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Can Politics Endanger My 501(c)(3) Status?

Written by Kristen Alexander on Sep 26, 2019 in IRS Compliance

With the 2020 elections around the corner, many pastors and ministry leaders are asking themselves, “Can my church participate in politics without endangering our tax-exempt status?”

Every year, the IRS issues a news release reminding nonprofits that they are prohibited by the federal tax law from intervening in political campaigns. This publication intimidates most 501(c)(3) organizations into steering clear of any involvement in politics. 

The truth is that while unable to directly endorse a political candidate, 501(c)(3) organizations are not absolutely prohibited from involvement in local and national elections. They just need to know the guidelines and procedures to follow to do so without putting their tax-exempt status at risk.

What does the law say?

Section 501 of the Internal Revenue Code states that 

no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.

In essence, the law states that to maintain tax-exempt status, organizations cannot

  • Voice their support for or opposition to a political candidate,
  • Use educational opportunities for the community as a platform to persuade voters to vote for one candidate or political party over another, nor  
  • Conduct fundraisers to financially assist a campaign.

Educational events and activities that encourage community members to exercise their civic duty are welcomed and encouraged, as long as it is performed in an unbiased and nonpartisan manner. 

Can we get involved in a campaign?

Tax-exempt organizations are completely prohibited from interfering in political campaigns. This limitation that prevents 501(c)(3) organizations from interfering in political campaigns in any way is referred to as the “Johnson Ban,” which was proposed in 1954 by then-Senator Lyndon B. Johnson. The provision was amended in 1987 to include the prohibition of statements in opposition to a candidate. When President Reagan overhauled the U.S. tax code in 1986, the Johnson Amendment remained.

President Donald Trump has mentioned that he is in favor of repealing the Johnson Amendment that prevents nonprofit organizations from intervening or interfering in political campaigns. However, the executive order that he signed in May of 2017 to give more freedom in expressing political views did not, in practice,  accomplish that. 

An act of Congress would be required to eliminate the amendment, which has not been done as of yet. There are still differing opinions on whether the removal of the ban would be helpful or detrimental to churches in our nation, as it would blur the line between Church and State. It is still a controversial topic among nonprofit organizations. Pastors and leaders should keep an ear out as these discussions move forward.

So, if your church can’t voice support for a candidate, and it can’t help their campaign financially, how can it make a difference during this crucial election season?

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An educational platform

Churches can participate in political elections if their participation is nonpartisan and educational. One of the best ways a church can support elections is through voter education efforts, provided in an educational and unbiased forum. 

Being unbiased means that you will need to offer all opportunities to both parties equally. If you invite one candidate to speak at a packed Sunday service with a brunch to follow, but only offer the opposing candidate the chance to speak to your Wednesday Bible study that averages 50 members, you are not treating each equally and affording them the same opportunities. It is also suggested that you ask both candidates the same questions, as asking pointed questions can seem to be supporting or attacking a candidate’s standpoint. 

You can also provide valuable resources to voters in your community. Providing unbiased information on all candidates and proposed laws can get your neighbors involved in their civic duty to get out and vote! Reminding Americans that they have a voice and a way to change the future of their country is vital to our democracy. Just make sure during all events and during contact with individuals that are utilizing these services that the information given remains nonpartisan. 

Common violations

Common violations include:

  • Not inviting all candidates to speak during a worship service or event
  • Distributing biased "voter education" literature showcasing particular candidates' views on hot topics
  • Voter registration events or activities that are in favor of a select candidate or political party
  • Enlisting help for a certain candidate's campaign
  • Fundraising for a particular candidate
  • Making statements during worship services either supporting or opposing candidates

What happens if I don’t comply?

The IRS has the ability and means to strip your organization of its tax-exempt status if it does not comply with these regulations. If it is believed that the organization may have conducted itself in a partisan manner, the IRS may send a letter or conduct an on-site evaluation. 

Generally, interference is determined using a “facts and circumstances” test, decided on the current political climate as well as the organization’s other activities. If the nonprofit is found to be in violation, revocation can occur, although it is more likely that they will ask for corrective behavior and possibly impose excise taxes.

When it comes to issues surrounding nonprofits interfering with politics, most grievances are brought to the attention of the IRS from supporting members of the opposing candidate. It would be wise to remember that people are watching, and some organizations even encourage their followers to look for violations to report! Websites from organizations dedicated to keeping church and state separate in every way are littered with numbers to call and people to contact if someone should see or hear of a violation.

You can learn more about how churches and ministries get audited in this blog, "IRS Increases 2019 Audit Focus."

How are you going to impact your community?

The ultimate question is: how are you going to educate and inform the people in your influence? 

Now that you know what you can do and how to do it take the next step and become the voice that your congregation needs in receiving educational information on where each candidate stands on common hot topics and how those can influence change in your community. 

If you have questions about how to become a 501(c)(3) organization with the power to impact the people in your influence, call and ask about our StartRight Service at 877-494-4655, or click the button below to have a specialist call you. 

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Please feel free to comment. We always appreciate good dialogue. However, we do moderate each comment to ensure that it is on topic and not derogatory to other participants. We ask that you keep your comments brief and pertinent to the topic so that others may benefit.

Raul Rivera

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