On Tuesday, November 8, Americans will go to the polls to elect the forty-fifth president of the United States, 34 Senators, and the entire House of Representatives, as well as hundreds of state and local officials. And while interested parties may urge constituents to get involved and participate in the political process, 501(c)(3) organizations are limited with respect to their ability to get involved in political campaign activity.
Simply put, a charitable organization may not support or oppose candidates for public. And because campaign intervention depends upon all the facts and circumstances of each individual case, below, is an instance of a community foundation that contacted us over concerns its anticipated event might venture into prohibited territory.
Well before election season commenced, the foundation planned to sponsor a large event, and was leaning toward asking a well-known individual to be its keynote speaker. Because of his popularity and schedule, the foundation felt it critical to immediately contract with him. The foundation was apprehensive in moving forward because of the high probability that he was going to announce his candidacy for the 2016 Presidential Race before the event.
The foundation’s president was aware of the rule against campaign activity, but was unsure as to how the law would apply to her particular facts and circumstances. Specifically, she wanted to know if the speaker announces his candidacy after the contract is signed, but before the event occurs, whether a problem would exist.
Pursuant to IRC § 501(c)(3), to qualify for tax-exempt charitable status, one criteria is that an organization “not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.” This prohibition applies to campaigns at all levels. The term “candidate for public office” is defined as an individual who offers himself or herself, or is proposed by others, as a contestant for an elective public office, whether such office be national, state or local. And when tax-exempt organizations invite candidates to events, the IRS classifies these visitors as either “candidate” or in their “individual capacity” (not as a candidate).
The Council’s legal team analyzed the facts and concluded based on the “high probability” he would run, the speaker should be classified as a “candidate.” While the speaker had yet to formally declare his intention to run for the presidency, when does election season actually begin? Cynics often make the argument that politicians are always campaigning and, as such, elections and polling are ongoing, even when the public least expects it or when it is outside election season.
Regardless of the speaker’s potential “candidate” status, the legal team informed the foundation that it still may invite him to speak, but to steer clear of campaign participation or intervention as the IRS will look to several factors to determine whether the foundation participated or intervened. For example, the foundation should avoid indicating its support for or opposition to the candidate. This could include introductions and communications concerning his attendance, i.e., “Please give a warm welcome to the next President of the United States.” In addition, the foundation should not allow any political fundraising to occur at the event.
A factor that would bode favorably for the foundation in the direction of not participating or intervening would be if it insists that he talk solely on his area of expertise (education, for example) and refrain from saying anything political. The legal team advised, by limiting the speaker only to his area of expertise, this may re-classify him as a non-candidate. In this regard, the speaker in his individual capacity would be seen as an expert of a non-political field.
Therefore, by limiting his speech to his expertise and avoiding introductions that make reference to his candidacy, the foundation will be compliant with the law because it would maintain a nonpartisan atmosphere at the event.