As the federal midterm elections approach along with Arizona state and local elections, churches risk violating important restrictions regarding involvement in the elections. Organizations described in section 501(c)(3) of the Internal Revenue Code that are exempt from federal income tax (including churches) are prohibited from directly or indirectly participating or intervening in any political campaign on behalf of, or in opposition to, any candidate for public office. Whether a tax-exempt charitable organization is engaging in prohibited political campaign activity depends upon all the facts and circumstances in each case. For example, churches may encourage people to participate in the electoral process by sponsoring debates or forums to educate voters, distributing voter guides, or conducting voter registration or get-out-the-vote drives. If the debate or forum, voter guide, or voter registration or get-out-the-vote drive shows a preference for or against a certain candidate or party, however, it becomes a prohibited activity.
In addition, under federal law tax-exempt charitable organizations are prohibited from endorsing any candidates, making donations to their campaigns, engaging in fund-raising, distributing statements, or becoming involved in any other activities that may be beneficial or detrimental to any candidate. Even activities that encourage people to vote for or against a particular candidate on the basis of nonpartisan criteria violate the political campaign prohibition of section 501(c)(3) of the United States Code.
The federal courts have upheld this prohibition on political campaign activity, most recently in Branch Ministries v. Rossotti, 211 F.3d 137 (D.C. Cir. 2000). The courts have held that it is not unconstitutional for the tax law to impose conditions, such as the political campaign prohibition, upon exemption from federal income tax.
The prohibition on political campaign activity applies only to tax-exempt charitable organizations, not to the activities of individuals in their private capacity. The political campaign activity prohibition is not intended to restrict free expression on political matters by leaders of charitable organizations, including churches, speaking for themselves, as individuals. Nor are leaders prohibited from speaking about important issues of public policy. However, for their organizations to remain tax-exempt under section 501(c)(3), leaders cannot make partisan comments in official organization publications or at official organization functions, including official church publications and functions.
Similarly, the prohibition on political campaign activity does not prohibit charitable organizations from having contact of any kind with individuals who are candidates for public office. Depending on the facts and circumstances, a church may invite political candidates to speak in their capacity as candidates without jeopardizing its tax-exempt status if the organization takes steps to ensure that:
- It provides an equal opportunity to other political candidates seeking the same office,
- It does not indicate any support of or opposition to any candidate, and
- No political fund-raising occurs in conjunction with the speech.
A charitable organization may invite a political candidate to speak in his or her individual (noncandidate) capacity if the organization takes steps to ensure that:
- The candidate speaks only in a non-candidate capacity,
- Neither the candidate nor any representative of the organization makes any mention of the election or candidacy of the individual, and
- No campaign activity occurs in connection with the candidate’s attendance.
If the IRS finds a section 501(c)(3) organization engaged in prohibited campaign activity, the organization could lose its tax-exempt status and it could be subject to an excise tax on the amount of money spent on that activity
If you have any questions regarding this issue, or other questions related to church law in Arizona, please feel free to contact the author, Scott B. Carpenter, at firstname.lastname@example.org or 480-991-6949.