Log in
Log in
  • Home
  • Political Campaigns


By ANAFP Member Deepak Butani, CPA, LLM

Under the IRS code, nonprofit organizations incorporated under code section 501 C (3) are prohibited from participating in any political activity on behalf of and in opposition to any candidate standing for public office. This includes contribution to political campaigns or statements of position for or against any candidate. Direct and indirect participation on behalf of or in opposition to a candidate is prohibited.  This restriction is not intended to curb free expression but rather to maintain the non-partisan purpose for which the not for profit came into being. Not for profit leaders cannot make partisan comments in their official capacity at functions and other public gatherings.

The IRS uses a facts and circumstances approach to determine if the not for profit has violated this prohibition. The IRS will assess the potential misconduct using the context of the organization’s other activities and the current political climate. Examples of an activity that has been held in violation include:

    • Using not-for-profit funds to publish campaign material,
    • Remitting donations to political campaigns or candidates,
    • Inviting candidates to deliver a campaign speech,
    • Communicating internally and externally about the obvious preference to a candidate,
    • Organizing telephone or online drives with a clear partisan preference to a candidate or party, and
    •  Including a link in the organization’s website to the aspiring candidate’s website.

The IRS first asks the violating organization to take correction action and implement internal procedures. Continued violation may result in denial or revocation of tax-exempt status and imposition of certain excise taxes in the most egregious cases.

Certain activities or expenditures may not be prohibited based on a facts and circumstance standard. Examples include:

    • Nonpartisan activities such as voter registration drives, voter education activities, encouraging constituents to vote, and non-partisan debates, and
    • Legislative advocacy such as issues related to advocacy with no partisan content.

A 501 c (3) organization can also risk losing its tax-exempt status if a substantial part of its activities, beyond certain thresholds, involves lobbying activities such as attempting to influence legislation. Legislation includes action taken by the US congress, the state legislature, and any local government body with respect to pending acts, bills, resolutions, and ordinances. This does not include actions by executive, judicial or other administrative institutions. The organization should not urge its constituents to contact legislative representatives and their employees for the purpose of supporting or opposing legislation. Organizations may conduct educational meetings, prepare, and distribute educational material or consider and debate on public policy issues without jeopardizing their tax-exempt status. Non-compliance will expose the 501 c (3) organization to the risk of loss of not-for-profit status.

Not for profits organized under code Section 501 c (4) of the IRS code are allowed to engage in lobbying activities, issue advocacy or political activity such as through independent expenditures to support or oppose a candidate.

Not a member yet?
Become a Member


Use of ANAFP's website, resources, publications, tools, materials, and email lists are subject to ANAFP's Terms of Use and Privacy Policy.

© Association of Nonprofit Accountants and Finance Professionals, 2019-2024

Powered by Wild Apricot Membership Software