The IRS Moves to Limit Political Activity by 501(c)(4) Nonprofits

Election spending by 501(c)(4) "social welfare" organizations not required to disclose their donors mushroomed from a few million in 2006 to over $250 million in 2012.

On Thanksgiving eve, the IRS and Treasury department released a long awaited proposal to define and restrict the political activity of 501(c)(4) organizations. What are they proposing? Is it needed? How might this affect nonpartisan election activity of the vast majority of nonprofits who are 501(c)(3) charities - social service agencies, churches, civic groups and the like?

What are 501(c)(4) organizations?
501(c)(4)s are granted tax exempt status as nonprofit organizations operated for the promotion of social welfare that are "primarily" engaged in activities that advance the common good and general welfare of the people of the community "for the purpose of bringing about civic betterments and social improvements." It can include advocacy and lobbying related to the organization's exempt purpose. Unlike 501(c)(3) charities, contributions to 501(c)(4)s are not tax deductible. In the past (c)(4)s have been allowed to conduct a limited though not defined amount of political/election activity.

What's the IRS proposing?
See this IRS-Treasury press release for an outline of new rules to restrict partisan election activities aimed at electing or defeating candidates by 501(c)(4)s. They include common definitions of political activity like election intervention within 60 days of the election all the way to proposed restrictions on the ability of 501(c)(4)s to do even nonpartisan get out the vote or voter registration drives. The purpose is to create clear definitions on prohibited political activity to determine who can qualify for and maintain exempt status as a (c)(4) social welfare organization.

Is it needed?
Yes. Specific guidelines and clear definitions of political activity are long overdue to ensure 501(c)(4)s are actually set up primarily to promote social welfare and civic good, not election intervention. Recently, political operatives and millionaires have taken advantage of rules that allow 501(c)(4)s to hide the names of donors to vastly expand spending by 501(c)(4)s who spend almost all their money to support and oppose candidates. It makes a mockery of the "social welfare" purpose of (c)(4)s and undermines democracy.
 
What about proposed restrictions on 501(c)(4)s doing nonpartisan GOTV, voter registration, or even candidate forums?
It's just a proposal. Nonprofit VOTE and many others would defend the right of any entity to conduct nonpartisan political activity as a constitutional right and bedrock to encouraging participation in our democracy. While welcoming the new rules to protect and restore (c)(4)s to their original civic purpose, there's been a strong outcry by the Bright Lines Project, Bolder Advocacy and others in the field to this part of their proposal. 
 
When might new rules go into effect?
There will be a lengthy period of public comment. New rules won't be issued until after the 2014 election.

How does it affect 501(c)(3) nonprofits and charities?
It doesn't. The proposal is only for 501(c)(4)s. However, the debate over rules for 501(c)(4)s could unfortunately make some charities less likely to engage – such as helping people participate in elections, doing voter education, or connecting with candidates on issues on a nonpartisan basis. We would urge the opposite. Our nonpartisan approach and voice is needed more than ever.

To learn more, see these resources:

• Tax Prof Blog: Treasury, IRS Announce 'Crackdown' on Political Campaigning by Crossroads GPS, Other 501(c)(4) Groups
• Bolder Advocacy: Q and A on Proposed IRS Rules for 501(c)(4)s
• Bright Lines Project
• OSU Moritz College of Law: FAQs on 501(c)(4) Social Welfare Organizations

Connecticut Debuts Election Day Registration

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This month's municipal elections in Connecticut marked the first time voters in the state could register on Election Day. In Connecticut, Election Day Registration is not available at polling places. Instead, each town has a designated Election Day Registration location.

Secretary of State Denise Merrill estimates that between 1,500 and 2,000 people took advantage of Election Day Registration and that it was particularly popular in New Haven. She noted, "This is the first election it's in effect and it did very well; we had no problems."

Secretary Merrill tweeted that turnout was 31% statewide--a high of 77% in Bridgewater and a low of 5.21% in Hartford.

Learn more about the states that allow Election or Same-Day Registration. 

CIRCLE Reports on Youth Turnout in NJ and VA

According to CIRCLE's calculations of exit polls, youth turnout was 26% in Virginia and 18% in New Jersey this year.  Using the same methods, CIRCLE concluded that youth turnout in Virginia was 17% in 2009 and 18% in 1997, and in New Jersey 26% in 1997 and 19% in 2009. This suggests a significant increase in Virginia in 2013 compared to the two most recent gubernatorial races.

These turnout estimates mean that roughly 288,000 young voters cast ballots on November 5th in Virginia, out of the estimated 1.1 million 18-29 year-old citizens who live in that state. In New Jersey, roughly 206,000 young voters cast a ballot out of the estimated 1.2 million 18-29 year old citizens.

CIRCLE Director Peter Levine noted that "Although 18% and 26% are far from satisfactory, these statistics should be put in context," and that "Turnout is always much lower in off-year gubernatorial elections than in presidential years"

Read CIRCLE's full analysis.

* The estimated numbers of young people who voted in the 1997 and 2009 governors’ races were calculated using: (1) the number of ballots cast in each race according to the media, (2) the youth share of those who voted, based on the exit polls conducted by Edison Research for the National Election Pool, and (3) the estimated number of 18-29 year old citizens taken from the Census Current Population Survey, March Demographic File of that year. Edison Research estimates that its exit polls have a margin of error rate of plus or minus three percentage points.

Washington Voters Reject Changes to Initiative Process

This post was written by Aisia Davis, Nonprofit VOTE's Administrative Assistant and a 2L student at New England Law | Boston.

Earlier this month, Washington voters rejected a proposal that would have increased the profitability of the signature gathering business by altering the state's initiative process. Washington is one of 24 states which use an initiative or referendum process that offers citizens the right to make and remake laws, as well as check the decisions of the legislature. If citizens are dissatisfied with a particular law or feel that a new law is needed, they can forward an initiative and place it on the ballot.

Once a path for citizen democracy, ballot measures have increasingly become yet another way for well-funded interests to pursue their agenda. The "money equals 'free' speech" legal theory has prohibited states from limiting the special interest money behind these measures and has created an uneven playing field between issue supporters and opponents. What was once a volunteer driven process that required a high threshold of citizen support has turned into a system where the signatures required to qualify a measure are usually gathered by for-profit companies that contract with ballot measure sponsors.

I-517 proposed significant changes to Washington’s initiative and referendum process, including expanding the rights of paid and volunteer signature gatherers and making it illegal to interfere with an individual gathering signatures. Purporting to protect the First Amendment rights of citizens (or signature gathering firms), the initiative sought to permit signature collection on public sidewalks, store entrances and exits, sport stadiums, convention/exhibition centers, and public fairs. This would have greatly imposed upon the rights of business owners, nonprofits, and government alike to set guidelines about when and where signatures are collected. It would have also proved intrusive to the public as it expanded the types of areas and venues in which signatures could be collected. Lastly, the initiative would have increased the time allotted to collect signatures from 10 to 16 months, an expanded time frame that would also have helped signature-collection companies earn more money.

Voter Engagement Case Studies - Learning From 2012

How do nonprofits carry out voter engagement work? Our report Can Nonprofits Increase Voting Among Their Clients, Constituents, and Staff? Case Studies describes how 16 organizations engaged their communities around the 2012 election.

These organizations were among the 94 nonprofit service providers that tracked their voter contacts with 33,741 individuals last year. They ranged from California to North Carolina and included community health centers, multi-service agencies, and children and family groups, in addition to organizations that serve people with disabilities, ex-offenders, and people currently experiencing homelessness. Through interviews with these organizations, we learned more about the challenges they faced, their successes, and common takeaways.

While Part I of the report showcases the impact of nonprofit voter engagement on turnout, Part II tells the story of the nonprofits doing the work. The case studies describe how organizations approached voter engagement, as well as their specific tactics and strategies. Each one includes an organizational profile, background information, a description of activities, and concludes with lessons learned. We hope that these findings will serve as a guide while incorporating voter engagement into programs and services in 2014 and beyond.

New Reports on Disability and Voter Turnout

The National Council on Disability and the Research Alliance for Accessible Voting have both released new reports on the Experience of Voters with Disabilities in the 2012 Election Cycle and Disability, Voter Turnout, and Voting Difficulties in the 2012 Elections.

They found that 15.6 million people with disabilities reported voting in the November 2012 elections. Their turnout rate was 5.7 percentage points lower than that of people without disabilities, meaning 3 million more voters with disabilities would have participated if they voted at the same rate as people without disabilities. Additionally in 2012,

• 30.1% of voters with disabilities reported difficulty in voting at a polling place, compared to 8.4% of voters without disabilities. 
• Over one-fourth of voters with disabilities voted by mail, compared to one-sixth of people without disabilities. Among people with disabilities who voted by mail, about one-tenth reported difficulties and the need for assistance in filling out or sending the ballot. 
• Almost one-third of voters with disabilities required assistance in voting, most commonly given by election officials or family members. 

The National Council on Disability noted architectural and physical barriers at registration and polling sites, as nearly 40% of respondents encountered physical barriers at their polling places.

The findings from both reports highlight the ongoing challenges voters with disabilities face in casting a ballot. Through advocacy and voter education we can help ensure that all eligible voters--including those with disabilities--can successfully cast a ballot. An easy way to start is by ensuring that our communities are registered: in 2012, the voter registration rate of people with disabilities was 2.3 percentage points lower than that of people without disabilities.