2. 1 Political and Legislative Activities

3. 2 Information Sources and Reference Materials CPE Articles: “Lobbying Issues” FY1997 “Election Year Issues” FY2002 “Political Campaign and Lobbying Activities of IRC 501(c)(4), (c)(5) and (c)(6) Organizations” FY2003 IRM 4.76.30 Rev. Rul. 2004-6 Rev. Rul. 2007-41 Rev. Proc. 86-43

4. 3 Outline: I. Objectives II. Overview III. Political Activity IV. Legislative Activity

5. 4 I. Objectives What can 501(c)(3) organizations do? What can 501(c)(3) organizations do? Identify prohibited political activities Identify prohibited political activities Distinguish between legislative activities & political activities Distinguish between legislative activities & political activities

6. 5

7. 6 Types of Exempt Organizations that engage in political and/or lobbying activities: § 501(c)(3) Charitable Organizations § 501(c)(4) Social Welfare Organizations § 501(c)(5) Labor Organizations § 501(c)(6) Business Leagues § 527 Political Organizations Other types of exempt organizations may engage in these activities but these are the most common ones.Other types of exempt organizations may engage in these activities but these are the most common ones.

8. 7 Prohibition on 501(c)(3) organizations - Political A 501(c)(3) organization cannot intervene in any political campaign for or against a candidate. A 501(c)(3) organization cannot intervene in any political campaign for or against a candidate.Authority IRC 501(c)(3): “…an organization exempt from tax is one... which does not participate in or intervene in…any POLITICAL CAMPAIGN on behalf of (or in opposition to)… any candidate for public office...” “…an organization exempt from tax is one... which does not participate in or intervene in…any POLITICAL CAMPAIGN on behalf of (or in opposition to)… any candidate for public office...”

9. 8 §501(c)(3) issues Political activity: Absolute prohibition Absolute prohibition Be aware of related §501(c)(4) organizations with §527 funds Be aware of related §501(c)(4) organizations with §527 funds Subject to potential revocation Subject to potential revocation Subject to §4955 excise tax Subject to §4955 excise tax §6852 authority for termination assessments for flagrant abuse §6852 authority for termination assessments for flagrant abuse §7409 authority to seek injunction for flagrant abuse §7409 authority to seek injunction for flagrant abuse

10. 9 Prohibition on 501(c)(3) organizations – Legislative Activity A public charity cannot devote a “substantial” amount of its activities in attempting to influence legislation. A public charity cannot devote a “substantial” amount of its activities in attempting to influence legislation.Authority IRC 501(c)(3): “…an organization exempt from tax... in which no substantial part of its activities is carrying on propaganda or otherwise attempting to influence LEGISLATION…” “…an organization exempt from tax... in which no substantial part of its activities is carrying on propaganda or otherwise attempting to influence LEGISLATION…”

11. 10 §501(c)(3) issues Legislative activity: May be germane May be germane Risk their exemption if an “action” organization Risk their exemption if an “action” organization May make §501(h) election May make §501(h) election Subject to §4911 excise tax for excess lobbying Subject to §4911 excise tax for excess lobbying Subject to §4912 excise tax for disqualified lobbying Subject to §4912 excise tax for disqualified lobbying Private foundations subject to §4945 excise tax Private foundations subject to §4945 excise tax

12. 11 Excess lobbying expenditures By filing Form 5768, most §501(c)(3) organizations may make an election to be held to the expenditure limits of §501(h), in order to avoid treatment under §4912 for disqualifying lobbying expenditures.

13. 12 Excess lobbying expenditures Churches Churches Associations of Churches Associations of Churches Integrated Auxiliaries of Churches Integrated Auxiliaries of Churches Organizations affiliated with: Organizations affiliated with: –Churches, –Associations of Churches, –Integrated Auxiliaries of Churches The following types of organizations can not make the election:

14. 13 Excess lobbying expenditures The following types of organizations also can not make the election: §509(a)(3) organizations that support §501(c)(4), §501(c)(5), or §501(c)(6) organizations §509(a)(3) organizations that support §501(c)(4), §501(c)(5), or §501(c)(6) organizations Private foundations Private foundations

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16. 15 What is participation or intervention in a Political Campaign?  Publishing/distributing written/printed statements or making oral statements  for or against a candidate for public office public office

17. 16 Participation and Intervention, cont.  Providing or soliciting $$ or other support for candidates or political organizations  Establishing a political (“action”) organization (“PAC”)

18. 17 Political activities Listed below are some common activities that may be political campaign intervention: Radio & TV attack ads Radio & TV attack ads Partisan voter guides Partisan voter guides Guest speakers at events Guest speakers at events Rallies Rallies Dinner fundraisers Dinner fundraisers Newspaper editorials Newspaper editorials Endorsements Endorsements

19. 18 Political expenses Listed below are some common expenditures that may be political campaign intervention: Checks to candidates; for speeches, material, contributions Checks to candidates; for speeches, material, contributions Checks to committees Checks to committees Advertising & publicity Advertising & publicity Honorariums Honorariums Travel expenses Travel expenses Polls, Surveys, white papers Polls, Surveys, white papers Fundraisers Fundraisers Newsletters Newsletters Written, printed or oral statements Written, printed or oral statements

20. 19 What is a political campaign? Man on the street: “It’s a candidate running for office!”

21. 20 Who is a candidate? Anyone who offers him/herself (or is proposed by others) as a contestant for elective public office whether it is national, state or local.

22. 21 What is public office?  Position created by statute  Position is continuous  Position not contractual  Fixed term of office  Required oath of office

23. 22 Is this political? Fed up with the candidates running in the primary for the US Senate, the officers of an exempt organization decide to have the organization endorse the US Ambassador to Japan for the position, encouraging voters to write in the candidate. The ambassador states that she has no wish or intention to run for the senate. The ambassador wins the primary. Is this a political activity and/or expense? Yes or no? Why or why not?

24. 23 Advocacy vs. Political Advocacy is generally defined as the act of pleading for, supporting or recommending something, such as a cause, idea or policy. Advocacy is generally defined as the act of pleading for, supporting or recommending something, such as a cause, idea or policy. A public charity is not restricted from taking a position on issues providing the position does not involve the participation or intervention in a political campaign. A public charity is not restricted from taking a position on issues providing the position does not involve the participation or intervention in a political campaign.

25. 24 Advocacy vs. Political, cont. Some factors to consider when determining whether a communication results in political campaign intervention: results in political campaign intervention: Whether the statement identifies one or more candidates Whether the statement identifies one or more candidates Whether the statement makes reference to voting or an election Whether the statement makes reference to voting or an election Whether the statement expresses approval or disapproval of one or more candidates’ positions and/or actions. Whether the statement expresses approval or disapproval of one or more candidates’ positions and/or actions.

26. 25 Education or Political Participation?  Unsupported facts  Distorted facts  Inflammatory terms based on emotions  Not aimed at developing audience’s understanding

27. 26 Partisan vs. Non- Partisan  Everybody’s voting record  All candidates’ opinions  Opinions on certain issues  Voting record on certain issues PoliticalEducational

28. 27 EXAMPLES: Situation 1. Situation 1. B, a section 501(c)(3) organization that promotes community involvement, sets up a booth at the state fair where citizens can register to vote. The signs and banners in and around the booth give only the name of the organization, the date of the next upcoming statewide election, and notice of the opportunity to register. No reference to any candidate or political party is made by the volunteers staffing the booth or in the materials available at the booth, other than the official voter registration forms which allow registrants to select a party affiliation. B is not engaged in political campaign intervention when it operates this voter registration booth. B, a section 501(c)(3) organization that promotes community involvement, sets up a booth at the state fair where citizens can register to vote. The signs and banners in and around the booth give only the name of the organization, the date of the next upcoming statewide election, and notice of the opportunity to register. No reference to any candidate or political party is made by the volunteers staffing the booth or in the materials available at the booth, other than the official voter registration forms which allow registrants to select a party affiliation. B is not engaged in political campaign intervention when it operates this voter registration booth.

29. 28 EXAMPLES (cont.) Situation 2. Situation 2. President B is the president of University K, a section 501(c)(3) organization. University K publishes a monthly alumni newsletter that is distributed to all alumni of the university. In each issue, President B has a column titled “My Views.” The month before the election, President B states in the “My Views” column, “It is my personal opinion that Candidate U should be reelected.” For that one issue, President B pays from his personal funds the portion of the cost of the newsletter attributable to the “My Views” column. Even though he paid part of the cost of the newsletter, the newsletter is an official publication of the university. Because the endorsement appeared in an official publication of University K, it constitutes campaign intervention by University K. President B is the president of University K, a section 501(c)(3) organization. University K publishes a monthly alumni newsletter that is distributed to all alumni of the university. In each issue, President B has a column titled “My Views.” The month before the election, President B states in the “My Views” column, “It is my personal opinion that Candidate U should be reelected.” For that one issue, President B pays from his personal funds the portion of the cost of the newsletter attributable to the “My Views” column. Even though he paid part of the cost of the newsletter, the newsletter is an official publication of the university. Because the endorsement appeared in an official publication of University K, it constitutes campaign intervention by University K.

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31. 30 Measuring Legislative Activities  Substantial Part Test  Expenditure Test

32. 31 Substantial Part Test Facts & Circumstances Test Facts & Circumstances Test Activities and financial aspects of the organization are analyzed to determine the substantiality of the legislative activities Activities and financial aspects of the organization are analyzed to determine the substantiality of the legislative activities

33. 32 Expenditure Test Described in IRC section 501(h) Described in IRC section 501(h) Applied to the expenditures of the IRC 501(c)(3) organization in order to determine if a substantial part of the organization’s activities are conducted to influence legislation Applied to the expenditures of the IRC 501(c)(3) organization in order to determine if a substantial part of the organization’s activities are conducted to influence legislation

34. 33 What Is Legislation?  Action on: Acts Acts Bills Bills Resolutions Resolutions  By: Congress Congress State legislature State legislature Local council or similar Local council or similar  Action on: Referendum Initiative Constitutional amendment  By: The Public

35. 34 Action includes  Introduction  Amendment  Enactment  Defeat  Repeal

36. 35 Influencing Legislation = Lobbying

37. 36 Attempting to influence legislation by… Attempting to influence legislation by…  Affecting the general public’s opinion  Communicating with a legislative body member or employee  Communicating with government official or employee who can affect legislation Definition of Lobbying

38. 37 DIRECT Lobbying Factors:  Communication with Member or employee of a legislative body Member or employee of a legislative body A government official or employee who can influence legislation A government official or employee who can influence legislation  Communication must Refer to specific legislation and Refer to specific legislation and Reflect a view on the legislation Reflect a view on the legislation

39. 38 EXAMPLE: An organization exempt under IRC 501(c)(3) whose purpose is the prevention of cruelty to animals contacts their Legislators in the State of Michigan regarding legislation to prevent greyhound racing in the state. An organization exempt under IRC 501(c)(3) whose purpose is the prevention of cruelty to animals contacts their Legislators in the State of Michigan regarding legislation to prevent greyhound racing in the state.

40. 39 Indirect Lobbying = Grass Roots Lobbying

41. 40 INDIRECT Lobbying Factors:  Attempting to influence legislation by Influencing the general public’s Influencing the general public’s opinion opinion  Communication must Refer to specific legislation Refer to specific legislation Reflect a view on the legislation Reflect a view on the legislation Encourage reader to take action Encourage reader to take action

42. 41 EXAMPLE: An organization exempt under IRC 501(c)(3) whose purpose is the prevention of cruelty to animals uses TV and radio ads to ask the general public to contact the state legislators in the State of Michigan regarding legislation to prevent greyhound racing in the state. An organization exempt under IRC 501(c)(3) whose purpose is the prevention of cruelty to animals uses TV and radio ads to ask the general public to contact the state legislators in the State of Michigan regarding legislation to prevent greyhound racing in the state.

43. 42 QUESTIONS?

44. 43 The END