The US Supreme Court ruled on June 25, 2012, that the 2010 Citizens United decision applies to state campaign finance laws (American Tradition Partnership v. Bullock). As a result, the Montana ban on corporate spending on elections was struck down. Twenty-one states and the District of Columbia had urged the Court to uphold Montana law and/or reconsider Citizens United in light of the enormous spending that has flowed into politics in the two years since it was decided.
The U.S. Supreme Court’s landmark decision in Citizens United v. Federal Election Commission (No. 08-205; decided January 21, 2010), concerning the application of certain election laws to corporations, does NOT change how other laws limit the election-related activities of charitable nonprofit organizations with tax-exempt status under Section 501(c)(3) of the Internal Revenue Code. The National Council of Nonprofits prepared this brief analysis to clear up any confusion surrounding the decision and to help charitable nonprofits avoid actions that could jeopardize their tax-exempt status.
Key Laws Still Limit Election Activities by Charitable Nonprofits
Federal law declares that charitable nonprofits and foundations may not “participate in, or intervene in (including publishing or distributing statements), any political campaign on behalf of (or in opposition to) any candidate for political office” at the federal, state, and local levels. 26 U.S.C. § 501(c)(3). The IRS has warned: “all section 501(c)(3) organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective office. Contributions to political campaign funds or public statements of position (verbal or written) made on behalf of the organization in favor or in opposition to any candidate for public office clearly violate the prohibition against political campaign activity. Violating this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes.”
The Supreme Court’s Majority Opinion
Readers of the Supreme Court’s majority opinion must look at the entire context, the underlying facts, and the actual holding of the case rather than just this sweeping language on page 50: “Government may not suppress political speech on the basis of the speaker’s corporate identity. No sufficient governmental interest justifies limits on the political speech of nonprofit or for-profit corporations.” That language does not allow 501(c)(3) charitable nonprofits to ignore other federal laws. Here’s why:
1. Know the law. Federal law, as interpreted by the IRS, still allows charitable nonprofits to engage in a lot of different activities relating to elections, such as “certain voter education activities … [and] other activities intended to encourage people to participate in the electoral process, such as voter registration and get-out-the-vote drives … if conducted in a non-partisan manner.” Indeed, to fully advance their own missions, charitable nonprofits need to appreciate the many reasons why they should get more involved in election-related work, and how easy it is to do. The Nonprofit Voter Engagement Network’s website explains why nonprofits should engage in election work. Nonprofits can learn more about what they legally can do in connection with elections from these trusted resources:
2. Participate on a nonpartisan basis in elections involving candidates. Although charitable nonprofits may not endorse or work for or against individual candidates, the IRS recognizes that charitable nonprofits may engage in voter registration, education, and participation efforts if done neutrally on a nonpartisan basis. Revenue Ruling 2007-41 I.R.B. (June 18, 2007) at 3. For example, charitable nonprofits “may encourage people to participate in the electoral process through voter registration and get-out-the-vote drives, conducted in a non-partisan manner. On the other hand, voter education or registration activities conducted in a biased manner that favors (or opposes) one or more candidates is prohibited.” Id.
3. Campaign for/against specific issues (e.g., legislation, initiatives and ballot measures). Charitable nonprofits are free to engage in campaigns regarding issues. Any expenditures of money (including for staff time) will be reported on your 990 as a lobbying expenditure.
What Else Can Charitable Nonprofits Do?
Many commentators are predicting that the Court’s decision will allow big corporations to have a far greater impact on elections and legislation across the country, so is there anything that charitable nonprofits can do? Yes. It is essential that charitable 501(c)(3) nonprofits:
The information on this page is intended for educational and informational purposes only. Nothing contained herein is to be considered as legal advice for specific matters; readers are responsible for obtaining such advice from their own legal counsel.
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