Nonprofits and Political Activities
Today, according to NPR (and many other outlets), “more than 30 pastors across the country are expected to preach a sermon that endorses or opposes a political candidate by name. This would be a flagrant violation of a law that bans tax-exempt organizations from involvement in political campaigns.”
I’ve previously discussed two pillars of nonprofit structure: Incorporation (and Discretionary Conception) and Tax Exemption. So today lets talk about Restrictions on Political Activity for nonprofits.
Section 501(c)3 of the Tax code is relatively clear on prohibiting candidate endorsement: organizations are prohibited, directly and indirectly from participating in, contributing to, or speaking on on behalf of (or in opposition to) any candidate for elective public office. on behalf of (or in opposition to) any candidate for elective public office.
Nonprofit organizations are allowed though:
Neutral and non-partisan voter education and registration activities. For example, an organization could indicate how candidates voted in the past or a survey of opinions on an issue, so long as all candidates were included no preference was given to the outcomes.
Lobbying, so long as “no substantial part” of their activities may be that of attempting to influence legislation. Lobbying rules are complicated but the The Nonprofit Lobbying Guide makes it all very clear.
So how did this all come about: some sources place responsibility upon the shoulders of Lyndon Johnson and reactionary, red-baiting, 1950s politics.
In 1952, the Cox Committee was formed to determine “whether foundations have been infiltrated by communists, as well as whether tax-exempt groups are using their money for stated purposes and are not endangering our existing capitalistic structure.” The committee found that foundations weren’t infiltrated, but were vulnerable. Foundations were powerful and could exercise “thought control” and through this could “materially influence public opinion”( OMB Watch).
Echoing today’s nonprofit criticisms (other than the fear of communist leanings) foundations were knocked for their arrogance, insular and irresponsible mismanagement, cronyism, and ignorance of sound practice—existing tax rules did not compel compliance, “as interpreted by the courts, permits far too much license.” Said one former fund advisor, testifying before the Cox Committee:
“Not a single member of the staff [of The Ford Fund for the Advancement of Education], from the president down to the lowest employee, has had any experience, certainly none in recent years, that would give understanding of the problems that are met daily by the teachers and administrators of our schools…. As a former member of the so-called Advisory Committee I testify that at no time did the administration of the fund seek from it any advice on principles of operation, nor did it hospitably receive or act in accordance with such advice as was volunteered.”
(This quote, along with many others, can be found in the right-leaning American Mercury article