Nonprofit organizations that have 501(c)(3) tax-exempt status should be aware of how they and their employees can participate in national, statewide, and local elections. These 501(c)(3) public charities have strict restrictions against political campaign activities.
Generally, a 501(c)(3) tax-exempt organization is not allowed to engage in political activity and can engage only in very limited lobbying.
Other tax-exempt groups, like 501(c)(4) organizations, follow different IRS regulations.
What is the difference between political activity and lobbying?
- Political (campaign) activity deals with the support of or opposition to a candidate for elected office.
- Lobbying is activity in support of or in opposition to, or a call to action on, specific legislation.
What restrictions does the IRS place on 501(c)(3)tax-exempt organizations?
The IRS prohibits 501(c)(3) organizations 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.
This means that 501(c)(3) organizations
- cannot endorse candidates for office
- cannot donate money or resources to candidates
- cannot rate candidates based on how they feel about issues affecting the nonprofit.
An 501(c)(3)organization that violates this prohibition can lose its tax-exempt status and be subject to certain excise taxes.
Can 501(c)(3) nonprofit organizations engage in any political activities?
The IRS allows 501(c)(3) organizations to participate in nonpartisan voter engagement activities designed to encourage voter participation, including
- Voter registration – Promoting and encouraging voter registration is allowable as long as parties or candidates are not endorsed or opposed.
- Voter education – Organizations can provide voters information on how to vote, where to vote, and nonpartisan voter guides. However, they cannot compare their position on issues with candidates.
- Candidate engagement – Candidates can be invited to events and forums, and to participate in questionnaires, but all candidates must be invited.
- Mobilizing individuals to vote – Encouraging and enabling people to vote is permissible as long as the organization is only endorsing the act of voting, not candidates.
Can 501(c)(3) nonprofit organization engage in any lobbying?
A 501(c)(3) organization may spend an “insubstantial” amount of its time, efforts, and resources on lobbying efforts. (The term “insubstantial” has not been clearly defined.) The organization still has to follow nonpartisanship rules.
Staying within the allowed-lobbying boundaries can be a complicated matter, and we recommend legal counsel in this area.
Can employees of a tax-exempt organization engage in political campaign activities?
The IRS prohibition on political campaign activity does not restrict the individuals who work for a nonprofit organization from expressing their views on political matters, so long as they are expressing the opinion for themselves as individuals (instead of for the organization).
For the organizations to remain tax-exempt, nonprofit leaders cannot make partisan comments in official organization publications or at official functions of the organization.
What about using nonprofit organization resources?
The 501(c)(3) tax-exempt resources cannot be used for partisan activities. Nonprofits should be clear with employees that any participation in partisan activities should take place on vacation days, off days, or utilizing unpaid leave and should not use the organization’s resources (like the copy machine).
Can nonprofit employees run for political office?
Yes. Nonprofit employees are free to run for a political office. Like any political campaign activity, the individual must keep the campaign activity out of the nonprofit office place.
What other types of 501(c) tax-exempt organizations can engage in political activity? What is the 501(c)(4)?
- A tax-exempt 501(c)(4) is often called a social welfare organization.
- These groups have a social purpose. They may use lobbying to effect change for their cause.
- These organizations may be involved in certain political activities – and they have different restrictions that the 501(c)(3) public charity.
- Many 501(c)(3) public charities that want to lobby more than an “insubstantial” amount opt to establish a separate 501(c)(4) tax-exempt organization.