With the 2016 party conventions over and the election season in full swing, many nonprofits have needlessly gone silent, says James Joseph, a tax lawyer at Arnold & Porter.
Many groups fear the Internal Revenue Service will yank their tax-exempt status if they take a stand on political issues as the balloting draws near. But there is no reason for nonprofits to sit on their hands, Mr. Joseph says. They just need an understanding of what raises eyebrows at the IRS, particularly as Election Day gets closer and the restrictions grow more stringent.
Over the past six months, Mr. Joseph and Lauren Bright, legal director at the Bill & Melinda Gates Foundation, have appeared at several conferences to urge nonprofits not to relinquish their political voice. Tax-exempt organizations can sound off on policy matters, Mr. Joseph says — as long as they are prudent, and get expert advice if they’re uncertain how to proceed.
“Nonprofits don’t have to just shut up for a year about public-policy issues because of these rules,” he says. “They just have to be careful.”
No Clear Guidelines
To determine whether a nonprofit has run afoul of rules on electioneering, the IRS considers whether the group is signaling that it favors or disfavors a candidate or political party. But Mr. Joseph says nonprofits often feel their speech is stifled because there is no clear definition of what constitutes electioneering. Rather than set precise guidelines, the IRS uses what is called the “facts and circumstances” of each political or policy-tinged message.
That means if a political statement is brought to the agency’s attention, it will consider context and wording. There are “good” facts that support any comment, blog post, or written reference to a policy, and there are “bad” facts that can lead to unwanted IRS scrutiny.
Mr. Joseph used the following hypothetical examples of a nonprofit that works on death-penalty issues to demonstrate what can separate a “good” fact from a “bad” one. These are general guidelines. Remember that the wording of each statement presented below doesn’t determine whether it crosses the line; the IRS considers the comment in the broader context in which it is made.
References to candidates: It’s fine to refer to a person who happens to be running for office, but avoid referring to that person as a candidate, and don’t mention an upcoming election.
Good: Martha Jones agreed with us about capital punishment at our forum last year.
Bad: Martha Jones, who is running for governor, agreed with our position at a forum last year.
Timing: Knowing when to make a statement is crucial. As the November election nears, the stakes are higher for nonprofits eager to get a message out.
“Something you could say in January or February you might not be able to say in late October,” Mr. Joseph says. For example, stating, “The death penalty is deeply important to the way our society treats criminals and regards human life,” may be acceptable early in the year but not in October, particularly if capital punishment is a major campaign issue or the subject of a ballot question.
External factors: A comment driven by an external event, like a scheduled execution, isn’t necessarily considered political. But nonprofits could cross the line if the timing is motivated by an election.
Good: We have a position on whether convict Bill Smith should be executed at midnight on October 25.
Bad: Bill Smith will be executed tonight, less than two weeks before an important election that could determine the future of capital punishment in our state.
A few other pointers:
- Don’t globalize a politician’s views on a particular issuing by saying, for instance, that because of a candidate’s stance on capital punishment, he or she “isn’t fit to serve.”
- Comment only on issues if you have a track record of involvement.
- Avoid wedge issues when there is a clear difference between two candidates.
- If asked by the press about an issue, feel free to comment, but steer clear of talking about candidates.
Above all, Mr. Joseph says, talk to experts if you are unsure. Because electioneering is vaguely defined, it helps to get advice from people who understand the law and have a good idea of what has gotten other nonprofits in trouble.
“It’s helpful to know how far out in front you are getting,” he says. “You don’t want to be the outlier. The IRS is going to go after the people violating the rules in the most egregious, high-profile way.”
