IV. Political and Lobbying Activities
The preface in the Announcement to this set of questions on political activities and
lobbying refers to "charitable organizations described in Section 501(c)(3)."
The specific questions are directed towards Section 501(c)(3) organizations. Any guidance
issued with respect to Section 501(c)(3) organizations will, necessarily, affect the
analysis for Section 501(c)(4) organizations and Section 527 organizations as well. In
providing guidance to Section 501(c)(3) organizations, the IRS might also discuss whether,
and if so how, such guidance might be relevant for non-501(c)(3) organizations.
We now address each of the questions, in turn.
- What facts and circumstances are relevant in determining whether
information on a charitable organization’s website about candidates for public office
constitutes intervention in a political campaign by the charitable organization or is
permissible charitable activity consistent with the principles set forth in Revenue Ruling
78-248, 1978-1 C.B. 154, and Revenue Ruling 86-95, 1986-2 C.B. 73 (dealing with voter
guides and candidate debates)?
This is a Category Three (3)
item — some guidance would be helpful, such as through the development of a safe
harbors, but definitive guidance is not currently possible or advisable given the rapidly
changing technology and uses of the Internet.
Scope of IRS Question
There are many ways in which a website operated by a Section 501(c)(3) organization
could potentially involve political activities. Some ways might be obvious such as overt
statements on a website that support or oppose a candidate for office.
This question focuses specifically on voter guides and candidate debates, two of the
more complex areas. The leading precedential authorities in this area are fourteen to
twenty-two years old. Revenue Ruling 78-248, 1978-1 C.B. 154 deals with voter guides and
voting records, and Revenue Ruling 86-95, 1986-2 C.B. 73 deals with candidate debates.
There are also private letter rulings (such as PLR 9652026 (Dec. 27, 1996)), CPE articles,
and informal guidance in IRS remarks at conferences that have helped clarify the rules.
Even though half of Revenue Ruling 78-248 discusses the distribution of incumbent voting
records, this question does not mention this issue or refer to Revenue Ruling 80-282,
1980-2 C.B. 178, which distinguished Revenue Ruling 78-248 and dealt with the distribution
of incumbent voting records. Accordingly, we do not offer proposals for dealing with
incumbent voting records. We have limited our recommendations to the issues of voter
guides and candidate debates.
Existing Authority
Tax exemption under Section 501(c)(3) requires that an organization not
"participate in, or intervene in (including the publishing or distribution of
statements), any political campaign on behalf of (or in opposition to) any candidate for
public office." Section 4955 provides for a 10% excise tax on political expenditures
as a sanction that may be imposed on the organization instead of, or in addition to,
revocation of tax-exempt status, as well as a tax on organization managers who approve
such expenditures.
Treasury Regulation Section 1.501(c)(3)-1(c)(3)(i) states that an organization is not
operated exclusively for one or more exempt purposes if it is an "action"
organization. Treasury Regulation Section 1.501(c)(3)-1(c)(3)(iii) defines one type of
"action" organization as an organization that participates or intervenes,
directly or indirectly, in any political campaign on behalf of or in opposition to any
candidate for public office. The regulations further provide that activities that
constitute participation or intervention in a political campaign on behalf of or in
opposition to a candidate include, but are not limited to, the publication or distribution
of written statements or the making of oral statements on behalf of or in opposition to
such a candidate.
In general, Section 501(c)(3) charities must avoid taking positions in support of, or
in opposition to, candidates for elected office, whether on a website or elsewhere. The
body of laws that has developed with respect to such written statements should also
generally apply with respect to statements that a charity puts onto its website.
Voter Guides. Revenue Ruling 78-248 contains certain safe harbors for voter
education materials. Situations 1 and 4 describe the publication of the voting records of
incumbents, while Situations 2 and 3 deal with voter guides, in which candidates for
office respond to sets of questions.
Situation 1 described what the IRS considered to be an appropriate publication of
incumbent voting records, while Situation 4, the IRS opined, focused only on a narrow
topic, "land conservation issues" of importance to the organization. Similarly,
Situation 2 describes a voter guide that the IRS considers to be appropriate for a Section
501(c)(3) organization, while Situation 3 describes a voter guide based on questions that
evidenced a bias on the part of the organization.
Situation 2 represents what many have considered to be a safe harbor for voter guides.
The requirements for this safe harbor appear to be the following:
- The voter guide must be based only upon answers in response to a questionnaire sent to
candidates. The ruling does not appear to permit use of information from other sources,
such as legislative voting records, the candidate’s public statements, news stories,
or campaign literature.
- The questionnaire must be sent to all candidates for a particular public office. It
appears that this includes minor party candidates and generally anyone who "offers
himself, or is proposed by others, as a contestant for an elective public office."
Treas. Reg. § 1.501(c)(3)-1(c)(3)(iii).
- The questionnaire must solicit a brief statement of each candidate’s position on a
wide variety of issues. The term "wide variety" is not defined, but it appears
to be broader than the scope of issues covered in Situation 4 of Revenue
Ruling 78-248 – that is, "land conservation issues of importance to the
organization." The issues must be selected solely on the basis of their importance
and interest to the electorate as a whole.
- All responses must be published in the voter guide. The ruling is silent as to whether
this means that publishing the responses of only one candidate, where the opposing
candidate failed to respond, meets the safe harbor. In contrast, Regulations of the
Federal Election Commission ("FEC") require only that all candidates "be
provided an equal opportunity to respond." 11 C.F.R. 114.4(c)(5)(ii)(B).
- The voter guide must be made generally available to the public.
- Neither the candidate questionnaire nor the voter guide, in content or structure, may
evidence a bias or preference with respect to the views of any candidate or group of
candidates.
Voting Records. Revenue Ruling 80-282 examined the specific question of whether
the publication of a newsletter, by an organization otherwise described in Section
501(c)(3), containing the voting records of congressional incumbents on selected issues in
the manner described in the ruling, constituted participation or intervention in any
political campaign within the meaning of Section 501(c)(3). The IRS approved the
particular newsletter in that ruling, looking at all the facts and circumstances. Some of
the key points were as follows:
- The organization published in an issue of its newsletter a summary of the
voting records of all incumbent members of Congress on selected legislative issues
important to the organization, together with an expression of the organization’s
position on those issues.
- The newsletter was politically non-partisan, and did not contain any
reference to or mention of any political campaigns, elections, candidates, or statements
expressly or impliedly endorsing or rejecting any incumbent as a candidate for public
office.
- The voting records of all incumbents were presented, and candidates for
reelection were not identified.
- Publication was made after Congressional adjournment and was not geared to
the timing of any federal election. The newsletter was distributed to the usual
subscribers, and was not targeted toward particular areas in which elections were
occurring.
The IRS found that there were facts and circumstances to be weighed on both sides in
this case. On the one hand, the organization expressed its own views on the issues, and
the issues were not "broad ranging." On the other hand, the IRS focused on the
very limited target audience – only regular newsletter subscribers, numbering a few
thousand nationwide, and the fact that the newsletters were timed during periods of
adjournment and not during elections. Thus, targeting and timing became crucial new
factors.
The facts in Revenue Ruling 80-282 deal with incumbent voting records and do not
directly involve voter guides. We review it here, however, because it did specifically
modify Revenue Ruling 78-248, and because some practitioners believe that a voter guide
that does not fit squarely within all of the facts of Revenue Ruling 78-248 is more
likely to be acceptable to the IRS if it is distributed only to members, not targeted to
districts with close races, and not timed to coincide with an election.
Candidate Debates. Revenue Ruling 86-95 approved a League of Women Voters style
of candidate debate in which:
- All legally qualified candidates were invited to participate.
- The debate covered a broad range of issues.
- Questions were prepared by a non-partisan panel of knowledgeable persons
composed of representatives of media, educational organizations, community leaders, and
other interested persons.
- Each candidate was given equal opportunity to present his or her views.
- There was a moderator, whose sole purpose was to make sure that ground rules
were followed.
The ABA Proposals. In 1999, the ABA Exempt Organizations Committee’s
Subcommittee on Political and Lobbying Organizations and Activities presented a position
paper (the "ABA Proposals") which urged the IRS to modify, update, and expand
the older Revenue Rulings on voter guides. The ABA Proposals do not discuss the Internet,
but simply try to bring the 1978 revenue ruling on voter guides up to date. As the ABA
Proposals indicate, we continue to need updated guidance with respect to this area
generally, and, in providing such guidance, the IRS should also discuss the use of the
Internet.
Like our discussion, the ABA Proposals focused only on voter guides, not on voting
records and not on debates. First, the ABA Proposals recommend the following change to
Situation 2 of Revenue Ruling 78-248:
For consistency, and to prevent obstruction by nonresponding candidates, we propose
that the following clarification be made in Revenue Ruling 78-248, Situation 2:
"All candidates for a particular office must be provided an equal and reasonable
opportunity to respond. The organization must publish all responses received to all
questions. The organization may do so even though only one candidate responded. Where no
response is given, the guide may indicate that fact without attaching any negative
implication to it."
Among other things, the ABA Proposals asked the IRS to expand the revenue ruling. It
focused on four-real life examples of voter guides and explained why these guides should
be permitted. In particular, the examples presented varied from Revenue Ruling 78-248 in
the following ways:
- By permitting the organization to express its view on questions asked
without taking a position on the candidates.
- By permitting the organization to send its questionnaire only to major party
candidates, using some objective standard to determine appropriate candidates, such as
those receiving a certain percentage of votes in a primary.
- By permitting the organization to focus a questionnaire on a narrower range
of issues important to the organization.
- By permitting the organization to publish, in a full and accurate manner,
other public statements made by a candidate that were not prepared in direct response to
the questionnaire.
- By permitting the organization to publish a chart, created by the entity,
that fully and fairly summarizes and compares the views of candidates on a range of
issues.
FEC Guidance. In September 1999, an organization called Democracy Network
("DNet") received an advisory opinion from the FEC. FEC Advisory Opinion
1999-25. DNet is a website which, among other things, operates a voter guide. It is
sponsored by the League of Women Voters (the "LWV") and the Center for
Governmental Studies. The website offers, among other things, an on-line database of
textual, audio, and visual statements, which candidates can directly update, and which
voters can access according to their interests. Candidates can respond to questions from
the public that have been screened by the LWV. To see a candidate’s position on an
issue, the viewer clicks a checkmark in a grid of issues. The viewer can also create his
or her own grid, by topic, by sorting and searching. This type of website makes a voter
guide much more useful and practical for the user.
The FEC Opinion is also significant because it is allows a charitable organization to
present the views of candidates other than by asking the candidates questions; for
example, by publishing representative samples of newspaper editorials or news articles
about the candidate. The FEC found that this website did not cause DNet or LWV to be
engaged in intervention in a political campaign.
The statutes that the IRS and the FEC enforce are not comparable, and we are not
suggesting that the IRS is in any way bound by the FEC opinion. On the other hand, we
believe that the FEC’s analysis could be helpful to the IRS, and, and as we recommend
below, we believe that the particular voter guide examined in this FEC opinion is exactly
the type of website that the IRS could use as a model of an acceptable voter guide for tax
purposes.
The Internet Difference
How might voter guides and candidate debates be different when delivered or conducted
on the Internet?
To the extent that an activity on the Internet is (or could be) exactly the same as an
activity not on the Internet, the same law should apply. For example, if a website
webcasts a candidate debate that it sponsors and conducts, and the debate follows the
principles of Revenue Ruling 86-95, it should be treated as acceptable as a similar
televised debate. If a website publishes the verbatim transcript from a candidate debate
that otherwise would qualify as non-intervention in a campaign, that should be permitted.
In most situations, however, the Internet offers the ability to make printed
information more useful to the reader, in ways that are not equivalent to television,
radio, newspaper text, or printed materials. Currently, we can only imagine some of the
ways in which the Internet may in the future present information, such as voter guides or
candidate debates, in a different way.
Three of the ways in which the Internet differs from printed communications are
targeting and timing, and interactivity.
Targeting. Information available on a website is not, absent some other facts,
targeted to anyone. It is available for anyone who chooses to visit the website. Although
it is clearly more accessible, conceptually at least, a website is like a physical office
that a visitor can choose to visit or not. If a charity does not actively email, call, or
write to people and suggest that they visit the website to examine its voter guide, a
website remains a passive communication. A properly drafted voter guide should be treated
as such regardless of whether it is mailed to potentially interested parties or simply
available on a website.
Timing. A publication is written at a point in time, and it is mailed or
otherwise delivered at another. A website is published, it can be changed frequently or
infrequently, and it remains on until it is "turned off." As long as the exempt
organization gives candidates a reasonable amount of time before an election to state
their positions, timing should not affect a validly configured voter guide.
Interactivity. Voter guides, voting records, transcripts of candidate debates,
and debates themselves become more useful and informative on a website that permits
interactivity. A good example is DNet.org. This website published by LWV allows the user
to take basic information, which otherwise clearly complies with the voting guide
standards of Revenue Ruling 78-248, and sort and search in ways to make the information
more meaningful to the user. The FEC Opinion stated that this website did not violate FEC
prohibitions against corporations engaging in candidate activity, and we believe that the
IRS could use this website as an example of a website that would be consistent with
existing revenue rulings. Unfortunately, at this time, it is not possible to anticipate
all of the ways in which an interactive website might be constructed.
In our view, as long as the voter guide is presented and available in a manner that
complies with Situation 2 of Revenue Ruling 78-248, as modified by the ABA Proposals, and
as long as the site is structured in such a way that the user can select the material that
is important to the user, and the user sorts or searches based on the user’s
priorities, the charity should not be penalized for making a more flexible, functional
voter guide available to users. The feature of interactivity alone should not affect the
legal status of the voter guide. The IRS needs to encourage exempt organizations to make
the most of technology.
Recommendations
Overall, therefore, we recommend the following:
- The IRS should consider the examples suggested in the ABA Proposals, and we continue to
recommend that it adopt a revenue ruling based on the ABA Proposals to update the law on
voter guides generally.
- The IRS could provide a revenue ruling with a safe harbor based on the DNet.org
website’s voter guide as discussed in the FEC opinion. This example might at least be
helpful in showing how an interactive voter guide might work.
- With respect to candidate debates, it would be helpful if the IRS could indicate that
the format approved in Revenue Ruling 86-95 would also be acceptable on the Internet, even
if the candidates were given a more extended length of time to respond to questions in
writing. The medium of the Internet would allow candidates to consider their thoughts
rather than responding immediately. It might cause them not to avoid answering questions
that they are unable or unwilling to answer quickly in a live debate. In addition, it
would be helpful if the IRS could clarify that questions from the audience are permitted
as well, whether or not they are screened by the charity, as long as, if screened, they
are screened in a non-biased, non-partisan manner.
- The IRS should make it clear that interactivity, in and of itself, does not transform
the status of a valid voter guide. The status of the voting guide should not be affected
just because the user is provided with the ability to make the guide more useful for the
user by being able to sort and search a voting guide, or to tailor a guide that covers
issues of concern to the user. Again, the DNet.org site is a good safe harbor example.