In November 2013, the IRS issued a Notice of Proposed Rulemaking, Guidance for Tax-Exempt Social Welfare Organizations on Candidate-Related Political Activities (NPRM). According to the Department of Treasury and the IRS, the NPRM’s stated goal is to clarify the definition of political activity for tax-exempt organizations. However, as currently written, the NPRM has the potential to chill legitimate nonprofit advocacy related to civic engagement efforts across the country.
With the proposed changes, the IRS would identify as “political” (defined in the NPRM as “Candidate-Related Political Activity” or CRPA) certain activities by disregarding whether they are conducted on a partisan or nonpartisan basis. Further, in several instances it adds to already-existing ambiguity to issues relevant to 501(c)(4) organizations, such as by failing to define several key terms.
If adopted, the NPRM has the potential to significantly limit the ability of 501(c)(4) and 501(c)3 organizations’ work on several fronts. These include:
- Voter registration and get-out-the-vote (GOTV) activities: As proposed in the NPRM, all such work would be classified as CPRA, even when this work is nonpartisan and involves referenda elections with no candidate on the ballot.
- Judicial and executive appointments: Currently, nominees for judicial and executive appointments are not considered candidates. Work by 501(c)(4)s on the appointment or confirmation of judges is considered lobbying and, is not subject to any limits. Under the proposed regulations, judges and executive nominees would be considered candidates, making this CRPA.
- Public communications: Any public communication disseminated within 30 days of a primary or 60 days of a general election that references one or more candidates in an election or, one or more political parties would be treated as CRPA. This is true even if the candidate is referenced in a non-candidate capacity. This will hinder the ability of 501(c)(4)s to communicate on many policy-related issues via a numerous media including websites, newspapers, magazines and paid advertising.
- Ballot measure activities: Under the proposed rules, all voter registration and GOTV work would be considered CPRA, including such work in support of the passage or defeat of policy-based ballot measures conducted by social welfare organizations
- Hosting nonpartisan candidate events: The NPRM would restrict the ability of 501(c)(4) organizations to sponsor candidate debates and forums, which aim to educate the public concerning the candidates’ views, and will also limit the opportunities available for public officials to meet with their constituents. It proposes that any event within 30 days of a primary or 60 days of a general election be considered CRPA if one or more candidates in these elections appear as part of the program—even in a non-candidate capacity.
- Grants and transfers to 501(c) organizations: The NPRM considers as CRPA any gift, grant, subscription, loan, advance or deposit of money or anything of value to any 501(c) organization that engages in CRPA unless the contributor obtains a written statement that the grantee does not engage in CRPA and the contribution is subject to a written restriction that it not be used for CRPA. This proposal is far more restrictive than current law that could significantly minimize legitimate social welfare activities by 501(c)(4) organizations. The full amount of the grant will be treated as CRPA regardless of the amount of CRPA actually conducted by the grantee organization. It would deter many 501(c)(4)s from transferring funds to 501(c)(3) organizations that engage in nonpartisan, charitable activities now considered CRPA for 501(c)(4)s.
NCRP submitted comments to the IRS yesterday noting each of these areas as problematic and requesting a revised set of rules that would be open for public comment. Many of our sister organizations have done the same in an effort to urge the IRS to develop new rules that are sensible and not draconian.
The potential for disenfranchisement of many voters is great, especially when coupled with the Supreme Court’s ruling in Shelby County v. Holder, which essentially negated the Voting Rights Act by striking down its most important provision.
With restrictions such as burdensome voter identification requirements and the ability of nine mostly southern states to now make changes to local election laws without preclearance from the federal government, the disparate impact on low-income communities and communities of color is daunting.
As we celebrate Black History Month, now is the time for foundations to ensure that the most fundamental form of democratic participation, the right to vote, is protected and that their grantees who engage in civic engagement are provided with the needed funds and appropriate rules from the IRS to do this vital work.
Niki Jagpal is director of research and policy at the National Committee for Responsive Philanthropy (NCRP). She frequently blogs about philanthropy, race, class and social justice.
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