501(c)(3) Political Campaigns and President Trump’s Executive Order
by Tara Vitale
On May 4, 2017, President Trump signed the Presidential Executive Order Promoting Free Speech and Religious Liberty. He intended to target the Johnson Amendment and its regulations on tax-exempt organizations and its prohibition on participating in political campaigns. Trump referred to the Executive Order as “giving the churches their voices back.”
However, the Executive Order’s directive is not quite as strong as President Trump touted it to be. It can be summarized as “IRS, do the job you’ve been doing.” The Executive Order states “In particular, the Secretary of the Treasury shall ensure, to the extent permitted by law, that the Department of the Treasury does not take any adverse action against any individual, house of worship, or other religious organization on the basis that such individual or organization speaks or has spoken about moral or political issues from a religious perspective, where speech of similar character has, consistent with law, not ordinarily been treated as participation or intervention in a political campaign on behalf of (or in opposition to) a candidate for public office by the Department of the Treasury.” [emphasis mine]
So what speech is or is not ordinarily treated as participation or intervention in a political campaign? Back in 2007, the IRS issued Rev. Rule. 2007-41 to outline and provide examples of what is treated and what is not treated as participation or intervention in a political campaign. The general rule is that an organization cannot participate or intervene, directly or indirectly, in any political campaign on behalf of or in opposition to any candidate for public office. If your organization is found to be participating in any political campaign, it could lose its tax-exempt status.
To enforce this rule the IRS relies on a facts and circumstances test to determine if the actions of an organization are “on behalf of or in opposition to.” This test means the IRS looks at every situation individually, but luckily in Rev. Rule. 2007-41, the IRS has provided some guidance on what it looks for.
Below is a chart that summarizes the examples of situations covered by Rev. Rule. 2007-41. While reading the full scenarios and consulting legal counsel will best help you avoid missteps, the chart can serve as a quick guide.
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|---|---|
| Non-partisan voter education activities are allowed.
-Booth with organization’s name, election dates, and notice of voter registration. |
Biased voter education activates are prohibited.
-Telephone bank to call registered voters and volunteers ask questions regarding election issues. |
|
| Organizational leader speaks for themselves in an individual capacity on issues.
-President A, the CEO of a hospital, is listed by Candidate T as endorsing him and states that President A’s credentials are provided only for identification. |
Organizational leader makes comments in her or his official capacity on issues.
-President B of University X writes and pays for his column endorsing Candidate C in the University newspaper. Because it is in an official publication of the University, it is prohibited. |
| Organizations must give equal opportunity, discuss broad range election topics, moderated by an independent nonpartisan panel or moderator.
-President E invites all 3 of the Candidates to speak to Organization. President E does not comment on credentials or preference for a candidate. |
Organization invites Candidates to 2 different events that are vastly different, topics are narrowed to fit Organization’s political leanings, moderators are biased during event.
-Minister F invites Candidate X, but no other candidate, to speak to the congregation during services. Candidate X speaks about his campaign. Candidate X’s comments are attributed to the Church and therefore prohibited. |
| Organization invites Candidate to speak because (i) currently or formerly holds a public office, (ii) considered an expert in her or his field, (iii) has lead a distinguishing career.
-President P of a historical society recognizes current Lieutenant Governor Y (a candidate in the upcoming election) at a meeting. |
Organization invites Candidate to speak because of (i)-(iii) but campaigns during event or is chosen solely for reasons related to candidacy.
-Mayor G is invited to a symphony in the park. Symphony director endorses Mayor G due to the mayor’s past support. |
| Organization’s business activities must be available on an equal basis or charges candidates the usual rates.
-Museum K generally rents its event hall to the public on a first come, first served basis. Candidate P rents the hall for the standard fee and is treated as a normal customer. |
Organization provides only one candidate the benefits of its business activities.
-Theater L has never rented its mailing list and has previously declined other candidates who requested to rent the list. Theater L rents the list at a market rate to the Candidate Q because he supports increased funding for the arts. |
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| Organization follows the same rules for its website as if it were written material, oral statements, or broadcasts.
-Organization posts an unbiased, nonpartisan voter guide with links to all candidate’s websites for the purpose of educating voters. |
Organization links to political campaigns, does not have a purpose other than endorsement, and treats the website as if exempt from the IRS rules.
-Church P maintains a website with activities of its members. Member B is running for election. Church posts “Lend your support to B, your fellow parishioner, in Tuesday’s election for town council.” |
Again, the above is a summarization of Rev. Rule. 2007-41 and it is important that as a tax-exempt organization that your organization does not participate or intervene, directly or indirectly, in any political campaign on behalf of or in opposition to any candidate for public office. Your organization’s involvement may put its tax-exempt status at risk.
The article provided above is for general information purposes only and should not be relied on as specific legal advice. This article does not form an attorney-client relationship. If you have any questions about this article, please feel free to contact Tara M. Lukjan at tara@apexlg.com.
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