Electioneering Rules for Private Foundations and Public Charities — Course Transcript

Introduction

Maya: Hi, in case we haven’t met before, I’m Maya and I am new to my work at a private foundation. I have so much to learn. Like you, I’m here today to learn about the electioneering rules that apply to private foundations and public charities. I get so excited around election season! Voters are paying close attention to important policy issues, and it’s a great opportunity for private foundations and public charities to get their messages out!

Narrator: Eh-hem, Maya, remember me? I am here to help you with any questions you may have along the way.

Maya: Oh, uh, hello. I’m glad you’ll be here! I’ve heard that private foundations and public charities have to be careful during election season, particularly if they interact with candidates and voters. I have questions like….. What do I need to watch out for during election season? And what can private foundations and public charities do and how do we do it safely around elections

Narrator: Those are great questions, Maya. There are many ways to continue your organization’s work during election season, but it’s important to know the rules and understand your organization’s policies. Private foundations and public charities do not have to close up shop during election season. There are many election-related activities that private foundations and public charities have supported for many decades without any problems.

Today we’ll discuss how to observe the IRS’ prohibition against electioneering when the grants you fund-or the activities you engage in as a staff member involves candidates or voters. This course consists of the six modules listed here.

You can click on each module to view more details on what we’ll cover. Also, you should be aware that other regulations, outside the IRS requirements, may also apply to your advocacy work but are beyond the scope of this course.

Maya: Great! This is exactly the information I’ve been looking for. So after this training, I’ll have all the information I need?

Narrator: Well, this course will be a really good start, and you can refer back to this course as a refresher, but as sticky situations come up in your work you should always seek assistance. Depending on your organization, assistance could come from: your in-house legal staff, outside legal counsel, grants management, or another department responsible for compliance. Because the rules around electioneering are especially tricky, you should always seek assistance before engaging in potentially prohibited activities.

If you’re taking a Learn Foundation Law.org course for the first time, it’s best that you start by clicking the Course Navigation button on the bottom of your screen to learn how to control your training experience.

Additionally, if you’re taking this course for the first time we recommend that you go through each module in order, starting with the module on the Electioneering Prohibition. If you are a returning user, please select any of the modules to continue with your learning.

Navigation

Narrator: Again, If you’re taking this course for the first time, it’s best that you go through each module in order. If you’re returning to the course and using it as a reference, you can click any of the module titles on this page and jump right to your specific area of interest. To control your training experience, you will use the navigation bar at the bottom of the screen. To mute the sound, click the Mute button. To pause or play, click the …well, pause or play buttons. And to move forward and back a topic, use the Next and Previous buttons. If you want to access a particular section at any point in the training, use the Course Map tab at the top of the screen. To view a transcript of what’s being said, click the Transcript tab. Click the Resources tab to download each of the documents referenced in this course. Once you save a file to your desktop, you can refer to it or print whenever you want. The course Transcript is available here as well. Over here is the Glossary tab. You can click on each term to see the definition below.

Oh, and these little buttons show you where you are at within a particular module. You can also click these buttons to move back and forth through the topics…if you roll over a button, you’ll see the topic title. The home button will bring you back to this list of modules.

If you have to leave the course, you can reopen it and select “Continue” or “Start From Beginning”. Keep in mind that this will only work if you use the same computer each time you view the training.

Click the first module to get started!

 

Module 1: Overview of the Electioneering Prohibition

Introduction

Maya: Hello? Oh, hi Terry! Great to hear from you. It’s my friend Terry, the political director for an environmental group. Wow, a candidate for the U.S. Senate has endorsed your organization’s platform on environmental issues? A meeting? You’d like us to endorse him? Well, it sure sounds like he’d be a valuable advocate in the Senate if he wins, so….

Narrator: Pssst. Maya? Before you commit, I think we’d better talk more about the electioneering rules that apply to private foundations and public charities.

Maya: Hi, uh, Terry, you still there? Thanks so much for calling. There are some rules that apply to private foundations that I need to look into. Can I call you back in a little while? Perfect, I’ll call you back soon. Okay, you’ve got my full attention! What were you saying I need to know?

Narrator: Thanks, Maya. Let’s start by looking at what the IRS says private foundations and public charities can and cannot do around elections. The IRS says Section 501(c)(3) charities – that means both private foundations and public charities – cannot support or oppose political candidates. Ever! Thanks, Maya. If you’re unsure of the differences between private foundations and public charities, click on the buttons to learn more. Click the Next button when you are ready to move on.

Electioneering Definition

Narrator: In language the IRS would use, 501(c)(3) private foundations and public charities cannot “intervene in an election campaign on behalf of, or in opposition to, any candidate for public office.”  So, taking any actions to help get someone elected is a “no go”-even if you think your organization’s objective is nonpartisan or furthers your organization’s charitable goals. In this course, we’ll go through a variety of examples to see how the IRS’ broad prohibition on electioneering is applied in practice.

Maya: Got it, I’ll make a mental note: “no electioneering for (c)(3)s”… Wait a second, what about (c)(4)s? I keep hearing about them.

Narrator: Well, the law does allow (c)(4) organizations to engage in a certain amount of electioneering. This means that (c)(3) charities should take care when interacting with (c)(4)s. You should consult with your legal advisor any time your (c)(3) is thinking of working with a (c)(4).

Maya: What about elections overseas? Does the electioneering prohibition apply there, too?

Narrator: Good question. Yes, it does. The electioneering prohibition applies to any and all local, state, national, and foreign elections involving candidates for public office.

Maya: This electioneering prohibition sounds pretty serious. I hope you’re going to tell me that the rules are clear?

Narrator: Unfortunately, the electioneering prohibition is largely undefined and often depends on the specific circumstances around an activity. So, it can be difficult to determine whether or not something might count as electioneering under the IRS’ rules.

Maya: OK, so, what I understand is that private foundations and public charities have to stay clear of electioneering. But the rules aren’t clear and activities often fall into grey areas. Wow, this is frustrating! It sounds like a lot of work to understand and apply.

Narrator: I understand your frustration, Maya. This is a complicated area of the law and, in addition, there can be serious consequences for getting it wrong. You should know that any amount of political campaign activity could allow the IRS to revoke your organization’s tax-exempt status. So, you’re exactly right Maya, this is pretty serious.

Maya: Hmmm, High stakes…Unclear rules…that sounds kind of scary.

Narrator: Well, it’s true the rules are somewhat vague. However, this course is designed to help you understand what kinds of activity might violate the electioneering prohibition, so you know what’s allowed and what to avoid. And, of course, if you’re ever concerned about whether something might count as electioneering, you should…

Maya: Seek assistance from a legal expert?

Narrator: That’s exactly right Maya. When any of the scenarios we discuss today come up in your work, you’ll want to look closely at the proposed activity to see if it might be electioneering under the IRS’ rules and seek further assistance if you have questions.

Key Points

And, always remember the basic point: private foundations and public charities cannot support or oppose candidates for public office.

You should ask the following questions when considering whether an activity violates the electioneering prohibition. If the answer is yes to a couple of these questions, you may have a problem. Here are five questions to keep in mind:

1. Does the activity or work product mention candidates, elections, or voting explicitly?

2. Is the activity close in time to an election?

3. Is this a new activity for the private foundation or public charity, or an activity they have never done outside of an election season?

4. Does the activity benefit one candidate or party at the expense of another?

5. Does the activity involve an issue that has been identified with one candidate or party during the campaign?

The goal of this course is to give you the tools you need to spot potential issues. See the Resource  Guide for this course for a printable version of these questions. If you think an activity may involve electioneering, you should consult with your legal advisor. Remember, if the activity involves candidates, voting, or elections, or If it just seems like something that may help or hurt a candidate, talk to your legal advisor about whether it might be electioneering.

Maya: OK, the pieces of the puzzle are starting to come together. Based on what I’ve learned about the electioneering prohibition, I guess I’ll have to tell Terry we definitely can’t endorse her candidate since an endorsement is a clear example of supporting a candidate.

Narrator: That’s true. But just remember, there’s still plenty you can do to increase voter participation and educate voters about the election and about the issues. The key is that the activities must be “nonpartisan”-that means your organization must treat all candidates in the same way without favoring one over the others. As we continue through the course, we’ll talk more about specific activities that private foundations and public charities can do-and how to make sure those activities meet the IRS requirement of nonpartisanship.

Now it’s your turn to do the driving. Click Begin to complete a brief Knowledge Check.

 

Module 2: Voter Education

Introduction

Narrator: Hi again, Maya! Let’s move on to module two: voter education. During election season, private foundations and public charities often want to educate the public about where candidates stand on the important issues of the day, as well as to continue to educate the public about critical developments on their issues. In this module, we’ll talk about the rules for voter education and how you can use tools like voter guides and candidate questionnaires to educate voters without violating the electioneering prohibition.

Maya: Sounds great! [Phone Rings] Uh oh, just a sec.

Hi, Terry! The candidate endorsement? Great, so you understand private foundations can’t endorse candidates. A voter guide or candidate questionnaire to educate the public? That could be monumental! Let me look into it!

OK, I’m ready to roll up my sleeves and find out what we can do!

Narrator: I can see you’re developing a good sense of what to watch out for, Maya. First, click on the buttons on your screen to learn more about what voter guides and candidate questionnaires are.

When you’re ready, click the Next button.

Narrator:  Private foundations and public charities can fund or distribute voter guides and candidate questionnaires if they are…

Maya: Nonpartisan?

Narrator: You got it, Maya.

Maya: So, how do I know if a voter guide or candidate questionnaire is nonpartisan?

Voter Guides

Narrator: The nonpartisanship question depends on whether the guide or questionnaire is designed to help or hurt a particular candidate or political party. So, for example, a nonpartisan voter guide would publish voting records of all members of a given legislature on a wide range of issues. It would not contain any editorial opinion and its contents and structure should not imply approval or disapproval of any of the legislators.

Maya: So, if an environmental organization puts up a webpage where viewers could find out how their representatives voted on key environmental bills…That would be partisan and count as prohibited electioneering, right?

Candidate Questionnaires

Narrator: Yep, you’ve got it Maya. The same principles apply to candidate questionnaires. A nonpartisan candidate questionnaire will be sent to all candidates and ask for each candidate’s position on a wide range of issues, selected on the basis of importance to the public as a whole-and not contain any editorializing by the organization collecting the responses.

Maya: That all makes sense to me. I understand that voter guides and candidate questionnaires will need to cover a broad range of issues and shouldn’t show a bias. So, even groups whose mission is focused on only one issue, like healthcare or immigration reform, would have to include questions about other issue areas in their voter guides or candidate questionnaires. Is that right?

Narrator: You got it, Maya.

 

Module 3: Issue Advocacy

Introduction

Maya: But wait, lots of groups are focused on one issue like the environment or taxes. Are you telling me that those groups have to stop educating the public about their issue during election season?

Narrator: Great point, this topic is the focus of module three, what the IRS calls issue advocacy. Let me walk you through the rules.

Maya: Can you keep it brief?

Narrator: I wish, but it’s not that simple. Under the IRS’ rules for electioneering, context matters. So, if a group has an established history of doing issue advocacy to raise public awareness around a  particular issue, and they want to continue doing the same type of advocacy during an election period, that’s generally not going to be electioneering.

Maya: That’s helpful.

Narrator: Groups can usually encourage candidates to address the organization’s issues-provided they don’t overtly or implicitly comment on or evaluate candidates’ positions.

Maya: OK.

Narrator: Like everything in this area of the law, the final assessment will still depend on all of the surrounding factors, including whether the issue is an important one distinguishing the candidates. So, you’ll want to talk with your legal advisor to determine whether an issue-focused communication made close to an election is electioneering.

 Ballot Measures

Maya: I knew you were going to say that. One more question-what about ballot measures? They typically just address one issue. Would that be subject to the same test?

Narrator: Great question, Maya. I get this question a lot since both candidates and ballot measures  are voted on at the ballot box. The electioneering prohibition only applies to elections for public office. Therefore, these rules don’t apply to ballot measures.

Unfortunately, efforts to support or oppose a ballot measure do raise questions about lobbying. So you will want to keep those rules in mind as you consider whether the Foundation can support ballot initiative projects. You can learn more about the advocacy and lobbying rules for private foundations  by clicking on the button on your screen. When you’re ready, click the Next button to continue.

Narrator: Now, time for a Knowledge Check. Click Begin to get started.

 

Module 4: Interacting With Candidates

Introduction

Maya: It would be fantastic if the candidates would get engaged on our issues. I can just imagine it!…Meeting with them, providing research on how they can solve issues important to us, getting them excited to make important changes, and maybe even we could get their public pledge to support our cause!

Narrator: Hello again, Maya! Before you firm up your plans, let’s go through module four. In this module we will talk about some common interactions with candidates and how you can stay within the electioneering rules. For example, you may want to host an event that involves candidates or  candidates may contact you because of your expertise in an issue area. When we are done with this section, I hope you’ll be aware of some situations that require extra care.

Maya: This is helpful, especially because I’m excited about a proposal I’ve just been reviewing that deals with this subject. The organization would like to host a debate to encourage the candidates for state governor to discuss where they stand on government reform. So, can we do that?

Candidate Forums

Narrator: The key issue to focus on is whether or not this particular debate will qualify as nonpartisan. As we discussed, for an activity to be nonpartisan, the activities cannot favor one candidate over the others. To determine if a candidate forum is nonpartisan, the factors the IRS will look at are:

• Whether the questions are prepared and presented by an independent, nonpartisan panel;

• Whether the forum covers a broad range of issues;

• Whether each candidate has an equal opportunity to present his or her views on each issue;

• Whether the candidates are asked to agree or disagree with the positions, agendas, or statements of the organization; and

• Whether the moderator comments on the questions or otherwise implies approval or disapproval of the

Maya: Well, I’ll have to look more closely at this proposal and talk with the grantee to find out more. But I already see one possible problem. The forum won’t cover a broad range of issues.

Narrator: Yes, that’s one of the factors for a nonpartisan candidate forum. You may not be able to fund this proposal as it is currently written. However, what defines a broad versus a narrow set of issues is itself a hard question. Whether a forum is sufficiently broad can depend on the context. If this is something you want to pursue, you should consult with your legal advisor about what will be required.

Maya: You mentioned that each candidate has to have a chance to present his or her views. What if there are a LOT of candidates for a given office?

Narrator: That’s another really good question. You may not need to invite every candidate if some have very little support among the public and no real chance of winning. However, whether or not someone is a viable candidate is another question you should discuss with your legal advisor before deciding to exclude a candidate from a forum.

The bottom line is that candidate forums often raise legal questions and can take extra care and time by all involved to ensure they are structured properly and not prohibited electioneering.

Candidate Pledges

Maya: By the way, I see that the grantee also plans to ask the candidates to take a pledge promising that, if elected, they will support additional limits on government spending.

Narrator: Let’s tackle this one together, Maya. Do you think this is allowed? Would a pledge help or hurt one side in the election?

Maya:  Well, the budget shortfall a big issue in this state. I’m guessing that voters might consider a candidate’s position on that and other fiscal issues when making their choice.

Narrator: Good instincts, Maya. In fact, the IRS sees candidate pledges as supporting the election efforts of those candidates who take the pledge. So, a private foundation cannot fund and a public charity cannot engage in efforts to get candidates to make a pledge.

Candidates or Current Government Officials as Expert Speakers

Maya: This is making more sense. But many of the people who are candidates are also experts in a particular field or current government officials and they may have important information to share on these topics. Can these people speak at an event sponsored by my organization? Or could we fund an organization that wanted to sponsor such an event? Would that count as a candidate forum?

Narrator: Not necessarily. Let’s talk about candidates or current government officials as expert speakers. You can certainly have an expert or a current government official speak publicly at an issue- focused event, so long as they are not doing so in their capacity as a candidate. Practically, what this means is that the event should not mention the person’s candidacy or the election. Your legal advisor can help you walk through this scenario to make sure you get it right.

When is Someone a Candidate?

Maya: Hmmm… That’s interesting. It seems to me that besides figuring out if something is nonpartisan, it is really important to know what makes someone a candidate. We have been talking about having the Mayor of London, who is considering a run for Member of Parliament in the UK, speak at an event about his environmental enforcement efforts. He hasn’t declared his candidacy for Parliament yet, but everyone says he’s going to run and a couple of groups have even run ads saying he would do a good job…

Narrator:  Well, Maya, I wish there was an easy answer to this question. Unfortunately, it is not always clear when someone is a candidate. If someone has declared himself or herself to be a candidate, then you’ll definitely want to view them as a candidate. But — and here is the tricky part — depending on the circumstances, the IRS can treat someone as a candidate even if they have not officially announced that they are running for public office. The IRS definition of a candidate is someone who holds them self out as a candidate for public office or is held out by others as a candidate for public office.

Maya: Wow, confusing.  Sounds like I should assume most people who are expected to run for an elected office will be candidates.

Narrator: That’s my recommendation, Maya. The other useful thing to remember is that there are a few limitations on what types of candidacies are covered by the IRS electioneering prohibition. The prohibition applies only to supporting or opposing candidates for elected public office. So, campaigning for or against the appointment of a Supreme Court justice or other appointed official would not count as electioneering. Remember though, if the appointment requires the approval of a legislative body,  like Congress, the IRS lobbying laws likely apply and you should consult your legal advisor. For more information on the IRS lobbying rules, please see the Advocacy and Lobbying Rules for Private Foundations course.

Sharing Research With Candidates

Maya: OK, another question. What about requests from candidates to provide information? For example, what if a candidate asks us to provide them with research conducted by my foundation or one of our grantees?

Narrator: Well, you can certainly point candidates to any publicly available information. That’s not a problem-although you should of course be sure that if you direct one candidate to research available on your website, you do the same for any other viable candidates who call.

Narrator: But if you’re talking about research or analysis that hasn’t been made widely available yet, then that’s much trickier. You may be able to provide the research if you offer it to all of the candidates-but you’ll definitely want to talk with your legal advisor about that. Above all, however, you should never perform research or provide any other services to a candidate at his or her request, since that would be viewed by the IRS as helping the candidate.

Transition Teams

Maya: What about after the candidate is elected? Could we provide research to a gubernatorial or presidential transition team?

Narrator: After the candidate is elected, providing him or her with information would no longer raise the concern that the private foundation or public charity might be influencing the election. However, you will still need to consider whether providing the information might be lobbying under the IRS rules or treated as supporting the official’s political party, or captured under any lobbying disclosure rules. In the context of transition teams, those rules become tricky and you should consult with your legal advisor.

Personal Activities

Maya: One more question. What if I want to help a candidate on my own time? Say, by volunteering to help canvas for a candidate on a Saturday morning?

Narrator: The rules are not meant to limit personal activities. As far as the IRS is concerned, a private foundation or public charity employee can participate in elections on their own time just like any other private citizen. However, you should check and see if the organization you work for has any additional guidance. And always be sure not to suggest that your organization has endorsed or supports the candidate you are helping. For example, you may want to clarify that you are volunteering on your own personal time if there is any risk of confusion. Also, you should not use your organization’s office supplies or equipment for campaign purposes or let the campaign use your organization’s space for meetings or other activities.

Ready for another knowledge check? Click Begin when you’re ready.

 

Module 5: Voter Participation

Introduction

Narrator: Hi, Maya. Since we are talking about election season, we should also discuss ways that private foundations and public charities can increase voter participation without running afoul of the electioneering prohibition.

Maya: Excellent! [Phone rings] Can you hold that thought for just one minute?

Maya: Hello? It’s Terry again, my friend at the environmental organization. Hi, Terry! Thanks for calling back. Oh, you’ll be conducting voter registration and get out the vote drives this election year? Yes, I agree, increasing voter participation is very important, especially among students and first-time voters. We would love to help you, and I was just talking about ways to increase voter participation…

Narrator: Pssst… Maya…

Maya: Terry, I am really interested in hearing more, but I need to take care of something. Can I call you back about this a little later? Okay. Talk soon!

You have perfect timing! I was just talking with Terry about helping promote voter participation. What are the things that we can do?

Narrator: There are several things that private foundations and public charities can do to support voter participation. But, in order to not be considered electioneering, the work has to be nonpartisan. In module 5, we will cover the rules for voter participation. But before we talk more about nonpartisanship, click on the buttons to learn more about get out the vote drives and voter registration drives. When you’re ready, click the Next button to continue.

Maya: So, it is okay to encourage people to vote and even assist in registering people to vote as long as we have made sure that the activities are nonpartisan? Right?

Narrator: Yes, that’s exactly right, although special rules apply to private foundations that want to support voter registration. Now let’s look at Get Out and Vote, and voter registration activities in turn.

Maya: Great! I cannot wait to tell Terry that we can help.

Get Out the Vote Drives

Narrator: Both private foundations and public charities, can conduct nonpartisan get out the vote drives.

When evaluating whether a get out the vote activity is nonpartisan, you should consider whether:

• Candidates are named or depicted in a way that favors some over others;

• The get out the vote communication names any political parties-unless it just identifies the party affiliation of all viable candidates;

• The communication is limited to urging people to vote and to describing the hours and places of voting; and

• The get out the vote services are broadly available and are not targeted towards voters with a particular political

Maya: Hmmm. I have seen many get out the vote drives that do not meet these factors.

Narrator: Remember, different types of organizations can fund voter participation work, including 501(c)(3) charities, 501(c)(4) social welfare organizations, and political parties. These types of organizations are subject to different rules, so it’s very important that your organization’s work is easily distinguished from what political parties are doing. Since the IRS considers multiple factors to determine if an activity is nonpartisan, it’s possible that a get out the vote drive that does not exhibit all the favorable factors could still be okay. But in that case, you’d want to run the idea by your legal advisor first.

Also, if there are any additional circumstances that make you wonder whether the get out the vote drive is designed to influence the election one way or the other, talk to your legal advisor.

Maya: I think I understand, but what about get out the vote work that focuses on a particular group in a community-like minorities, women, students, or low-income people? Terry specifically mentioned some of those groups.

Narrator: That’s a great point, Maya. The IRS does allow private foundations and public charities to conduct get out the vote drives for traditionally disenfranchised groups like those you describe-even if they are more likely to vote for a particular candidate or party.

Maya: Are there any issues I need to look out for when focusing on these groups?

Narrator: Where you need to be careful is when a get out the vote effort focuses on mobilizing only those individual voters who have actually indicated that they will vote for a particular candidate or party, because this type of focus would violate the electioneering prohibition.

Let’s look at some examples of get out the vote drives. Click “yes” if you think this get out the vote drive is nonpartisan or “no” if you think it’s electioneering.

Get Out the Vote Drives

Narrator: What about this scenario? Click “yes” if you think this get out the vote drive is nonpartisan or “no” if you think it’s electioneering.

Voter Registration

Maya: OK, so I understand how we can support nonpartisan get out the vote drives. Are the rules the same for voter registration drives?

Narrator: All of the general considerations about targeting and nonpartisanship apply to voter registration, too. But, some special additional requirements apply to private foundations when they support voter registration. First, private foundations cannot directly engage in voter registration efforts themselves. They can only make grants to public charities to register voters.

Maya: Oh! I did not know that.

Narrator: Second, the grantees must meet some very specific criteria, listed on your screen-regarding how they operate and where their funding comes from. For example, the grantee has to do voter registration work in five or more states and in more than one election cycle. The rules for private foundations’ funding of voter registration work are very technical and this is an area where you should always consult your legal advisor.

And of course, the voter registration drive itself must be nonpartisan. So, the efforts:

• Must be strictly neutral about the party and candidate preferences of the people it registers (and should not be coordinated with any party or candidate organizations);

• Must not explicitly or implicitly endorse or oppose any candidate or party; and

• Must not focus on particular geographic areas or groups selected on the grounds that increased registration in those areas is likely to favor one candidate or party.

Maya: Wow, funding voter registration work sounds pretty complicated. But at the same time, I see that we can do a lot to promote voter participation-so long as we get our ducks in a row and follow the rules.  I’m going to send Terry an email to find out whether their voter registration work will be done  by a public charity-and whether their voter registration and get out the vote work will meet the other IRS rules. And then I’ll run the whole thing by my legal advisor.

Narrator: Maya, that is a great start. Now, time for a Knowledge Check. Click Begin to get started.

 

Module 6: Other Issues

Introduction

Narrator: Maya, now that you’ve got the basics, let’s discuss in module 6 how the electioneering prohibition applies when working with a wider variety of organizations, including foreign organizations and other non-501(c)(3) public charities.

Maya: There’s more? [Phone Rings] Hello? Winston, great to hear from you! Ahh, you’d like funding to produce pamphlets encouraging voters who are concerned about the economy to vote for a particular party in the upcoming elections? Well, I have to say I think it would be difficult for us to support that, unless-hey, wait a minute! You’re in the UK! This is great news! We just might be able to do something here…

Narrator: Hold on, Maya? Do you have a minute?

Maya: Uh-oh, I see where this is heading… Winston, I need to look into that question. Can I call you back? Great, thanks.

OK, now I need to learn more about how the electioneering rules apply in foreign countries.

Foreign Elections

Narrator: That’s right, Maya. The electioneering prohibition applies not only to activities in the United States (including at the local, state, and federal levels), but to elections for public office in foreign countries as well.

Maya: So what you’re saying is that we can’t give Winston’s organization funding for activities that would count as electioneering because the prohibition applies to work in foreign countries, too? Is that right?

Narrator: That’s right, Maya.

Grantees with Afilliated Organizations

Maya: OK, I’ll have to call Winston back and let him know. Now, I have another question for you. Many of my friends and professional contacts work for different types of nonprofit organizations. We talked about section 501(c)(3) private foundations and public charities earlier. But what about funding grantees with affiliated organizations, such as section 501(c)(4) social welfare organizations and section 527 political action committees? Sometimes I get proposals from grantees with affiliated organizations and I am not always sure what we can fund.

Narrator: This is definitely worth talking about, But, Maya, I have to warn you…This stuff gets technical! Let’s take it step by step.

First, you can click on the boxes to learn more about section 501(c)(4) organizations, 527s, PACs, and SuperPACs. When you’re ready to continue, click on the Next button.

Grantees with Afilliated Organizations

Narrator: You may have noticed that on occasion there are affiliations between these groups–for example, a 501(c)(3) public charity that is affiliated with a “sister” section 501(c)(4) organization, and sometimes also with a 527 or political action committee.

Maya: Yes, I have noticed!! And I have also been wondering about whether the fact that a public charity is affiliated with other types of nonprofits affects our ability to fund even their nonpartisan work. So can we fund their nonpartisan work?

Narrator: Let’s talk this over. As we discussed earlier, private foundations can provide funding to public charities for certain election-related activities. The fact that a public charity grantee is affiliated with a separate (c)(4) organization or a PAC does not mean that the foundation can’t fund that public charity’s nonpartisan, charitable or educational work. The important consideration here is whether the grantee is good about keeping the work done by their various affiliates separate and the foundation puts a good grant agreement in place. You’ll need to discuss this with your legal advisor.

Funding 501(c)(4) and other Non-­‐501(c)(3) Charities

Maya: And what about funding non-charitable organizations, maybe even including for-profits directly to do issue advocacy work to educate voters?

Narrator: Great questions, Maya. A private foundation can also fund organizations that are not public charities, even for-profits, to do nonpartisan charitable or educational work. If a foundation wanted to fund work by an entity that is not a public charity, it would have to follow the expenditure responsibility procedures for grant funding or, alternatively, execute a contract for the group to  provide specifically designated nonpartisan services to the foundation. You’ll want to discuss any ideas for funding organizations that are not public charities with your legal advisor.

You can learn more about expenditure responsibility grants in the course: Expenditure Responsibility Rules for Private Foundations.

Click the Next button when you’re ready to move on.

527s, PACs and SuperPACs

Maya: So does that mean we can also fund 527s, PACs, and SuperPACs? I’ve heard a lot about those organizations lately.

Narrator: Another good question, Maya. Private foundations cannot fund activities by 527s, PACs, or SuperPACs because these organizations are dedicated specifically to electioneering that is prohibited for private foundations and public charities.

Ready for another knowledge check? Click Begin when you’re ready.

 

Conclusion

Maya:  Thank you! I am feeling more comfortable with the electioneering rules-and about what private foundations and public charities can and can’t do.  Most importantly, I understand that the IRS test for nonpartisanship can be complicated and I’ll want to get my legal advisor involved most of the time.

What we’ve talked about today all sounds pretty political!

Narrator: It’s been great talking with you today, Maya. I’m glad you found this helpful. You should remember that individual organizations have different views about what type of work they want to do surrounding elections and drawing bright-lines can sometimes be hard. But private foundations and public charities do not have to close up shop during election season. There are many election-related activities that private foundations have supported for many decades without any problems.

Maya:  Thanks, again!  I will keep my eyes open for any questions related to the topics we discussed today.

Narrator: Remember, you can always click the Course Map button, and access any topic of interest to you. Use this course as a reference, as often as you need. If you want to return to the Home screen, then click…you guessed it…the Home button. You can now print a certificate of completion and complete a short survey. We hope you will take the time to complete the survey. Your feedback will help us design future courses! Thanks!