Election season has begun, with major primaries underway in several key states. In the wake of Citizens United, many nonprofit organizations are being urged by their members and contributors to support one candidate or another. However, nonprofits should carefully assess the practical and legal implications of using funds for political purposes, especially while the dust settles in Congress. According to a Congressional Research Service report published on May 13, 2010, more than 40 bills introduced during the 111th Congress may be relevant for legislative responses to the Supreme Court decision. How or whether Congress will ultimately respond remains unclear.
McGuireWoods has prepared general guidance for nonprofit organizations this electoral season. A Primer on How to Avoid the Pitfalls of Electioneering from a Tax Perspective is intended to help nonprofit organizations avoid engaging in activities that could endanger their tax-exempt status or subject them to penalties under the Internal Revenue Code or the Federal Election Laws. Topics include:
- Political activities and section 501(c) tax exemptionSection 501(c)(3)Permitted activities as distinguished from electioneeringVoting recordsPublic opinion pollsRelease of staff to work on political campaigns and provide office and other servicesBallot measuresAffiliated section 501(c)(6) or 501(c)(4) action organizations and segregated funds
- Section 501(c)(3)
- Permitted activities as distinguished from electioneering
- Voting records
- Public opinion polls
- Release of staff to work on political campaigns and provide office and other services
- Ballot measures
- Affiliated section 501(c)(6) or 501(c)(4) action organizations and segregated funds
- Affiliated section 501(c)(3), 501(c)(4), 501(c)(6) and PAC combinationsSeminal ruleImproper cooperation or coordination of events Improper conditions of fundraising between a section 501(c)(3) and a PAC
- Seminal rule
- Improper cooperation or coordination of events
- Improper conditions of fundraising between a section 501(c)(3) and a PAC
- The separate segregated fundPolitical organizationsPublic officeSegregated fundsPolitical activity by section 501(c)(3) organizationsTaxable corporationIndividuals
- Political organizations
- Public office
- Segregated funds
- Political activity by section 501(c)(3) organizations
- Taxable corporation
- Individuals
McGuireWoods attorneys are available to address any of your questions and to keep you informed as developments occur in this important area. For a discussion of how Citizens United affects nonprofit 501(c) organizations see Citizens United Changes Landscape: May Produce Some Landmines for Nonprofit Organizations, Citizens United Alters Landscape for Political Spending: Issues to Consider, and Citizens United Spawns New Nonprofit Legislative Initiatives.
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