As long as it is provided in general terms that are not explicitly linked to a political actor or group, nonprofit workers can rest assured that they will not face sanction or scrutiny.
Without actual voter participation, elections cannot take place and candidates and parties cannot ascend to positions where they can make positive changes to public policy. As such, encouraging citizens to vote, whether via voter registration campaigns or simply by informing them how important their votes truly are, is an acceptable activity for nonprofit organizations. Voter registration and voter encouragement does not violate campaigning/political activity regulations, as long as citizens are not explicitly asked to vote for a particular candidate or party or “persuaded” to do so.
Interestingly, there have been some recent developments regarding how select third-sector organizations have been able to lawfully engage in political activities while maintaining their tax-exempt statuses. 501(c)(4) organizations, which in many ways share similarities with more widely known 501(c)(3) organizations, have received much less scrutiny for engaging in activities that are more directly and explicitly linked to the works of political campaigns. These organizations, in many cases, realize that political campaigns do not last forever and that their operating activities will generally last a year or less, especially in the case of local or smaller-scale elections. Because 501(c)(4) organizations do not need to generally file a 990 Form (essentially a public document that conveys all of the organization's finance-related actions and activities over the course of a year) for 16½ months after incorporation, it is perfectly reasonable to assist campaigns, whether in the form of providing funds or directly advertising for a campaign, and then disbanding the organization before the 990 submission deadline. Additionally, recent Congressional activity has made it even easier for these groups to get started with their politically-related ventures, with recent legislation stating that groups interested in operating a 501(c)(4) organization don’t have to apply for this designation and simply have to submit a basic registration form within 60 days of starting operations. Many have spoken out against this legislation and feel as though it adds additional funding streams for politicians and political parties. However, for those interested in supporting a particular party or campaign on a short-term basis, this new legislation can be especially helpful.
Ultimately, it is important to be mindful and respectful of regulations associated with political activity when contemplating organization involvement. Nobody wants to compromise their organization’s tax-exempt status or to incur fines of any kind in the facilitation of organization operations. However, for organizations that are creative and/or flexible, there are many opportunities to be “Stronger Together” or to “Make America Great Again”!