Election season brings about lively debates among candidates, pontifications about potential policy changes and – for charities – a few potential traps for the unwary. There are certain activities related to election season that are permitted for charities, others that are permitted within certain limits and still others that are prohibited altogether. The restrictions, which have been around for more than six decades, exist to prevent subsidy of partisan political activity. Nonprofit board members and the charities they serve should be aware of these limitations.

Permitted Activities: Voter Education, Get Out the Vote and Focus on Issues

Charities are permitted to engage in activities related to voter education. This may include presentation of public forums or debates, provided that it is done in a manner that does not show preference for or against a particular candidate. For example, the debate’s moderator should give each candidate reasonable amounts of airtime and should ensure questioning procedures are not biased. Voter education also may include publication of voter education guides if they are carried out in a nonpartisan manner.

Charities also are permitted to participate in “Get Out the Vote” efforts, provided certain rules are met. These efforts must be intended to increase overall voter participation and may not be used as a way to register voters who are believed to support a certain candidate or political party. To comply with these rules, charities engaged in “Get Out the Vote” efforts should not reference any political party or specific candidate. They must make voter registration available to everyone – not just certain demographic groups believed to be more supportive of the charity’s mission.

Charities may advocate for or against issues that are in the political arena, even if those issues are considered politically divisive. For example, consider a college that publishes an advertisement advocating for increased educational opportunities for underserved students. Provided the advertisement does not reference a candidate or a political party, and does not make reference to voting or an election, it likely would not be in violation of the restrictions.

Permitted Within Limits: Lobbying

Charities are permitted to engage in lobbying, within certain limitations. Lobbying is an attempt to influence legislation, as those terms are defined in the rules. There may be other activities that we generally think of as lobbying but are not prohibited under the rules.

Activities that “attempt to influence” include making, or urging the public to make, direct contact with a member of a legislative body for the purpose of taking sides on legislation. “Legislation” includes actions by Congress, state legislatures or local councils, as well as actions by the public in referendum or on a ballot initiative. It does not include executive, judicial or administrative action.

Lobbying is permitted within limits. The limitations relate to time and money spent by the charity on lobbying activities. Generally, a charity is safe if it meets the “substantial part” test or the “expenditure” test. To meet the substantial part test, lobbying must not comprise a substantial portion of the charity’s overall activities. While the IRS has not provided explicit guidance on what level of activity is deemed insubstantial, a charity that spends less than 5% of its time and effort is generally considered safe. Under the expenditure test, the charity may spend more on lobbying than is permissible under the substantial part test. A charity wishing to meet the expenditure test must make an election on its tax return. Electing charities are subject to a sliding scale based on overall budget and may spend up to 20% of their budgets on lobbying, up to a $1 million.

Consider whether Libby, a board member of an environmental nonprofit organization, is lobbying on behalf of the organization. Libby travels to Washington, D.C., to see Sen. Smith for the purpose of expressing gratitude over the senator’s recent vote in support of the permanent authorization of the Land and Water Conservation Fund, which passed and was signed into law. Because the law already passed and Libby was not asking Sen. Smith to take sides on legislation, this is not lobbying and would not be subject to the limitations.

Prohibited Activities: Political Campaign Activities

Charities may not participate in a political campaign on behalf of or in opposition to any candidate for public office. This might include making written or oral statements, including on the charity’s website through links to a candidate’s website, creating visibility for one candidate or political party and providing favorable business terms for one candidate or political party.

For example, consider a charity that prepares and publishes a nonpartisan voter guide to its website. If the charity provides a link to only one candidate – the candidate deemed to be in support of its position – the link likely is political activity. However, if the charity provides in an unbiased way a link to each of the candidates, it likely is not political activity.

In another example, consider a charity that agrees to lease a facility to a candidate for use as a campaign headquarters. If the terms of the lease are more favorable than the terms available to the general public, or a similar facility is not made available to other candidates in the same election on similar terms, the lease might be deemed political activity.

The determination as to whether any particular activity is prohibited is based on the facts and circumstances around that activity. Charities should be mindful of these restrictions and seek counsel when appropriate.

Special Considerations for Board Members

The restrictions discussed apply to charities and, to the extent they are representing a charity, to the charity’s board members. However, the restrictions do not apply to leaders of a charity who are acting in their individual capacity. To ensure their activity is not attributed to the organization, the board members should not make partisan comments in the charity’s publications or at its events. They also should exercise caution regarding how their affiliation with a charity is represented.

Consider, for example, Hazel, the president and CEO of a hospital, who has personally endorsed Cam, a political candidate. Cam wishes to publish a list of endorsements, and next to Hazel’s name, wishes to identify Hazel as the hospital’s CEO. The advertisement will include a note that states: “Titles and affiliations of each individual are provided for identification purposes only.” Provided the hospital does not pay for the advertisement, and the advertisement is not an official publication of the hospital, Hazel’s endorsement should not be attributed to the hospital.

Final Thoughts

Charities and nonprofit board members understand that certain candidates support policy that furthers their mission. Other candidates may support policy that is detrimental to their mission. While it is understandable for a charity to prefer one candidate over another, the charity and its board members must be careful not to run afoul of the restrictions against political activity.

Through our Philanthropic Advisory practice, Brown Brothers Harriman advises nonprofit clients and board members on issues relating to governance and compliance. We would be happy to speak with you if you have any questions on this topic.