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How does nonprofit acknowledge gifts from candidates?

Your Legal Questions Answered

How does nonprofit acknowledge gifts from candidates?

Our nonprofit is hosting a large community event for the public. This is an election year for mayor and city commission in our community, and the incumbents want to be listed under sponsorship as John Doe, City Commissioner or Jane Doe, Mayor. Candidates running against them want to be listed as John Roe for Commissioner or Jane Roe for Mayor. Are either, neither, or both allowable?

When you say you are a “nonprofit,” I assume that you mean a 501(c)(3) charity, which is the only type of nonprofit that can’t be involved in “electioneering” either for or against a candidate for public office.  If you are a (c)(4) social welfare organization or a (c)(6) trade association like a chamber of commerce, you don’t have to worry about the Internal Revenue Service electioneering limitations for a charity.  If you are a (c)(3) you could lose your charitable exemption for electioneering.

The safest way to handle this situation is to list the sponsorships of John Doe and John Roe or Jane Doe and Jane Roe, without any designation or suggestion of incumbency or candidacy for public office.  That is clearly sanctioned by the IRS.  (See Ready Reference Page: “IRS Guidance Has Not Changed on Electioneering”). What you can do with candidates who show up at your public event is a little less clear in the IRS rules.  With public officials or candidates, you can acknowledge them with no statement that they are running for election.  Some organizations traditionally acknowledge both all incumbents and all challengers who show up, but the IRS’s writings don’t specifically support that policy.

The IRS says how you handle candidates can be a “facts and circumstances” test, which only means that you cannot know exactly how they might come out on an investigation.  You can only know that it will take a long time and divert you from other things you want to do with your organization.  If I were in your position, I would take the conservative approach and list sponsors by name only to reduce the likelihood that you would be challenged for electioneering.

Tuesday, June 11, 2024

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