United States: Political Electioneering On Campus

INTRODUCTION

With the political campaign season of 2012 now in full swing, many college and university campuses have already been affected by this year's unpredictable presidential primaries. Political activities on campus will continue to heat up until Election Day in November and will be magnified by state and local election campaigns occurring across the country.

The combination of an engaged faculty, idealistic and galvanized students and passionately contested issues can transform normally quiet campuses into hotbeds of political activity. But as tax-exempt 501(c)(3) organizations, colleges and universities must abide by specific rules concerning the political activity they permit on campus and the political activity engaged in by administrators, faculty and staff. These rules also apply to any affiliated 501(c)(3)s connected with public institutions and as a standard of behavior for public institutions that are not 501(c)(3) entities.

On Jan. 21, 2010, the U.S. Supreme Court issued a landmark decision in Citizens United v. Federal Election Commission that created a dramatic impact on the level of spending for political activities by business corporations, nonprofit 501(c)(4) social welfare organizations, 501(c)(5) labor organizations and 501(c)(6) trade associations. The Supreme Court struck down the Bipartisan Campaign Reform Act of 2002 (BCRA) prohibition regarding the use of corporate funds for "independent expenditures," the express advocacy and the election or defeat of federal, state or local candidates or their equivalents. We have seen the rise of "Super PACS" and issue-oriented organizations soliciting large amounts of money to enter this year's presidential primaries and campaign.

Nonprofit corporations, including labor organizations, trade associations and grassroots issue organizations, will now be permitted under the federal election laws to spend corporate treasury funds to finance public communications that support or oppose federal candidates for public office, so long as such expenditures are not coordinated with either the candidate or a political party.

Also before Citizens United, BCRA had prohibited corporate and union treasuries from funding broadcast advertisements known as electioneering communications that mention clearly identified federal candidates (but not necessarily calling for their election or defeat) within 60 days of a general election or 30 days of a primary election. As a result, corporations that wanted to air at least some messages referring to federal candidates during periods preceding elections either had to establish a PAC to receive voluntary contributions to fund the ads or forgo the advertising altogether. Now, however, corporations and unions appear to be free to fund electioneering communications from their treasuries at any time.

However, this decision overruled only an election law restriction on political speech under 2 U.S.C. § 441(b) of the BCRA; but it did not cover the Internal Revenue Code (IRC) disallowance of business deductions for political purposes under IRC § 162(e), or the prohibitions and restrictions against political expenditures by § 501(c)(3) organizations and other § 501(c) organizations that could jeopardize their tax-exempt status.

I. POLITICAL ACTIVITIES AND SECTION 501(c) TAX EXEMPTION

A. Section 501(c)(3)

Section 501(c)(3) of the Internal Revenue Code (IRC) precludes exemption of an organization that participates or intervenes in any political activity on behalf of or in opposition to any candidate for elective public office. See § 1.501(c)(3)-I(c)(3)(ii) of the Treasury regulations. This is an absolute prohibition. Section 1.501(c)(1)-1(c)(3)(iii). Periodically legislation has been introduced to lessen this strict restriction or limit its effect on religious organizations. Intervention can also include the publication or distribution of written or printed statements on behalf of or in opposition to a candidate. See Rev. Rul. 2007-41, 2007-25 I.R.B. and FS-2006-17, February 2006 (IRS publications regarding political intervention activities). http://www.irs.gov . These helpful guidelines will be disclosed in this paper.

State colleges and universities are exempt from federal income tax because they are instrumentalities of the state and exempt from tax under § 115 of the Code. However, many have also applied for exemption under § 501(c)(3). Thus, the prohibition against political activity would apply to them if they sought and obtained 501(c)(3) status. State colleges and universities are also subject to certain state laws regarding intervention in political campaigns. Private colleges and universities are tax exempt under the provisions of § 501(c)(3). As a general rule, colleges and universities have wider latitude as to the types of political activities in which they can engage so long as they can show a reasonable relationship between the activities and their educational mission.

There are a number of definitional issues in applying the IRS prohibition.

1. Who is candidate? A candidate is an individual who offers himself or is proposed by others as a candidate for an elective public office, whether a national, state or local office. The definition includes a person who has either declared or is an incumbent who may by presumption be treated as a candidate until they announce an intention not to run. "Proposed by others" includes individuals who have not declared their nomination but who have formed an exploratory committee or a committee to "test the waters." The IRS does not follow the FEC rule regarding the receipt or expenditures of $5,000 or more; rather the IRS applies a facts and circumstances test.

2. What is an "intervention in a political campaign?" Under the IRS rules, intervention includes the "publishing or distribution of written or printed statements or the making of oral statements on behalf or in opposition to a candidate." Intervention can be motivated by an educational purpose such as the ranking of candidates who support the organization's mission. However, the motivation is irrelevant as to whether it is a political activity; ranking shows preference to one candidate over another.

3. Endorsement of a candidate can come from related entities such as subsidiaries that are controlled by the college and university or are affiliated with it, such as a research institute, supporting foundation, medical facility, alumni associations and student organizations. The political problem lies in the control over the activity exercised by the educational institutions.

4. Attribution of political activities by facility, students, university officials and board members can be an issue for the educational institution.

B. Permitted Activities as Distinguished From Electioneering

1. Get-out-the-vote campaigns, Voter Education and Registration

Voter education, registration and get-out-the-vote campaigns all must be nonpartisan. A nonpartisan program is one that does not result in supporting or opposing a candidate, but only attempts to educate the public and encourage them to vote. See LTR 954044 (women voters in minority communities); LTR 9223050 (homeless); LTR 8822080 (low voter participation); and LTR 8822056 (poor, minority and immigrant groups).

a. Voter registration activities

Identification of unregistered voters during an election campaign is a permissible activity. The organization may target specific voters who are unrepresented or historically have not voted. A charity must not make its choices with a view of affecting the outcome of a particular election. The selection should be based on neutral and nonpartisan selection criteria arising naturally out of the charity's charitable purpose. There are special rules for student residency and voter registration activity at Virginia and North Carolina colleges and universities. See Attachment A.

b. Nonpartisan activities

Situation 1, a student organization B that promotes community involvement sets up a booth on the campus of University A where students can register to vote. The signs and banners in and around the booth give only the name of the organization, the date of the next upcoming statewide election and notice of the opportunity to register. No reference to any candidate or political party is made by the volunteers staffing the booth or in the materials available at the booth, other than the official voter registration forms that allow registrants to select a party affiliation. B is not engaged in political campaign intervention when it operates this voter registration booth. See Rev. Rul. 2007-41C.B. 1421.

(1) Impermissible activities

(a) Picking sites in cooperation with an election campaign.

(b) Picking sites based on candidates where activity is undertaken to defeat candidates who have expressed views contrary to those of the organization.

(c) Picking sites because a particular candidate belongs to the group.

(d) Zeroing in on candidates in swing states.

(2) Private foundation grants for voter registration drives

(a) Section 4945(f) allows foundation grants to public charities specifically earmarked for voter registration if:

• grant is paid to a § 501(c)(3) organization;
• grant supports nonpartisan activities not confined to one election period and carried on in five or more states;
• substantially all of the income is expended directly for the active conduct of voter registration;
• not more than 25 percent of the support for the activity comes from any one private foundation; and
• donated funds are not restricted for use in any particular political subdivision.

c. Partisan activities

Activities evidencing a preference or opposition to a candidate, a political party or candidates who have taken particular positions will not qualify as nonpartisan. IRS will look to a program's substance and not its form under a facts and circumstances test.

(1) Examples:

(a) The practice of rating candidates and of publishing the ratings for elective office is a political activity. Association of the Bar of the City of New York v. Commissioner, 62 AFTR 2d 88-625, 858 F.2d 876 880 (2nd Cir. 1988), cert. denied, 490 U.S. 1030 (1989).

(b) Rev. Rul. 78-248, 1978-1, C.B. 154. The IRS described four situations in which the compilations of voting records and questions were either political or nonpartisan activities.

(c) Rev. Rul. 80-282, 1980-2 C.B. 178, amplifying Rev. Rul. 78-248, described factors that led the IRS to the conclusion that the distribution of voting records was not a political activity because voting records were distributed to a limited group rather than as a mass distribution and such distribution was not timed to coincide with a particular election.

(d) Prohibited activities:

• Making contributions to candidates or parties, including "in kind" contributions of services, publicity, advertising and paid staff time and use of facilities (xeroxing, postage meter, etc.).
• Establishing a segregated fund for political expenditures or managing a PAC.
• Evaluating candidates or their positions.
• Coordinating activities with a candidate. See GCM 39811, where the organization urged members to attend party caucuses and to vote for anti-choice candidates.

(e) The IRS has found and the Tax Court agreed that a "secondary private benefit" to a political party may occur even if the activity itself was educational. See American Campaign Academy, 92 T.C. 1053 (1989), where a training school for campaign staff workers was denied exemption under § 501(c)(3) because it benefited the Republican party.

2. Use of College and University Facilities and Services

The question of whether an activity constitutes participation or intervention in a political campaign may also arise in the context of a business activity of the organization, such as selling or renting of mailing lists, the leasing of office space, or the acceptance of paid political advertising. In this context, some of the factors to be considered in determining whether the organization has engaged in political campaign intervention include the following:

• Whether the good, service or facility is available to candidates in the same election on an equal basis;
• Whether the good, service or facility is available only to candidates and not to the general public;
• Whether the fees charged to candidates are at the organization's customary and usual rates; and
• Whether the activity is an ongoing activity of the organization or whether it is conducted only for a particular candidate.

Examples from IRS Rev. Rul. 2007-41

Situation 17. Museum K is a § 501(c)(3) organization (affiliated with a public university). It owns a historic building that has a large hall suitable for hosting dinners and receptions. For several years, Museum K has made the hall available for rent to members of the public. Standard fees are set for renting the hall based on the number of people in attendance, and a number of different organizations have rented the hall. Museum K rents the hall on a first-come, first-served basis. Candidate P rents Museum K's social hall for a fundraising dinner. Candidate P's campaign pays the standard fee for the dinner. Museum K is not involved in political campaign intervention as a result of renting the hall to Candidate P for use as the site of a campaign fundraising dinner.

Situation 18. Theater L is a § 501(c)(3) organization (affiliated with a private university). It maintains a mailing list of all its subscribers and contributors. Theater L has never rented its mailing list to a third party. Theater L is approached by the campaign committee of Candidate Q, who supports increased funding for the arts. Candidate Q's campaign committee offers to rent Theater L's mailing list for a fee that is comparable to fees charged by other similar organizations. Theater L rents its mailing list to Candidate Q's campaign committee. Theater L declines similar requests from campaign committees of other candidates. Theater L has intervened in a political campaign.

3. Websites & Blogs

The Internet has become a widely used communications tool. Section 501(c)(3) organizations use their own websites to disseminate statements and information. They also routinely link their websites to websites maintained by other organizations as a way of providing additional information that the organizations believe is useful or relevant to the public.

A website is a form of communication. If an organization posts something on its website that favors or opposes a candidate for public office, the organization will be treated the same as if it distributed printed material, oral statements or broadcasts that favored or opposed a candidate.

An organization has control over whether it establishes a link to another site. When an organization establishes a link to another website, the organization is responsible for the consequences of establishing and maintaining that link, even if the organization does not have control over the content of the linked site. Because the linked content may change over time, an organization may reduce the risk of political campaign intervention by monitoring the linked content and adjusting the links accordingly.

Links to candidate-related material, by themselves, do not necessarily constitute political campaign intervention. All the facts and circumstances must be taken into account when assessing whether a link produces that result. The facts and circumstances to be considered include, but are not limited to, the context for the link on the organization's website, whether all candidates are represented, any exempt purpose served by offering the link, and the directness of the links between the organization's website and the web page that contains material favoring or opposing a candidate for public office.

Situation 19. M, a nonpartisan student political club, maintains a website linked to a university home page and posts an unbiased, nonpartisan voter guide that is prepared consistent with the principles discussed in Rev. Rul. 78-248. For each candidate covered in the voter guide, M includes a link to that candidate's official campaign website. The links to the candidate websites are presented on a consistent, neutral basis for each candidate, with text saying "For more information on Candidate X, you may consult [URL]." M has not intervened in a political campaign because the links are provided for the exempt purpose of educating voters and are presented in a neutral, unbiased manner that includes all candidates for a particular office. See Rev. Rul. 2007-41.

Situation 20. Hospital N, affiliated with a university, maintains a website that includes such information as medical staff listings, directions to Hospital N and descriptions of its specialty health programs, major research projects and other community outreach programs. On one page of the website, Hospital N describes its treatment program for a particular disease. At the end of the page, it includes a section of links to other websites titled "More Information." These links include links to other hospitals that have treatment programs for this disease, research organizations seeking cures for that disease and articles about treatment programs. This section includes a link to an article on the website of O, a major national newspaper, praising Hospital N's treatment program for the disease. The page containing the article on O's website contains no reference to any candidate or election and has no direct links to candidate or election information. Elsewhere on O's website, there is a page displaying editorials that O has published. Several of the editorials endorse candidates in an election that has not yet occurred. Hospital N has not intervened in a political campaign by maintaining the link to the article on O's website because the link is provided for the exempt purpose of educating the public about Hospital N's programs, and neither the context for the link, nor the relationship between Hospital N and O, nor the arrangement of the links going from Hospital N's website to the endorsement on O's website indicate that Hospital N was favoring or opposing any candidate. See Rev. Rule 2007-41.

Care must be taken in establishing links to another website because the college or university is responsible for the consequences of the link even if it does not control the content of the linked site.

The IRS will apply a facts and circumstances test to determine whether a particular link to a candidate's website constitutes electoral activity. Questions to resolve:

a. Are all candidates treated equally?

b. Is there a tax-exempt purpose served by the links?

c. Directness of the link to institution's website

d. Our blogs linked to institution's website governed by the same rules as websites of affiliated organizations

4. Discussion of Issues v. Electioneering

a. General rule: a charity can focus on the issues in structuring voter registration and get-out-the-vote campaigns. The charity can continue normal public education programs during election periods even if the issues are controversial or policy issues of concern to the voting public. See Attachment B.

Example: Student organization has taken positions on the health issues facing women including controversial and policy issues involving the individual mandate, insurance coverage for abortions and contraceptive devices. These issues have become part of a candidate's platform. The organization can continue to discuss these issues during the campaign without promoting or rejecting specific candidates based on their viewpoints.

b. Caution — the focus must be on promoting the charity's viewpoint on those issues and not promoting the candidates' views. See LTR. 9609007.

(1) Issue education can become partisan even without mentioning a candidate by name. See Rev. Rul. 80-282 1980-2C.B. 178 holding that issue advocacy is permissible.

(2) Narrow-issue organizations, e.g., parental consent on an abortion law for minors or state-mandated tests, could have a more difficult time establishing permissible advocacy than a "women's issues" organization. Because of the broad range of potential issues that apply to women's health, they are less identified with a particular candidate. The single-issue organization's safest course of action during the final stage of a political campaign may be to refrain altogether from mass-media voter advertisements.

(3) Candidate forums are a permissible vehicle to produce public debate, as long as a bias or preference is not shown to any specified candidate. See Rev. Rul. 66-256, 1966-2 C.B. 210; Rev. Rul. 86-95, 1986-2 C.B. 73. The following rules should be observed:

(a) The sponsoring organization should have a record of concern with public and legislative matters.

(b) All viable candidates should be invited.

(c) The choice of forum should be based on nonpolitical considerations.

(d) A broad range of issues should be discussed.

(e) Questions should be prepared and presented by a nonpartisan panel of knowledgeable persons.

(f) Each candidate must be given an equal opportunity to present his or her views.

(g) Questioning must not be biased.

(h) The forum must be run by a nonpartisan moderator.

(i) The moderator must state at the beginning and the end of the program that the views expressed are those of the speaker and not the sponsoring charity.

(j) The moderator should state that all candidates have been invited.

(k) The organization can report on what happened at the forum without any editorial comments.

5. Individual Activity by College and University Officials, Employees and Students

The political campaign intervention prohibition is not intended to restrict free expression on political matters by university officials speaking for themselves, as individuals. Nor are officials prohibited from speaking about important issues of public policy. However, for their institutions to remain tax exempt under § 501(c)(3), leaders cannot make partisan political comments in official college and university publications or at official functions of the institutions.

Examples from Rev. Rul. 2007-41:

Situation 4. President A is the chief executive officer of Hospital J, a university hospital, and is well known in the community. With the permission of five prominent healthcare industry leaders, including President A, who have personally endorsed Candidate T, Candidate T publishes a full-page ad in the local newspaper listing the names of the five leaders. President A is identified in the ad as the CEO of Hospital J. The ad states, "Titles and affiliations of each individual are provided for identification purposes only." The ad is paid for by Candidate T's campaign committee. Because the ad was not paid for by Hospital J, the ad is not otherwise in an official publication of Hospital J and the endorsement is made by President A in a personal capacity, the ad does not constitute campaign intervention by Hospital J or the university.

Situation 3. President B is the president of University K, a § 501(c)(3) organization. University K publishes a monthly alumni newsletter that is distributed to all alumni of the university. In each issue, President B has a column titled "My Views." The month before the election, President B states in the "My Views" column, "It is my personal opinion that Candidate U should be reelected." For that one issue, President B pays from his personal funds the portion of the cost of the newsletter attributable to the "My Views" column. However, even though he paid part of the cost of the newsletter, the newsletter is an official publication of the university; because the endorsement appeared in an official publication of University K, it constitutes campaign intervention by University K.

6. Candidate Appearances

Depending on the facts and circumstances, an organization may invite political candidates to speak at its events without jeopardizing its tax-exempt status. Political candidates may be invited in their capacity as candidates, or in their individual capacity (not as a candidate). Candidates may also appear without an invitation at organization events that are open to the public.

When a candidate is invited to speak at an organization event in his or her capacity as a political candidate, factors in determining whether the organization participated or intervened in a political campaign include the following:

• Whether the organization provides an equal opportunity to participate to political candidates seeking the same office.
• Whether the organization indicates any support for or opposition to the candidate (including candidate introductions and communications concerning the candidate's attendance).
• Whether any political fundraising occurs.
• Whether the candidate's statement is delivered close in time to the election.
• Whether the statement makes reference to voting or an election.
• Whether the issue addressed in the communication has been raised as an issue distinguishing candidates for a given office.
• Whether the communication is part of an ongoing series of communications by the organization on an issue that they cover independently of the timing of any election.
• Whether the timing of the communication and identification of the candidate are related to a nonelectoral event such as a scheduled vote on specific legislation by an officeholder who also happens to be a candidate for public office.

In determining whether candidates are given an equal opportunity to participate, the nature of the event to which each candidate is invited will be considered, in addition to the manner of presentation. For example, an organization that invites one candidate to speak at its well-attended annual banquet but invites the opposing candidate to speak at a sparsely attended general meeting will likely have violated the political campaign prohibition, even if the manner of presentation for both speakers is otherwise neutral.

When an organization invites several candidates for the same office to speak at a public forum, factors in determining whether the forum results in political campaign intervention include the following:

• Whether questions for the candidates are prepared and presented by an independent, nonpartisan panel.
• Whether the topics discussed by the candidates cover a broad range of issues that the candidates would address if elected to the office sought and are of interest to the public.

To view this article in full please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.