U.S. law has not always prohibited tax-exempt charities from engaging in political campaign activities. In 1954, Congress approved an amendment by then U.S. Senator Lyndon Johnson to prohibit 501(c)(3) organizations from engaging in political campaign activity. This amendment came to be known as "the Johnson Amendment," and it is now codified in the Internal Revenue Code and accompanying Treasury regulations. Under the Treasury regulations, an organization cannot be a 501(c)(3) charity if its governing documents expressly empower it
i. To devote more than an insubstantial part of its activities to attempting to influence legislation by propaganda or otherwise ["lobbying"]; or
ii. Directly or indirectly to 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; or
iii. To have objectives and to engage in activities which characterize it as an action organization ….
--Treas. Reg. § 1.501(c)(3)-1(b)(3).
Although public charities may engage in some lobbying, provided it is insubstantial, the prohibition on political campaign activity is an absolute bar.
What Are Political Campaign Activities?
An organization engages in political campaign activity when it directly or indirectly participates in, or intervenes in (including the publishing or distributing of statements), any political campaign on behalf of or in opposition to any candidate for public office. The term candidate for public office means an individual who offers himself, or is proposed by others, as a contestant for an elective public office, whether such office be national, state, or local. Treas. Reg. § 1.501(c)(3)-1(c)(3)(iii).
Activities that may be considered campaign intervention include the following:
- Endorsing or rating political candidates on an organization's issues
- Making political campaign contributions
- Publishing voter guides expressing support for or against particular candidates
- Seeking to persuade voters to vote for or not to vote for particular candidates
- Taking other steps designed to favor one candidate over another
What Does Not Constitute Political Campaign Activity?
Certain activities or expenditures may not be prohibited, depending on the facts and circumstances. For example, charitable organizations are permitted to conduct certain voter education activities — including the presentation of public forums and the publication of voter education guides — if they are carried out in a nonpartisan manner.
In addition, other activities intended to encourage people to participate in the electoral process, such as voter registration and get-out-the-vote drives, would not be prohibited political campaign activity as long as they are conducted in a nonpartisan manner. See Rev. Rul. 2007-41 (PDF).
The IRS has provided some guidance on how charitable organizations may engage in certain activities without jeopardizing their charitable status. In each case, the IRS will look at a number of facts and circumstances to determine whether the organization has engaged in political campaign activity. For examples of situations where such facts and circumstances might be employed and how, see Revenue Ruling 2007-41.
What Happens If an Organization Engages in Prohibited Political Campaign Activity?
Consequences for a 501(c)(3) organization that violates the prohibition on political campaign activities can be severe. In many instances, it can result in the organization losing its tax-exempt status. In less serious situations, the IRS may require corrective actions from the organization.
Appropriately, a foreign organization will not qualify for equivalency if it engages or has recently engaged in any prohibited political campaign activity.
- Avoid Political Campaign Intervention (PDF), Internal Revenue Service
- The Restriction of Political Campaign Intervention by Section 501(c)(3) Tax-Exempt Organizations, Internal Revenue Service
- Political Campaign Activity on the Internet (PDF), Internal Revenue Service
- 501(c)(3) Electioneering Rules: Candidate Appearances & Debates, NEO Law Group
This article is for general informational purposes only and does not represent legal advice as to any particular set of facts. Please seek legal counsel as you deem necessary.