Federal Electioneering Rules

Charities are strictly prohibited under Federal Law from engaging in electioneering. Electioneering is participating or intervening in any political campaign on behalf of, or in opposition to, any candidate for public office. Charities cannot endorse any candidates, make donations to their campaigns, engage in fund raising, distribute statements, or become involved in any other activities that may be beneficial to or detrimental to any candidate for public office.

As election season approaches, charities must be aware that engaging in prohibited campaign activity could result in excise taxes imposed on the money spent electioneering; loss of tax-exempt status, and more severe penalties for flagrant violations. Contributions to charities that lose their tax exempt status are not deductible by the donors for federal income tax purposes.

The IRS recognizes that voter education and issue advocacy are important charitable services. Charities are permitted and encouraged to educate the public on genuine issues related to charitable mission. However, electioneering is primarily about the candidate rather than the issue.

Generally permitted activities like voters guides, candidate forums and literature distributions, could be prohibited electioneering. Legitimate issue advocacy could become electioneering if the facts of the case demonstrates bias. However, certain activities by charities, such as contributing money to a political campaign, are clear violations of Federal law.

1/21/10 US Supreme Court Overturns Campaign Finance Law; Permits Corporate Contributions. Following a rare rehearing of a Federal Campaign Finance case, (Citizens United v. Federal Election Commission) the US Supreme Court ruled 5-to-4 that government may not ban political spending by corporations in candidate elections.  This decision is based on First Amendment free speech and applies to corporations, labor unions and other organizations.  The decision has been criticized as representing a sharp doctrinal shift that will allow corporate and special interest money to flood the political marketplace and corrupt democracy. 

Citizens United is a conservative nonprofit corporation that released its documentary “Hillary: The Movie,” a 90-minute documentary about Hillary Clinton during the 2008 Democratic presidential primaries in which she was a candidate. Later that year, the Federal Election Commission won its court battle to prohibit the broadcast of the film. BTW- you can still watch the film on DVD and the Internet.

Those of you who have been advocating with me since I started at PANO will remember the black-out periods and the Wisconsin Right to Life case argued under the Bipartisan Campaign Reform Act of 2002 (BCRA), a.k.a. McCain-Feingold. That's where the FEC regulation prohibiting organizations from broadcasting “electioneering communications” 30 days before of a presidential primary or 60 days before the general election.  Since 2007, this law applied to communications “susceptible to no reasonable interpretation other than as an appeal to vote for or against a specific candidate.”  Organizations also had to include disclaimers (even on a 30 second trailer) and disclose the names of its contributors. The Citizens United case seemed destined for obscurity until this past September when the Court decided to rehear the case to address the more important issue of restrictions on corporate spending to support or oppose Federal political candidates. 

Note:  While some nonprofits such as 501(c)(4)’s, 501(c)(5)’s, and 501(c)(6)’s, will be able to do more because of the court’s relaxation of election laws, but this decision does not affect the tax laws that still prohibit 501(c)(3) charitable nonprofit organizations from engaging in political campaigns for or against individual candidates.

 So what did the Citizens United decision change?  By removing the prohibition on corporations seeking to finance independent, electoral advertising without using political action committees funded by employees, the Supreme Court invalidated McCain-Feingold’s ban on corporate electioneering advertising within 60 days of a general election or 30 days of a primary. Corporate contributions (direct or in-kind) to candidates, parties, or PACs are still banned. However, the judgment was affirmed with respect to the BCRA’s disclaimer and disclosure requirements. Therefore, corporations are now free to pay for ads that are “genuine issue advocacy” as defined under the prior case FEC v. Wisconsin Right to Life (6/25/07) so long as they disclose it.

7/1/09 New Federal Election Commission Initiative to Improve Communications with Public. For the first time in its history, the Federal Election Commission is seeking formal recommendations by the public on how to improve it’s process of disclosing information to the public. The Commission is seeking to improve its website, making it easier for the public to gain information about federal campaign finance laws, the disclosure of campaign data, and the actions of the Commission. This is a rare and valuable opportunity to improve a vitally important source of information and transparency. A copy of the Commission’s Notice of Public Hearing and Request for Comment is posted at http://www.fec.gov/pages/hearings/internethearing.shtml.  E-mail your comments to improvefecinternet@fec.gov  by July 21, 2009.

2/25/09 FEC Posts additional Public Comments on Improving its Procedures and Policies. The Federal Election Commission has posted comments that it received during is extended public comment period. The FEC solicited these comments for its January 14-15, 2009 public hearing as part of an initiative to identify ways to Increase the transparency, fairness and efficiency (or compliance and enforcement) of its regulations and procedures. Comments are posted at http://www.fec.gov/law/policy/enforcement/2009/comments/comments.shtml. 

2/11/09 FEC Extends Deadline. The FEC has extended the deadline for written comments on might improve transparency, fairness and efficiency regarding compliance, enforcement, public disclosure, advisory opinions and other matters. The deadline is now February 18. The FEC held a hearing on January 14-15 and heard recommendations from 15 witnesses. Others have submitted recommendations through written comments, which can be found at http://www.fec.gov/law/policy/enforcement/publichearing011409.shtml.  Written comments may be submitted by e-mail to agencypro2008@fec.gov

1/14/09 FEC Releases Draft Final Rules on Reporting of Bundled Lobbying Contributions. The FEC released draft Final Rule on reporting campaign contributions that are bundled by lobbyists, registrants and their PACs. The FEC unanimously approved these rules on December 18, 2008. http://www.ombwatch.org/article/blogs/entry/5595/34.  The draft Final Rule implements the HOLGA (Honest Leadership and Open Government Act of 2007) section 204, regarding the disclosure of bundled lobbyist contributions. By bundling campaign contributions, the money becomes essentially anonymous.

8/8/08 New IRS Memo Offers Rules for Charity's Internet Electioneering. The IRS issued a new directive for IRS field inspectors on the examination of cases involving allegations of political activity by 501(c)(3) nonprofits on the Internet.  This directive offers guidance on electronic proximity such as, when links on your websites may be considered inappropriate political activity for “promoting, encouraging, or urging viewers to use the link to get information about specific candidates and their positions on specific issues.”

Supreme Court Upholds Charities' Rights

12/17/07 FEC Releases Final Rules and Explanation & Justification on electioneering communications. These Regulations implement the US Supreme Court’s decision in WRTL v FEC preserving charities advocacy rights to run genuine issue ads prior to a Federal election. For a copy of the regulations go to http://www.fec.gov/law/cfr/ej_compilation/2007/notice_2007-26.pdf. 

11/20/07 FEC Posts final rules for electioneering communications online. As a result of the Wisconsin right to Life Supreme Court case settled in favor or Nonprofit Advocacy rights, the Federal Election Commission is required to issue regulations consistent with that ruling. See the draft final rules for electioneering communications are posted online at http://www.fec.gov/law/law_rulemakings.shtml#ec07. 

8/23/07 FEC Issues Notice of Proposed Rulemaking on Electioneering Communications. The Federal Election Commission (FEC) issued a Notice of Proposed Rulemaking (NPRM) to implement the US Supreme Court decision in Wisconsin Right to Life v. FEC (WRTL). The Court ruled that the specific ads in question were not the “functional equivalent of express advocacy” because they were “susceptible of a reasonable interpretation other than as an appeal to vote for or against a clearly identified Federal candidate.” Therefore, the Court determined, the ads in question were entitled to an exemption from the restriction on the use of corporate or union funds for electioneering communications.

The NPRM seeks comment from the public about whether corporations should be required to disclose general treasury funds used to pay for exempt electioneering communications. The NPRM also seeks comment on a number of questions related to the specific description of the exemption (i.e., what types of ads should be eligible) and how these rules might impact other aspects of campaign finance regulation. The FEC plans to make clear how they interpret this exemption, before mid-December, when the electioneering communication timeframes for the 2008 campaign begin. The public comment period closes on October 1, 2007. For more information go to the FEC website at http://www.fec.gov/press/press2007/20070823nprm.shtml or Independent Sector for additional analysis and background http://www.independentsector.org/programs/gr/WRTLamicus.html. 

8/1/07 FEC Responds to Supreme Court Ruling; to Release Notice of Proposed Rulemaking. Since the Supreme Court Ruling last month in FEC v. Wisconsin Right to Life. This decision permits charities to air genuine issue advertisements within the former blackout period (30 days before a Federal primary election and 60 days before a general election). Because of the plurality decision, additional test cases were being filed to finally settle the issue on its merits. To settle the matter, the FEC’s announcement that it will release a notice of proposed rulemaking later this month to finally implement the Supreme Court’s decision. The FEC also filed a motion to end a similar case against the Christian Civic League of Maine. According to FEC Chairman Robert Lenhard “The FEC intends to make clear how we are interpreting this exemption before mid-December, when the electioneering communication timeframes for the 2008 campaign will begin.” For the FEC’s July 19 announcement of a proposed rulemaking go to http://www.fec.gov/press/press2007/20070719rule.shtml.  For other FEC actions go to http://www.ombwatch.org/article/articleview/3918/.

6/25/07 US Supreme Court Announces Major Decision for Charity’s Advocacy Rights. On June 25, the U.S. Supreme Court announced its 5-4 decision in FEC v. Wisconsin Right to Life ruling that the FEC ban is unconstitutional (and not prohibited electioneering) when applied to genuine issue ads.

The case challenged a provision in the Bipartisan Campaign Reform Act of 2002 (BCRA) that bars corporations, including nonprofits, from paying for broadcasts that mention federal candidates within 60 days before a general election or 30 days before a primary (known as the blackout period). The high Court ruled in favor of charity’s right to run issue ads during elections, but the debate will likely continue throughout the upcoming 2008 presidential election and beyond. This is a major Supreme Court ruling in favor of charity’s advocacy rights. PANO was a signor of the first Amicus Brief filed in 2004, and was the second Brief filed in 2007.

For the Supreme Court Opinion go to http://www.scotusblog.com/movabletype/archives/06-969_All.pdf. For more information go to http://www.ombwatch.org/article/articleview/3890/1/489. For the Washington Post news article http://www.washingtonpost.com/wp-dyn/content/article/2007/06/25/AR2007062500548.html. 

4/25/07 Supreme Court Arguments begin on FEC v. Wisconsin Right to Life Case. The United States Supreme Court will begin to hear arguments in the FEC v. Wisconsin Right to Life (WRTL) case. This case will determine whether charities may air issue advocacy ads within 30 days of a primary election or 60 days of a general election. While charities are prohibited by law from supporting a candidate for public office, issue advocacy is core to our charitable mission. In 2004 Congress, passed the Bipartisan Campaign Reform Act which included a provision to extend charities’ electioneering ban to include genuine issue ads published by charities prior to a Federal election. WRTL and a coalition of charities including NCNA, Independent Sector, OMBWatch and PANO have opposed BCRA in the belief that the ban is an unconstitutional restriction of nonprofit grassroots lobbying. The Supreme Court will begin hearing arguments this week from the FEC, WRTL, and members of Congress. For more information: http://www.ombwatch.org/article/articleview/3794/1/48?TopicID=1. 

3/28/07 PANO signs on to US Supreme Court Brief to Oppose FEC Blackouts periods. PANO signs on to the OMB Watch Amicus Brief filed last week in the pending Supreme Court Case of FEC v Wisconsin Right to Life. The Wisconsin Right to Life case challenged a Federal Election Commission rule prohibiting charities from posting the name of a Candidate for Federal office within 30 days of the primary election and 60 days of a general election. Charities are prohibited by law from engaging in electioneering, and according to the FEC this was electioneer. However, such prohibitions impose unnecessary limitations on charitable organization advocacy rights and freedom of speech.

8/30/06 FEC upholds ban on nonprofit grassroots lobbying communications that mention a candidate for public office prior to the election. August 29, the Federal Election Commission (FEC) voted to block a proposed interim rule that would have exempted grassroots lobbying broadcasts from a federal rule banning nonprofit grassroots lobbying communications prior to an election. Under the current electioneering rule, nonprofits may not mention a federal candidate for public office (even if an incumbent) in any issue advocacy communication within 60 days of a general election or within 30 days of a primary. Many nonprofits regard these Federal blackout periods as a severe impediment to legitimate grassroots issue advocacy. These blackout periods apply for all Federal candidates with respect to otherwise legitimate issue advocacy communications. So if your nonprofit advocates for or against a bill pending in the US Senate Finance Committee, and Senator Grassley of Iowa (Committee Chairman) happens to be on the November 8 ballot in Iowa, regardless which state your charity is from, you may not mention Grassley in your grassroots advocacy emails, after September 9. During these blackout periods, Congress would not be prohibited from passing laws adversely impacting nonprofits, but nonprofits would be unable to effectively respond. For a copy of the press statement by OMB Watch go to http://www.ombwatch.org/article/articleview/3573/1/192?TopicID=5.

8/15/06 FEC’s August meeting will consider easing restrictions on nonprofit issue advocacy blackout periods. With less than 3 months before the general election, the FEC will consider allowing charities and associations to air issue ads aired during the 30-day period before a federal primary and 60-day period before a federal general election. The proposal will be considered at the FEC’s open meeting on August 29 in Washington, DC. If approved, the exemption would remain in effect until September 2007.

The FEC proposal is in response to a request for rulemaking filed in February by the AFL-CIO, the U.S. Chamber of Commerce, the National Education Association, and the Alliance for Justice. Over 200 charities and associations have filed comments with the FEC supporting the request. The FEC’s current restrictions on electioneering communications prevents charities from effectively communicating with Congress and from disseminating vital public policy information on basic issues. For additional information go to http://www.ombwatch.org/article/articleview/3553/1/457  and http://www.fec.gov/members/von_Spakovsky/speeches/statement20060803.pdf. 

For a copy of the Agenda and the proposal go to http://www.fec.gov/agenda/2006/mtgdoc06-53.pdf. 

IRS Field Directive (7/28/08)

10/11/07 FEC Posts Electioneering Communications Rulemaking Comments Online; Public Hearing to be held October 17, 2007. In an effort to demonstrate transparency in their rulemaking process, the Federal Elections Commission has posted comments and requests to testify received from the September 4 Notice of Proposed Rulemaking . The FEC is required to issue regulations consistent with the US Supreme Court Ruling in FEC v. WRTL whereby “genuine issue ads” by charities were determined to be protected speech rather than prohibited electioneering communications. The NPRM sought comments on questions related to the specific description of the exemption and what types of ads should be exempt.

Public comments
Schedule and witness list for 10-17 hearing
The Supreme Court Case

11/29/06 FEC Expands Restrictions on Voter Guides. On Nov. 9, 2006, the Federal Election Commission (FEC) announced in an enforcement decision cracking-down on the use of voter guides by nonprofits. Under Federal law, charities may not engage in electioneering. However, nonpartisan voter guides are permissible as long as they do not favor a particular candidate or party. The FEC’s enforcement decision, changes the existing rule. Now the bright-line Federal rule that required magic words “vote for” or “vote against” are no longer needed for the FEC to find partisan electioneering. Rather voter guides will now be considered electioneering if the overall content implies support of or opposition to a federal candidate. For more information see http://www.fec.gov/press/press2006/20061115mur.html.

IRS Initiative to Prevent Electioneering

6/1/07 IRS releases Guidance and Report on Charities Political Campaign Activities. The IRS released new Guidance (Revenue Ruling 2007-41) on political activities for exempt organizations. Charities are prohibited by law from engaging in campaigns or elections. These new guidelines offer 21 factual situations where 501(c)(3) charities (including churches) may or may not be engaged in prohibited electioneering. More information is posted at http://www.irs.gov/charities/article/0,,id=170893,00.html. 

Revenue Ruling 2007-41: http://www.irs.gov/pub/irs-drop/rr-07-41.pdf. 

For the latest May 2007 IRS Political Activity Compliance Initiative (PACI) issued May 30 2007, go to http://www.irs.gov/pub/irs-tege/2006paci_report_5-30-07.pdf.  The new PACI Report is based on the original PACI Final Report of February 2006. The 2006 PACI Final Report is posted at http://www.irs.gov/pub/irs-tege/final_paci_report.pdf.