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A US Non-Profit entity cannot conduct political activities, this includes domestic and foreign political activities. Furthermore, lobbying activities cannot be a substantial part of a charitable organization’s total activities, including foreign political lobbying. The IRS makes no distinction between US and foreign political activities.
When looking at what a non-profit can do, as they are a US non-profit, the US non-profit laws apply even when they deal with foreign countries.
In IRC 501(c)(3), lobbying is described as "carrying on propaganda, or otherwise attempting, to influence legislation," while political activity is described as "participat[ing] in, or interven[ing] in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office." In short, IRC 501(c)(3) organizations may take sides with respect to political issues, but not political candidates.
Organizations that make lobbying a very substantial part of their activities are often advised not to apply for federal tax-exempt status under IRC 501(c)(3), which prescribes strict limits to this type of activity, but use another classification. Although this means you lose some advantages associated with IRC 501(c)(3) status, it also frees the organization from the significant limits on lobbying and political activity imposed on IRC 501(c)(3) organizations.
IRC 4911(d). Influencing legislation
(1) General rule
Except as otherwise provided in paragraph (2), for purposes of this section, the term ''influencing legislation'' means -
(A) any attempt to influence any legislation through an attempt to affect the opinions of the general public or any segment thereof, and
(B) any attempt to influence any legislation through communication with any member or employee of a legislative body, or with any government official or employee who may participate in the formulation of the legislation.
For purposes of this section, the term ''influencing legislation'', with respect to an organization, does not include -
(A) making available the results of nonpartisan analysis, study, or research;
(B) providing of technical advice or assistance (where such advice would otherwise constitute the influencing of legislation) to a governmental body or to a committee or other subdivision thereof in response to a written request by such body or subdivision, as the case may be;
(C) appearances before, or communications to, any legislative body with respect to a possible decision of such body which might affect the existence of the organization, its powers and duties, tax-exempt status, or the deduction of contributions to the organization;
(D) communications between the organization and its bona fide members with respect to legislation or proposed legislation of direct interest to the organization and such members, other than communications described in paragraph (3); and
(E) any communication with a governmental official or employee, other than -
(i) a communication with a member or employee of a legislative body (where such communication would otherwise constitute the influencing of legislation), or
(ii) a communication the principal purpose of which is to influence legislation.
(3) Communications with members
(A) A communication between an organization and any bona fide member of such organization to directly encourage such member to communicate as provided in paragraph (1)(B) shall be treated as a communication described in paragraph (1)(B).
(B) A communication between an organization and any bona fide member of such organization to directly encourage such member to urge persons other than members to communicate as provided in either subparagraph (A) or subparagraph (B) of paragraph (1) shall be treated as a communication described in paragraph (1)(A).
IRC 4911(e)(2). Legislation
The term ''legislation'' includes action with respect to Acts, bills, resolutions, or similar items by the Congress, any State legislature, any local council, or similar governing body, or by the public in a referendum, initiative, constitutional amendment, or similar procedure.
Lobbying is divided into two categories [as given by IRC 4911(d)(1)(A) and IRC 4911(d)(1)(B) above]:
- Grass roots lobbying
- Any attempt to influence any legislation through an effort to affect the opinions of the general public or any segment thereof.
- Direct lobbying
- Any attempt to influence any legislation through communication with any member or employee of a legislative body or with any government official or employee who may participate in the formulation of legislation.
The distinction between grass roots lobbying and direct lobbying is important because the rules given by IRC 501(h) set spending limits for all lobbying activities combined, and also specifically for grass roots lobbying.
"Political activity" is not defined in the law regulating tax-exempt organizations with more detail that in IRC 501(c)(3), where it is "participat[ing] in, or interven[ing] in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office." However, "political expenditure" is defined in further detail. Note, however, that 501(c)(3) tax-exempt organizations may lose their tax-exempt recognition for any political activity, and not just for making political expenditures. Therefore, the definition of a political expenditure given here should only be taken as a rough guide to what is most clearly considered political activity.
IRC 4955 (d) Political expenditure
For purposes of this section -
(1) In general
The term ''political expenditure'' means any amount paid or incurred by a section 501(c)(3) organization in any participation in, or intervention in (including the publication or distribution of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.
(2) Certain other expenditures included
In the case of an organization which is formed primarily for purposes of promoting the candidacy (or prospective candidacy) of an individual for public office (or which is effectively controlled by a candidate or prospective candidate and which is availed of primarily for such purposes), the term ''political expenditure'' includes any of the following amounts paid or incurred by the organization:
(A) Amounts paid or incurred to such individual for speeches or other services.
(B) Travel expenses of such individual.
(C) Expenses of conducting polls, surveys, or other studies, or preparing papers or other materials, for use by such individual.
(D) Expenses of advertising, publicity, and fundraising for such individual.
(E) Any other expense which has the primary effect of promoting public recognition, or otherwise primarily accruing to the benefit, of such individual.
IRC 501(c)(3) organizations that engage in any political activity may at the discretion of the IRS either immediately lose their tax-exempt status recognition, or be compelled to pay fines. These take the form of excise taxes, described in IRC 4955, levied against both the organization itself and the organization managers responsible for the illegal activity.
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