Unleashing your 501(c)(3)’s Potential 

non-profit organization in legislation

501(c)3 organizations are tax-exempt nonprofits which may be set up to promote chartable, educational and other causes. Often, these organizations want to fight back against predatory legislation, but don’t know where to begin. After recently consulting with a number of 501(c)3 organizations, I’ve realized that a lot of Executive Directors and Board Members have unknowingly limited their organization’s potential.

Combating bad legislation can be a confusing and scary realm of law for many organizations. The line between 501(c)3 prohibited and non-prohibited activities can become blurred for even the most seasoned Executive Director. 501(c)(3)s may educate voters or candidates on the issues, provide opportunities for voters to hear the candidates’ positions, encourage citizens to register to vote, and get registered voters to go to the polls on election day, provided they engage in these activities without favoring one candidate over another.

Many organizations refuse to run advocacy advertisements which mentions an elected representative’s name because they believe this type of advertisement is prohibited.  This is incorrect. The IRS permits 501(c)3s to inform and mobilize constituents to oppose a proposed legislative bill regardless if a candidate’s name is mentioned. The IRS has explicitly allowed this type of activity, even during election seasons.

If the purpose of an advocacy campaign is to educate constitutes on the possible impact of proposed legislation, then a 501(c)3 may run advertisements as long as these ads do not promote “electioneering.” This includes ads specifically targeting a legislator’s constituents. 501(c)(3) organizations may also advocate through all forms of media including radio, TV, social media, and print. The key to keeping your organization compliant with the 501(c)(3) constraints is to focus on the issues and not the candidates.

But, 501(c)(3) 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 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.  Violating this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes.

501(c)(3)s though may not engage in any activity which is considered a “Political Campaign Intervention.” The IRS defines this activity as “any and all activities that favor or oppose one or more candidates for public office.” Thus, a 501(c)3 cannot actively take a stand on which candidate to support in an election.

Factors in determining whether a communication results in political campaign intervention include the following:

  • Whether the statement expresses approval or disapproval of 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 distinguishes candidates for a given office

501(c)3s can also engage in limited lobbying. However, a 501(c)3 must properly execute and file a 5758 form prior to engaging in any lobbying activities. Once this form has been filed, the 501(c)3 may lobby as long as the organization spends less than 5-20% of the organizational budget on lobbying activities, depending on the size of the organization.