Our 501(c)(3) organization rents part of our multi-tenant building to a food business. The owner of the business has posted political signs in the windows of the building facing the outside. Some members of our board fear that our neutrality in political matters is being compromised. The business has no intention of taking the signs down because they say it is their right as a renter to put them up. How can I make this go away before too many people are involved and it becomes a town scandal?
You are right to be concerned about the appearance that your charity may become involved in a political campaign, because a 501(c)(3) organization that intervenes either for or against a candidate in a campaign for public office can lose its charitable exempt status. But it doesn’t sound as though this situation should get you in trouble.
In its most extensive recent guidance on “electioneering,” the IRS has made it clear that it looks at all of the “facts and circumstances” to determine whether the charitable organization itself has taken action in some official way to support or oppose a candidate. (See Ready Reference Page: “IRS Issues New Guidance on Electioneering”) In its Revenue Ruling in 2007, it even said that it is okay for a charity to rent facilities to a political candidate if the rental is on the same terms and conditions as the facilities are generally rented to the public. In your case, it sounds as though you rented to the food business as you rented to others. Your organization did not put up the political signs and, in fact, tried to get them taken down, but the business said it had a right to keep them posted under its lease. Assuming that you didn’t reserve the right to control political signage in the lease, it seems pretty harsh to say that you should be tainted by an action you can’t control.
If you are really concerned about the image, you could put a no-political-activity clause in every new or renewed lease, but I don’t think you are required to do so.
With respect, while a legally correct response, I believe the question was more about local image and reputation than potential IRS risk.
The follow-up questions I would have re the suggested addition of language in new and renewing leases are:
- Would such language raise any risk re attempts to ban free speech and/or be seen as discriminatory in leasing practices?
And even if on solid legal ground for both of those issues, there remains the public perception issue.
Can you suggest other options?
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