Under current protocol to determine whether an applicant qualifies for 501(c)(4) status, the IRS assesses “all the facts and circumstances” to determine whether an activity is political or furthers social welfare. Employees then apply another ambiguous facts-and-circumstances test to determine whether the applicant is primarily furthering social welfare or engaged in too much politics. In other words, overburdened mid- and lower-level IRS staff are asked to flag possibly political organizations based on no clearer a standard than knowing political activity when they see it.
This also raises questions about how the agency can be expected to enforce unclear rules that its employees do not understand.
Much of this problem could be addressed by adopting objective, substantive criteria to define political intervention for nonprofit organizations. For the past four years, we have worked with legal experts and nonprofit leaders at the Bright Lines Project (now housed at Public Citizen) to develop just such a proposal.
Using standards similar to those that have worked for more than two decades to define lobbying for charities, we crafted working definitions for political intervention that would apply to tax-exempt entities. Communications that refer to a clearly identified candidate and reflect a view on that candidate would meet the threshold definition of “political intervention.” Our test provides exceptions for bona fide lobbying and other non-electoral activity. For example, lobbying aimed at moving a public official to take a specific official action, voter-education materials developed using an impartial methodology and limited responses to candidates who take aim at an organization would not be treated as campaign advocacy unless the communication consists of paid mass-media advertising.
The Bright Lines proposal, which is to be released Friday, is accompanied by more than 30 examples to illustrate how each concept would apply in the real world. For instance, if the group is trying to influence a pending vote, highlighting that a politician seeking reelection had voted against similar legislation in the past would not be politicking. But it would be political activity for the group to bash an incumbent’s record while there was no prospect of a legislative vote. (Our proposal allows a different definition for 527 organizations, which must disclose their donors and their expenditures, to avoid discouraging political actors to opt for this classification.)