Nonprofit Political Activity

The Council supports recent efforts by the Department of the Treasury (Treasury) and Internal Revenue Services (IRS) to provide much-needed clarity on the political activities of tax-exempt organizations. However, the Council strongly opposes any new rules that would dampen nonpartisan activities and civic engagement efforts of nonprofit organizations.

In November 2013, Treasury and IRS issued guidance regarding tax-exempt social welfare organizations on candidate-related political activities. In formal comments, the Council strategically addressed 3 primary concerns that will affect its members directly:

  • The rules would chill civic engagement and education efforts of 501(c)(3)s—activities that are vital for a thriving democracy;
  • If applied to the Council’s 501(c)(3) members, the political activity standard in the rules would be inconsistent with current tax law, which permits foundations to fund certain voter education and voter registration activities;
  • The rules go beyond the Treasury Department’s rulemaking authority.

By defining nonpartisan activities as “political” for 501(c)(4) exempt organizations but not for 501(c)(3)s, as written, the proposed rules would create tremendous uncertainty, confusion, and burdensome compliance costs. In the face of this uncertainty, foundations concerned about compliance are far more likely to be cautious and potentially stop their grantmaking for civic engagement activities altogether. The Council strongly urged Treasury to consider the impact of this proposed rule on the larger civic education environment in the United States.

In response to an overwhelming number of public comments on the rules, most in opposition, Treasury withdraw the rules and promised to publish a revised version in the summer of 2015. While the revised rules have not yet been released, IRS officials have stated that it may seek to regulate the political activities of 501(c)(3) organizations in addition to 501(c)(4)s.

The Council will continue to monitor any developments from Treasury and the IRS on these regulations as it awaits the announcement of revised rules.

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