Recently, President Trump signed his Executive Order “Promoting Free Speech and Religious Liberty.” It directs the Secretary of the Treasury to exercise discretion to avoid taking any adverse action against an individual, house of worship, or religious organization that speaks about moral or political issues from a religious perspective, including the revocation of 501(c)(3) status. According to President Trump, this Executive Order “removes the financial threat faced by tax-exempt churches from the Internal Revenue Service when pastors speak out on behalf of political candidates.”
Under the Internal Revenue Code, 501(c)(3) charitable organizations are prohibited from engaging in partisan political activity. This means: making political contributions, making statements that endorse or oppose a candidate, and asking candidates to sign pledges on any issue. However, charitable organizations are allowed to engage in limited non-partisan activity, such as: voter-registration drives, limited lobbying on ballot initiatives, and educating candidates on issues that fall under the purview of the entity. Also, the officers, directors, and employees of a 501(c)(3) retain the right to personally engage in partisan political activity.
So, does this Executive Order free religious 501(c)(3) charitable organizations to engage in partisan political activity without fear of tax-exempt status revocation? Perhaps not. While the Executive Order may promote more relaxed enforcement, the restrictions on partisan political activity still exist in statute and legislative action would be required to change the law. In addition, this Executive Order may face legal challenges in court. The Executive Order also raises the question whether churches should be treated differently from non-religious 501(c)(3) entities. Until and unless the statute is changed, 501(c)(3) organizations would do well to refrain from participating in partisan political activity.
For more information on how this Executive Order may effect you, please contact Rebecca Moll Freed, Esq., Chair of the Corporate Political Activity Law Group, at firstname.lastname@example.org or 973-230-2075.
As the 2016 presidential primary season proceeds, we are quickly approaching the summer conventions and the November presidential election. With the political contests becoming more heated, this post is part of a new series on what different entities and groups need to know about their political activity as the 2016 election approaches.
There are many obvious benefits to earning the designation of a 501(c)(3) charitable organization—the organization is exempt from tax and donations are deductible. But the Internal Revenue Code places a key limitation on all 501(c)(3) organizations by prohibiting them from engaging in any political activity. Violation of this prohibition on political activity may lead the IRS to refuse or revoke 501(c)(3) status. A 501(c)(3) therefore must avoid any partisan activity that supports or opposes political candidates or political parties.
A 501(c)(3) generally MAY NOT:
- Make political contributions (monetary or in-kind).
- Issue a statement that supports or opposes a candidate (e.g., stand-alone statements, statements in newsletters, or material on a website).
- Endorse a candidate.
- Ask a candidate to sign a pledge on any issue.
However, a 501(c)(3) may generally engage in non-partisan activity that is related to the democratic process. Therefore, a 501(c)(3) generally MAY:
- Engage in non-partisan election-related activities such as get-out-the-vote and voter registration drives.
- Engage in limited lobbying (related to the mission of the organization), including ballot-measure advocacy.
- Educate all candidates on issues within the purview of the organization.
- Conduct non-partisan public-education and training sessions about participation in the political process.
- Prepare and disseminate non-partisan candidate questionnaires and sample ballots.
However, the officers, directors, and employees of a 501(c)(3) retain the right to personally engage in political activity (just as we described in our recent post on political activity for corporations). A 501(c)(3) must simply be careful to avoid allowing organization resources (from mailing lists to letterhead) to be used for political activity or permitting individuals to engage in political activity that suggests the support or endorsement of the organization.