Limitations on political activity 501(c)(3) organization

1 limitations on political activity

1.1 constitutionality
1.2 political campaign activities
1.3 lobbying

limitations on political activity

section 501(c)(3) organizations prohibited supporting political candidates, result of johnson amendment enacted in 1954. section 501(c)(3) organizations subject limits on lobbying, having choice between 2 sets of rules establishing upper bound lobbying activities. section 501(c)(3) organizations risk loss of tax-exempt status if these rules violated. organization loses 501(c)(3) status due being engaged in political activities cannot subsequently qualify 501(c)(4) status.

constitutionality

since section 501(c)(3) s political-activity prohibition enacted, commentators , litigants have challenged provision on numerous constitutional grounds, such freedom of speech, vagueness, , equal protection , selective prosecution. historically, supreme court decisions, such regan v. taxation representation of washington, suggested court, if squarely examine political-activity prohibition of § 501(c)(3), uphold against constitutional challenge. however, have suggested successful challenge political activities prohibition of section 501(c)(3) might more plausible in light of citizens united v. fec.

political campaign activities

organizations described in section 501(c)(3) prohibited conducting political campaign activities intervene in elections public office. internal revenue service website elaborates on prohibition:

under internal revenue code, section 501(c)(3) organizations absolutely prohibited directly or indirectly participating in, or intervening in, political campaign on behalf of (or in opposition to) candidate elective public office. contributions political campaign funds or public statements of position (verbal or written) made on behalf of organization in favor of or in opposition candidate public office violate prohibition against political campaign activity. violating prohibition may result in denial or revocation of tax-exempt status , imposition of excise taxes.

certain activities or expenditures may not prohibited depending on facts , circumstances. example, voter education activities (including presenting public forums , publishing voter education guides) conducted in non-partisan manner not constitute prohibited political campaign activity. in addition, other activities intended encourage people participate in electoral process, such voter registration , get-out-the-vote drives, not prohibited political campaign activity if conducted in non-partisan manner.

on other hand, voter education or registration activities evidence of bias (a) favor 1 candidate on another; (b) oppose candidate in manner; or (c) have effect of favoring candidate or group of candidates, constitute prohibited participation or intervention.

lobbying

in contrast prohibition on political campaign interventions section 501(c)(3) organizations, public charities (but not private foundations) may conduct limited amount of lobbying influence legislation. although law states no substantial part... of public charity s activities can go lobbying, charities large budgets may lawfully expend million dollars (under expenditure test), or more (under substantial part test) per year on lobbying.

the internal revenue service has never defined term substantial part respect lobbying.

in order establish safe harbor substantial part test, united states congress enacted §501(h), called conable election after author, representative barber conable. section establishes limits based on operating budget charity can use determine if meets substantial test. changes prohibition against direct intervention in partisan contests lobbying. organization presumed in compliance substantiality test if work within limits. conable election requires charity file declaration irs , file functional distribution of funds spreadsheet form 990. irs form 5768 required make conable election.