Legal Brief

You cannot turn on a television or pick up a newspaper without realizing that election season is here. And the election season—particularly in a presidential election year—brings with it both opportunities and challenges for private foundations and public charities. Grantmakers can use this opportunity to increase civic involvement, provide nonpartisan information about candidates and educate candidates about important issues. The challenge for grantmakers is working within the applicable guidelines the Internal Revenue Service (IRS) has established for political activity.

The Only Commandment

There is only one primary rule to consider on funding or engaging in political activity: Thou shalt not engage in partisan political activity. Section 501(c)(3) organizations, whether private foundations or public charities, such as community foundations, may not engage in any activity that supports or opposes either candidates for public office or political parties. Such support or opposition is partisan political activity. In contrast, encouraging the public to vote, educating voters about the candidates and educating candidates can all be nonpartisan activities, if they are carried out in a way that does not suggest bias for a particular candidate or party.

Who is a candidate for public office? A candidate includes any person who has declared his or her candidacy, is considering candidacy or is being offered as a possible candidate for an elective public office at the federal, state or local level. For example, candidates in races for the presidency, city council, local school boards or judicial positions are all included under this term. Appointed officials, such as federal judges or a governor's cabinet members, are not considered candidates for public office because they are not elected.

What does it mean to support or oppose a candidate? A wide range of activities, including outright monetary contributions to a campaign, endorsements or simply presenting a candidate or political party in a more favorable or unfavorable light, could be considered partisan. The IRS uses a facts and circumstances test to make the determination, weighing all the relevant factors—including the context and timing of the activity, past activities of the organization, how the activity is carried out and the messages communicated by the organization—to determine if the activity is partisan or nonpartisan.

Permissible Nonpartisan Activities

While the general prohibition against partisan political activity is clear, the IRS has provided guidance on the ways that charitable grantmakers can conduct or support activities carried out in a nonpartisan manner. When evaluating potential grants, the key consideration is whether, in light of all facts and circumstances, the activity is supporting or opposing a candidate for public office or political party.

Voter registration and get-out-the-vote activities both encourage individuals to exercise their right to vote. Public charities may support those activities so long as they are nonpartisan; private foundations must comply with additional requirements. Common features of nonpartisan activities in those areas include:

• Nonpartisan messages are used to encourage voter participation.

Messages such as "exercise your right to vote" indicate nonpartisan activity. However, a message suggesting a position on one particular issue, such as "It's time for a change: Vote pro-choice," indicates partisan activity.

• Services are provided without regard to an individual's political affiliation or tendency to vote in a particular manner.

A project that will only provide free rides to the polls to individuals who support the organization's position on a single issue, such as welfare reform or only to members of one political party, will likely be deemed partisan.

• The project targets individuals based on a common interest, such as the environment or individuals who are historically excluded or underrepresented populations, not based on expectations of how an individual will likely vote.

Targeting a region because the area tends to vote Republican is impermissible, but targeting a region because its voters are historically underrepresented at the polls indicates a nonpartisan effort.

Private foundations must also ensure that a grant earmarked for a voter registration project meets several additional requirements to avoid having the grant or activity classified as a taxable expenditure. In part, these requirements—found in Section 4945(f)—require voter registration activities to be carried out by a Section 501(c)(3) organization over more than one election cycle and in at least five states.

Further, private foundations may not earmark their contribution to the project for a particular location or a particular election period. To ensure that the proposed project meets these and the other requirements, private foundations may ask the potential grantee to obtain an advance ruling from the IRS stating that the project meets the 4945(f) requirements.

Voter education includes activities that provide information to the public about candidates, such as publishing voter guides or hosting a candidate debate. Both public charities and private foundations may support these activities if they are nonpartisan. Key indicators of nonpartisanship include:

• The project includes all candidates for a particular office.

All candidates for a particular race should be solicited for participation. In the case of a candidate debate in which the field of candidates is too large to afford the opportunity for a meaningful debate, the project could still be nonpartisan if the host establishes objective criteria for determining which candidates will be invited to participate. 

• The questions will address a broad range of issues.

Inclusion of a broad range of issues is important to avoid making it appear that the organization has a preference for one candidate over another based upon the answers to a narrow set of questions. 

• The material, whether in print or in person, is presented in an unbiased manner.

This includes ensuring that questions are unbiased, candidates are provided with equal opportunities to respond to questions and moderators (or others from the organization) do not add commentary about the candidate's responses.

Candidate education. A grantmaker may educate candidates or political parties about issues by providing information or discussing issues with the candidates on its own initiatives or in response to a request for information from a candidate or party. Several cautions should be taken into consideration when providing this information:

• Either offer or provide all other parties or candidates in the particular race the same materials to avoid any appearance of partisanship. 
• If the material provided expresses a view on specific legislation, be cautious if providing the material to a candidate who is an incumbent. This is an area where the rules for political activity and lobbying intersect and the rules for lobbying applicable to the grantmaker should be consulted (see "Resources," below). 
• Do not develop new materials in response to a request from a candidate or party. This could be viewed as supporting the party or candidate who requested the new material. 
• Carefully consider whether to ask a candidate or party to pledge support for the grantmaker's position on an issue. Publicizing which candidates or parties pledged to support the grantmaker's position could be seen as support for those who make the pledge.

Typically, educational material that either does not reference legislation or that presents enough information on all sides of an issue for a reasonable person to reach his or her own conclusions is the ideal material to share.

Final Notes

While the rules governing lobbying activity are beyond the scope of this article (see "Resources," especially "What the Law Allows" for a further discussion of the lobbying rules for grantmakers), grantmakers should know that they are not required to be silent on policy issues on which they regularly engage solely because it is an election season.

In fact, election season is often a time when the public and policymakers take an increased interest in issues of concern to foundations or grantees. Grantmakers should look for the intersections of the rules for lobbying and political activity when the foundation seeks to engage incumbents or the general public on matters of public policy—particularly when expressing a view on pending or proposed legislation—or supporting projects that involve such advocacy.

Furthermore, foundation employees and board members in their individual capacities are not barred from engaging in partisan political activity and even running for office themselves solely because of their affiliation with the foundation. The key to keep in mind is that individuals should make it clear that they are not representing the foundation and that foundation resources, such as postage, telephone, photocopiers, e-mail or office space are not used for this individual partisan activity.

Finally, while this article has highlighted some important aspects of the law on political activity, it is no substitute for a knowledgeable lawyer who is familiar with your foundation's activities.

Resources

Council on Foundations Information

John A. Edie, Foundations and Lobbying: Safe Ways to Affect Public Policy (Washington, DC: Council on Foundations, 1991). To order, call 888/239-5221 or visit www.cof.org and click on "Publications." Order #702, $20, nonmembers $30.

Thomas A. Troyer and Robert A. Boisture, "What the Law Allows." Legal Brief, Foundation News & Commentary, May/June 1997, online at www.foundationnews.org/CME/article.cfm?ID=2454.

IRS Guidance

Judith E. Kindell and John Francis Reilly, "Election Year Issues" in FY 2002 Continuing Professional Education material. Internal Revenue Service. Online at www.irs.gov/pub/irs-tege/topici02.pdf.

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