Political activity, as defined by the Internal Revenue Service, is directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office.
While 501(c)(3) nonprofit organizations are absolutely prohibited from participating in political activity, 501(c)(4) nonprofit organizations are allowed to within some parameters. Independent Sector strongly believes that the rules governing political activity in the nonprofit sector need to be improved to allow all nonprofits to more easily comply with current law.
501(c)(3)s and the Johnson Amendment
In 1954, then Senator Lyndon Johnson introduced an amendment to the tax code that creates a legal separation between 501(c)(3) organizations and electoral politics. Also known as the “Johnson Amendment,” the law prohibits charities, including religious organizations, from directly or indirectly support or oppose any candidate. If they do, they risk losing their tax-exempt status.
The Johnson Amendment only restricts charitable organizations’ ability to engage in political activity. It does not restrict their free speech or capacity to participate in public policy. Charitable organizations remain able to advocate around mission-driven issues that impact our communities and our nation. Independent Sector opposes efforts to repeal the Johnson Amendment, which would jeopardize the public’s trust in and support for the charitable community.
501(c)(4)s and Political Activity
Independent Sector supports the development of clearer guidelines for 501(c)(4) social welfare organizations that engage in political activities and has actively monitored and contributed to lawmakers’ considerations of the topic. In 2012, the Independent Sector Board of Directors adopted a set of principles on 501(c)(4) electoral campaign activity. Learn more about the Principles for Evaluating Legislative and Regulatory Proposals on 501(c)(4) Electoral Campaign Activity.
Following the long-awaited release of proposed rulemaking for 501(c)(4)s engaged in politics in November 2013, the Board similarly acted to endorse three principles for policy decisions affecting exempt organizations’ political activities.
- Read the Washington Post op-ed co-authored by former IS President and CEO Diana Aviv and Bauman Foundation Executive Director Gary Bass
- Read the Chronicle of Philanthropy op-ed co-authored by former IS President and CEO Diana Aviv and Bauman Foundation Executive Director Gary Bass
501(c)(4) organizations include two types of organizations: (a) social welfare organizations, defined by statute as civic leagues or organizations operated exclusively for the promotion of social welfare; and (b) local associations of employees of which the net earnings are devoted exclusively to charitable, educational, or recreational purposes. Learn more from the IRS.
501(c)(4) organizations are tax-exempt, but donations to them are not tax deductible and the identities of donors do not have to be disclosed. These organizations are allowed to engage in unlimited lobbying activities, and can engage in some campaign activity, as long as it is not their primary activity.
To be tax-exempt as a social welfare organization described in Internal Revenue Code (IRC) section 501(c)(4), an organization must not be organized for profit and must be operated exclusively to promote social welfare. The promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office. However, a section 501(c)(4) social welfare organization may engage in some political activities, so long as that is not its primary activity.