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Could I lose my 501(c)(3) status because I had an event for a political candidate in my building?

San Francisco, CA |

Hello,

A few months ago, I held an event in my non-profit business and had an individual running for re-election come by and had a press conference about an issue he was for, and additionally, he verbally supported what I do at my non-profit. We posed afterwards for pictures I posted online and I posted a scan of a "thank you" card he sent afterwards.

I didn't think anything of this till recently. If the IRS somehow discovered this happened, could I lose my 501(c)(3) status? Thanks for your help.

Attorney Answers 3


  1. The issue is whether your conduct could be construed as an endorsement. Many nonprofits seek their own endorsements from public figures, including politicians. From what your description, you appear to have been seeking his endorsement for your cause and your group more than you were giving it.

    The press conference about the issue should not be a problem, so long as it does not occur regularly. The law does not completely prohibit nonprofits from backing legislation the way it completely prohibits them from endorsing candidates.

    As usual, no answer is possible without more specific facts. Consult with an attorney first, next time.


  2. Your description does not show endorsement of a candidate or political cause. Nevertheless, the facts may be different than you have summarized. This is an area where you need to tread very carefully because 501(c)(3) organizations cannot campaign, endorse or support any candidate or political agenda. It sounds like the candidate was attempting to align himself with your non-profit for a tacit endorsement.

    You should contact a good tax and no-profit attorney for a complete review of the facts and how to address these issues in the future.

    I hope this helps!

    Ron Cappuccio
    www.NonProfitEsq.com

    If you do not like this answer or disagree, please look at one of the other answers provided. It is not necessary for you to try prove this answer is "wrong" or something with which you do not agree. This is a free service for you based on limited facts. Nevertheless, many times you need to consult an attorney with the details to get actual advice specific to your concerns. Do not put too many details in your questions or comments because this makes the information public and could hurt you. Government Regulations contained in IRS Circular 230 regulate written communications about Federal tax matters, including e-mail, between us and our clients. This is another attempt by the government to limit your rights and to extend the control of government over individuals and businesses. Nevertheless, such communications are either opinions or other written communications. This is not an opinion. It is other written communication and was not written to be relied upon, by itself, to avoid any tax penalties. In order to receive assurances of protection from tax penalties from a written communication, you should get an opinion letter. If you would like to discuss an opinion letter relating to any matter, please contact me and I will explain what is involved and what it will cost.


  3. Timing is an issue you must consider. Was "a few months ago" immediately prior to the November elections? If so, you might be walking on some pretty thin ice.

    The IRS uses what is called a "facts and circumstances" test to help determine whether an 501(c)(3) organization has violated the strict prohibition against political campaigning. This means that the IRS will evaluate any potential action or misconduct within the context of your other activities and the current political climate.

    In other words, this same activity might be considered political campaigning if it occurred two weeks before an election, but probably not if it happened two years before an election.

    One of the prime activities that the IRS has found to violate the prohibition on political campaigning includes inviting a political candidate to make a campaign speech at an event hosted by an exempt organization. In your case, it seems like this was clearly a campaign speech (pertaining to an issue he was campaigning upon) and YOU were created the Press Release.

    In the future - I would encourage you and your Board to be very serious in making sure that your organization complies with federal law in this area, and evaluate the plan BEFORE implementing it.

    May L. Harris, J.D., M.A.
    For Purpose Law Group, a PLC

    The information that has been provided on this website, including information contained in any link or informational reference, does not – and shall not be considered to – constitute legal or professional advice. The reader should not consider such information to be an invitation for an attorney-client relationship, should neither act nor rely on such information, and should always seek the advice of competent counsel licensed in the reader's state. Attorneys with the For Purpose Law Group are generally licensed to practice law only in the State of California. The ability of the reader to access this website in another jurisdiction does not constitute the practice of law outside of California, or a representation that members of the For Purpose Law Group are licensed to practice in any other jurisdiction. This site is not intended to, nor does it establish an attorney / client relationship between you and this office.

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