Tax-Exempt Organizations Under Internal
April 12, 2024
Revenue Code Section 501(c): Political Activity Justin C. Chung
Restrictions
Legislative Attorney

The ability of tax-exempt organizations under 26 U.S.C § 501(c) to engage in political activity,
such as campaign activity and lobbying, depends on the nature of the organization. For example,

the charitable organizations described in § 501(c)(3) may not engage in any campaign activity
and may only conduct a limited amount of lobbying. Meanwhile, § 501(c)(4) social welfare organizations, § 501(c)(5) labor
unions, and § 501(c)(6) trade associations may engage in campaign activity (so long as such activity is not their primary
activity) and an unlimited amount of lobbying. Other types of § 501(c) organizations appear either to be subject to restrictions
like those imposed on § 501(c)(3) organizations or treated similarly to § 501(c)(4), (c)(5), and (c)(6) organizations.
While some types of organizations are permitted to engage in campaign and lobbying activities under the Internal Revenue
Code (I.R.C.), § 501(c) organizations are subject to tax for making certain political expenditures. If a § 501(c) organization
engages in prohibited political activity, it can lose its tax-exempt status.
Finally, § 501(c) organizations must report information regarding their political activities to the Internal Revenue Service
(IRS) on Schedule C of the Form 990. The organization and the IRS must make this information publicly available.
Information about substantial donors also must be reported to the IRS on Form 990’s Schedule B, but any identifying
information about those donors generally is not publicly disclosed.
This report discusses restrictions on political activity of § 501(c) organizations, taxes on their political activity, and reporting
of political activity to the IRS.
This version of the report updates and supersedes previous versions authored by Erika K. Lunder.

Congressional Research Service

Tax-Exempt Organizations Under I.R.C. Section 501(c): Political Activity Restrictions

here are approximately thirty types of organizations that qualify for federal tax-exempt
status under § 501(c) of the Internal Revenue Code (I.R.C.). Whether a § 501(c)
T organization may engage in political activity, such as lobbying or campaign activity,
depends on the provision of § 501(c) under which it receives tax exemption. The most common
types of § 501(c) entities, and the ones with the most explicit limits on political activity are,
• § 501(c)(3) charitable organizations;
• § 501(c)(4) social welfare organizations;
• § 501(c)(5) labor unions; and
• § 501(c)(6) trade associations.
This report analyzes the I.R.C. limitations on political activity by tax-exempt organizations,
focusing on these four categories.1 It ends with a discussion of the I.R.C. reporting and disclosure
requirements.2
Political Activity by I.R.C. § 501(c)(3) Organizations
Organizational Definition in I.R.C. § 501(c)(3)
Entities entitled to tax-exempt treatment under I.R.C. § 501(c)(3) are commonly referred to as
“charitable organizations.” The I.R.C. defines these organizations as
organized and operated exclusively for religious, charitable, scientific, testing for public
safety, literary, or educational purposes, or to foster national or international amateur sports
competition (but only if no part of its activities involve the provision of athletic facilities
or equipment), or for the prevention of cruelty to children or animals, no part of the net
earnings of which inures to the benefit of any private shareholder or individual, no
substantial part of the activities of which is carrying on propaganda, or otherwise
attempting, to influence legislation (except as otherwise provided in subsection (h)), and
which does not participate in, or intervene in (including the publishing or distributing of
statements), any political campaign on behalf of (or in opposition to) any candidate for
public office.3
There are two types of § 501(c)(3) organizations, distinguished primarily by the level of public
involvement in their activities and funding: public charities and private foundations.4 Public
charities receive contributions from a variety of sources, whereas private foundations receive
contributions from limited sources. A § 501(c)(3) organization is presumed to be a private
foundation unless it requests, and qualifies for, a determination as a public charity, which

1 Congress has held a number of hearings on this topic. See, e.g., Hearing on Growth of the Tax-Exempt Sector and the
Impact on the American Political Landscape Before the Subcomm. on Oversight of the H. Comm. on Ways and Means,
118th Cong. (Dec. 13, 2023); Hearing on Laws and Enforcement Governing the Political Activities of Tax Exempt
Entities Before the Subcomm on Taxation and IRS Oversight of the S. Comm on Finance, 117th Cong. (May 4, 2022).
2 While this report discusses the political activity limitations in the I.R.C., organizations must also comply with
applicable election and lobbying laws, which are beyond the scope of this report. For analyses of the intersection
between tax and campaign finance policy. See CRS Report R41542, The State of Campaign Finance Policy: Recent
Developments and Issues for Congress, by R. Sam Garrett (2023); CRS In Focus IF11005, Donor Disclosure: 501(c)
Groups and Campaign Spending, by R. Sam Garrett (2018); CRS In Focus IF11034, Campaign Finance: Key Policy
and Constitutional Issues, by R. Sam Garrett and L. Paige Whitaker (2018); and CRS In Focus IF10277, Candidates,
Groups, and the Campaign Finance Environment: A Brief Overview, by R. Sam Garrett (2016).
3 26 U.S.C § 501(c)(3).
4 26 U.S.C. § 509.
Congressional Research Service

1

Tax-Exempt Organizations Under I.R.C. Section 501(c): Political Activity Restrictions

generally involves proving public support or activity.5 To prevent abuse, private foundations are
subject to stricter regulation than public charities. This includes additional restrictions on their
political activities, as discussed below.
Summary of the Definition’s Restrictions on Political Activity
The organizational definition in § 501(c)(3) restricts the ability of a charitable organization to
participate in political activity in two ways: (1) lobbying cannot be a substantial part of its
activities and (2) it may not intervene in political campaigns. An organization that violates either
restriction may lose its tax-exempt status and the eligibility to receive deductible contributions,
among other consequences.6 The lobbying restriction and political campaign prohibition are
discussed in detail below.
Legislative History of the Political Activity Restrictions
Congress enacted the lobbying limitation in 1934 and the political campaign prohibition in 1954.
The legislative history of each provision is sparse.
In 1919, the U.S. Department of the Treasury (Treasury) took the position that organizations
“formed to disseminate controversial or partisan propaganda” were not “educational” for
purposes of qualifying for tax-exempt status under the precursors to § 501(c)(3).7 One
consequence of this rule was that contributions to these organizations were not deductible.
Several lawsuits were brought that challenged this treatment, but no clear standard emerged from
the court decisions: some courts denied the deduction if the organization advocated for any type
of change, whereas others looked at factors such as how controversial the advocacy was or if the
organization’s actions were intended to influence legislation.8 In what is generally recognized as
the seminal case, Slee v. Commissioner,9 the U.S. Court of Appeals for the Second Circuit used
another rationale. In that decision, the court held that contributions to an organization were not
deductible because it did not appear that the lobbying was limited to causes that furthered the
organization’s charitable purpose.10

5 Id.; Treas. Reg. § 1.509(a)-3. The test used to determine whether a § 501(c)(3) organization is a public charity is
called the “public support test.” See, e.g., EO Operational Requirements: Private Foundations and Public Charities,
INTERNAL REVENUE SERVICE, https://www.irs.gov/charities-non-profits/eo-operational-requirements-private-
foundations-and-public-charities (last visited April 8, 2024); Exempt Organizations Annual Reporting Requirements -
Form 990, Schedules A and B: Public Charity Support Test, INTERNAL REVENUE SERVICE, https://www.irs.gov/
charities-non-profits/exempt-organizations-annual-reporting-requirements-form-990-schedules-a-and-b-public-charity-
support-test (last visited April 8, 2024); Public Charities, INTERNAL REVENUE SERVICE, https://www.irs.gov/charities-
non-profits/charitable-organizations/public-charities (last visited April 8, 2024).
6 See, e.g., Regan v. Taxation With Representation of Washington, 461 U.S. 540 (1983); Ass’n of the Bar of the City of
New York, 858 F.2d 876; Rev. Rul. 67-71, 1967-1 C.B. 125.
7 Treas. Reg. 45, art. 517, T.D. 2831, 21 Treas. Dec. Int. Rev. 285 (1919).
8 For a discussion of the Treasury position and these cases, see William J. Lehrfeld, The Taxation of Ideology, 19
CATH. U. L. REV. 50 (1969); Tommy F. Thompson, The Availability of the Federal Educational Tax Exemption for
Propaganda Organizations, 18 U.C. DAVIS L. REV. 487 (1985); Laura B. Chisholm, Exempt Organizations Advocacy:
Matching the Rules to the Rationales, 63 IND. L.J. 201 (1988); Miriam Galston, Lobbying and the Public Interest:
Rethinking the Internal Revenue Code’s Treatment of Legislative Activities, 71 TEX. L. REV. 1269 (1993); Oliver A.
Houck, On The Limits of Charity: Lobbying, Litigation, and Electoral Politics by Charitable Organizations under the
Internal Revenue Code and Related Laws, 69 BROOK. L. REV. 1 (2003).
9 42 F.2d 184 (2d Cir. 1930).
10 See id. at 185.
Congressional Research Service

2

Tax-Exempt Organizations Under I.R.C. Section 501(c): Political Activity Restrictions

With this background, Congress enacted the lobbying limitation as part of the Revenue Act of
1934.11 There is very little legislative history for the provision, but it appears that Congress was
concerned with organizations that lobby also being able to receive tax-deductible contributions.12
While discussing the provision on the Senate floor, one Member criticized the deductibility of
donations that were made for “selfish” reasons, while at the same time expressing concern that
the limitation also appeared to restrict organizations that acted without “selfish motives.”13 Other
Members argued that all contributions to organizations that lobby should be nondeductible
because of the difficulty in trying to distinguish between organizations that deserve the benefit
and those that do not.14 It has also been suggested that Congress enacted the provision to codify
the Slee decision.15 Although this statement of historical purpose may have been accurate, the
Slee test and the lobbying provision are not identical. This asymmetry results because the focus of
the test under Slee is whether the lobbying furthers the organization’s tax-exempt purpose,
whereas the focus of the lobbying provision as enacted is whether the lobbying is a substantial
part of the organization’s activities.
The 1934 Act had also included a provision that would have restricted the ability of charities to
participate in partisan politics. That limitation was removed in conference, however, apparently
out of concern that it was too broad.16
Congress enacted the political campaign prohibition for § 501(c)(3) organizations as part of the
I.R.C. of 1954.17 Senator Lyndon Johnson added the provision as a floor amendment, resulting in
the prohibition subsequently being referred to as the “Johnson Amendment.”18 Senator Johnson
analogized the political campaign prohibition to the lobbying limitation, mistakenly
characterizing the latter as denying tax-exempt status to all organizations that lobbied, when it did
so only for those organizations that engaged in substantial lobbying.19 The legislative history
contains no further discussion of the prohibition.
Lobbying by § 501(c)(3) Organizations
The organizational definition in I.R.C. § 501(c)(3) states that “no substantial part” of the activities
of an organization that receives tax exemption under that provision may be the “carrying on [of]
propaganda, or otherwise attempting, to influence legislation” (i.e., lobbying).
What Is Lobbying?
Lobbying includes activities that attempt to influence legislation by (1) contacting, or urging the
public to contact, legislators about proposing, supporting, or opposing legislation and (2)

11 Revenue Act of 1934, Pub. L. No. 73-216, ch. 277, 48 Stat. 680, 690, 700, 760.
12 See 78 CONG. REC. 5959 (1934) (statement by Sen. Harrison).
13 78 CONG. REC. 5861 (1934) (statement by Sen. Reed).
14 See 78 CONG. REC. 5861, 5959 (1934) (statements by Sens. Harrison and La Follette).
15 See e.g., I.R.S. Gen. Couns. Mem. 34289 (May 3, 1970). General Counsel Memoranda contain legal interpretations
of the I.R.C. by the IRS. They have no precedential value. They are available through such services as Lexis and
Westlaw.
16 See 78 CONG. REC. 7,831 (1934) (statement by Rep. Hill).
17 The I.R.C. did not impose the same explicit prohibitions against engaging in political activities on § 501(c)(4), (c)(5),
and (c)(6) organizations. Internal Revenue Code of 1954, Pub. L. No. 83-591, 68 Stat. 3; 26 U.S.C. § 501.
18 See 100 CONG. REC. 9604 (1954).
19 See id.
Congressional Research Service

3

Tax-Exempt Organizations Under I.R.C. Section 501(c): Political Activity Restrictions

advocating for or against legislation.20 Thus, it includes direct lobbying (contacting governmental
officials) and grassroots lobbying (appeals to the electorate or general public).21 “Legislation”
includes action by any legislative body and by the public through such things as referenda and
initiatives.22 “Action” by a legislative body includes the introduction, amendment, enactment,
defeat, or repeal of such things as acts, bills, and resolutions.23 It also appears to include Senate
confirmation of judicial and executive branch nominations.24 An organization’s advocacy
activities may be lobbying even if specific legislation is not mentioned.25 For example, publishing
articles appealing to the public to react to certain general policy positions, without mentioning
specific legislation, can be lobbying.26 An organization also may be treated as lobbying if it does
such things as make a contribution or lend money on favorable terms to an entity that lobbies.27
Lobbying generally does not include providing testimony in response to an official request by a
legislative body.28 It also does not include contacting executive, judicial, and administrative
bodies on matters other than legislation, for example, making an office appointment.29 Additional
examples of activities that may not be lobbying include conducting and publishing nonpartisan
analysis, study, or research; discussing broad social issues, so long as specific legislation is not
discussed; and contacting legislative bodies about legislation that relates to the organization’s
existence or status (i.e., “self-defense” lobbying).30
What Does “No Substantial Part” Mean?
To determine whether lobbying is a substantial part of an organization’s activities, a § 501(c)(3)
organization can be subject to either the “expenditure test” or the “no substantial part test.” Under
the “expenditure test,” some organizations may elect under I.R.C. § 501(h) to measure their
lobbying expenditures against objective, numerical standards.31 Electing organizations can then
be taxed on certain levels of lobbying expenditures without losing their exempt status.
Most organizations do not elect the expenditure test,32 and some, including churches and private
foundations, are not allowed to use it.33 In those cases, the § 501(c)(3) organization is subject to

20 See Treas. Reg. § 1.501(c)(3)-1(c)(3)(ii).
21 See Treas. Reg. § 1.501(c)(3)-1(b)(3).
22 See Treas. Reg. § 1.501(c)(3)-1(c)(3)(ii). Legislation applies to actions by all levels of government, i.e., federal, state,
and local.
23 See 26 U.S.C. § 4911(e)(3); I.R.S. Gen. Couns. Mem. 39694 (Jan. 22, 1988).
24 See I.R.S. Notice 88-76, 1988-2 C.B. 392; I.R.S. Gen. Couns. Mem. 39694 (Jan. 22, 1988).
25 See e.g., Christian Echoes Nat’l Ministry Inc. v. United States, 470 F.2d 849, 855 (10th Cir. 1972); Fund For Study
of Economic Growth and Tax Reform v. IRS, 997 F. Supp. 15, 22 (D.D.C. 1998), aff'd, 161 F.3d 755 (D.C. Cir. 1998).
26 Christian Echoes, 470 F.2d at 855.
27 I.R.S. Tech. Adv. Mem. 91-17-001 (Apr. 26, 1991).
28 See Rev. Rul. 70-449, 1970-2 C.B. 112.
29 See Treas. Reg. § 1.501(c)(3)-1(c)(3)(ii).
30 See 26 U.S.C. § 4945(e); Treas. Reg. § 53.4945-2(d); Rev. Rul. 64-195, 1964-2 C.B. 138; I.R.S. Gen. Couns. Mem.
36127 (Jan. 2, 1975).
31 26 U.S.C. § 501(h)(4). Congress enacted § 501(h) as part of the Tax Reform Act of 1976, Pub. L. No. 94-455.
32 Jill S. Manny, Nonprofit Legislative Speech: Aligning Policy, Law, and Reality, 62 CASE W. RSRV. L. REV. 757, 760
n.8 (2012) (“[L]ess than 2 percent of eligible charities have actually made the election.”)
33 26 U.S.C. § 501(h)(5). Some churches lobbied not to be eligible for the election because they were concerned that
their inclusion would be interpreted as congressional approval of Christian Echoes Nat’l Ministry, Inc. v. United States,
470 F.2d 849 (10th Cir. 1972), in which the court held that the lobbying limitation did not violate a church’s rights
under the First Amendment. The legislative history of the election provision explicitly states that its enactment does not
(continued...)
Congressional Research Service

4

Tax-Exempt Organizations Under I.R.C. Section 501(c): Political Activity Restrictions

the “no substantial part” test, which has no bright-line standards and is instead based on the facts
and circumstances of the organization’s operations.34 Non-electing organizations are taxed
differently on their lobbying expenditures depending on whether they are a public charity or
private foundation.35
Test 1: The “Expenditure Test” and Associated Excise Tax on Excess Lobbying
Expenditures
Organizations that elect, under § 501(h), to apply the “expenditure test” measure their permissible
level of lobbying activities against the limits in I.R.C. § 4911(c) for taxing “excess” lobbying
expenditures. Section 4911 imposes a 25% excise tax on excessive lobbying and grassroots
expenditures.36 To avoid tax for excessive lobbying, an organization must limit spending on such
activities to the sum of (1) 20% of its first $500,000 of expenditures;37 (2) plus 15% of its second
$500,000 of expenditures; (3) plus 10% of its third $500,000 of expenditures; and (4) plus 5% of
its remaining expenditures, with no more than $1 million total on lobbying expenditures for the
year being nontaxable.38 To avoid tax for excessive grassroots lobbying, the organization may not
spend on such efforts more than the sum of (1) 5% of its first $500,000 of expenditures; (2) plus
3.75% of its second $500,000 of expenditures; (3) plus 2.5% of its third $500,000 of
expenditures; and (4) plus 1.25% of its remaining expenditures; with no more than $250,000
spent in total on grassroots expenditures being nontaxable for the year.39 The 25% excise tax can
be triggered by either excessive (i.e., greater than the nontaxable amount) lobbying or grassroots
expenditures, with the tax applied to the greater of those two.40
Electing organizations lose their tax exemption if the organization “normally” makes
expenditures in excess of 150% of either of the nontaxable amounts in I.R.C. § 4911(c) on
lobbying or grassroots expenditures.41 To determine an organization’s normal lobbying
expenditures, the IRS generally looks to lobbying expenditures in the determination year and the
three taxable years immediately preceding the determination year.42 Thus, depending on its
activities in prior years, an electing organization could conduct lobbying in the current year that is
significant enough to be subject to tax, but not lose its tax-exempt status.

indicate congressional approval or disapproval of the Christian Echoes decision. See Joint Committee on Taxation,
General Explanation of the Tax Reform Act of 1976, JCS-33-76, at 416 (1976).
34 See Treas. Reg. § 1.501(c)(3)-1(c)(3)(ii).
35 26 U.S.C. §§ 4912, 4945.
36 26 U.S.C. § 4911(a)(1), (c). “Lobbying expenditures” is defined as “expenditures for the purpose of influencing
legislation” and encompasses direct and grassroots lobbying. Id. § 4911(c)(1), (d). “Grassroots expenditures” excludes
expenditures on direct lobbying. Id. § 4911(c)(3), (d).
37 This amount reflects the total of “exempt purpose expenditures,” not just lobbying expenditures. Id. § 4911(e)(1).
38 Id. § 4911(c)(2); Treas. Reg. § 56.4911-1(c)(1). The sum is called the “lobbying nontaxable amount.”
39 26 U.S.C. § 4911(c)(4); Treas. Reg. § 56.4911-1(c)(2). The sum is called the “grass roots nontaxable amount.”
40 26 U.S.C. § 4911(a), (b); Treas. Reg. § 56.4911-1(b).
41 Id. § 501(h)(2)(B); Treas. Reg. § 1.501(h)-3(b).
42 Treas. Reg. § 1.501(h)-3(e). The determination year and the three taxable years immediately preceding the
determination year are referred to collectively as “base years.” The base years, however, do not include any taxable
year preceding the taxable year for which the organization is treated as a § 501(c)(3) organization. Id. § 1.501(h)-
3(c)(7).
Congressional Research Service

5

Tax-Exempt Organizations Under I.R.C. Section 501(c): Political Activity Restrictions

Test 2: The “No Substantial Part Test” and Associated Excise Tax on Lobbying
Expenditures
For organizations that do not make the election and those that cannot (e.g., private foundations
and churches), the determination as to whether they have conducted more than the permissible
amount of lobbying depends on the facts and circumstances of each case. There is no bright-line
test and the percentage of expenditures spent on lobbying is not necessarily determinative.43
Rather, courts have examined the lobbying in the broad context of the organization’s purpose and
activities by looking at such things as how important lobbying is to the organization’s purpose,
the amount of time devoted to lobbying as compared with other activities, and the extent to which
the organization is continuously involved in lobbying.44
Unlike electing organizations, non-electing public charities are subject to an excise tax on their
lobbying expenditures only when they lose their exempt status because of substantial lobbying.45
The tax equals 5% of the organization’s lobbying expenditures, and the same tax may also be
imposed on the organization’s managers if they agree to expenditures they know would result in
loss of exempt status.46 Some public charities, including churches, are not subject to the tax.47
Private foundations, on the other hand, must generally pay an excise tax on any lobbying
expenditures they make.48 The tax equals 20% of the expenditures.49 Additionally, a foundation
manager who agrees to the expenditure knowing that it is taxable may individually be subject to a
tax equal to 5% of the expenditure, with the tax limited to $10,000.50 If the foundation fails to
timely correct the expenditure, it is subject to an additional tax equal to 100% of the expenditure
and the manager may be subject to an additional tax equal to 50% of the expenditure, limited to
$20,000, if the manager refuses to correct the expenditure.51
Regan v. Taxation With Representation of Washington
In 1983, the Supreme Court ruled in Regan v. Taxation With Representation of Washington that
the lobbying limitation is constitutional.52 In that case, the IRS denied the application of Taxation
With Representation of Washington (TWR) for § 501(c)(3) status because a substantial amount of

43 See Christian Echoes Nat’l Ministry, Inc. v. United States, 470 F.2d 849, 855 (10th Cir. 1972); Fund For Study of
Econ. Growth & Tax Reform v. I.R.S., 997 F. Supp. 15, 18 (D.D.C.), aff'd sub nom. Fund for the Study of Econ.
Growth & Tax Reform v. I.R.S., 161 F.3d 755 (D.C. Cir. 1998); Haswell v, United States, 500 F.2d 1133, 1142 (Ct. Cl.
1974); Krohn v. United States, 246 F. Supp. 341, 347–48 (D. Colo. 1965); see also, I.R.S. Gen. Couns. Mem. 36,148
(Jan. 28, 1975). Courts have found ‘no substantial part’ when lobbying expenditures have been between 5% and 20%
of the organization’s expenditures. See, e.g., Seasongood v. Comm'r, 227 F.2d 907, 912 (6th Cir. 1955); Haswell, 500
F.2d at 1146–47.
44 See Christian Echoes, 470 F.2d at 855–86; Fund For Study of Econ. Growth & Tax Reform v. I.R.S., 997 F. Supp. at
20–21; Haswell, 500 F.2d at 1145; Krohn, 246 F. Supp. at 348–49.
45 26 U.S.C. § 4912.
46 Id. § 4912(a), (b). Managers can avoid the tax if their agreement to the expenditures is not willful and is due to
reasonable cause.
47 Id. § 4912(c)(2)(B).
48 Id. § 4945. Congress enacted this section as part of the Tax Reform Act of 1969, Pub. L. No. 91-172, 83 Stat. 512.
49 26 U.S.C. § 4945(a)(1).
50 Id. § 4945(a)(2), (c)(2).
51 Id. § 4945(b), (c)(2). The foundation must correct the expenditure within the “taxable period” to avoid the additional
tax.
52 461 U.S. 540 (1983).
Congressional Research Service

6

Tax-Exempt Organizations Under I.R.C. Section 501(c): Political Activity Restrictions

the group’s activities would be lobbying.53 TWR argued that the lobbying limitation violated its
right to freedom of speech under the First Amendment.54 The group also argued that it was being
denied equal protection under the Fifth Amendment because § 501(c)(19) veterans’ organizations
were allowed to lobby substantially and still qualify for tax-exempt status and to receive tax-
deductible contributions.55
The Supreme Court rejected both claims. With respect to the First Amendment, the Court found
that Congress had not prevented TWR from speaking, but had simply chosen not to subsidize it
by means of the tax exemption and tax-deductible contributions.56 The Court also explained that
TWR could qualify for exemption under § 501(c)(4) and receive deductible contributions for its
non-lobbying activities by setting up a separate § 501(c)(3) organization.57 With respect to the
Fifth Amendment, the Court stated that the test to determine whether the classification was
constitutionally permissible was whether it bore a rational relationship to a legitimate
governmental purpose.58 Writing that legislatures have broad discretion when it comes to making
classifications for tax purposes, the Court found that it was not irrational for Congress to decide
not to extend the taxpayer-funded benefit of unlimited lobbying to charities because of concerns
they may lobby for their members’ benefit.59 The Court also stated that distinguishing charities
from veterans organizations was permissible because the United States “has a longstanding policy
of compensating veterans for their past contributions by providing them with numerous
advantages.”60
Political Campaign Activity by § 501(c)(3) Organizations
The organizational definition in I.R.C. § 501(c)(3) prohibits these organizations from
“participating in, or intervening in (including the publishing or distributing of statements), any
political campaign on behalf of (or in opposition to) any candidate for public office,” but does not
further elaborate on the prohibition. Treasury regulations define candidate as “an individual who
offers himself, or is proposed by others, as a contestant for an elective public office, whether such
office be national, State, or local.”61 As to what types of activities are prohibited, the regulations
add little besides specifying that they include “the publication or distribution of written or printed
statements or the making of oral statements on behalf of or in opposition to such a candidate.”62
Thus, the statute and regulations do not offer much insight as to what activities are prohibited.
They do make clear, however, that § 501(c)(3) organizations may not do such things as make

53 See id. at 542.
54 See id. at 545.
55 See id. at 546–47.
56 See id.
57 See id. at 544.
58 See id. at 547.
59 See id. at 547, 550.
60 Id. at 551.
61 Treas. Reg. § 1.501(c)(3)-1(c)(3)(iii).
62 Id.
Congressional Research Service

7

Tax-Exempt Organizations Under I.R.C. Section 501(c): Political Activity Restrictions

statements that endorse or oppose a candidate, publish or distribute campaign literature, or make
any type of contribution,63 monetary or otherwise, to a political campaign.64
On the other hand, § 501(c)(3) organizations are allowed to conduct activities that are political in
nature but are not related to elections, such as lobbying for or against legislation65 and supporting
or opposing the appointment of individuals to nonelective offices.66 Additionally, § 501(c)(3)
organizations may engage in certain election-related activities so long as the activities do not
indicate a preference for or against any candidate. Whether such an activity constitutes campaign
intervention depends on the facts and circumstances of each case. The following examples show
some of the ways in which the IRS has indicated that an activity might be biased. As will be seen,
some biases can be subtle and it is not necessary for the organization to expressly mention a
candidate by name.
Examples of Political Campaign Activities
Voter Guides
Section 501(c)(3) organizations may create and/or distribute voter guides and similar materials
that do not indicate a preference for any candidate.67 The guide must be unbiased in form,
content, and distribution.68 According to the IRS, there are numerous ways in which a guide may
be biased, and the determination will depend on the facts and circumstances of each case.69 For
example, a guide could display a bias by not including all candidates on an equal basis.70 Another
way a guide could be biased is by rating candidates, such as evaluating candidates and supporting
a slate of the best-qualified candidates, even if the criteria are nonpartisan (e.g., based on
professional qualifications).71 A voter guide could also indicate a bias by comparing the
organization’s position on issues with those of the candidates.72 A more subtle way in which a
guide may show bias is by only covering issues that are important to the organization, as opposed
to covering a range of issues of interest to the general public.73
Some guides consist of candidate responses to questions provided by the organization. According
to the IRS, factors that tend to show that such guides are candidate-neutral include the following:
• the questions and descriptions of the issues are clear and unbiased;
• the questions provided to the candidates are identical to those included in the
guide;

63 A loan by a 501(c)(3) organization to a political organization, where the 501(c)(3) organization does not control the
use of the loan, is a political contribution. I.R.S. Tech. Adv. Mem. 9812001 (Mar. 20, 1998).
64 26 U.S.C. §§ 501(c)(3), 4955(d)(1) (“The term ‘political expenditure’ means any amount paid or incurred by a
section 501(c)(3) organization in any participation in, or intervention in . . . any political campaign on behalf of (or in
opposition to) any candidate for public office.”).
65 As explained above, however, “no substantial part” of a § 501(c)(3) organization’s activities may be lobbying.
66 See, I.R.S. Notice 88-76, 1988-2 C.B. 392; I.R.S. Gen. Couns. Mem. 39,694 (Jan. 22, 1988).
67 See Rev. Rul. 78-248, 1978-1 C.B. 154.
68 See id.
69 See id.
70 See I.R.S. FS-2006-17 (Feb. 2006).
71 See Ass’n of the Bar of the City of New York v. Comm’r, 858 F.2d 876 (2d Cir. 1988); Rev. Rul. 67-71, 1967-1 C.B.
125.
72 See I.R.S. FS-2006-17 (Feb. 2006).
73 See Rev. Rul. 78-248, 1978-1 C.B. 154.
Congressional Research Service

8

Tax-Exempt Organizations Under I.R.C. Section 501(c): Political Activity Restrictions

• the candidates’ answers have not been edited;
• the guide puts the questions and appropriate answers in close proximity to
each other;
• the candidates are given a reasonable amount of time to respond to the
questions; and
• if the candidates are given limited choices for an answer to a question (e.g.,
yes/no, support/oppose), they are given a reasonable opportunity to explain
their positions.74
Other factors that may be important include the timing of the guide’s distribution and to whom it
is distributed.75 For example, the IRS ruled that a § 501(c)(3) organization could include a
compilation of Members’ voting records on issues important to it and its position on those issues
in the edition of its monthly newsletter published after the close of each Congress.76 The
newsletter was sent to the usual small number of subscribers and not targeted to areas where
elections were occurring. In this specific situation, the IRS stated that the publication was
permissible because it was not timed to an election or broadly distributed.
Conducting Public Forums
Section 501(c)(3) organizations may conduct unbiased and nonpartisan public forums where
candidates speak or debate. According to the IRS, factors that tend to show a public forum is
unbiased and nonpartisan include the following:
• all legally qualified candidates are invited;
• the questions are prepared and presented by a nonpartisan independent panel;
• the topics and questions cover a broad range of issues of interest to the
public;
• all candidates receive an equal opportunity to present their views; and
• the moderator does not comment on the questions or imply approval or
disapproval of the candidates.77
Inviting Candidates to Speak
A § 501(c)(3) organization may invite a candidate to speak at its functions without it being
prohibited campaign activity. According to the IRS, factors that tend to indicate the event was
permissible include that
• the organization provided an equal opportunity to speak at similar events to
the other candidates;
• the organization did not indicate a preference for or against any candidate;
and
• no fund-raising occurred at the event.78

74 See I.R.S. FS-2006-17 (Feb. 2006); Rev. Rul. 78-248, 1978-1 C.B. 154.
75 See I.R.S. FS-2006-17 (Feb. 2006); Rev. Rul. 78-248, 1978-1 C.B. 154.
76 See Rev. Rul. 80-282, 1980-2 C.B. 178.
77 See Rev. Rul. 86-95, 1986-2 C.B. 73; Rev. Rul. 2007-41, 2007-1 C.B. 1421.
78 See Rev. Rul. 2007-41, 2007-1 C.B. 1421.
Congressional Research Service

9

Tax-Exempt Organizations Under I.R.C. Section 501(c): Political Activity Restrictions

Section 501(c)(3) organizations may also invite candidates to speak in their non-candidate
capacity.79 Factors indicating that no campaign intervention occurred include the following:
• the individual was chosen to speak solely for non-candidacy reasons;
• the individual spoke only in his or her non-candidate capacity;
• no reference to the upcoming election was made;
• no campaign activity occurred in connection with the individual’s attendance;
• the organization maintained a nonpartisan atmosphere at the event; and
• the organization’s communications announcing the event clearly indicated
the non-candidate capacity in which the individual was appearing and did not
mention the individual’s candidacy or the election.80
Voter Registration
Section 501(c)(3) organizations may conduct nonpartisan voter registration and get-out-the-vote
drives.81 Again, the activities may not indicate a preference for any candidate or party. According
to the IRS, factors indicating that these activities are neutral include the following:
• candidates are named or depicted on an equal basis;
• no political party is named except for purposes of identifying the party
affiliation of each candidate;
• the activity is limited to urging individuals to register and vote and to
describing the time and place for these activities; and
• all services are made available without regard to the voter’s political
preference.82
Issue Advocacy Compared to Campaign Activity
Section 501(c)(3) organizations may take positions on policy issues. Because there is no rule that
campaign activity occurs only when an organization expressly advocates for or against a
candidate,83 the line between issue advocacy and campaign activity can be difficult to discern.
According to the IRS, key factors that indicate an issue advocacy communication does not cross
the line into campaign intervention include the following:
• the communication does not identify any candidates for a given public office,
whether by name or other means, such as party affiliation or distinctive
features of a candidate’s platform;
• the communication does not express approval or disapproval for any
candidate’s positions and/or actions;
• the communication is not delivered close in time to an election;

79 See id. A violation is possible even when a candidate attends an organization’s event as a non-candidate and does not
speak if the organization makes statements showing preference for the candidate at the event.
80 See id.
81 See id. Private foundations making expenditures for these activities may be subject to tax. See 26 U.S.C. §
4945(d)(2).
82 See Rev. Rul. 2007-41, 2007-1 C.B. 1421; JUDITH E. KINDELL AND JOHN FRANCIS REILLY, ELECTION YEAR ISSUES,
I.R.S. 2002 EO CPE TEXT, 448–51 (2002) [hereinafter 2002 EO CPE TEXT].
83 See Rev. Rul. 2007-41, 2007-1 C.B. 1421.
Congressional Research Service

10

Tax-Exempt Organizations Under I.R.C. Section 501(c): Political Activity Restrictions

• the communication does not refer to voting or an election;
• the issue addressed in the communication has not been raised as an issue
distinguishing the candidates;
• the communication is part of an ongoing series by the organization on the
same issue and the series is not timed to an election; and
• the identification of the candidate and the communication’s timing are related
to a non-electoral event (e.g., a scheduled vote on legislation by an
officeholder who is also a candidate).84
Selling Mailing Lists and Other Business Activities
Under certain circumstances, § 501(c)(3) organizations may sell or rent goods, services, and
facilities to political campaigns. This includes selling and renting mailing lists and accepting paid
political advertising. According to the IRS, factors that tend to indicate the activity is not biased
towards any candidate or party include the following:
• the activity is an ongoing business activity of the organization;
• the goods, services, and facilities are available to the general public;
• the fees charged are the organization’s customary and usual rates; and
• the goods, services, or facilities are available to all candidates on an equal
basis.85
Website Links
A § 501(c)(3) organization might be deemed to have engaged in campaign activity by linking its
website to another website that has content showing a preference for or against a candidate.86
When an organization establishes a link to another web site, the organization can be 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.87 Whether the linking is campaign intervention
depends on the facts and circumstances of each case. Factors the IRS will look at include the
context of the link on the organization’s website, whether all candidates are represented, whether
the linking serves the organization’s exempt purpose, and whether the organization’s website
directly links to the page at the other site with the biased material.88
Activities of the Organization’s Officials
A § 501(c)(3) organization acts through individuals such as its officers, directors, and trustees.89
Such officials may participate in campaign activity in their private capacity. The organization

84 See id.; see also 2002 EO CPE TEXT, supra note 82, at 376−77.
85 See Rev. Rul. 2007-41, 2007-1 C.B. 1421; see also, 2002 EO CPE TEXT, supra note 82, at 383−84.
86 See Rev. Rul. 2007-41, 2007-1 C.B. 1421. Due to possible constitutional concerns stemming from the Supreme
Court’s decision in Regan v. Taxation With Representation of Washington, 461 U.S. 540 (1983), the IRS indicated that
it would not pursue cases involving a link between the website of a § 501(c)(3) organization and the home page of a
related § 501(c)(4) organization. See Memorandum from Marsha A. Ramirez, Director, Exempt Organizations,
Examinations, to All EO Revenue Agents (July 28, 2008), http://www.irs.gov/pub/irs-tege/
internetfielddirective072808.pdf (last visited April 8, 2024).
87 See Rev. Rul. 2007-41, 2007-1 C.B. 1421.
88 See id.
89 See 2002 EO CPE TEXT, supra note 82, at 364.
Congressional Research Service

11

Tax-Exempt Organizations Under I.R.C. Section 501(c): Political Activity Restrictions

cannot support the activity in any way.90 For example, these individuals may not express political
views in the organization’s publications or at its functions (this is true even if the individual pays
the costs associated with the statement),91 and the organization may not pay expenses incurred by
the individual in making the political statement, such as paying for a newspaper advertisement
with such a statement.92 Individuals may be identified as being associated with an organization,
but there should be no intimation that their views represent those of the organization.93
Consequences of Engaging in Political Campaign Activity: Loss of Tax-
Exemption and Excise Tax on Political Expenditures
A § 501(c)(3) organization that engages in any amount of campaign activity may lose its tax-
exempt status and eligibility to receive tax-deductible contributions.94 It may also be taxed on its
“political expenditures,”95 either in addition to or in lieu of revocation of § 501(c)(3) status.96 The
tax equals 10% of the expenditures, with an additional tax equal to 100% of the expenditures if
they are not corrected in a timely manner, i.e., within the “taxable period.”97 A correction occurs
when the expenditures are recovered and safeguards are established to prevent future ones.98
The organization’s managers99 may also be subject to tax. A tax equal to 2.5% of the expenditures
(limited to $5,000 with respect to any one expenditure) is imposed on the organization’s
managers who agreed to the expenditures knowing they were political expenditures, unless the
agreement is not willful and is due to reasonable cause.100 Any managers who refuse to agree to
correct the expenditures are subject to an additional tax equal to 50% of the expenditures (limited
to $10,000 with respect to any one expenditure).101
For flagrant violations of the prohibition, the IRS may immediately determine and assess all taxes
due and/or seek an injunction and other relief to stop the organization from making additional
political expenditures and to preserve its assets.102

90 See Rev. Rul. 2007-41, 2007-1 C.B. 1421; see also 2002 EO CPE TEXT, supra note 82, at 364.
91 See Rev. Rul. 2007-41, 2007-1 C.B. 1421.
92 See id.
93 See id.
94 Ass’n of the Bar of the City of New York v. Comm’r, 858 F.2d 876 (2d Cir. 1988).
95 See 26 U.S.C. § 4955. Campaign expenditures of both public charities and private foundations may be taxed under §
4955. The lobbying and campaign expenditures of private foundations also may be taxed under I.R.C. § 4945, although
taxes under that provision are not assessed if the § 4955 tax is assessed on the same expenditure. Id. §§ 4945(d)–(e),
4955(e). See supra page 6 for discussion of the § 4945 tax on private foundations. Section 4945 gives the government
more options to tax private foundations because what is taxable under § 4945 is broader than that in § 4955.
Id. §§ 4945(d)–(e), 4955(d). The tax rates in § 4945 are also higher than those in § 4955. Id. §§ 4945(a)–(b), 4955(a)–
(b).
96 See Treas. Reg. § 53.4955-1(a); H.R. REP. NO. 100-391(II), at 1623–24 (1987).
97 26 U.S.C. § 4955(a)(1), (b)(1), (f)(3); Treas. Reg. § 53.4955-1(e).
98 26 U.S.C. § 4955(a)(1), (b)(1), (f)(3); Treas. Reg. § 53.4955-1(e).
99 An organization’s managers include any officer, director, or trustee, and any employee with authority over the
expenditure. 26 U.S.C. § 4955(f)(2).
100 26 U.S.C. § 4955(a)(2), (c)(2); Treas. Reg. § 53.4955-1(b).
101 26 U.S.C. § 4955(b)(2), (c)(2).
102 See 26 U.S.C. §§ 6852, 7409.
Congressional Research Service

12

Tax-Exempt Organizations Under I.R.C. Section 501(c): Political Activity Restrictions

Political Activity by § 501(c)(4), (c)(5), and (c)(6)
Organizations
Organizational Definitions
I.R.C. § 501(c)(4)
The organizations described in § 501(c)(4) include those that are commonly referred to as social
welfare organizations. The section describes:
[c]ivic leagues or organizations not organized for profit but operated exclusively for the
promotion of social welfare, or local associations of employees, the membership of which
is limited to the employees of a designated person or persons in a particular municipality,
and the net earnings of which are devoted exclusively to charitable, educational, or
recreational purposes. [This paragraph] shall not apply to an entity unless no part of the net
earnings of such entity inures to the benefit of any private shareholder or individual.
Treasury regulations clarify that “[a]n organization is operated exclusively for the promotion of
social welfare if it is primarily engaged in promoting in some way the common good and general
welfare of the people of the community.”103
I.R.C. § 501(c)(5)
Section 501(c)(5) organizations are described as “labor, agricultural, or horticultural
organizations.” These include labor unions.
I.R.C. § 501(c)(6)
The organizations described in § 501(c)(6) are generally thought of as trade associations and
chambers of commerce. The section describes these organizations as
[b]usiness leagues, chambers of commerce, real estate boards, boards of trade, or
professional football leagues ... not organized for profit and no part of the net earnings of
which inures to the benefit of any private shareholder or individual.
Lobbying by § 501(c)(4), (c)(5), and (c)(6) Organizations
The organizational definitions for §§ 501(c)(4), (c)(5), and (c)(6) do not contain any explicit
limitations on lobbying. The organizations described in these three sections may participate in an
unrestricted amount of lobbying so long as the lobbying furthers the purpose for which the
organization is exempt.104 Organizations whose sole activity is lobbying may be recognized under

103 Treas. Reg. § 1.501(c)(4)-1(a)(2)(i). The purposes described in I.R.C. §§ 501(c)(3) and (c)(4) overlap, so that an
organization may be able to qualify under either section. A § 501(c)(3) organization is eligible to receive tax-deductible
contributions, while a § 501(c)(4) organization generally is not. A § 501(c)(3) organization is more limited, however, in
the amount and types of political activity it may undertake. Thus, an organization that could qualify under either section
will generally choose based on which is more important: receiving tax-deductible contributions or participating in
political activity. With the exception of churches and related organizations, an organization that loses its § 501(c)(3)
status because of political campaign activity or substantial lobbying may not then seek recognition as a § 501(c)(4)
organization. See 26 U.S.C. § 504.
104 Treas. Reg. § 1.501(c)(4)-1(a)(2)(ii) (“A social welfare organization . . . may qualify under section 501(c)(4) even
though it is an action [i.e., lobbying] organization . . . if it otherwise qualifies under this section.”) (emphasis in
(continued...)
Congressional Research Service

13

Tax-Exempt Organizations Under I.R.C. Section 501(c): Political Activity Restrictions

these sections so long as they serve the appropriate tax-exempt purpose.105 For example, a
business association whose only activity is lobbying for and against legislation according to its
members’ interests may qualify for § 501(c)(6) status.106
If an organization engages in lobbying, it can impact the deductibility of any dues paid by its
members. While dues are potentially deductible under I.R.C. § 162 as a trade or business
expense,107 that section disallows a deduction for the portion of dues that represents lobbying and
political expenditures.108 In general, the organization must either notify its members of the
amount that is nondeductible or pay a tax on its lobbying expenditures.109
Political Campaign Activity by § 501(c)(4), (c)(5), and (c)(6)
Organizations
The organizational definitions in §§ 501(c)(4), (c)(5), and (c)(6) do not contain any explicit
restrictions on political campaign activity. Thus, these organizations may engage in such activity
under the tax laws, although it cannot be the organization’s primary activity (along with any other
activities that do not further an exempt purpose).110
Additionally, because a § 501(c)(4) organization must be “primarily engaged in promoting in
some way the common good and general welfare of the people of the community,”111 it cannot
qualify for § 501(c)(4) status if it primarily provides private benefits.112 Thus, it appears an
organization that primarily benefits partisan interests could jeopardize its § 501(c)(4) status.113
Whether an organization is “primarily engaged” in promoting social welfare depends on the facts
and circumstances of each case, looking at a variety of factors, not merely the amount of

original); Rev. Rul. 2004-6, 2004-1 C.B. 328 (2003) (“Organizations that are exempt from federal income tax under §
501(a) as organizations described in § 501(c)(4), § 501(c)(5), or § 501(c)(6) may, consistent with their exempt purpose,
publicly advocate positions on public policy issues. This advocacy may include lobbying for legislation consistent with
these positions.”).
105 See Rev. Rul. 61-177, 1961-1 C.B. 117; Rev. Rul. 71-530, 1971-2 C.B. 237.
106 See Rev. Rul. 61-177, 1961-1 C.B. 117.
107 The deduction under I.R.C. § 162 is suspended for individuals through 2025 as a miscellaneous itemized deduction.
26 U.S.C. § 67(g).
108 26 U.S.C. § 162(e).
109 See 26 U.S.C. § 6033(e).
110 See Treas. Reg. § 1.501(c)(4)-1(a)(2) (“An organization is operated exclusively for the promotion of social welfare
if it is primarily engaged in promoting in some way the common good and general welfare of the people of the
community. . . The promotion of social welfare does not include direct or indirect participation or intervention in
political campaigns on behalf of or in opposition to any candidate for public office”); Rev. Rul. 81-95, 1981-1 C.B. 332
(ruling that lawful participation in campaign activity would not affect the § 501(c)(4) status of an organization whose
primary activity was promoting social welfare); Rev. Rul. 67-368; 1967-2 C.B. 194 (ruling that an organization whose
primary activity was rating candidates using non-partisan criteria did not qualify for § 501(c)(4) status); I.R.S. Gen.
Couns. Mem. 34233 (Dec. 30, 1969).
111 Treas. Reg. § 1.501(c)(4)-1(a)(2).
112 See Contracting Plumbers Cooperative Restoration Corp. v. United States, 488 F.2d 684 (2d Cir. 1973).
113 See Am. Campaign Acad. v. Comm’r, 92 T.C. 1053 (1989) (ruling that an organization that operates for the benefit
of private interests, such as members and entities of one political party, on a more than insubstantial basis may not
qualify for § 501(c)(3) status); see also Democratic Leadership Council v. United States, 542 F. Supp. 2d 63 (D.D.C.
2008) (ruling that the retroactive revocation of group’s § 501(c)(4) status was improper because case did not meet
circumstances required for retroactive revocation; IRS had revoked the group’s § 501(c)(4) status after determining the
group had impermissibly benefitted private interests, specifically Democratic elected officials); I.R.S. Priv. Ltr. Rul.
12-21-025 (March 2, 2012).
Congressional Research Service

14

Tax-Exempt Organizations Under I.R.C. Section 501(c): Political Activity Restrictions

expenditures.114 Relevant factors include the manner in which the organization’s activities are
conducted; the resources used in conducting the activities (e.g., buildings and equipment); the
time devoted to activities by employees and volunteers; the purposes furthered by various
activities; and the amount of funds received from and devoted to particular activities.115
As to what activities constitute campaign activity, IRS guidance interpreting the similar
“campaign intervention” language in § 501(c)(3), explained above, is instructive for other 501(c)
organizations.116 In 2013, the IRS proposed new regulations with the goal of providing more
definitive rules regarding a § 501(c)(4) organization’s political activities to reduce the need for
facts and circumstances determinations.117 The proposed regulations would have created a new
category of “candidate-related political activity” distinct from the political campaign activities in
which § 501(c)(3) organizations are prohibited from engaging.118 The IRS did not finalize the
proposed regulations after a record number of public comments. Appropriations acts have since
prevented the IRS from using funds to make new regulations on determining whether § 501(c)(4)
organizations are operated exclusively for their exempt purpose.119
Political Activity by Other Types of § 501(c)
Organizations
While the majority of § 501(c) organizations fall into one of the categories discussed above, the
I.R.C. describes numerous other types of organizations. The limitations the I.R.C. places on the
ability of these organizations to participate in political activity are often less clear, and there is
minimal IRS guidance on the topic.
The other types of § 501(c) organizations fall into two categories. The first are those that are
likely prohibited from participating in most, if not all, types of political activity. This category
might include the § 501(c) trusts whose funds must be dedicated to their exempt purpose (e.g., §
501(c)(17) supplemental unemployment benefit trusts, § 501(c)(21) black lung benefit trusts, and
501(c)(22) multi-employer pension plan trusts). It also likely includes the organizations that the
IRS has indicated in unofficial guidance may not participate in political activities “because the
subparagraph in which they are described limits them to an exclusive purpose (for example,
I.R.C. § 501(c)(2) title holding companies, I.R.C. § 501(c)(20) group legal services plans).”120
This rationale could also prohibit § 501(c)(10) domestic fraternal societies, for example, from
participating in political activities, because their net earnings must be devoted exclusively to
certain purposes.

114 See, e.g., Rev. Rul. 74-361, 1974-2 C.B. 159; Rev. Rul. 68-45, 1968-1 C.B. 259; I.R.S. Priv. Ltr. Rul. 12-24-034
(March 21, 2012).
115 I.R.S. Priv. Ltr. Rul. 12-24-034 (March 21, 2012).
116 See Rev. Rul. 81-95, 1981-1 C.B. 332 (citing IRS guidance on § 501(c)(3) organizations when considering political
campaign activities of § 501(c)(4) organizations).
117 Guidance for Tax-Exempt Social Welfare Organizations on Candidate-Related Political Activities, 78 Fed. Reg.
71535 (Nov. 29, 2013).
118 Id. at 71536–37
119 See, e.g., Consolidated Appropriations Act, 2023, Pub. L. No. 117, div. E, tit. 1, § 123, 136 Stat. 4459, 4659.
120 2002 EO CPE TEXT, supra note 82, at 434. Some might argue this rationale is suspect because § 501(c)(3) requires
those organizations to be organized and operated “exclusively” for an exempt purpose, but the IRS has interpreted the
term to mean “primarily” in this context and permits them to engage in nonpartisan political activity. See Treas. Reg. §
1.501(c)(3)-1(c)(1).
Congressional Research Service

15

Tax-Exempt Organizations Under I.R.C. Section 501(c): Political Activity Restrictions

The second category are those § 501(c) organizations that the IRS has indicated can participate in
some political activity. Examples would appear to include § 501(c)(7) social and recreational
clubs,121 § 501(c)(8) fraternal benefit societies and associations,122 and § 501(c)(19) veterans’
groups.123
Tax Under I.R.C. § 527(f)
Even though certain § 501(c) organizations may engage in campaign or lobbying activity, they are
subject to tax if they make an expenditure for a § 527 “exempt function.”124 An “exempt
function” is the “influencing or attempting to influence the selection, nomination, election, or
appointment of any individual to any Federal, State, or local public office or office in a political
organization, or the election of Presidential or Vice-Presidential electors . . .”125 In addition to
campaign activity, the definition of “exempt function” encompasses some “lobbying” activities
because lobbying can include advocating for appointment of non-elected positions.126
The tax is imposed at the corporate income tax rate (21%) on the lesser of the organization’s net
investment income or the total amount of “exempt function” expenditures.127 Thus, for
organizations with little or no net investment income or those making low-cost expenditures, the
tax is of minimal import. For others groups, however, it might serve as a disincentive to directly
engage in the activities giving rise to the taxable expenditures.
Section 501(c) organizations may lawfully avoid the tax by setting up a separate segregated fund
under § 527(f)(3) to conduct the taxable activities.128 Assuming the fund is set up and
administered properly, it will be treated as a separate § 527 political organization and the § 501(c)
organization will not be subject to tax.129 A § 501(c) organization may not, however, set up such a
fund to accomplish activities the organization itself may not do.130 Thus, for example, a §
501(c)(3) organization may not use such a fund as a way to get around the prohibition on
campaign intervention.131

121 See Rev. Rul. 68-266, 1968-1 C.B. 270; see also H.R. REP. NO. 391, at 1606–08 (1987).
122 See I.R.S. Priv. Ltr. Rul. 8342100 (July 20, 1983); I.R.S. Priv. Ltr. Rul. 8852037 (October 4, 1988).
123 See Treas. Reg. § 1.501(c)(19)-1(c)(1); Regan v. Taxation with Representation of Washington, 461 U.S. 540, 546
(1983); I.R.S. Priv. Ltr. Rul. 7904064 (October 25, 1978).
124 26 U.S.C. § 527(f); Rev. Rul. 2004-6, 2004-1 C.B. 328 (2003). Even if an organization is forbidden from an activity,
such as the prohibition on campaign activity by § 501(c)(3) organizations, the organization can still be subject to the §
527(f) tax for engaging in the forbidden activity. Treas. Reg. § 1.527-6(g).
125 26 U.S.C. § 527(e)(2); see also Treas. Reg. § 1.527-2(c).
126 See I.R.S. Notice 88-76, 1988-2 C.B. 392; I.R.S. Gen. Couns. Mem. 39694 (Jan. 22, 1988).
127 26 U.S.C. § 527(b), (f); Treas. Reg. § 1.527-6(a).
128 See also, Treas. Reg. § 1.527-6(f).
129 Rev. Rul. 2004-6, 2004-1 C.B. 328 (2003). A separate segregated fund under § 527(f)(3), though, is subject to the §
527(i) notice and § 527(j) reporting requirements. Thus, organizations have the choice of either (1) using their own
funds and being subject to the § 527(f) tax or (2) creating a separate segregated fund and being subject to the notice and
reporting requirements of § 527 political organizations. The restrictions and requirements of § 527 political
organizations are otherwise beyond the scope of this report.
130 See Treas. Reg. § 1.527-6(g).
131 See id.
Congressional Research Service

16

Tax-Exempt Organizations Under I.R.C. Section 501(c): Political Activity Restrictions

I.R.C. Reporting and Disclosure Requirements
Under the I.R.C., § 501(c) organizations are generally required to file an annual information
return (some version of the Form 990) with the IRS.132 Filing organizations are required to report
information regarding their political activities on the Form’s Schedule C and substantial donors
on the Form’s Schedule B.
Political Activity Reporting on Schedule C
On the Schedule C,133 § 501(c)(3) organizations are required to describe their direct and indirect
political campaign activities and report information on their political expenditures, volunteer
hours, and any § 4955 excise taxes incurred on political expenditures.134 Section 501(c)(3)
organizations must also report information about their lobbying activities on the schedule.135 The
specific information that must be reported differs depending on whether the organization made
the § 501(h) election.136
Meanwhile, organizations other than those described in § 501(c)(3) must (1) describe their direct
and indirect political campaign activities; (2) report the amount spent conducting campaign
activities and the number of volunteer hours used to conduct those activities; (3) report the
amount directly spent for § 527 exempt function activities; (4) report the amount of funds
contributed to other organizations for § 527 exempt function activities; (5) report whether a Form
1120-POL (the tax return filed by organizations owing the § 527 tax) was filed for the year; and
(6) report the name, address, and employer identification number of every § 527 political
organization to which a payment was made and the amount of such payments, and indicate
whether the amounts were paid from internal funds or were contributions received and directly
transferred to a separate political organization.137 There is also space for § 501(c)(4), (c)(5), and
(c)(6) organizations to report information regarding their lobbying activities with respect to the
deductibility of dues paid by their members.138
Substantial Donors Reporting on Schedule B
The ability of some § 501(c) organizations to engage in political activity has led to concern about
who is potentially funding that activity. On the Form 990’s Schedule B,139 § 501(c) organizations
must report certain information about significant donors, which are generally individuals who

132 See 26 U.S.C. § 6033.
133 I.R.S., Schedule C (Form 990): Political Campaign and Lobbying Activities (2023), https://www.irs.gov/pub/irs-
pdf/f990sc.pdf (last visited April 8, 2024).
134 I.R.S., Schedule C (Form 990): Political Campaign and Lobbying Activities (2023), https://www.irs.gov/pub/irs-
pdf/f990sc.pdf (last visited April 8, 2024); 26 U.S.C. § 6033(b)(10); Treas. Reg. § 1.6033-2(a)(2)(K).
135 I.R.S., Schedule C (Form 990): Political Campaign and Lobbying Activities (2023), https://www.irs.gov/pub/irs-
pdf/f990sc.pdf (last visited April 8, 2024); 26 U.S.C. § 6033(b)(10); Treas. Reg. § 1.6033-2(a)(2)(K), (M).
136 I.R.S., Schedule C (Form 990): Political Campaign and Lobbying Activities (2023), https://www.irs.gov/pub/irs-
pdf/f990sc.pdf (last visited April 8, 2024); 26 U.S.C. § 6033(b)(8), (10); Treas. Reg. § 1.6033-2(a)(2)(K), (M).
137 I.R.S., Schedule C (Form 990): Political Campaign and Lobbying Activities (2023), https://www.irs.gov/pub/irs-
pdf/f990sc.pdf (last visited April 8, 2024); 26 U.S.C. § 6033(e).
138 I.R.S., Schedule C (Form 990): Political Campaign and Lobbying Activities (2023), https://www.irs.gov/pub/irs-
pdf/f990sc.pdf (last visited April 8, 2024); 26 U.S.C. § 6033(e).
139 See I.R.S., Schedule B (Form 990): Schedule of Contributors (2022), https://www.irs.gov/pub/irs-pdf/f990ezb.pdf
(last visited Apr. 8, 2024).
Congressional Research Service

17

Tax-Exempt Organizations Under I.R.C. Section 501(c): Political Activity Restrictions

contributed at least $5,000 during the year. Under current IRS regulations in place since 2020,140
the donor information (i.e., names and addresses) required to be included by tax-exempt
organizations in their Schedule Bs differs depending on whether the organization is established
under § 501(c)(3) or one of the other provisions of § 501(c). Because they have a statutory
requirement to do so, § 501(c)(3) organizations must disclose both the amount of significant
contributions and information regarding the source of these contributions (i.e., the donor
information).141 Section 501(c)(4) and other 501(c) organizations are not subject to a similar
statutory requirement and do not have to disclose donor information on their Schedule Bs,142
although they still must report the amount of each substantial contribution. They also must
maintain internal records of the names and addresses of their substantial contributors and make
those records available for inspection by the IRS on request.143
Public Disclosure of Forms 990s and Schedules
The filing organization and the IRS must make the organization’s Form 990 and accompanying
schedules publicly available.144 In the case of § 501(c)(3) organizations, however, identifying
information (i.e., names and addresses) about the substantial donors reported on the Schedule
Bs145 is not subject to public disclosure, except for donors to private foundations.146 For all other
501(c)(3) organizations (i.e., public charities), however, the IRS will, and the organizations can,
redact donor information on any publicly released Schedule B.147
Donor Reporting and Free Speech
Heightened disclosure of donor information at the state level has at times implicated First
Amendment free speech concerns.148 In 2021, the Supreme Court struck down a California

140 Guidance Under Section 6033 Regarding the Reporting Requirements of Exempt Organizations, 85 Fed. Reg. 31959
(May 28, 2020) (codified at 26 C.F.R. 1, 56). The IRS issued the final rule in 2020 after notice and comment
rulemaking. The IRS tried in 2018 to implement substantially the same rules in Revenue Procedure 2018-38. A federal
district court set aside the Revenue Procedure for failing to follow Administrative Procedure Act rulemaking
requirements. Bullock v. Internal Revenue Serv., 401 F. Supp. 3d 1144 (D. Mont. 2019); see also CRS Legal Sidebar
LSB10187, Nonprofit Donor Information Disclosure, by David H. Carpenter.
141 26 U.S.C. § 6033(b); Treas. Reg. § 1.6033-2(a)(2)(ii)(F); Guidance Under Section 6033 Regarding the Reporting
Requirements of Exempt Organizations, 85 Fed. Reg. at 31966.
142 Treas. Reg. § 1.6033-2(a)(2); Guidance Under Section 6033 Regarding the Reporting Requirements of Exempt
Organizations, 85 Fed. Reg. at 31966.
143 Guidance Under Section 6033 Regarding the Reporting Requirements of Exempt Organizations, 85 Fed. Reg. at
31966.
144 See 26 U.S.C. § 6104(b) and (d). The organization is subject to a penalty of $20 per day per return (limited to
$10,000) for failing to do so. See 26 U.S.C. § 6652(c)(1)(C).
145 As explained above, other 501(c) organization need not include donor information on the Schedule B.
146 See 26 U.S.C. § 6104(b) and (d); 26 C.F.R. § 301.6104(d)-1(b)(4); Public Disclosure and Availability of Exempt
Organizations Returns and Applications: Contributors’ Identities Not Subject to Disclosure, IRS,
https://www.irs.gov/charities-non-profits/public-disclosure-and-availability-of-exempt-organizations-returns-and-
applications-contributors-identities-not-subject-to-disclosure (last visited April 8, 2024).
147 IRS, Schedule B (Form 990): Schedule of Contributors (2022), https://www.irs.gov/pub/irs-pdf/f990ezb.pdf (last
visited April 8, 2024); Public Disclosure and Availability of Exempt Organizations Returns and Applications:
Contributors’ Identities Not Subject to Disclosure, IRS, https://www.irs.gov/charities-non-profits/public-disclosure-
and-availability-of-exempt-organizations-returns-and-applications-contributors-identities-not-subject-to-disclosure (last
visited April 8, 2024).
148 See, e.g., Americans for Prosperity Found. v. Bonta, 141 S. Ct. 2373 (2021); Citizens United v. Schneiderman, 882
F.3d 374 (2d Cir. 2018).
Congressional Research Service

18

Tax-Exempt Organizations Under I.R.C. Section 501(c): Political Activity Restrictions

regulation that required organizations to file unredacted Schedule Bs with the state.149 A
congressional action increasing donor disclosure requirements would likely be distinguishable
from what California did in that case. First, California was requesting more information than the
organizations were required to publicly provide by federal law and which the state did not need in
order to carry out its enforcement purposes. California was requesting unredacted Schedule Bs
with the names and addresses of major donors, which are kept confidential for most 501(c)
organizations.150 Second, California made filing unredacted Schedule Bs a requirement for
registration status, which allows the organization to operate and solicit funds in the state. A
congressional action would likely be constitutionally supported by Congress’s taxing power and
make the additional information a requirement for tax exemption, a voluntary government
subsidy. The Court’s decision and the United States in an amicus filing discuss this distinction,
both citing Regan151 for Congress’s power to set conditions of federal tax-exempt status.152

149 Bonta, 141 S. Ct. at 2389. See also, CRS Legal Sidebar LSB10621, Supreme Court Invalidates California Donor
Disclosure Rule on First Amendment Grounds, by Victoria L. Killion (2021).
150 26 U.S.C. § 6104(d)(3)(A).
151 Regan v. Taxation With Representation of Washington, 461 U.S. 540 (1983). See also, supra page 6–7.
152 Bonta, 141 S. Ct. at 2389; Brief for the United States as Amicus Curiae Supporting Vacatur and Remand,
Americans for Prosperity Found. v. Bonta, 141 S. Ct. 2373 (2021); 2021 WL 877687, at *24.
Congressional Research Service

19

Tax-Exempt Organizations Under I.R.C. Section 501(c): Political Activity Restrictions

Table 1. Summary of Lobbying Activity Allowed for Section 501(c)(3) and 501(c)(4),
(c)(5), and (c)(6) Organizations
§ 501(c)(4),

§ 501(c)(3)
(c)(5), and (c)(6)
Lobbying Activity
Unlimited, if related
Allowed
Limited
to exempt purpose
Tax on organization
If lobbying expenditures are not from a segregated fund, 21% of the lesser of the
organization’s net investment income or the total amount of “exempt function”
expenditures. 26 U.S.C. § 527(f)
501(h)

electing
Non-501(h) electing
25% of excess
Public
Private
lobbying or
Charities
foundations
grassroots
expenditures. Id. 5% of lobbying
20% on any lobbying
§ 4911
expenditures
expenditures. Id. §
upon loss of
4945(a)(1)
exempt status

for making
disqualifying
Additional tax of
lobbying
100% of any lobbying
expenditures. Id. expenditures for
§ 4912(a)
failure to timely
correct. Id. §
4945(b)(1)
Tax on managers
None
5% of lobbying
5% of any lobbying
None
expenditures
expenditures, limited
upon loss of
to $10,000. Id. §
exempt status
4945(a)(2)
for making

disqualifying
lobbying
Additional tax of
expenditures. Id. 50% of any lobbying
§ 4912(b)
expenditures for
failure to timely
correct, limited to
$20,000. Id. §
4945(b)(2)
Source: 26 U.S.C. §§ 501(c)(3), (4), (5), (6); 501(h); 527(f); 4911; 4912; 4945; Treas. Reg. § 1.501(c)(3)-1; Treas.
Reg. § 1.501(c)(4)-1.
Congressional Research Service

20

link to page 24 Tax-Exempt Organizations Under I.R.C. Section 501(c): Political Activity Restrictions

Table 2. Summary of Campaign Activity Allowed for Section 501(c)(3) and 501(c)(4),
(c)(5), and (c)(6) Organizations
§ 501(c)(4), (c)(5),

§ 501(c)(3)
and (c)(6)
Campaign Activity
Must not be its primary
Allowed
None
purpose
Tax on organization
If campaign expenditures are not from a segregated fund, 21% of the lesser of the
organization’s net investment income or the total amount of “exempt function”
expenditures. 26 U.S.C. § 527(f)
10% of any campaign expenditures. Id. § 4955(a)(1)a

Additional tax of 100% of campaign expenditures for
failure to timely correct. Id. § 4955(b)(1)
Tax on managers
2.5% of campaign expenditures, limited to $5,000 with
None
respect to any one expenditure. Id. § 4955(a)(2)

Additional tax of 50% of campaign expenditures, limited
to $10,000 with respect to any one expenditure, if
manager refuses to correct. Id. § 4955(b)(2)
Source: 26 U.S.C. §§ 501(c)(3), (4), (5), (6); 501(h); 527(f); 4955; Treas. Reg. § 1.501(c)(3)-1; Treas. Reg. §
1.501(c)(4)-1.
a. Campaign expenditures of both public charities and private foundations may be taxed under § 4955. The
lobbying and campaign expenditures of private foundations also may be taxed under I.R.C. § 4945, although
taxes under that provision are not assessed if the § 4955 tax is assessed on the same expenditure. 26
U.S.C. §§ 4945(d)–(e), 4955(e). See supra page 6 for discussion of the § 4945 tax on private foundations.
Section 4945 gives the government more options to tax private foundations because what is taxable under §
4945 is broader than that in § 4955. Id. §§ 4945(d)–(e), 4955(d). The tax rates in § 4945 are also higher than
those in § 4955. Id. §§ 4945(a)–(b), 4955(a)–(b)

Congressional Research Service

21

Tax-Exempt Organizations Under I.R.C. Section 501(c): Political Activity Restrictions

Table 3. Summary of Donor Disclosure Requirements on IRS Schedule B (Form 990)
for Section 501(c)(3) and 501(c)(4), (c)(5), and (c)(6) Organizations
§ 501(c)(4), (c)(5),

§ 501(c)(3)
and (c)(6)

Private Foundation
Public Charity

Is the amount of significant
contributions reported?
Yes
Yes
Yes
Is donor information (i.e.,
name and address) reported?
Yes
Yes
No
Is donor information released
N/A
to the public?

Yes
No
(Not reported in the
first instance.)
Source: 26 U.S.C. §§ 6104, 6033; Treas. Reg. § 1.6033-2(a)(2)(i )(F); Guidance Under Section 6033 Regarding
the Reporting Requirements of Exempt Organizations, 85 Fed. Reg. 31959, 31966 (May 28, 2020) (codified at 26
C.F.R. § 1).

Author Information

Justin C. Chung

Legislative Attorney

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
shared staff to congressional committees and Members of Congress. It operates solely at the behest of and
under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other
than public understanding of information that has been provided by CRS to Members of Congress in
connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not
subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in
its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or
material from a third party, you may need to obtain the permission of the copyright holder if you wish to
copy or otherwise use copyrighted material.

Congressional Research Service
RL33377 · VERSION 10 · UPDATED
22