July 05, 2000
Charities May Not Engage in
Political Campaign Activities
WASHINGTON - Charities should be careful that their efforts to educate
voters stay within the Internal Revenue Service guidelines for political campaign
activities, the tax agency said Wednesday in an election-year advisory.
Organizations described in section 501 (c) (3) of the Internal Revenue
Code that are exempt from federal income tax are prohibited from participating
or intervening in any political campaign on behalf of, or in opposition to, any
candidate for public office. Charities, educational institutions and religious
organizations, including churches, are among those that are tax exempt under
this code section.
These organizations cannot endorse any candidates, make donations to
their campaigns, engage in fund raising, distribute statements, or become
involved in any other activities that may be beneficial or detrimental to any
Whether an organization is engaging in prohibited political campaign
activity depends upon all the facts and circumstances in each case. For
example, organizations may sponsor debates or forums to educate voters. If the
debate or forum shows a preference for or against a certain candidate, however,
it becomes a prohibited activity.
The political campaign prohibition of section 501 (c) (3) may be violated
even though the organization had a non-partisan motivation for intervening in a
campaign. For example, the U.S. Court of Appeals for the Second Circuit held
in 1988 that "voter education activities" of the Association of the Bar of the City
of New York constituted prohibited campaign activities, even though these
activities were nonpartisan and in the public interest. The association rated and
published the ratings of candidates for elective judicial office.
The association had been tax-exempt under section 501 (c) (6) -- a
provision that permits some political campaign activity -- and had requested
reclassification as a 501 (c) (3) organization. The IRS denied the
reclassification on the grounds that the associationís rating of candidates
violated the political campaign prohibition of that section. The Second Circuit
upheld the action. Thus, activities that encourage people to vote for or against a
particular candidate on the basis of nonpartisan criteria nevertheless violate the political
campaign prohibition of section 501 (c) (3).
If the IRS finds a section 501 (c) (3) organization engaged in prohibited
campaign activity, the organization could lose its exempt status, or it could be
subject to an excise tax on the amount of money spent on that activity.
In cases of flagrant violation of the law, the IRS has specific statutory
authority to make an immediate determination and assessment of tax. Also, the
IRS can ask a federal district court to enjoin the organization from making further
In addition, contributions to organizations that lose their section 501 (c)
(3) status because of political activities are not deductible by the donors for
federal income tax purposes.
The IRS issued similar election-year advisories to charities in 1992 and
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