To what extent can non-profits support political candidates?
Here’s the short answer: to no extent. (Update 6/27/12: I should have specified “501(c)(3) non-profits,” which is really what this post is about.)
Earlier this week I delved into “The archbishop, lobbying, and the IRS.”
The other shoe of lobbying is political campaign activity.
I turn again to the IRS’s “Tax Guide for Churches and Religious Organizations,” described as “A quick reference guide of federal tax law and procedures for churches and religious organizations, to help them comply with tax rules.”
This booklet does not, by the way, represent some recent shift of policy; it has been basically unchanged since at least 2008.
Definitions: The IRS uses “church” to mean a place of worship of any religion. A church includes an “integrated auxiliary” organization, such as another non-profit set up to advance the church’s goals. A “religious organization” studies or advances religion without promoting any given faith.
I have added all underlines below for emphasis and later discussion.
Here is what the IRS guide (pdf p. 9) says on today’s topic, for campaign activity by churches:
Political Campaign Activity
Under the Internal Revenue Code, all IRC section 501(c)(3) organizations, including churches and religious organizations, are absolutely 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. Contributions to political campaign funds or public statements of position (verbal or
written) made by or on behalf of the organization in favor of or in opposition to any candidate for public office clearly violate the prohibition against political campaign activity. Violation of this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise tax.
Certain activities or expenditures may not be prohibited depending on the facts and circumstances. For example, certain voter education activities (including the presentation of public forums and the publication of voter education guides) conducted in a non-partisan manner do not constitute prohibited political campaign activity. In addition, other activities intended to encourage people to participate in the electoral process, such as voter registration and get-out-the-vote drives, would not constitute prohibited political campaign activity if conducted in a non-partisan manner. On the other hand, voter education or registration activities with evidence of bias that: (a) would favor one candidate over another; (b) oppose a candidate in some manner; or (c) have the effect of favoring a candidate or group of candidates, will constitute prohibited participation or intervention….
As you see, unlike with lobbying, where it is a question of degree, the prohibition against churches taking any part in a political campaign is absolute, even including any events that show “evidence of bias” for or against a candidate.
How about individual church leaders, such as a minister or bishop? Per the booklet (pdf p. 9):
Individual Activity by Religious Leaders
The political campaign activity prohibition is not intended to restrict free expression on political matters by leaders of churches or religious organizations speaking for themselves, as individuals. Nor are leaders prohibited from speaking about important issues of public policy. However, for their organizations to remain tax exempt under IRC section 501(c)(3), religious leaders cannot make partisan comments in official organization publications or at official church functions. To avoid potential attribution of their comments outside of church functions and publications, religious leaders who speak or write in their individual capacity are encouraged to clearly indicate that their comments are personal and not intended to represent the views of the organization…..
That’s pretty clear too: a religious leader who gives the appearance of speaking for his or her institution—e.g., in a service or publication or at an event on church premises—is subject to the same restrictions.
The booklet contains concrete examples of permitted and non-permitted campaign activity, with analysis. But because it seems a bit more detailed, I’m going to quote from the IRS download intended for all tax-exempt organizations: “Rev. Rul. 2007-41, 2007-25 I.R.B. 1421 - Guidelines on the scope of the tax law ban on political campaign activities by section 501(c)(3) tax-exempt organizations, explaining how the law applies in 21 factual situations.”
On pages 3-4 we find another scenario, where candidates appear at a church event:
Candidate Appearances Where Speaking or Participating as a Non-Candidate
Candidates may also appear or speak at organization events in a non-candidate capacity. For instance, a political candidate may be a public figure who is invited to speak because he or she: (a) currently holds, or formerly held, public office; (b) is considered an expert in a non political field; or (c) is a celebrity or has led a distinguished military, legal, or public service career. A candidate may choose to attend an event that is open to the public, such as a lecture, concert or worship service. The candidate’s presence at an organization-sponsored event does not, by itself, cause the organization to be engaged in political campaign intervention. However, if the candidate is publicly recognized by the organization, or if the candidate is invited to speak, factors in determining whether the candidate’s appearance results in political campaign intervention include the following:
Whether the individual is chosen to speak solely for reasons other than candidacy for public office;
Whether the individual speaks only in a non-candidate capacity;
Whether either the individual or any representative of the organization makes any mention of his or her candidacy or the election;
Whether any campaign activity occurs in connection with the candidate’s attendance;
Whether the organization maintains a nonpartisan atmosphere on the premises or at the event where the candidate is present; and
Whether the organization clearly indicates the capacity in which the candidate is appearing and does not mention the individual’s political candidacy or the upcoming election in the communications announcing the candidate’s attendance at the event.
Page 4 gives us further clarifications:
Issue Advocacy vs. Political Campaign Intervention
Section 501(c)(3) organizations may take positions on public policy issues, including issues that divide candidates in an election for public office. However, section 501(c)(3) organizations must avoid any issue advocacy that functions as political campaign intervention. Even if a statement does not expressly tell an audience to vote for or against a specific candidate, an organization delivering the statement is at risk of violating the political campaign intervention prohibition if there is any message favoring or opposing a candidate. A statement can identify a candidate not only by stating the candidate’s name but also by other means such as showing a picture of the candidate, referring to political party affiliations, or other distinctive features of a candidate’s platform or biography. All the facts and circumstances need to be considered to determine if the advocacy is political campaign intervention.
Key factors in determining whether a communication results in political campaign intervention include the following:
Whether the statement identifies one or more candidates for a given public office;
Whether the statement expresses approval or disapproval for one or more candidates’ positions and/or actions;
Whether the statement is delivered close in time to the election;
Whether the statement makes reference to voting or an election;
Whether the issue addressed in the communication has been raised as an issue distinguishing candidates for a given office;
Whether the communication is part of an ongoing series of communications by the organization on the same issue that are made independent of the timing of any election; and
Whether the timing of the communication and identification of the candidate are related to a non-electoral event such as a scheduled vote on specific legislation by an officeholder who also happens to be a candidate for public office.
A communication is particularly at risk of political campaign intervention when it makes reference to candidates or voting in a specific upcoming election. Nevertheless, the communication must still be considered in context before arriving at any conclusions.
On the whole, I think the IRS rules make some sense. I’m going to try to paraphrase: if a reasonable person gets the impression that the non-profit, through its words or actions, is supporting a candidate for office in a time frame that could help that candidate in an upcoming election, then it has violated its tax-deductible status.
Here’s a recent example of a non-profit that, in the view of many, violates IRS regulations:
“Liberty University ads in Iowa featured Gingrich,” by Alicia Petska, Lynchburg News and Advance, 1/3/12:
School says purpose was to boost Liberty, not GOP candidate
Recent TV ads run by Liberty University in Iowa were raising questions on the eve of that state’s Republican presidential caucus.
The 30-second commercials feature candidate Newt Gingrich — who’s appeared at LU several times over the years — praising the university.
LU says the ad is a commercial for the school, not Gingrich or his campaign, and is just one part of the university’s larger national marketing strategy.
But other sources suggest the ad’s timing and prominent showcasing of Gingrich was an attempt to boost the former House speaker’s profile in Iowa for the caucus.
The New York Times’ political blog, The Caucus, reported that Gingrich’s cash-strapped campaign was getting an assist from “well-financed allies” in the form of LU and the conservative magazine Newsmax, which aired a 30-minute special about Gingrich over the weekend.
While neither TV spot carried an express endorsement for Gingrich, The Caucus said both had “pro-Gingrich messages” and “appeared intended to help the former House speaker win the caucuses,” which Iowa will hold tonight.
As a tax-exempt institution, LU is barred from campaigning for political candidates….
There is certainly the appearance that this non-profit decided to give a boost to the Gingrich campaign by putting him in their own ads just before the critical Iowa caucuses, in which everyone knew that right-wing support was critical.
And furthermore, according to the same article,
Gingrich gave a public address at LU in October 2010 and held a private meeting with Chancellor Jerry Falwell Jr. and other conservative and evangelical leaders to discuss the state of the country.
Falwell said at the time that Gingrich would make a “wonderful president,” calling him “exactly what the nation needs at this point in history.”…
In addition to filming the commercial in 2010, Staver said Gingrich also pre-taped lectures that will be part of a new “American Exceptionalism” program LU will be rolling out next year.
The undergraduate course — which was described as dealing with the founding principles that made America great — was developed in close partnership with Gingrich, who Staver said was “very influential” in crafting the curriculum.
Gingrich is considered a visiting professor at LU, but was not paid for his contributions to the program, Staver said. The collaboration to develop the course has been under way for a couple of years, he added, long before Gingrich was a presidential hopeful…
So, it turns out, the commercial filmed in 2010 just happened to be aired in 2012 right before the Iowa primary. Just too much of a coincidence, I’d say!
The problem, as always in these matters, is that any enforcement of the law will take place long after the election; and, at any rate, it would not affect Gingrich, only the University.
For an example of a church that lost its tax-deductible status due to campaign activity, get the download of the US District Court for the District of Columbia recapping the facts and affirming the IRS’s position here. There we find (p. 2) that
…On October 30, 1992, four days before the election, plaintiff Branch Ministries, Inc. (“BMI”), doing business as the Church at Pierce Creek, expressed its concern about the moral character of Governor Clinton in a full page advertisement in the Washington Times and in USA Today. The advertisement proclaimed “Christian Beware. Do not put the economy ahead of the Ten Commandments.” It asserted that Governor Clinton supported abortion on demand, homosexuality and the distribution of condoms to teenagers in public schools. The advertisement cited various Biblical passages and stated that “Bill Clinton is promoting policies that are in rebellion to God’s laws.” It concluded with the question: “How then can we vote for Bill Clinton?”…
What could be clearer political activity than taking out ads against a candidate in two national newspapers just before a national election? Farther along (p. 12), the Court gives examples of two religious organizations whose tax-exempt status was earlier revoked.
I’m going to stop here, and next time will dig out relevant information in the much less clear case of the politicians who attended Archbishop Chaput’s press conference last week, received his praise for their stand on vouchers, and spoke (at least two of them) at the event.