The 2016 Elections and Beyond -- Last Minute Opportunities and Compliance Challenges Ahead

Date: October 26, 2016

The final weeks of the 2016 election season continue to offer unique opportunities to drive interest and support for your industry, profession or cause. Whatever your tax status, you have a constitutionally protected right to conduct a wide range of educational, issue advocacy and lobbying activities in order to engage your members, donors, the general public, policy makers, and candidates. Trade associations and social welfare organizations can do much more to help elect their preferred candidates. Although compliance with tax, election, ethics and lobbying laws can be challenging, they also offer opportunities, not obstacles, to generate interest and support for your public policy goals in these final days of the 2016 election season and beyond. 

While Section 501(c)(3) organizations are prohibited from engaging in political campaign activities to elect or defeat candidates, they are permitted to conduct voter education activities (including the presentation of public forums and the publication of voter education guides), as well as voter registration and get out the vote drives, as long as these activities are carried out in a non-partisan manner. With some longer range planning, they also can set up an affiliated Section 501(c)(4) or 501(c)(6) organization to engage in political campaign activities and/or to sponsor or help establish a PAC or SuperPAC.

Section 501(c)(6) Trade Associations and Section 501(c)(4) Social Welfare Organizations can accept unlimited corporate and individual contributions to engage in campaign communications and other political activities under the Citizens United Supreme Court decision as long as it is not their primary purpose.  Such activities cannot be coordinated with candidates, however, and federal corporate campaign contributions are prohibited.  But PACs and individuals affiliated with organizations can contribute, and there are many states in which corporate political contributions are permitted, although often subject to limits. 

There is much talk about changing some of these rules after the elections and it is not too soon to start thinking about how these changes might impact your organization.  Depending upon who wins, possible changes may include:

  • Revising the tax code to allow certain Section 501(c)(3) organizations to engage in limited political campaign activities. 
  • Eliminating the Congressional freeze on proposed IRS regulations that would drastically curtail election related activities by nonprofit organizations.
  • Changing lobbying registration, ethics and revolving door rules by eliminating the 20% of time threshold in the LDA definition of a “lobbyist” (in order to require advisors and consultants to register); imposing a 5-year revolving door rule to bar legislative and executive branch officials and staff from moving to private sector lobbying firms or positions; banning foreign lobbyists form campaign fundraising; and establishing Congressional term limits.
  • Increased scrutiny by the FEC of foreign sourced contributions to PACs, SuperPACs and politically active trade associations and social welfare organizations.
  • Greater scrutiny of foundations associated with public figures.
  • Possible legislation to prohibit the IRS from requiring donor disclosure in IRS Form 990, Schedule B.
  • Increased efforts at the state and local level to restrict or regulate campaign and lobbying activities as well as to broaden donor disclosure and impose more stringent pay-to-play rules.
  • Requiring federal contractors to disclose political spending. 
  • Changes in the composition of the Supreme Court that could result in reconsideration of the Citizens United decision.

Whiteford Taylor Preston has launched a new quarterly political law newsletter to keep our clients and friends informed about developments in the fast-changing world of federal and state campaign finance, lobbying, tax, and government ethics laws. If you did not receive it, you can access the inaugural issue of Whiteford Political Law Notes at our website. 

Please also be on the lookout for special updates (such as the following alerts issued this past year and other materials that can be found at our Political Law Compliance home page):