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Is "political action" a red flag to the IRS?

Your Legal Questions Answered

Is "political action" a red flag to the IRS?

As a 501(c)(3) organization, we know that we may not participate in elections but can engage in lobbying activity on legislation. Advocacy is an important part of what we do. Can we take part in “political action” to advocate legislation, or would that raise a red flag on our exempt status?

I am one of those who believes that if a charity is not engaging in lobbying and legislative activity it is probably not doing its job.  So much of what charities worry about is affected significantly by public policy.  Failing to try to influence that public policy is abdicating the use of leverage that could make a real difference to the organization’s concerns.

Using the term “political action,” however, sounds suspiciously like “political action committee” which support or oppose candidates, and more likely connotes electioneering than lobbying.  It could raise a red flag for the IRS, or those who might report you to the IRS, because charities can lose their exempt status for engaging in political action to endorse or oppose candidates.  (See Ready Reference Page:  “IRS Issues New Guidance on Electioneering”)

“Advocacy” is much less incendiary and much more easily recognized as an appropriate role for charities in lobbying on legislation that affects their interests.  (See Ready Reference Page:  “Lobbying Rules Create Opportunity for Charities”)

Also check our Store for a pre-recorded webinar on Lobbying and Electioneering or our Ready Reference Audios on Lobbying and Electioneering.

 

Thursday, April 1, 2010

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