Insights
Publications

Prohibited Campaign Intervention: Stay Alert in the Final Stretch

10/13/2016 Articles

Engaging in any political electoral campaign activity on behalf of or in opposition to a candidate for public office is a prohibited activity for all charities and private foundations that are exempt under Internal Revenue Code Section 501(c)(3). Unlike lobbying activities, where the risk of loss of exempt status is fairly remote, a single intervention in a political campaign can result in the loss of exempt status (at worst) or time consuming and embarrassing congressional inquiries or adverse publicity.

Examples of campaign activity include, but are not limited to, the following:

  • endorsing a candidate for public office,
  • urging the public to vote for or against a specific candidate,
  • contributing money to an election campaign,
  • forming or supporting a political action committee (PAC),
  • providing mailing lists to candidates,
  • “scoring” or “grading” candidates,
  • providing campaign workers to campaigns for public office; and
  • supporting political party platforms.

Each of these types of activities are often carried out in any number of ways, including online and social media sites. Activities which cannot be carried out on paper also cannot be carried out in any form of social media. Nonprofits need to keep in mind that links to political campaign sites could be viewed as a publication or distribution of a statement on behalf of or in opposition to a candidate for public office. When exempt status may be at stake, the risks should be considered carefully before providing or encouraging links to sites which may contain political campaign messages. A charity or private foundation is generally responsible for messages that appear on every landing page linked from its site.

While private foundations are prohibited from engaging in legislative lobbying, public charities can engage in some lobbying activities, and there are also a number of exceptions relevant to legislative issues that are allowed (nonpartisan analysis and research, discussions of broad social, economic and similar problems, technical advice to legislative committees and self-defense communications, and communications about administrative rules and regulations). However, in the final throes of a heated candidate campaign, reliance on lobbying exceptions may not protect a nonprofit communication that is using a code word or issue to intervene in a candidate campaign by showing support for one candidate over another.

Even the appearance of participation in a political campaign may have catastrophic results for a nonprofit. As the election season nears its climax, the wise will be vigilant in preventing any political campaign activity. When an inadvertent intervention happens, quick damage control by competent counsel is often helpful. Unless the nonprofit’s “got nothing left to lose,” the best advice until after the polls close on November 8 is to stay out of the fray. Now is a great time to remind all staff members who are able to post to your social media to resist the urge to post, tweet and link, and to get a second opinion if there’s a chance of stepping over the line.

For more information about the rules, visit the IRS website or contact any member of the Farella Braun + Martel Exempt Organization practice.

Firm Highlights

Publication

Corporate Transparency Act: A Guide on Beneficial Ownership for Nonprofit Executives

The Corporate Transparency Act, enacted as part of the National Defense Authorization Act for Fiscal Year 2021, represents a significant shift in regulatory requirements for entities across the United States. This act, set to...

Read More
News

Farella Braun + Martel Earns San Francisco Green Business Recertification

Read More
News

Farella Announces 2024 Leadership Council on Legal Diversity Pathfinders: Taylor Rottjakob and John Ugai

Farella Braun + Martel is proud to announce that senior associates  Taylor E. Rottjakob and John M. Ugai have been named 2024 Leadership Council on Legal Diversity (LCLD) Pathfinders. Pathfinders have been identified as...

Read More
News

Scraping Battles: Meta Loses Legal Effort to Halt Harvesting of Personal Profiles

Alex Reese spoke to Matt Fleischer-Black of  Cybersecurity Law Report about the Meta v. Bright Data decision and its impact on U.S. scraping case law. Read the article here (paywall or trial).

Read More
Publication

Corporate Transparency Act: State of the Law and Beneficial Ownership Reporting Requirements

Key Points: Despite ongoing legal challenges, the Corporate Transparency Act (CTA) generally remains in effect and enforceable. Clients should continue to abide by its regulations. Initial reports for entities formed in 2024 are due within...

Read More
News

North Coast Industry Insiders Weigh In on Why California Cannabis Tax Revenue Slipped in 2023

Jeff Hamilton spoke to Susan Wood with the North Bay Business Journal for the article "North Coast Industry Insiders Weigh In on Why California Cannabis Tax Revenue Slipped in 2023." Read the article with Jeff's...

Read More
Publication

Insurance Market Crushes Wineries and Wine Country Homeowners

We keep hearing about how difficult it is for winery and vineyard owners to get property insurance these days, both for their homes and their wine businesses in California’s wildfire-prone areas. Those who have...

Read More
Publication

Employment Law Update for Nonprofits With Holly Sutton

Welcome to  EO Radio Show - Your Nonprofit Legal Resource . Charities, foundations, and their founders often request help addressing employment practices and compliance questions. In this episode, host Cynthia Rowland is joined by Holly...

Read More
News

JPMorgan Chase Accuses TransUnion of Stealing 'Trade Secrets'

Intellectual property practice chair Eugene Mar provided expert commentary to American Banker for the article "JPMorgan Chase Accuses TransUnion of Stealing 'Trade Secrets'." In the article, he said: "By filing this as a trade...

Read More
Publication

Nonprofit Quick Tip: State Filings in North Carolina and South Carolina

Welcome to  EO Radio Show - Your Nonprofit Legal Resource . Episode 75 is the tenth in a series of Quick Tip episodes focusing on the details of state registration of nonprofit corporations. With...

Read More