Nonprofit Groups and Politics: Tread Lightly

With just a few weeks remaining in what has been a hotly contested and potentially historic election campaign, nonprofit organizations are trying to make their voices heard. However, as in previous election cycles, their efforts reveal again how confusing — and potentially dangerous — the rules governing participation in politics are for tax-exempt groups.

Legislation passed more than 50 years ago, and reaffirmed since by the Internal Revenue Service and federal courts, forbids most tax-exempt organizations from supporting candidates for public office. (Political-action committees are the principal exception.) An organization that does so risks fines and even loss of its tax-free status. Yet, as three recent incidents in Indiana alone demonstrate, the line between what these groups can and cannot do is often nebulous.

One occurred on the first day of Rosh Hashanah, the Jewish holiday marking the start of a new year, when a rabbi in an Indiana synagogue delivered a sermon on poverty. Much of it was devoted to criticizing — by name — candidates running for public office, both in Indiana and nationally, for being insufficiently sensitive to the plight of the needy. The sermon ended with a call to the congregation to help the poor during the coming year, not just through giving and other personal activities but also with their votes.

Even though he did not endorse a candidate, the rabbi’s remarks verged on violating IRS rules on political involvement by tax-exempt organizations in election campaigns. Those rules make a fine distinction between expressing views on issues such as poverty, which is permitted, and showing favor for candidates who might share those views, which is not allowed.

According to the IRS, among the factors separating one type of message from the other are how close the remarks in question are to an election, whether people running for office are identified by name, and the extent to which the message was part of a series on the issue, unrelated to the timing of an election. “A communication is particularly at risk of political-campaign intervention,” the IRS warns, “when it makes reference to candidates or voting in a specific upcoming election.”

Although the rabbi might have intended the sermon as a religious and moral appeal, appropriate for the holiday, it could have been construed, in the context of an election campaign, as an inappropriate political statement as well.

A second incident involved a public speech by Madeleine Albright, the former secretary of state, at Indiana University at Bloomington last month. Colleges and universities generally welcome such appearances as valuable extracurricular activities, giving students opportunities to hear from and meet with distinguished public servants, as well as to inform themselves on policy issues before casting their votes.

But in this case, Ms. Albright was coming in her role as an adviser to Sen. Barack Obama to explain his views on foreign policy. Moreover, sponsoring her visit was a pro-Obama student group, whose flyers advertising the talk featured the Obama campaign’s logo.

Since the speech was to be given on the campus, university officials faced some tricky problems. Tax-exempt organizations are allowed to sponsor appearances by candidates (or, as in this case, by a surrogate), but according to IRS rules, they must offer an equal opportunity — not just a pro forma one — to all candidates for the same office. In view of the overwhelming support Senator Obama enjoys at college and universities, fulfilling that requirement could be difficult.

In any case, although Ms. Albright was not appearing under the auspices of Indiana University, she was scheduled to lecture in the institution’s Alumni Hall, which would normally have been available at minimal cost for student activities, such as sponsoring a speaker. However, since this was really a campaign event, the university was obliged to charge full rent and expenses. Otherwise, despite the educational value of Ms. Albright’s visit, the university could have been accused of contributing its space to the Obama campaign, a definite no-no.

The final episode involved a televised commercial on behalf of Mitch Daniels, Indiana’s governor, who is running for re-election. The head of an Indianapolis family-services charity appeared in the ad, praising Mr. Daniels’s improvements to the state’s child-welfare system. Since her link with the nonprofit group was noted in the ad, critics, including the Indiana chapter of Common Cause, questioned whether she had committed a violation by using her position with a tax-exempt group to endorse a candidate.

In fact, the IRS rules do permit nonprofit affiliations to be listed in identifying people backing contenders for office, provided they are accompanied by a disclaimer indicating that the individuals named, not the groups with which they are connected, are responsible for the endorsement. But this is much easier to do in print than in broadcast media, and the distinction is easily lost among those reading, listening, or watching, especially, as in this case, when the nonprofit group’s area of activity is the focus of the candidate’s message.

Incidents like these have led the IRS to issue warnings at the start of every presidential campaign since 1992 and to create a special Political Activities Compliance Initiative to enforce the prohibition on campaigning by tax-exempt groups. So far, however, it has led to few penalties.

On the other hand, this year a group of 33 Christian ministers challenged the existing rules by endorsing (or “recommending”) Sen. John McCain for president in their sermons at the end of September. The ministers say that their First Amendment rights to freedom of speech and religion were being violated, and they hope their actions will eventually produce a Supreme Court decision overturning the ban.

Who will prevail will not be settled until long after there is a new occupant in the White House, if at all. In the meantime, nonprofit organizations and their leaders who want to speak out on issues with which they are concerned, or even encourage wider discussion of them, should keep in mind that if an election is under way, they are venturing into treacherous waters.

Leslie Lenkowsky is a professor of public affairs and philanthropic studies at Indiana University and a regular contributor to these pages. His e-mail address is llenkows@iupui.edu.