Nonprofits & the Politics Tightrope

IRS Regulations: Know the Dos and Don’ts

• Limited Political Involvement: Section 501(c)(4) organizations can engage in some campaigning, but not as their primary activity.
• Strict Prohibitions for 501(c)(3): These nonprofits are strictly prohibited from endorsing candidates or participating in political activity (directly or indirectly). This includes actions like publishing campaign materials, making moral statements favoring candidates, or setting up political action committees.
• Defining the Terms: A “candidate” includes those officially declared and even potential contenders. “Public office” refers to major policy-making positions in government.

The “Substantial Part” Rule

Nonprofits risk losing their tax-exempt status if a “substantial part” of their activities attempt to influence legislation. This includes contacting legislators to support or oppose specific bills or advocating for their adoption or rejection. However, educational activities are permissible without influencing legislation.

Speaking Engagements & Candidate Appearances

One thing your organization generally can do is host informational candidate forums ahead of an election. However, you must walk a fine line.

• Do not invite only one candidate. Instead, provide an equal opportunity for all candidates running for the office to participate.
• Do not indicate support for or opposition to any candidate in your invitations, in introductions or in other communications.
• Do not conduct or allow fundraising at your event.

Another activity that’s generally permitted is to invite a candidate for public office to speak in a “non-candidate capacity.” To protect your exempt status:

• Do ensure the individual has been chosen to speak solely for reasons other than candidacy for public office (for example, disaster relief for the community).
• Do ensure neither the candidate nor any representative of your organization makes any mention, directly or indirectly, of the individual’s candidacy or the election before, during or after your event.
• Do ensure there’s no campaign activity or fundraising for the candidate at the event.
• Do ensure your organization facilitates a nonpartisan atmosphere.
• Do ensure you clearly indicate that the candidate is appearing in a capacity other than a political one (but don’t refer to the person’s political candidacy or the upcoming election).

The Bottom Line

IRS rules are complex. When in doubt, err on the side of caution. For more information, the IRS provides an FAQ about the ban on political campaign intervention by 501(c)3 organizations. By understanding the rules and navigating cautiously, your nonprofit can stay focused on its mission while remaining compliant with regulations.

Brady Ware Nonprofit Advisors want to help you fulfill your mission with financial health and compliance services and a network of nonprofit consultants who specialize in strategic decision-making.