It’s just as easy for a 501(c)(3) organization to lose its tax-exempt status as it is to establish it. Public charities, including hospitals, churches, and educational institutions, do not pay federal income taxes. Nonprofits agree to abstain from directly or indirectly engaging in political campaign activities in return for this status.
Violating this prohibition is a serious issue and may result in the revocation of your tax-exempt status. The Internal Revenue Service can also impose excise taxes on your organization if the government discovers the violation. Florida-based lawyer and uber lobbyist expert Ron Book say you should avoid the following activities if you want your organization to keep its status.
1. Donating Funds to Political Candidates
Donating official organization money to a political candidate’s campaign violates the rule. You should avoid giving money to individuals running for the following offices:
- President
- Governor
- Mayor
- School board officials
- City supervisors
- County trustees
These rules apply to candidates running for offices in every U.S. state and overseas territory. You should consult with an attorney or tax professional if you need advice on how your organization appropriates official funds.
2. Inviting Political Candidates to Speak
It is common for nonprofit organizations to invite well-known people from the local community to speak at seminars, training events, and fundraisers. However, Ron Book notes that asking a candidate for public office to speak at any organization-hosted event is likely a violation.
3. Doing Too Many Lobbying Activities
Nonprofit organizations cannot participate in certain types of lobbying activities, or they risk losing their tax-exempt status. The Internal Revenue Service defines lobbying as attempting to persuade members of any state or federal legislative body to repeal, oppose, amend, or support laws.
The IRS says that a nonprofit is not at risk of losing its tax-exempt status as long as a substantial part of its overall activities is not dedicated to influencing legislation. Unfortunately, this guidance is ambiguous. Ron Book recommends consulting with a tax or legal professional if you need guidance on the scope of your nonprofit’s lobbying activities.
4. Supporting a Candidate on Your Organization’s Website
Many nonprofits have an active online presence, including a website and social media profiles. Your organization cannot support or criticize a specific candidate on its website or social media channels. In fact, it is often best to avoid mentioning specific candidates altogether, especially on controversial issues.
About Ron Book
Ron Book is the CEO of Ronald L. Book, P.A, a law firm specializing in Governmental Affairs and Advocating (lobbying) in Florida. A prominent South Florida Attorney, Ron has more than 35 years of experience in the government affairs industry. His law firm has built a solid client list, including large corporations, nonprofit organizations, and hospitals. Ron’s expertise covers many areas, including economic development, affordable housing, healthcare, and more. He is also the co-founder and Board Chairman of Lauren’s Kids Foundation, a nonprofit organization that focuses on stopping childhood sexual abuse through awareness and outreach. Ron started the organization alongside his daughter and Florida State Senator Lauren Book.
