The Supreme Court’s Recent Decision and Nonprofit Electoral Advocacy
Does the decision affect election-related activities for 501(c)3s?
The U.S. Supreme Court’s recent landmark decision in Citizens United v. Federal Election Commission, concerning the application of certain election laws to corporations does NOT change how other laws limit the election-related activities of charitable nonprofit organizations with tax-exempt status under Section 501(c)3 of the Internal Revenue Code.
The laws still limit election activities by charitable nonprofits. Federal law declares that charitable nonprofits and foundations may not “participate in, or intervene in (including publishing or distributing statements), any political campaign on behalf of (or in opposition to) any candidate for political office” at the federal, state, and local levels. Violating this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes.”
How does the decision change the general landscape?
Some legal experts say that because the court grounded its decision on First Amendment free-speech rights, it could pave the way for a challenge to the current laws regulating campaign activity applying to charities under section 501(c)3 of the tax code.
The ruling could make it easier for organizations with 501(c)4s tax status (nonprofit advocacy groups) to speak out. They can now urge the public to vote for or against federal candidate without having to set up separate political-action committees. They will also be able to accept contributions from businesses to engage in such activity.
Despite that advantage, groups fighting for social causes will most likely not be able to match for-profit corporate spending. We feel that now, more than ever, the nonprofit community needs to engage more fully in legal forms of advocacy while also reevaluating the policies that restrain participation.
Mr. Ottinger, of the Center for Lobbying in the Public Interest says, “The Supreme Court is changing the rules of the game and nonprofits need to revisit and reexamine the rules that govern our participation in politics and policy in the democratic process.”
The Center proposes next steps for charities and foundations to prioritize policy and civic engagement.
For those who want to know more in general, the National Council of Nonprofits has put together a brief analysis with references.
For those who want to know even more about the effect of the Supreme Court’s decision on 501(c)3 nonprofits, the Alliance for Justice also has published a comprehensive overview.