Philanthropic Impact


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Tax-Exempt Organizations and Political Activities

Laura L. Brownfield
General Counsel

House Republicans have recently requested information on how tax-exempt organizations may be engaging in political activities. This may indicate a broader congressional probe and perhaps long-awaited updated IRS guidance on the amount of political activity allowed by 501(c)(4)s. 501(c)(3)s face strict prohibitions on participating in political candidates’ campaigns, while 501(c)(4)s face some limits on the extent to which they can intervene in campaigns but can engage in many political activities.

Democrats since 2013, amid Republican criticism of the IRS for subjecting conservative groups’ applications for tax-exempt status to extra scrutiny, have called for more limits on the political activity allowed by nonprofits. In the aftermath of lawmaker uproar at the IRS giving added scrutiny to some tax-exempt groups applications, a provision was added to an IRS appropriations bill in 2015 preventing the IRS from issuing guidance on the amount of political activity allowed by 501(c)(4) groups. That ban, in effect since 2016, would need to be lifted in the upcoming appropriations process or later overridden by legislation for IRS to update guidance on those entities. If the rider is eliminated, the IRS could issue guidance on political activity of (c)(4)s.

Note: This material was developed by Community Foundation for Southeast Michigan. It is published with the understanding that neither the publisher nor the author is engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a professional advisor should be sought.