Just curious: Why are some environmental groups allowed to retain their tax-exempt status while they campaign aggressively against selectively targeted politicians? For most of these groups, that’s not allowed under IRS rules, and yet some questionable activity has enabled an explosion of spending by these groups to topple politicos of a certain party they don’t like.
Outright political involvement by 501(c)(3) tax-exempt organizations is a violation of IRS rules, and the tax agency is stepping up its monitoring and enforcement of its ban against these tax-exempt organizations’ participation in partisan politics.
The IRS determines which organizations qualify for tax-exempt status. IRS rules state that while nonprofit organizations may be involved in advocacy and legislative activism, they may not engage in partisan politics. So they risk losing their tax exemption if a significant portion of their activity can be construed as political.
In fact, in recent years, a number of churches have either lost or been threatened with losing their tax-exempt status for inveighing against or urging votes for a candidate for public office.
As always with the US tax code, there are loopholes with qualifications. Certain types of nonprofit, tax-exempt entities are allowed to participate in some political activity and retain their tax-exempt status overall, although that activity may be subject to tax (e.g., MoveOn.org) . Not so 501(c)(3)s. But reinvent yourself under said loophole, and the partisan guerrilla war is on, baby.
A recent surge in partisan political activity and campaign spending by environmental organizations has raised eyebrows in Washington, DC.
Sen. James Inhofe (R-Okla.), ranking member of the Senate Environment and Public Works Committee, recently launched an investigation into the political activity of environmental groups and their supporting foundations.
According to a report to the Senate Environment and Public Works Committee, “supposed nonprofit, nonpartisan organizations can shift funds very easily to organizations formed for the sole purpose of partisan political activity.”
For example, 501(c)(3) entities can shift funds to 501(c)(4) organizations, which can participate in partisan activities, although those shifted funds cannot be used for campaign activities.
“Clearly, without a system for tracking funding in these types of organizations, a donor could contribute to a nonpartisan, nonprofit organization, and the donation could ultimately be used for partisan political activities,” the committee report said. “While this practice, if caught, would cause a 501(c)(3) to lose its tax-exempt status, it is nearly to impossible to detect these funding shifts.”
That’s because the 501(c)(4) is not subject to donor disclosure requirements. The committee noted that in 2006 two entities affiliated with the League of Conservation Voters (LCV) were fined by the Federal Election Commission for several violations of federal election law, including failure to register with the FEC as a political action committee and donor disclosure violations. Afterwards, the LCV restructured its organization into a 501(c)(4), which allows the organization to function with fewer disclosure restrictions.
In an Oct. 22 article, the trade publication Greenwire reviewed the partisan activity of major environmental groups in certain key battleground political campaigns and concluded that “in every instance, the environmental groups are backing the Democrats” and that “since the start of the fall campaign, every dollar spent by these organizations has been aimed at helping Democrats.”
(Disclaimer: Believing that the two-party system should go the way of the dodo, buggy whip, and 8-track, this writer has always and always will register as an independent.)
Inhofe, not exactly the BFF of the LCV, said in late September:
“Campaigns to ’save the cuddly animals’ or ‘protect the ancient forests’ are really disguised efforts to raise money for Democratic political campaigns.’
“Environmental organizations have become experts at duplicitous activity, skirting laws up to the edge of illegality and burying their political activities under the guise of nonprofit environmental improvement.”
Perhaps there is a certain irony in the IRS cracking down on churches for partisan politicking while environmental pressure groups seem to be getting a pass. After all, in a column I wrote for Oil & Gas Journal some years ago, I likened environmental extremists to the ancient people who would sacrifice humans in worship of trees they held to be sacred. I thought I was pretty clever in dubbing them “Neodruids.”
That was before Google. Now I find that there are, in fact, actual practicing Neodruids. So I guess apologies are in order to atone for my cultural insensitivity.
In fact, I got a hint of the existence of Neodruidism after that column appeared: Someone wrote a letter to me that used some pretty harsh verbal pummeling to question my intelligence and cultural awareness on the topic of ancient beliefs.
The writer didn’t sign his or her name. But the return address was one of the tonier, think-tank-harboring suburbs of Washington, DC.
I wonder if there’s going to be tax code-writing congressional committee retreat at Stonehenge next year.
