The 2020 presidential election is fast approaching and your non-profit has a stake in its outcome. But that does not mean your organization is free to participate in campaign activities. In general, Section 501(c)(3)s risk losing their tax-exempt status if they participate in campaigning. However, there is more nuance in the rules than you might suspect.

Five Potential Traps

Tax-exempt organizations cannot directly or indirectly act in federal, state, or local campaigns either for or against a candidate or party. Here are several examples of activities that are generally off-limits:

1. Supporting a candidate or party for election: Your organization cannot get behind or oppose a declared candidate or third-party movement, engage in efforts to draft candidates, or perform advance exploratory work for a candidate or party.
2. Contributing to a campaign or endorsing a candidate: This includes direct financial support and indirect support, such as having your staff make calls on a candidate’s behalf.
3. Providing monetary support: Organizations are barred from donating funds to a candidate or party, and they cannot use another event to raise funds. Section 501(c)(3) non-profits also are barred from making loans to candidates or parties.
4. Offering support for support: You cannot ask for ‘support’ from a candidate, political party, or other political organization in exchange for your endorsement.
5. Distributing materials: Your non-profit cannot distribute campaign materials or anything that tells recipient how to vote. This includes online communications.

Five Acceptable Activities

Of course, there are ways your non-profit can participate in elections. For example, you can:

1. Sponsor a candidate appearance: If a candidate is invited for nonpolitical reasons — say, as a supporter of your charitable mission — make sure the appearance does not turn into a campaign stop or fundraiser.
2. Hold a debate: If your non-profit hosts a candidate forum, invite all the candidates, have an independent panel prepare the questions, and provide every candidate with equal speaking opportunities. An impartial moderator should state that the views expressed within the debate do not represent those of your organization.
3. Advocate a political issue: You can try to sway candidates to your way of thinking and encourage them to take a public stand, but you cannot endorse any of them.
4. Help build party platform planks: Your non-profit can deliver testimony to a party’s platform committee, so long as you clarify that the testimony is strictly educational.
5. Launch a ‘get out the vote’ drive: The drive must be designed solely to educate the public about voting and cannot promote or oppose a candidate or party.

Avoid Penalties

Campaign-related offenses are punishable by revocation of tax-exempt status, but first-time offenders may be able to negotiate a less severe penalty. For example, you might agree to change procedures and stipulate that the violation will not occur again. If your non-profit spent funds on the banned activity, the IRS may impose excise taxes.

If you are unsure about the acceptability of a proposed election-related activity, contact us.