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Because of the interdigitation of pain management politics with non-profit organizations, it may be useful to examine the hazards of marching blindly behind an organization that is non-profit in status yet is extremely politically active. Congress has established limits on what non-profit organizations may do to influence legislation and support individuals for political office. Because many who march behind large organizations may not be aware of these limitations and because there may be legal ramifications for skirting the law, the discuission below is presented.
Permissible Political Activities of Non-profit Organizations
This memo briefly summarizes the degree of political activity that is permissible for non-profit organizations. Violations of these rules will cause the non-profit organization to lose its non-profit status or be liable for penalty taxes.
The most common type of non-profit organization is one formed for charitable, educational, or scientific purposes. 501(c)(3) refers to the relevant section of the Tax Code. There are two advantages of being a (501)(c)(3): they do not have to pay income tax (if, for example, they raise more money than they spend) and donations are generally tax deductible to the donors.
Another common type of non-profit organization are civil leagues and social welfare organizations under 501(c)(4). They are easier to establish than (501)(c)(3) organizations and are generally allowed to influence legislation (see below). They, too, are exempt from income tax, but donations are not deductible to the donors.
Campaign Activities by 501(c)(3) organizations
Non-profits are not allowed to support or oppose any candidate for political office, not even for non-partisan local offices such as school boards or library boards. This prohibition includes the publishing or distribution of statements. This is an absolute prohibition, with no requirement that the activity be substantial. A single statement could put the organization's non-profit status at risk.
Non-profits are, however, allowed to engage in voter education activities. Such activities must be conducted in a non-partisan manner and may include:
* public forums and public debates during a campaign in which all legally qualified candidates are invited; a broad range of issues are covered; questions are prepared and presented by an independent panel; and each candidate receives equal time.
* a compilation of voting records of public officials, if it involves a wide range of issues, contains no editorial opinions, and it does not imply approval or disapproval of any individual's voting record.
Non-profits can also organize public forums, lectures, and debates on controversial social, political, and international questions, even if the speakers are frequently controversial, as long as the organization adopts an unbiased position. A non-profit can invite a Green Party member to speak at their meetings (but the member should not be a declared candidate for public office).
Campaign Activities by 501(c)(4) organizations
The level of permissible campaign activities by (501)(c)(4) organizations in not entirely clear. According to the tax code, the same restrictions apply to (c)(3) and (c)(4) organizations (see above). A small number of cases and rulings, however, have allowed limited campaign activity. Campaign activities will trigger additional reporting requirements (Form 1120 POL) and might make the expenditures taxable. It is therefore recommended that any (c)(4) that wants to spend money in support of a candidate form a political action committee (PAC) under section 527.
Attempts to Influence Legislation by 501(c)(4) organizations
501(c)(4) organizations can influence legislation as long as the issue is relevant to the purpose and mission of the organizations. Thus, an animal rights organization can advocate specific legislation for the protection of animal rights, but not unrelated legislation.
Attempts to Influence Legislation by 501(c)(3) organizations.
501(c)(3) organizations are allowed to influence legislation to some degree (see below), but severe restrictions apply. "Legislation" is broadly defined to include federal, state, and local laws (for example, city councils ordinances), referenda, foreign legislation, and even the confirmation of judges.
There are two ways a non-profit might influence legislation. "Direct lobbying" is an appeal to the legislature in support or opposition of a specific piece of legislation. For example, an appeal to the Senate to approve the Kyoto Treaty is "direct lobbying." A general appeal "to protect the environment" is not lobbying (and not subject to any limits).
"Grassroots lobbying," on the other hand, attempts to influence legislation by changing public opinion. These activities are only restricted if the non-profit refers to specific legislation, communicates a view on such legislation, and urges recipients to take action with respect to such legislation (i.e., "call your congressperson", "mail this postcard," etc.). Thus, a non-profit could ask the public to "call your congressperson and tell her you care about air quality" (no specific legislation), to "call Bush about the Endangered Species Act" (no view expressed) or it could issue a statement that "passage of legislation S. 549 would mean the end of civilization as we know it" (no call to action).
If the activity is an attempt to influence legislation, non-profits may engage in such activity if within proper limits. For 501(c)(3) organizations, attempts to influence legislation must be "less than substantial." Because "less than substantial" is a vague test, (501)(c)(3) organizations can elect a strict mathematical test to apply. If the proper documents have been filed in advance, the non-profit may devote up to 25% of their expenditures to such activities (less for organizations raising more than $500,000 annually).
Permissible Political Activities of Non-profit Organizations
This memo briefly summarizes the degree of political activity that is permissible for non-profit organizations. Violations of these rules will cause the non-profit organization to lose its non-profit status or be liable for penalty taxes.
The most common type of non-profit organization is one formed for charitable, educational, or scientific purposes. 501(c)(3) refers to the relevant section of the Tax Code. There are two advantages of being a (501)(c)(3): they do not have to pay income tax (if, for example, they raise more money than they spend) and donations are generally tax deductible to the donors.
Another common type of non-profit organization are civil leagues and social welfare organizations under 501(c)(4). They are easier to establish than (501)(c)(3) organizations and are generally allowed to influence legislation (see below). They, too, are exempt from income tax, but donations are not deductible to the donors.
Campaign Activities by 501(c)(3) organizations
Non-profits are not allowed to support or oppose any candidate for political office, not even for non-partisan local offices such as school boards or library boards. This prohibition includes the publishing or distribution of statements. This is an absolute prohibition, with no requirement that the activity be substantial. A single statement could put the organization's non-profit status at risk.
Non-profits are, however, allowed to engage in voter education activities. Such activities must be conducted in a non-partisan manner and may include:
* public forums and public debates during a campaign in which all legally qualified candidates are invited; a broad range of issues are covered; questions are prepared and presented by an independent panel; and each candidate receives equal time.
* a compilation of voting records of public officials, if it involves a wide range of issues, contains no editorial opinions, and it does not imply approval or disapproval of any individual's voting record.
Non-profits can also organize public forums, lectures, and debates on controversial social, political, and international questions, even if the speakers are frequently controversial, as long as the organization adopts an unbiased position. A non-profit can invite a Green Party member to speak at their meetings (but the member should not be a declared candidate for public office).
Campaign Activities by 501(c)(4) organizations
The level of permissible campaign activities by (501)(c)(4) organizations in not entirely clear. According to the tax code, the same restrictions apply to (c)(3) and (c)(4) organizations (see above). A small number of cases and rulings, however, have allowed limited campaign activity. Campaign activities will trigger additional reporting requirements (Form 1120 POL) and might make the expenditures taxable. It is therefore recommended that any (c)(4) that wants to spend money in support of a candidate form a political action committee (PAC) under section 527.
Attempts to Influence Legislation by 501(c)(4) organizations
501(c)(4) organizations can influence legislation as long as the issue is relevant to the purpose and mission of the organizations. Thus, an animal rights organization can advocate specific legislation for the protection of animal rights, but not unrelated legislation.
Attempts to Influence Legislation by 501(c)(3) organizations.
501(c)(3) organizations are allowed to influence legislation to some degree (see below), but severe restrictions apply. "Legislation" is broadly defined to include federal, state, and local laws (for example, city councils ordinances), referenda, foreign legislation, and even the confirmation of judges.
There are two ways a non-profit might influence legislation. "Direct lobbying" is an appeal to the legislature in support or opposition of a specific piece of legislation. For example, an appeal to the Senate to approve the Kyoto Treaty is "direct lobbying." A general appeal "to protect the environment" is not lobbying (and not subject to any limits).
"Grassroots lobbying," on the other hand, attempts to influence legislation by changing public opinion. These activities are only restricted if the non-profit refers to specific legislation, communicates a view on such legislation, and urges recipients to take action with respect to such legislation (i.e., "call your congressperson", "mail this postcard," etc.). Thus, a non-profit could ask the public to "call your congressperson and tell her you care about air quality" (no specific legislation), to "call Bush about the Endangered Species Act" (no view expressed) or it could issue a statement that "passage of legislation S. 549 would mean the end of civilization as we know it" (no call to action).
If the activity is an attempt to influence legislation, non-profits may engage in such activity if within proper limits. For 501(c)(3) organizations, attempts to influence legislation must be "less than substantial." Because "less than substantial" is a vague test, (501)(c)(3) organizations can elect a strict mathematical test to apply. If the proper documents have been filed in advance, the non-profit may devote up to 25% of their expenditures to such activities (less for organizations raising more than $500,000 annually).
