A guest post on the current 501c3 bogusosity in New Mexico politics, by my friend, who wishes to remain anonymous and goes by the pen name “Mad Dog Casey.”
It’s time to dust off the cape and spandex and break out the nonprofit ninjitsu–after many long years of silence, MadDogCasey rides again to combat the misinformation spewed forth by the leftist, er, progressive blabosphere.
First, to you whiny activists who believe that you can violate IRC 501(c) by actively campaigning for or against specific political candidates and then calling it “free speech”–piss off! You know you’re wrong, so quit trying to hide behind the First Amendment. It’s absolutely clear that you’d like your cake and ice cream too, but that’s not how it works in the bright shiny world of the federal tax code.
Now for those of you saying, “Screw you Mad Dog! You don’t know what the hell you’re talking about!” Let me take you back to school–Ninja style.
When New Mexico nonprofit corporations apply for and receive tax-exempt status under 501(c) from the IRS, it provides some great benefits, but there are several strings attached–particularly when it comes to political communications like direct mail campaigns and canvas efforts to unseat an incumbent lawmaker. Hmmmmmm. I’ll bet that sounds familliar to some of you rubes. Here’s the MadDogCasey breakdown on what most nonprofits can and can’t do according to the IRS.
501 (c)(4) organizations–often called issue advocacy groups and referred to by those in the know as shadow pacs–are allowed to send out campaign literature, to speak on issues, and engage in political campaign and lobbying work–they have to be careful in terms of what they can do in support of or against specific candidates, but there aren’t a lot of restrictions. As far as nonprofits go, 501(c)(4)s have the greatest amount of freedom when it comes to political speech. Here’s the major drawback: Although 501(c)(4)s can fund raise, donations to those groups are not tax-deductible. As a nonprofit ninja master, I can tell you that if donations aren’t tax-deductible, supporters don’t like to open their checkbooks.
Now most of us are familiar with the important work that 501(c)(3)s do: youth services, affordable housing, animal shelters and humane societies, care and support of the disabled, etc. Here’s what they are not allowed to do: political communications and campaign work for or against specific candidates. Now they can address issues that affect their constituents, but typically, no more than 10 percent of their budgets can be spent on lobbying and issue advocacy. Furthermore, when it seems that all a 501(c)(3) organization is doing is political work, then something is wrong. In the case of a few NM nonprofits that campaigned against Shannon Robinson in the primary election last year, it resulted in spankings from the NM Attorney General Gary King, and backlash legislation this year from the Legislature.
Most other nonprofit organizations have to follow similar rules laid out for the 501(c)(3) organizations. BTW the reason for the communication restrictions lie in the fact that public charities and private foundations are public entities that use public money for their work–much like government agencies, which aren’t allowed to use their funds to campaign for or against elected officials either.
The one possible psuedo-exception to the above are churches. During last year’s election cycle, churches on the far right preached politics from the pulpit and claimed that they not only had a free speech right to do so, but that their speech was protected under religious ground. Now this isn’t a real exception–yet. The right-wing activist churches knew they were breaking the law, but their purpose is to challenge the tax code in court.
Frankly I agree with the attorney general’s actions regarding the organizations that banded together to take out Shannon Robinson. He reclassified them into their appropriate catagories (501(c)(4) or 527)–if a nonprofit public charity or private foundation engages in substantive political campaign work it needs to reclassify as a 527 (PAC) or a 501(c)(4)–period. 501(c)(3) organizations receive huge benefits–exemptions from property tax, gross receipts tax, and tax-deductible donations just to name a few. In exchange for these perks, the organizations agree to abide by the rules of conduct established in the federal tax code, which are explicit when they say something like this: “Yea verily thou shalt not engage in politicking, and if you do, thou shalt face dire consequences. So there!”
MadDogCasey is the nom-de-plume of an award-winning journalist, public relations practitioner and nonprofit ninja master.
Here endith the lesson.