501(C)(3) Organizations: Navigating Political Engagement

How nonprofits can balance advocacy with compliance

As the 2024 election cycle heats up, a crucial aspect of the political landscape is the role of 501(C)(3) organizations in shaping public discourse. These tax-exempt, nonprofit entities are pivotal in advocating for various social causes and providing vital community services. However, they must navigate strict regulations that limit their involvement in partisan politics to maintain their tax-exempt status. As candidates and campaigns ramp up their efforts, understanding the boundaries of political activity for these organizations becomes increasingly important. Balancing advocacy with compliance will be key for nonprofits aiming to influence societal issues without crossing the line into prohibited political engagement.

In order for a 501(C)(3) organization to maintain its tax-exempt status, it cannot “participate in or intervene in any political campaign on behalf of (or in opposition to) any candidate for public office.” If a 501(C)(3) organization participates in prohibited political campaign activity, they risk the revocation of its tax-exempt status as well as the imposition of an excise tax.

What political activities are prohibited and what activities are allowed?

501(C)(3) organization prohibited political activities:

• Making political contributions to any political organization under IRC Sec 527 – establishing or maintaining a separate segregated fund defined in Section 527.  This includes a contribution to a candidate committee, political action committee, or a political party committee. 

• Posting something on the organization’s website or social media that endorses or opposes a candidate running for public office. This includes a link to another website that the organization has no control over the content of the linked site.  The same concept applies to distributing printed materials or verbal statements made by the organization.

501(C)(3) organization allowable political activities:

• Conduct voter registration and get-out-the-vote drives if they are conducted in a neutral, non-biased manner.
  • If a particular candidate or political party is referenced, opposed or favored – then the action is prohibited.
• Invite a candidate to speak at an organization’s event but several additional circumstances must be met.
  • Equal opportunities must be presented to all political candidates.
  • The organization must not demonstrate support or opposition to any
  • Political fundraising is prohibited at these events if a candidate is speaking.
• Take a position on public policy issues, including issues dividing candidates in an election, as long as, their message does not favor or oppose a candidate. Even though a candidate is not specifically identified, using a photo of a candidate, referencing his/her political party affiliations or other identifiable information may constitute political campaign activity.
• Allow a candidate to attend an organization sponsored event that is open to the public. However, if the organization publicly recognizes the candidate or invites him/her to speak they may be engaged in prohibited political campaign activity.

While this is a general overview of some of the more common activities that may be conducted by 501(C)(3) organizations, it is not all inclusive. Additional information on the ban on political campaign activity by Section 501(C)(3) organizations, can be found in IRS Revenue Ruling 2007-41.

501(C)(3) organizations are crucial in shaping communities and advocating for various causes, but their engagement in political activities is tightly regulated to maintain their tax-exempt status. These organizations must navigate a complex landscape of restrictions, ensuring their activities remain focused on educational and charitable purposes rather than direct political influence. By adhering to these guidelines, 501(C)(3) entities can continue to contribute positively to societal issues without compromising their foundational mission or tax-exempt benefits.

Questions on this or other nonprofit compliance matters? Contact your Keiter Nonprofit Opportunity Advisor.