It’s Campaign Season: What Can Non-Profits Do? These slides are accompanied by an oral presentation and should not be relied upon as legal advice. Copyright © 2018 Wiley Rein LLP Presented By: Caleb P. Burns Thomas W. Antonucci Ryan P. Meyers July 17, 2018
Association of Corporate Counsel (ACC) - It’s Campaign Season: … · 2019-03-21 · 202.719.7558 [email protected] Ryan P. Meyers Deputy General Counsel U.S. Chamber of
Aug 02, 2020
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
It’sCampaignSeason:WhatCanNon-ProfitsDo?
Theseslidesareaccompaniedbyanoralpresentationandshouldnotberelieduponaslegaladvice.Copyright©2018WileyReinLLP
PresentedBy:CalebP.Burns
ThomasW.AntonucciRyanP.Meyers
July17,2018
Speakers
ThomasW.AntonucciPartner
WileyReinLLP202.719.7558
RyanP.MeyersDeputyGeneralCounsel
U.S.ChamberofCommerce202.463.5816
CalebP.BurnsPartner
WileyReinLLP202.719.7451
2
Topics§ Federalcampaignfinancelawapplicabletoallincorporatednon-profitorganizations.
§ Taxlawsthatapplydependingonwhethertheorganizationistax-exemptpursuantto:• I.R.C.501(c)(3)or• I.R.C.501(c)(4)/(6).
3
FederalCampaignFinanceLaw§ Federalcampaignfinancelawplacesrestrictionsonallincorporatedorganizations.• Theseincludefor-profitandnon-profitcorporations,and• Incorporatedtax-exemptorganizationslike501(c)(3)charities,501(c)(4)socialwelfareorganizations,and501(c)(6)tradeassociations.
§ Notethatthisportionofthepresentationaddressesthecampaignfinancelawrestrictionsatthefederallevel.Stateandlocalcampaignfinancelawsmustbeconsultedwhenparticipatinginstateandlocalelections.
4
FederalCampaignFinanceLaw:Prohibition§ Asageneralmatter,federalcampaignfinancelawprohibitstheuseofcorporateresourcesinconnectionwithfederalelections.
§ Inparticular,acorporationmaynotcontributeitsfundsdirectlyto:• Politicalcandidates• PoliticalpartiesregisteredwiththeFederalElectionCommission(“FEC”)
– TheRNC,DNC,NRSC,DSCC,NRCC,andDCCC,and– Thefederalaccountofanystateorlocalparty.
• OtherpoliticalcommitteesregisteredwiththeFEC– LeadershipPACsmaintainedbyMembersofCongress,and– Othernon-connectedPACs(e.g.,ActBlue,Emily’sList,BIPAC).
5
FederalCampaignFinanceLaw:Prohibition§ Acorporationalsomaynotuseitsresourcestofacilitatecontributionstotheforegoingentities.Thisincludes:• Facilitiesandresourcesforfundraisingevents(e.g.,roomsandadministrativestaff);
• Communications(e.g.,newsletters,intranetpostings,emails);and• Resourcestomakecontributions(e.g.,stamps,envelopes,stafftocollectandsend“bundled”contributions).
6
FederalCampaignFinanceLaw:Exceptions§ Variousexceptionshavebeencreatedbystatute,regulation,andcaselaw.• OperateaPAC.• Makecampaignorfundraisingcommunicationstothe“restrictedclass.”• Hostcampaignorfundraisingeventsforthe“restrictedclass.”• Makeindependentcampaignorfundraisingcommunicationstothepublic(CitizensUnitedv.FEC).
• Useofcorporateresourcesforotherlimitedpurposes.
7
OperateaPAC
§ APACisabankaccountintowhichacorporationsolicitscontributionsofupto$5,000fromcertaineligiblepersonsandmakescontributions–subjecttolimits–tofederalcandidates,parties,andcommittees.
§ Corporateresourcesmaybeusedtoestablish,fundraisefor,andadministeraPAC.
8
CampaignandFundraisingCommunicationstothe“Restricted
Class”§ The“restrictedclass”includescertainhigh-levelemployeesof
theorganizationaswellasqualifyingmembers.§ Acorporationmayuseitsresourcestocommunicatecampaign
support–includingfundraisingsupport–toits“restrictedclass.”§ Maynot:
• Republishcampaignmaterials(e.g.,campaignliterature,contributionsolicitations,orcontributionreplycards).
• Facilitatecontributionsbyincludingenvelopesorstampsorpermitothercorporateresourcestobeusedtomakecontributions.
9
CampaignandFundraisingEventsforthe“RestrictedClass”
§ Mayusecorporatefundsandresourcestohostaneventforacandidatetowhichonlythe“restrictedclass”isinvited.
§ Corporationmayexpresscampaignandfundraisingsupportforthecandidateandneednotprovideanequalopportunityforthecandidate’sopponent.
§ Maynot:• Republishcampaignmaterials(e.g.,campaignliterature,contribution
solicitations,orcontributionreplycards).• Facilitatecontributionsbyincludingenvelopesorstampsorpermitother
corporateresourcestobeusedtomakecontributions.
10
CampaignandFundraisingCommunicationstothePublic
§ OnJanuary21,2010,theSupremeCourtinCitizensUnitedv.FECstruckdownthefederalstatutoryprohibitiononcorporate-fundedpoliticalspeechthatpubliclyadvocatestheelectionordefeatofafederalcandidate.
§ Thesearecalled“independentexpenditures.”• Maynotbecoordinatedwithpoliticalcandidatesandparties;• MustbereportedtotheFEC;and• Includecertaindisclaimerinformation.
11
CampaignandFundraisingCommunicationstothePublic
§ CitizensUnitedv.FECalsostruckdownthefederalstatutoryprohibitiononcorporate-funded“electioneeringcommunications”whichareTVorradioadsthatmerelyrefertoacandidatewithin30daysofaprimaryor60daysofageneralelectionandaretargetedtotherelevantelectorate.
§ Like“independentexpenditures,”“electioneeringcommunications”• Maynotbecoordinatedwithpoliticalcandidatesandparties;• MustbereportedtotheFEC;and• Includecertaindisclaimerinformation.
12
Useofcorporateresourcesforotherlimitedpurposes
§ Anyotheruseofcorporateresourcesforpoliticalactivities(e.g.,facilities,catering,transportation,employeetime)mustbepaidfor,ofteninadvanceby:• Thecampaign,or• ByanindividualorPACandtreatedasanin-kindcontribution(subjecttotheappropriatecontributionlimits)tothecampaign.
13
Useofcorporateresourcesforotherlimitedpurposes
§ Exceptionsinclude:• Food,travel,andlodgingexpensesofemployeestoattendaneventforwhichthePAChasmadeacontribution.
• Employeetimethatdoesnotexceed1hourperweekor4hourspermonthtoconduct“volunteer”politicalactivitiesthatdonotincreaseoverheadexpenses.
• Meetingroomsthatareavailabletonon-politicalclubs,civicorcommunityorganizationsandmadeavailabletoanypoliticalorganizationonthesameterms.
14
TaxRulesfor501(c)Organizations§ CommonTypesofTax-ExemptOrganizations
• 501(c)(3):CharitableOrganizations– Organizedandoperatedforreligious,charitable,scientific,oreducational
purposes§ Twotypesof(c)(3)’s:PubliclyCharities,andPrivateFoundations
• 501(c)(4):SocialWelfareOrganizations– Operatedprimarilyforthepromotionofsocialwelfare(i.e.societyasa
whole)• 501(c)(6):BusinessLeagues/TradeAssociations– Operatedprimarilytopromotethecommonbusinessinterestsofits
members
15
501(c)Organizations(cont’d)§ Ingeneral,therulesonlobbyingandpoliticalactivitiesarethesamefor501(c)(4)and501(c)(6)orgs,buttheyaredifferentfromtherulesfor501(c)(3)organizations.
16
501(c)(3)Organizations–PoliticalActivities§ PoliticalActivities
• Maynot“participateorintervene,directlyorindirectly,inanypoliticalcampaignonbehalfoforinoppositiontoanycandidateforpublicoffice.”– Maynotendorseorcontributetocandidates– Prohibitionisabsolute
§ Violations:ExciseTaxesandRevocation
17
501(c)(3)Organizations–PoliticalActivities(cont’d)§ PermissibleActivities
– VoterEducationandVoterRegistration/GOTVefforts– Mustbeconductedinanonpartisanmanner,withoutshowingabiasorpreferencefororagainstanycandidateorpoliticalparty
18
501(c)(3)Organizations–PoliticalActivities(cont’d)§ VoterEducation
• VoterGuides:Format,Content,Distributionmustbenonpartisan– IncumbentVotingRecords:
§ Timing:ElectionSeason/LegislativeSession§ RegularActivity:comparevotingrecordtoorganization’spositiononissues§ Shouldnotreferencecandidates,orendorseorrejectanincumbent
– CandidateQuestionnaires:§ Shouldcoverawidevarietyofissues§ Shouldincludeallcandidates§ Shouldincluderesponseswithouteditorialcomment(nograding)Note:SimilarAnalysisforCandidateForums
19
501(c)(3)Organizations–PoliticalActivities(cont’d)§ VoterRegistration/Get-out-the-vote
• Nonpartisan• Shouldidentifyallcandidatesornocandidates• Communicationshouldbelimitedto– Encouragingorassistingwithregistrationandvoting– Providinghoursandplacesforregistrationandvoting
• Shoulduseneutralandnonpartisancriteriaforselectingareasandgroupstotarget.– Forexample,cantargetareas/groupsthattypicallyareunderrepresented,
butshouldnottargetareas/groupsbasedonhistoricalvoting
20
501(c)(3)Organizations–LobbyingActivities§ LobbyingActivities
• 501(c)(3)PublicCharitiesmayengageinalimitedamountoflobbyingactivities– 501(c)(3)PrivateFoundationsmaynotlobby
• Twotests:– SubstantialPart:Subjectivefactsandcircumstancestest.IRSwill
considerexpenditures,volunteertime,andotherfactors.– 501(h)Election:A501(c)(3)publiccharitycanmakea“501(h)Election”–
anobjectivetest,basedsolelyontheamountofmoneyspentonlobbyingactivities.
21
501(c)Organizations–LobbyingActivities(cont’d)§ 501(h)Election:Expenditures
22
ExemptPurposeExpenditures(EPE) PermissibleTotal(Direct+Grassroots)LobbyingExpenditures
PermissibleGrassrootsLobbyingExpenditures
Upto$500,000 20%ofEPE(upto$100K) 5%ofEPE(Upto$25K)
$500,000-$1,000,000 $100K+15%ofEPEover$500K $25K+3.75%ofEPEover$500K
$1,000,000–$1,500,000 $175K+10%ofEPEover$1M $43,750+2.5%ofEPEover$1M
$1,500,000-$17,000,000 $225K+5%ofEPEover$1.5M $56,250+1.25%ofEPEover$1.5M
Over$17,000,000 $1,000,000 $250,000
501(c)(4)and501(c)(6)Organizations§ LobbyingActivities
• Lobbyingcanbetheorganization’sprimaryactivity,provideditisrelatedtoexemptpurpose.
§ PoliticalCampaignActivities• Anorganizationcanengageinpoliticalactivity,provideditisnottheprimarypurpose.
23
501(c)(4)and(c)(6)Organizations(cont’d)§ PoliticalActivities
• 60/40Rule:Nomorethan40%ofexpensescanbespentonpoliticalcampaignpurposes.– NotaSafeHarbor,but…– IRSLetter5228:IRShasissuedletterstocertain501(c)(4)applicants
grantingexpeditedapprovaloftax-exemptioniftheorgcertifiesthatlessthan40%ofexpenses(andtime)willbeforpoliticalcampaignactivities.
• 501(c)(4)and501(c)(6)organizationsmaynotgivedirectlytocandidatesorcoordinateexpenditureswithcandidates.
24
501(c)(4)and(c)(6)Organizations(cont’d)
§ Donations–Deductibility• IRC162:OrdinaryandNecessaryBusinessExpense– 501(c)(4):Usuallyno– 501(c)(6):Usuallyyes
§ Inallcases,non-deductibletotheextentusedforlobbyingorpoliticalactivities.
25
501(c)(4)and(c)(6)Organizations(cont’d)§ Donations–Notices
• NoticestoAllDonors– 501c4and501c6organizationsmustnotifyalldonorsthatcontributionsarenot
deductibleascharitablecontributions.§ “Contributionsto[NameofOrganization]arenottaxdeductibleascharitablecontributions.”
• NoticestoMembers:– Organizationswithmembersmustnotifymembersthatdues(andothersimilar
payments)arenotdeductibletotheextentusedforlobbying/politicalactivities.– Noticemustincludeareasonableestimateoftheamountallocatedtolobbying/
politicalactivities.§ “Weestimatethatthenon-deductibleportionofyourduesis__%”
– Organizationsthatdonotprovidethenoticewillbesubjecttoproxytaxonlobbyingandpoliticalexpenses.
26
Affiliation§ AffiliatedPoliticalOrganization
• A501(c)orgmaywanttoaffiliatewithotherorganizations,includingwithapoliticalorganization(527/PAC)
• 527s/PACscanengageentirelyinpoliticalcampaignactivities
• 527s/PACsaresubjecttodisclosure/reportingrequirements• 501(c)(3)organizationsmaynotestablishaPACdirectly
27
Affiliation§ CommonAffiliatedStructures
28
501(c)(3)
501(c)(4)/(6)
527/PAC
501(c)(4)/(6)
501(c)(3) 527/PAC
Affiliation § Importantforaffiliatedorganizationstooperateasseparateentities–books,records,bankaccounts• Canhaveoverlappingdirectors
§ Theorganizationsmayshareresources(e.g.,facilities,employees,etc.),butmustallocateexpenses• SharingAgreementbetweentheorganizations• Reasonableandconsistentallocationmethod–e.g.,timesheetsforemployees
29
PracticalApplication § SenatorSmithrequestsacampaigncontribution.
• Campaignfinancelaw:– Cannotusecorporatefunds,butcanusePACfunds.– Personalcontributionspermissibleassumingnouseofcorporate
resources.
30
PracticalApplication § SenatorSmithrequestsacampaigncontribution.
• Taxlaw:– A501(c)(3)entitymaynotcontributetoacandidate.– Ifthecandidateisnon-federalandtheapplicablejurisdiction
permittedcorporatecontributions,thena501(c)(4)/(6)couldcontribute,butthecontributionwouldbepoliticalcampaignactivityandcounttowardsits40%limit.
31
PracticalApplication § Youwanttoholdacampaign/fundraisingeventforSenatorSmith.• Campaignfinancelaw:– Iftheaudienceislimitedtothe“restrictedclass,”thencorporate
fundsandresourcescanbeusedtoplanandadministertheevent.– Iftheaudienceisbroader,thenthecampaignmustpayfortheuseof
corporateresources(oranindividualorPACcanpayandtreatthepaymentasanin-kindcontribution).
32
PracticalApplication § Youwanttoholdacampaign/fundraisingeventforSenatorSmith.• Taxlaw:– A501(c)(3)maynothostthistypeofevent.– A501(c)(4)/(6)couldhostthistypeofevent;itwouldbepolitical
campaignactivityandcounttowardsits40%limit.– Seepreviousdiscussionregardingnon-partisan“all-candidate”events
thatcouldqualifyasnon-political.
33
PracticalApplication § YouwanttocommunicatecampaignsupportforSenatorSmith.• Campaignfinancelaw:– Iftheaudienceislimitedtothe“restrictedclass,”thencorporate
fundsandresourcescanbeusedtomakethecommunication.– Iftheaudienceisbroader,thenthecommunicationmustbemade
independentlyofthecampaignandsubjecttoreportingattheFEC.
34
PracticalApplication § YouwanttocommunicatecampaignsupportforSenatorSmith.• Taxlaw:– A501(c)(3)maynotcommunicatecampaignsupportforacandidate.– A501(c)(4)/(6)cancommunicatecampaignsupportforacandidate;it
wouldbepoliticalcampaignactivityandcounttowardsits40%limit.
35
PracticalApplication § YouwanttocommunicatepolicysupportforSenatorSmith.• Campaignfinancelaw:– IfpubliclydistributedbyTVorradiotoconstituentswithin30daysof
aprimaryor60daysofageneralelection,thenitwillbeconsideredan“electioneeringcommunication”andmustbeconductedindependentlyofthecampaignandsubjecttoreportingattheFEC.
36
PracticalApplication § YouwanttocommunicatepolicysupportforSenatorSmith.
• Taxlaw:– A501(c)(3)maycommunicatesupportforSenatorSmithwithrespecttopolicyor
legislation;howeversuchcommunicationmaybeconsidered“lobbying”(mustbeinsubstantial;butsee501(h)election).
– A501(c)(4)/(6)organizationmaycommunicatepolicyorlegislativesupportforacandidatewithoutlimitation.
– BUT…ifthecommunicationisan“electioneeringcommunication”(referringtoacandidate30/60daysbeforeanelection)itlikelywillbeconsideredapoliticalcommunication–i.e.,prohibitedfora501(c)(3),andwillcountagainstthe40%politicalbucketfor501(c)(4)/(6),particularlyifthecommunicationisisolated/targetedandnotpartofanongoingcampaign.
37
PracticalApplication § Youwanttodisseminateavoterguidebrochurethatexplainsthecandidates’positionsonissues.• Campaignfinancelaw:– Ifthevoterguidedoesnotexpresslyadvocateanycandidates’
electionordefeatandisnotcoordinatedwithacandidate,thennotrestrictedbycampaignfinancelaw.
38
PracticalApplication § Youwanttodisseminateavoterguidebrochurethatexplainsthecandidates’positionsonissues.• Taxlaw:
– Anonpartisanguideofincumbentvotingrecordsthatdoesnotexpresssupportoroppositionforacandidatemaybenon-political,particularlyifitispartofanorganization’sregular,ongoingactivities.
– Anonpartisanquestionnaireofcandidatespositionsonissuesthatincludesallcandidates,onawidevarietyofissues,withouteditorialbiasmaybenon-political.
– Ifdeemednon-political,all501(c)organizationsmaydisseminate.Ifdeemedpolitical,501(c)(3)orgsmaynotdistribute;501(c)(4)/(6)orgsmaydistributebutitwillcountagainstthe40%politicallimit.
39
PracticalApplication § Youwanttoencouragepeopletovoteorregistertovote.• Campaignfinancelaw:– Ifthecommunicationsdonotexpresslyadvocateanycandidates’
electionordefeatandarenotcoordinatedwithacandidate,thennotrestrictedbycampaignfinancelaw.
40
PracticalApplication § Youwanttoencouragepeopletovoteorregistertovote.
• Taxlaw:– Ifnonpartisan,referstonocandidatesorallcandidates,andtheselection
criteriaisneutral(i.e.,nottargetedbasedonhistoricalvotingrecord),thenGOTV/voterregistrationactivitymaybenon-political.
– Ifdeemednon-political,all501(c)organizationsmayengageinthisactivity.Ifdeemedpolitical,501(c)(3)orgsmaynotdistribute;501(c)(4)/(6)orgsmaydistributebutitwillcountagainstthe40%politicallimit.
41
Questions
ThomasW.AntonucciPartner
WileyReinLLP202.719.7558
RyanP.MeyersDeputyGeneralCounsel
U.S.ChamberofCommerce202.463.5816
CalebP.BurnsPartner
WileyReinLLP202.719.7451
42
Related Documents
