Can Non-Profits Donate to Political Campaigns?

In 1954, Congress passed the Johnson Amendment, prohibiting tax-exempt organizations from campaigning for or against political candidates. While no clear explanation for the statute was given, there are several reasons that the policy might be considered necessary.

• Because nonprofit entities are subsidized by the government in the form of tax-exemptions, political campaigning by these groups would be on par with the federal government subsidizing political ideologies.

• Unlike charitable contributions, political contributions are not tax-deductible. Allowing tax-exempt entities to contribute to political candidates, then, would mean that political contributions made indirectly through charities could be written off.

• Unlike Super PACs that have to identify contributors, individuals, corporations, and other charitable foundations are all able to give anonymously to 501c(3) organizations. If a tax-exempt organization were then to contribute that money to a candidate, it would be impossible to identify big money contributions that would normally pass through Super PACs.

What not to do in your nonprofit organization?

Tax-exempt public charities, private foundations, and private operating foundations benefit enormously from their 501c(3) status, but that status is endangered when they get involved in partisan politics. If your organization is participating in any of the following activities, you may be at risk of having your status revoked:

• Spending greater than 20% of your organization’s budget on lobbying activities

• Endorsing, opposing, or rating political candidates

• Donating money or time to political campaigns

• Showing preferential treatment to one candidate over another during events hosted by the organization

• Creating a PAC

• Printing and/or distributing biased voter education publications

If an organization’s executive director promotes or opposes one candidate over another while in his or her official capacity, the organization’s status will likewise be jeopardized. However, board directors, members, and staff are free to express their support for or opposition to a candidate in their private capacities.Though your organization can’t specifically endorse a candidate, you can still contribute in the field of politics. Many segments of the US population have benefited in the past when nonprofits have provided non-partisan support to registration drives, voter education programs, and candidate debates. The critical thing to remember in these cases is to stay outside the fray, remaining objective as an organization.For more information regarding the Johnson Amendment and how it applies to your organization, visit IRS.gov. Or be sure to visit ExemptMeNow for the latest updates pertaining to tax exemption and non-profit news.